Key Inputs of Li-ion Batteries - MacroPolo Key Inputs of Li-ion Batteries - MacroPolo

Key Inputs of Li-ion Batteries

Click on each of the six highlighted elements to discover more about the main ingredients in a li-ion battery.

lithium manganese
iron cobalt
nickel carbon

How Common Cathode Chemistries Stack Up

Different cathode chemistries have their own advantages and drawbacks—in terms of cost, energy density, and safety (not plotted here). Click on each of the main chemistries used today to learn about their attributes and applications.

matrix

Source: McKinsey

Battery Futures

In the next 10 to 20 years, more advanced li-ion battery technologies that promise higher energy density and improved safety are expected to become commercially viable. A key issue with today’s batteries is that a higher energy density usually means lower safety and a higher propensity to catch fire (like the batteries in Samsung’s Galaxy Note 7). New materials and innovative designs aim to ameliorate the density-safety tradeoff.

For example, lithium metal cathodes are a promising avenue for li-ion batteries that improve performance without relying on cobalt, and anodes made of silicon composite—rather than graphite—could well enter the market soon. In addition, solid-state electrolytes might also be introduced, which could improve both density and safety.

Current technology could be overtaken by experimental designs that boast higher theoretical energy densities as well as lower estimated costs, such as li-air and li-sulphur batteries. However, their performance and readiness for commercialization is still unproven. Even if more advanced batteries were to become available in the market by 2030, there would be a time lag in ramping up production and switching costs for suppliers embedded in the current li-ion ecosystem. This means that li-ion batteries, and variations thereof, are likely to dominate the EV market for the next couple of decades.

Iron is widely known as a key input in steelmaking, and the steel industry will continue to be the main driver of iron demand. But the potential growth of the Lithium Iron Phosphate (LFP) battery chemistry could lead to a rise in incremental iron demand.

Although this type of battery is not the most popular, it was still a $5 billion market in 2016, according to industry reports. That demand primarily comes from Chinese battery makers that use the LFP battery for electric buses, among other applications. Because of the lower cost (it does not use any cobalt) and higher safety of this type of battery, demand could be sustained, especially in China.

Iron Price Trends

ironchart - Key Inputs of Li-ion BatteriesSource: Based on estimates from Metalary.

Cobalt is a metal that is most commonly mined as a byproduct of nickel and copper. Although a few artisanal mines are dedicated to cobalt, the vast majority of the global cobalt supply is dependent on the production and demand of copper and nickel.

But the growth of li-ion batteries for EVs may change these dynamics, as cobalt is a key material for cathodes. This growing market suggests that it is possible for the cobalt market to diverge from that of copper and nickel.

On the other hand, because cobalt is expensive and highly concentrated in an unstable country (the Democratic Republic of Congo), producers are trying to reduce the cobalt content in li-ion batteries. The amount of cobalt in a cathode varies but it is a main ingredient in the Nickel-Manganese-Cobalt (NMC) cathode chemistry, currently the most popular type.

Cobalt Price Trends

Cobaltchart - Key Inputs of Li-ion BatteriesSource: Based on estimates from Metalary.

When it comes to battery cathode materials, manganese has been overshadowed by lithium and cobalt. That’s because manganese’s main application is in steelmaking, functioning as an oxygen remover when iron ore is being converted into pure iron and also serving as an ingredient in metal alloys.

But prospects for Manganese could continue to rise, depending on the type of li-ion batteries that will gain market share. For instance, in the compact EV category, the Nissan Leaf’s battery uses a Lithium-Manganese oxide chemistry. And before General Motors discontinued the Chevy Volt, its battery also combined this chemistry with the more popular NMC variety. Demand may also come from EV charging infrastructure, as Tesla’s Powerwall uses the NMC battery.

Manganese Price Trends

Manganesechart - Key Inputs of Li-ion BatteriesSource: Based on estimates from Metalary.

Lithium is the lightest metal and has good energy density when used in a battery. Its demand has been rising rapidly because of the projected growth of the EV market. About 46% of lithium production goes to batteries. A typical Tesla Model S battery pack contains roughly 63 kg of lithium, about 14% of the total weight of the battery pack.

Some of the largest lithium reserves are concentrated in South America and Australia, where it is typically extracted from salt brines and undergoes a solar evaporation process. A small portion of lithium is extracted from hard rock. The raw material needs to be processed into battery-grade lithium carbonate or lithium hydroxide.

Lithium Price Trends
lithiumchart - Key Inputs of Li-ion BatteriesSource: Based on estimates from Metalary.

Nickel demand historically has not been driven by batteries. Instead, demand for the metal was predominantly driven by stainless steel products, such as home appliances. There is currently no bottleneck in nickel supplies, and it is a common metal mined around the world. In fact, there is potentially an oversupply of Class 2 nickel that is below 99.8% purity.

But the growth of the EV market could prove to be a boon for Class 1 nickel demand, which is of a purity higher than 99.8% and suitable for battery material. Given the desire of major battery manufacturers to dramatically lower cobalt and raise nickel content, that could mean even more demand for nickel. The Tesla Model S battery, which uses the Nickel-Cobalt-Aluminum chemistry, has much higher nickel content than the popular NMC chemistry.

Nickel Price Trends

Nickelchart - Key Inputs of Li-ion BatteriesSource: Based on estimates from Metalary.

Graphite is a soft form of carbon and has multiple applications, ranging from steelmaking to pencils. Even though only around 5% of graphite is used in EV batteries, that proportion is set to grow. The anode of a li-ion battery is essentially all graphite, and it is reported that a Tesla Model S battery contains 54 kg of graphite.

Graphite is common around the world, but it needs to be highly pure for battery materials, which can take the form of synthetic graphite or natural flake graphite. Synthetic graphite requires processing capacity expansion, which is currently being led by China.

Graphite Price Trends

Graphitechart - Key Inputs of Li-ion BatteriesSource: Prices are for large flakes, based on estimates of high-end range from Northern Graphite.

This chemistry, commonly referred to as LCO, is mostly used in consumer electronics and not in EVs. It has good energy density and is fairly cheap because of its small size. But because it needs a lot of cobalt, it is not cost effective when it comes to the large battery packs required for EVs.

This chemistry, commonly referred to as LFP, is relatively new and expensive. Its strongest attribute is safety, but its energy density is about average with limited prospects for improvement in the future. Chinese auto manufacturer BYD in particular has backed this chemistry, which is primarily being used in electric buses.

This chemistry, commonly referred to as LMO, is one of the more well-established chemistries and was used in the Nissan Leaf and the recently discontinued Chevy Volt. However, It is one of the most expensive and has the lowest energy density when compared to other chemistries, but is considered about as safe as the LFP chemistry.

This chemistry, commonly referred to as NCA, is currently backed by Tesla, which is aiming to lower the cobalt content in its batteries by replacing it with more nickel. It has one of the highest energy densities among the different chemistries and its cost is moderate. However, it is not considered as safe as some of the other chemistries.

This chemistry, commonly referred to as NMC, is currently the most popular chemistry for EVs and comes in four types: NMC111, NMC523, NMC622, and NMC811. The numbers denote the proportion of each material in the cathode—that is, the NMC111 has equal parts nickel, manganese, and cobalt. Many manufacturers already use NMC622 and aim to soon shift to NMC811, the latest variation of the chemistry, which lowers cost and improves energy density by reducing cobalt content. This chemistry has very good energy density and the cost is moderate but is not considered as safe as the LFP.

LiCoO2

LiFePO4

LiMnO4

LiNi0.8Co0.15Al0.05O2

LiNixCOxMnxO2