With the world going green and automakers turning over a new leaf, we’ve seen the lithium-ion battery at the heart of the emerging electric vehicle (EV) industry. It has been so integral to the EV revolution that many have firmly tied the battery with the growth in the newly green sector.
However, its days on the golden seat will not last forever and while some may have thought of lithium or cobalt as a ‘sure thing’ may be mistaken. There are many factors at play and when it comes to the lithium-ion battery, and not all of these factors are playing out in its favour. Here’s what’s happening for the battery, its materials, and what’s on the horizon.
Lithium-ion battery demand growing
In recent years, the demand for all materials related to the lithium-ion battery have surged. As several countries in Europe plan to ban automobiles fuelled by fossil fuels by 2040, automakers have been lining up to get their hands on the lithium-ion batteries required to power their electric vehicle models. This has driven up demand and speculation as to the demand for these materials in the coming years. Of course, one of these materials is cobalt. From the NMC battery to the NCA to the LCO, cobalt is one of the main components of several of the lithium-ion batteries on the market.
Now, with all these automakers queuing up, many worry that the demand may outgrow the supply. It’s estimated that by 2023, there may be a shortage in cobalt.
Demand greater than supply
While the appetite for the lithium-ion battery is high, sourcing the materials out of the ground is another story. Cobalt for example, is predominantly mined in the Democratic Republic of Congo (DRC). The DRC’s mine production is head and shoulders ahead of any other production in the world. It also has a reputation for political unrest which has caused a great deal of unease amongst miners, automakers and investors alike. To add to that angst, is the latest change in legislation in the DRC, which could cost the mining industry – and carmakers, an arm and a leg.
New DRC legislation
Back in 2002, the government passed a new mining law that “contained a clause that stated that mining companies would be protected for 10 years if any changes were made to the law” according to the Financial Times. Under that law, if tax rates changed companies had a great deal of time to adapt before those rates were implemented.
Well, times have changed and the DRC parliament has voted in favour of making an amendment to that clause which could mean the rate hikes from 2 to 10 percent could come into effect quicker than expected, costing miners approximately $1billion.
A smart decision, or a costly one?
This comes just as miners and automakers are gearing up for another surge in demand for the materials required for lithium-ion batteries. Is this smart, strategic planning on the part of the DRC or will it cause further motivation for battery inventors to find another energy solution? One could write it off as greedy, or opportunistic however, perhaps the government of the DRC wants to cash in on a good thing while it’s still a good thing – as in, before it gets replaced by the next technology. On the other hand, their rate hikes are one of the main drivers in the lithium-ion battery’s replacement. So, with that, what competition is out there?
Other battery types filling the void, or replacing cobalt?
People from around the world have been incentivized to find a cheaper replacement for the popularized lithium-ion battery, and they might not be too far away. From carbon-ion to graphene, copper foam to aluminum air batteries, there are battery competitors cropping up worldwide. Many of them are cheaper, faster to charge, and last longer in terms of mileage. So, what’s the hold up? Many of them are still in development phase or are in need of funding to scale however, they aren’t too far behind. And when these other options arrive and receive uptake from a major automaker like Tesla, the lithium-ion battery will have to share a great deal more of the market. Let’s take a look at the new technology coming our way.
Newcomers to the scene and future developments
The variety of new battery inventions is incredible and very exciting. From charging with sound, air, skin, solar, to foldable or stretchable batteries – the options seem to be endless. Here are just a few of the options for electric vehicles (EV) which are either on the market, or currently being developed.
Zap&Go is a technology business founded in Oxford, England in 2013 as per their website. The company is producing a carbon-ion battery or c-cell, with the idea of shortening charge times considerably as compared with the Lithium-ion battery. This battery type is classified as non-flammable and can “withstand from tens to hundreds of thousands of charge/discharge cycles”. This is a much greater amount than Li-ion cells which withstand up to 1,000 cycles only. This battery’s technology also enables it to charge within five minutes. The company is currently at a proof of concept stage.
Graphene Car batteries
Graphenano is a technology company from Spain which has produced a graphene polymer battery that aims to help EVs charge faster and go farther. The batteries are to be manufactured in Spain and have an energy density of 1,000 Wh/kg. This is a huge leap compared with Lithium-ion batteries, which only have 180 Wh/kg. It also promises to charge 33 times faster than Li-ion batteries.
Prieto comes to the market with foam batteries which they describe as 3D. Rather than having currents moving in two directions, Prieto’s foam batteries are free to move in any direction. This is accomplished with the use of a copper foam substrate. They are not flammable, have a longer life, are cheaper than Lithium-ion batteries and they do not use electrolytes. The company is starting off in smaller products, but are scaling up to cars eventually.
Solid state batteries
Toyota scientists published a paper describing their tests on a solid state battery. This battery uses sulfide superionic conductors and can charge in seven minutes. It’s more stable than other batteries because it is a solid state. However, this battery is still in testing phases and electrolyte materials are still posing challenges for scientists. Therefore we likely won’t see it in EVs just yet.
Aluminum Air battery
The aluminum air battery runs on water, amazingly enough. These batteries have been proven to drive 1,100 miles on a single charge. That’s enough for people to sit up and take notice. Telsa’s model S has to stop every 300 miles by comparison. This battery uses “oxygen naturally occurring in the air to fill its cathode”. The result is a lighter battery than its liquid filled competitors. The battery was a co-creation between Phinergy, a company out of Israel, and Alcoa Canada, headquartered in Pittsburgh. The batteries are produced in Canada to lower costs.
Lithium-ion battery takeaway
In the end, it’s hard to say which way things will go. But one thing seems for sure, progress marches on and other batteries are coming. The future of EVs aren’t beholden to the lithium-ion battery. Investors should keep in mind that in this ever-changing technology sector, today’s golden goose could be tomorrow’s dinner. And if any of the materials required to create the lithium-ion battery don’t meet the demand, that will further incentivize the production of alternative batteries, and that will not be favourable for investors in lithium or cobalt.
Ironically, the short supply will likely create a fever and drive manufacturers to hoard materials. But any battery makers or carmakers holding the bag when the lithium-ion battery becomes old news will not be happy. Neither will mining companies who have gone all-in on supplying for this battery type if it gets usurped. That said, those with diversified assets should be able to pivot when the time comes, making them a safer bet for investors. Lithium-ion battery materials may be in the mining space, but they’re in technology too – and that is under a constant state of evolution.
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Securities Disclosure: I Amanda Kay, currently hold no direct investment interest in any company mentioned in this article.