In 2019, global demand for battery materials was estimated at US$46.8 billion, with a CAGR of 8.3%, primarily driven by expanding production of advanced battery types for hybrid and electric vehicles and portable electronics.
The chemicals segment is expected to capture high growth from this continuing trend, with the strongest gains in lithium and nickel chemicals.7 In response, leading chemicals companies and automakers are putting more money into R&D, hoping to create smaller, cheaper and more sustainable energy-dense batteries.
One leading chemicals company expects to create car batteries that are half the typical size of today but with twice the capacity, with a charge time of 15 to 20 minutes, by 2025. It has invested in cathode active-material research with that goal in mind; in early 2020, it announced that it would be upgrading a plant to efficiently produce cathode materials.
While such claims may not pan out as expected, efforts to expand the manufacturing capacity of lithium-ion batteries are advancing on multiple fronts. Global annual production capacity is expected to increase from 297 GWh in 2018 to 1.6 TWh in 2028.8 Companies are building materials factories by investing in new ways to scale up production, as the demand for batteries is expected to overtake demand for chemicals used in internal combustion engines (such as automotive catalysts).
Energy sources being used now or explored include:
1. Lithium-ion batteries
Currently, these batteries are expected to remain the most prominent through the near term, perhaps the next 15 years. Passenger EVs are expected to account for 85% of the overall demand for lithium-ion batteries by 2030, totaling more than 1,748 GWh by 2030.9
However, lithium, cobalt and graphite — all typical components used in the batteries, along with nickel, manganese and aluminum — may face supply shortages as demand surges in the medium term. As a result, battery minerals may enter a deficit in the near term over supply disruptions. On the other hand, this may act as a push for mining and automotive giants to invest in a battery minerals portfolio, a trend not witnessed significantly as of now.
The global market for graphite is expected to grow at a CAGR of 5.3% from 2018 to 2027 to reach US$21.6 billion with electric vehicle anode as one of the major applications. A world bank report estimates the demand for graphite to increase by 383% over the next 30 years.10 Some predict a shortfall of 100,000 metric tons for lithium by 2025, and because of cobalt’s relative scarcity, some industry experts foresee a 20% gap between supply and demand in 2025.
At the same time, experts expect cobalt content to decline as companies’ initiatives are directed toward increasing the energy density of batteries, reducing costs and ensuring an ethical supply chain. Other research focuses on how the metal anode battery could be followed by lithium-air batteries, which use oxygen molecules to generate energy. Development is also possible on the cathode side, which would reduce the lithium mix.
2. Redox flow batteries
While in many ways still in their infancy, these batteries promise greater lifespans at a lower cost, with less of an impact on the environment in manufacturing and recycling.
In a flow battery, a membrane separates two liquids that are circulated, and the electrolytes are isolated. However, at this point, they typically require vanadium, which is rarely found in nature and hard to extract. (Iron is being explored as an alternative.)
This energy storage system also requires pumps and moving parts, requiring more maintenance. The value of this battery market is expected to reach US$370 million by 2025, at a CAGR of 14.3%, up from US$130 million in 2018.11
Through vehicle-to-grid integration, any EV with a battery can act as an asset for electricity grids as a virtual power plant, in which spare capacity is leveraged during peak hours. This would generate cost savings for consumers, as utility companies would offer them compensation.
However, the batteries would be charged and discharged more frequently than anticipated by the car manufacturer. In this scenario, automakers must raise awareness of the resulting battery degradation so they are not unduly blamed.
3. All-solid-state batteries
Unlike traditional lithium-ion and redox flow batteries, these do not use a liquid electrolyte, so they can be more durable and are able to resist temperature changes. A liquid electrolyte requires a separator between the cathode and anode that can raise the cost of the battery and make it bulkier; by contrast, a solid-state electrolyte does not need a separator or protective casing. Also, in lithium-ion batteries, the liquid electrolyte is flammable, which can present safety concerns.
Automakers are seen as more enthusiastic about the potential of all-solid-state batteries than most battery makers, who believe it could take at least 10 years before they are widely in use. One ambitious Japanese automaker is striving to introduce an EV powered by an all-solid-state battery by 2022, while some German automakers are hoping to put forth their versions by the mid-2020s. In a 10-year forecast until 2029, IDTechEx predicts that the market for these batteries will reach over US$25 billion.12
4. Hydrogen storage and fuel cells
Enthusiasm is growing for this option, which is virtually emission free and requires less time for refuelling compared with battery-operated EVs. Energy densities by weight or by volume vary broadly, based on how the hydrogen is stored. Various methods exist for storing hydrogen. But a solution that is efficient, light and low-volume enough for small passenger cars, to rival how common liquid fuels are stored, while remaining competitively priced, is still in its infancy.
Even so, the market for hydrogen fuel cells is expected to grow from US$860 million in 2018 to US$49.12 billion by 2026, at a CAGR of 64.6%,13 as this option has proven successful for forklifts, buses, trucks, and trains and ships.
“As demand for hydrogen increases dramatically among various industries, industry convergence could further accelerate price reductions,” said Andreas Bliersbach, EY Global Energy Storage Lead. “This will in the short term challenge the concept of battery long-haul trucks and grid-scale battery storage and thereby disrupt battery demand forecasts and use cases.”
Perhaps, looking 15 years or so into the future, battery EVs may become a “bridge” solution for hydrogen-powered vehicles even for passengers, although currently the two types coexist under different use cases.