China, the US and Europe: In the Driver's Seat Race to Dominate Electric Cars
Ernest Ojeh, Unsplash
The global economy is currently on the verge of a power revolution. Creating sustainable and competitive energy storage solutions has therefore become the next big challenge, one many countries are beginning to face. As policymakers focus on raising our ambition for reducing greenhouse gas emissions, batteries have steadily been moving to the forefront of the discussion. With the global market for EV batteries expected to hit almost $1 trillion by 2030, according to BloombergNEF analysts, sustaining this growth is going to require massive amounts of batteries to be produced. China, US and Europe are hopping into the production of affordable, efficient large-scale storage solutions. The race is on. Who will be the leader in reshaping the global economy?
As China dominates lithium-ion battery production and builds factories at break-neck speed, Europe is also on the lead, aiming to become the second biggest battery cell producing region by 2025. The US, on the other hand, is falling behind on battery production even though they have many of the technologies to advance in a battery-building industry.
China's Critical Competitive Advantage: Gaining Access to Raw Battery Materials
The manufacturing of lithium-ion batteries depends on key materials like graphite, lithium and cobalt. These metals are used in today's active cathode materials and chemistries found in high performing batteries: lithium-ion, solid-state and silicon. China is one of the superpowers that dominates the processing of an important quantity of these materials followed by the US and Europe, two of the other powers that lead the world in early-stage energy storage technology development.
Growing demand for battery commodities: lithium, cobalt and nickel
According to data released from Benchmark Mineral Intelligence, a London-based research firm for the lithium-ion battery industry, Chinese chemical companies accounted for 80% of the world’s total output of raw materials for advanced batteries in 2019. "Of the 136 lithium-ion battery plants in the pipeline by 2029, 101 are based in China," the firm said in May.
Cobalt produced in mines in the Democratic Republic of the Congo (where the vast majority of the metals are found) is taken by a Chinese monopoly. This metal is an essential element within lithium battery cells as it makes up the cathode, the positive side of the traditional battery from which electricity is generated. Moreover, China has also been buying stakes in mining operations in Australia and South America where most of the world's lithium reserves are found. In fact, Tianqi Lithium, a Chinese company now owns 51% of the world’s largest lithium reserve.
The US is Also in the Game
Thanks to its federally-funded national labs and universities, the United States has some of the best early-stage battery research in the world. Without forgetting to mention it also has Tesla, one of the largest global suppliers of battery energy storage systems. The US is in the game due to being the pioneers of the majority of the lithium-ion battery technology on the market. Driven by the technological progress that allows batteries to store growing amounts of energy, grid-scale systems are also seeing record growth in the US and around the world.
Sharp Price Drop Due to Advances in Lithium-Ion Battery Chemistries
The price of utility-scale battery storage in the United States has declined, dropping nearly 70% between 2015 and 2018, according to the US Energy Information Administration. This sharp price drop has been enabled by advances in lithium-ion battery chemistries that have significantly improved performance.Power capacity has expanded rapidly, and batteries can store and discharge energy over ever-longer periods of time. The National Renewable Energy Laboratory sees costs for lithium-ion batteries falling an additional 45% between 2018 and 2030. With prices continuously falling, we meet a world in which fuel consumption will be replaced by electrification.
California is currently the global leader in the effort to balance the intermittency of renewable energy in electric grids with high-capacity batteries.
Gigafactory in Berlin
What's Holding the US Back?
According to the United States Department of Energy (DOE), a lot of what's holding the US back is the lack of national strategy. The DOE laid out its national priorities for federal investments in technology this decade yet one of the biggest problems is accessing enough key materials as shortages begin to rise. On the other hand, we are beginning to see more efforts from the US to compete and tap into lithium deposits in the country, finding ways to make lithium-ion batteries without cobalt and nickel. Also, it’s part of a broader push by the Biden administration to develop more domestic supply chains, with the DOE announcing fundings of $100 million for clean energy research and planning to distribute $17 billion in loans for EV manufacturing facilities in the US.
Manufacturing Capacity - US and Europe
An analysis of announced and committed investments states that by 2023, Europe will have more lithium-ion battery manufacturing capacity than the US, with a demand for EV batteries in the country expected to surpass 200 GWh per year by 2023 and reach around 400 GWh by 2028, generating at least 3-4 million jobs in the process. Additionally, the country's share of LIB capacity will increase from 6% in 2020 to 25% in 2025, potentially lowering China's forecast share from 77% to 65%.
As the world continues to rise in this era of electrification, we will see Europe and the U.S trying to create their own battery champions to challenge China, the global leader in electric vehicles and largest battery cell producer in the world. Battery demand is forecasted to be so powerful that production will barely keep pace by the end of this decade yet automakers are putting more and more efforts behind their electrification plans; the market will be colossal but there’s a need for competitive technology. The US and the EU are trying to compete with China in terms of prices and scale, yet the only way for them to do this is through innovation.
Improved battery cells will enable the acceleration of electrification and a decarbonized future. The electrification of the economy, from consumer electronics, to aviation, to mobility is an inevitable change that is rapidly happening both with escalating market adoption, and with exponential growth in investments in new technologies. There is no question we need longer-lasting and faster-charging batteries throughout our economy, from smartwatches to electric vehicles - and the demand is growing exponentially. The winning technologies in the battery domain will be the ones that have the most significant impact on performance, lower costs, and will be compatible with existing manufacturing infrastructure.
Addionics Smart 3D Electrodes is the missing part of the puzzle. Its revolutionary cell design is built to allow high power rates while still loading sufficient levels of active material to be high energy, minimizing the energy / power tradeoff seen within the battery industry. Improving cell design is a lower risk endeavour than attempting to incorporate new chemistries and one that can be implemented at market scale more quickly. Once 3D architectures can be manufactured in a low-cost manner, it is an obvious win-win for the sector. It is only a matter of time and the right technology before it becomes the default approach to manufacturing every battery in the world.