Here’s what the EV scene looked like a few years ago, pre-COVID: the legacy automakers were slow-walking the transition to EVs, producing just enough “compliance cars” to satisfy government regulators, doing nothing to market them, and insisting that customers didn’t want them. Of course, even then everyone knew this wasn’t true — Tesla had already proven that there were plenty of customers for compelling EVs.
A look at a Tesla Model 3 and Model Y (Source: Tesla)” data-medium-file=”https://cleantechnica.com/files/2022/05/Screenshot-363-1-400×298.png” data-large-file=”https://cleantechnica.com/files/2022/05/Screenshot-363-1-800×597.png” loading=”lazy” class=”size-large wp-image-267922″ src=”https://cleantechnica.com/files/2022/05/Screenshot-363-1-800×597.png” alt=”” width=”800″ height=”597″ srcset=”https://cleantechnica.com/files/2022/05/Screenshot-363-1-800×597.png 800w, https://cleantechnica.com/files/2022/05/Screenshot-363-1-400×298.png 400w, https://cleantechnica.com/files/2022/05/Screenshot-363-1-768×573.png 768w, https://cleantechnica.com/files/2022/05/Screenshot-363-1.png 1125w” sizes=”(max-width: 800px) 100vw, 800px”/>
A look at a Tesla Model 3 and Model Y (Source: Tesla)
We pundits had a plain prescription for the problem: if automakers would just get serious about EVs, and start advertising them, the customers would come, the sales curve would turn into a hockey stick, and the Oil Age would soon fade away.
Fast-forward to today, and it appears that the automakers took our advice — they’re advertising the heck out of EVs, and gearing up to deliver them in volume, and customers are clamoring to buy. However, the hockey stick has yet to appear.
Demand isn’t the problem, and it never really was. Tesla has been “production-constrained” for years, and now the whole industry is facing this problem (or opportunity?).
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Due to rising lithium prices, Elon Musk has hinted that Tesla may get into lithium mining (YouTube: CNBC Television)
The COVID pandemic led to the infamous semiconductor shortage, the war in Europe has disrupted the supply of wiring harnesses and other components, and soaring prices for nickel, lithium and other materials have reversed the decades-long decline in battery prices.
And this brings us to the question of battery chemistry. Two of the most popular chemistries used in today’s EVs are nickel-cobalt-manganese (NCM) and lithium-iron-phosphate (LFP). The former offers better range and some other performance advantages, but the latter is less expensive, and uses no controversial cobalt.
Chinese EV-makers have favored LFP for some time, and Tesla began using LFP in some of its models in 2021. As it so often has, the automaker started a trend — other brands, including VW, Ford, Stellantis and Rivian, have announced that they will use LFP in lower-priced models. Some industry gadflies have gone so far as to predict that NMC will eventually become a niche technology, used in vehicles that require high energy density, while LFP and other cobalt-free chemistries such as LNMO will move into the mainstream.
Not so fast, say some materials mavens. A recent report from S&P Global Commodity Insights argues that, thanks to leaping lithium prices, LFP may be losing its cost advantage.
War and upheaval, on top of rising demand for EVs, have caused prices for all the key battery materials to surge — cobalt is up around 85%, and nickel about 55%, over the past year. But lithium has really gone through the roof — according to S&P, prices for the light white stuff have surged over 700% since the beginning of 2021, and this has caused a big bump in battery pack prices.
Furthermore, the lack of lithium is likely to last. Research from S&P indicates that, assuming all the lithium projects currently in the pipeline come online on schedule, there could still be a shortfall of some 220,000 metric tons — or about 12% of projected demand — by 2030.
“It takes about 2 years to build a new battery gigafactory, but it takes at least 8 years to build a new lithium mine,” Dr. Qichao Hu, founder and CEO of Massachusetts-based battery-maker SES, told me. “While we have plenty of lithium in Earth’s crust, it’s impossible to scale lithium mining fast enough to match battery demand.”
LFP now offers “a smaller discount than you would expect” versus NCM, “and once you throw in performance factors it is a more difficult decision that it would have been,” one cobalt hydroxide seller told S&P. “You might want to give away some performance for cost, but it isn’t much cheaper these days.”
So, is the show over for LFP? No — it may not take the leading role that some predicted, but it will remain part of the cast of characters. All EV batteries use lithium, so the price rise affects all chemistries — LFP is just getting hit a little harder, making the price/performance trade-off less clear.
Some are as bullish on LFP as ever. Tim Poor, the President of Advanced Cell Engineering, a Florida-based firm that’s working on LFP and LM:FP chemistries, points out that cost isn’t the only selling point. “Safety is a key contributor as well, as LFP batteries don’t carry the same risk of causing a fire as does NMC technology,” he told me. LFP may also be catching up in terms of energy density. “Today’s LFP has [specific energy] of about 160 Wh/kg compared to the 260 Wh/kg of NMC,” says Poor. “New advanced LFP chemistry developed by Advanced Cell Engineering has a [specific energy] of up to 200 Wh/kg.”
Looking at the bigger picture, automakers and battery producers need to consider a range of chemistries. “When looking at designing battery plants, we look at flexibility,” an automaker told S&P. “Right now there is price parity between LFP and NCM. If LFP becomes a lot cheaper again we can maybe prioritize production, but right now we should produce NCM because it’s a premium product.”
“LFP batteries will be there for entry-level vehicles, but not adopted for premium cars,” said a second OEM.
This chimes with comments I recently heard from Richard LeCain, Director of Cell and Process Engineering at battery-maker Britishvolt (the subject of an upcoming feature in Charged). “There are always new chemistries, new advances, and new claims,” he said, emphasizing the need to stay flexible.
Britishvolt is building a 40 GWh-per-year battery gigafactory, which it plans to future-proof by building it out in phases. “You wouldn’t build a 40 GWh factory all at once based on one form factor and one chemistry, because as the industry evolves, some OEMs will want different chemistries,” LeCain told me. “You want a phased buildout to remain on the cutting edge. You should end up with a very flexible factory that can accommodate different chemistry types and form factors to satisfy an array of customers.”
Originally posted on EVANNEX. By Charles Morris
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