By the close of the next decade, lithium-ion battery factories around the world will have a combined production capacity equivalent to 22 Tesla Gigafactories. Despite a ten-fold drop in costs over the past decade, Lithium-ion battery costs are the biggest reason why electric vehicles (EVs) remain uneconomical compared to gas alternatives, with 30 to 50% of the cost of an electric car currently dedicated to the battery. This March, Volkswagen and battery maker Northvolt launched a consortium to promote EV battery research in Europe, and last month, Ford poured $500 million into electric truck start-up, Rivian. Leading battery manufacturers are struggling to keep up with demand, operating at maximum capacity they cannot meet delivery expectations into 2020. This is creating window of opportunity for alternative players, such as Powin Energy.
Improving the Li-ion
With marginal improvements, experts believe that by 2028 lithium-ion costs will drop 450% from 2016 levels. These cost savings will ultimately come via innovation across the anode, cathode and electrode to improve four core parameters: Energy, the amount of energy that can be stored in a battery; power, the rate at which energy can be released; lifespan, how long the battery will last before suffering from degradation, and safety, preventing explosions such as the April Arizona explosion and the numerous other cases. Remember exploding Samsung batteries?
A near-term solution for better anodes
While energy densities can be increased in the cathode, the near-term opportunity for increased densities exist within the anode. Numerous innovators have attempted to replace graphite with silicon, which has higher energy absorption levels, capable of theoretically increasing density by a factor of 25 compared to a graphite anode. Over the last ten years, many start-ups have experimented with alternative chemistry designs. But none have flourished, because silicon anodes break apart under the stress of so many lithium ions.
Some innovators are finally reaching a commercialization tipping point, developing novel solutions to address the degradation of these newer materials. Valued at over $1 billion, Sila Nanotechnologies has raised $240 million in equity, supported by corporates in the automotive, electronics and industrial sectors to develop a solution which packs silicon atoms inside a matrix of empty nanoparticles. CEO Gene Berdichevsky explained that the company is now reaching commercialization after eight years of development and is currently commissioning a 50MWh line.
From consumer electronics to cars
The company’s first product, which will be released into the consumer electronics market, will increase the energy density of existing Li-ion batteries by 20% with Samsung and will drop directly into existing manufacturing lines. Eventually the batteries will be used in the automotive sector, initially by Daimler (a lead investor) following the completion of the five to seven year testing phase that newer battery chemistries must go through in the automotive industry. Likewise, several companies including Amprius, LeydenJar Technologies, Enovix, Enevate and Nexeon have all received backing in the race be the first company to commercialize silicon anodes.
Figure 2 shows the design of Sila Si Anodes, courtesy of Green Car Congress.
A near-term solution for better electrolytes
Lithium-ion batteries suffer from an inherent safety flaw. The electrolyte is made of a flammable liquid in order to increase conductivity. Currently made for small-volume, low-temperature applications, dry electrolyte (solid-state) is now the alternative frontrunner, with large scale applications predicted to hit the market in around five years. In 2018, more than half a billion dollars from automakers and cell suppliers was invested in solid-state technologies.
Ionic Materials has raised $65 million from investors including Renault, Nissan, Mitsubishi, A123 Systems, Hitachi, Dyson, Samsung and Volta Energy Technologies. Senior Director Erik Terjesen explained that the company has developed its own polymer electrolyte that can be used with many other chemistries, and has the benefit of being compatible with existing and upcoming chemistries. Ionic have the potential to be the first room-temperature polymer players to the market, looking to enter the military aviation market in 2022, the consumer electronics market in 2023 and the EV market as early as 2024 with A123.
QuantumScape have received over $120 million from Volkwagen, Kholsa, KPCB and Breakthrough Energy Ventures for a secretive solid-state. Solid Power have also received $26 million from Hyundai, Samsung Ventures, Solvay Ventures, A123 Systems, Volta Energy Technologies and others.
Other ideas for the li-ion market
Not all solutions with financial traction are following the same route. Other solutions are taking a step back, redesigning and modifying manufacturing processes to extend viable lifetime of the Li-ion chemistry, limiting the risk of transitioning over to less tried and tested chemistries.
24M, a spin out from A123, is rethinking the Lithium-ion manufacturing and cell process to develop a more capital efficient semi-solid solution. In March, the company announced a dual electrolyte technology, allowing for different electrolytes on the cathode and anode sides of the battery, which also houses much thicker electrodes. The solution uses the electrolyte as the processing solvent, meaning it’s integrated with the electrode at the start of the manufacturing process, as opposed to back filling at the end of the process. This has the potential to increase energy capacity by a factor of five and frees the designer from having to make one electrolyte work for both sides, which remains a core issue for many newer batter designs. With the $22 million raised at the end of 2018, the company is scaling up to finish a 100-megawatt-hour line with an industrial partner later this year.
The tough road ahead
The solar industry ultimately consolidated around crystalline silicon not because it was the best technology, but because economies of scale have been established via scaled supply chains. Much like the early failures of thin-film solar in the last cleantech boom, new battery players need to be wary of the hurdles the economically constrained market will present. Both Ionic Materials and Sila Nanotechnologies have found their core value proposition via developing products which drop into standard manufacturing lines at the cell level.
As more Gigafactories come online over the coming years the declining cost of existing Li-ion batteries will make it increasingly difficult for newer entrants into the market. To that end, economic profits will be dependent on scarcity rather than differentiated technologies or brand. New market entrants will need a unique selling point, and possibly could find traction exploring adjacent markets where new sets of high-quality customers are located.
Keep an eye on…
The production cost of lithium has become significantly cheaper, thanks to a technological breakthrough in China. The cost of extracting the mineral has dropped to $2,180, compared to the international price of $12,000 – $20,000 per ton. As a result, companies such as state-owned Qinghai Lithium Industry are seeing average profit margins of 50%. With China dominating the low-cost supply of the key materials, Europe and the U.S. need to drive regulation, legislation and general innovation in battery material production quickly to avoid losing out on the next big market opportunity.
Next week at the Cleantech Forum Europe in Stockholm, we are hosting a session on the cross-sectoral applications of emerging battery technology. Be sure to check out the lineup and stay tuned for the next battery blog where we will be looking at battery software innovation.