EVs for Everyone, Better Batteries :: F, GM, TSLA :: Revisited

 Guess when this was written: 

“Now there's a growing demand for electric car batteries. With GM, Nissan, Ford, and Tesla ramping EV production, battery usage in electric cars could begin to drive a meaningful segment of the battery market. As a result, a number of improved battery designs are being developed in laboratories, involving silicon, graphene, and a zinc-air composition to name a few.”

The above is not an exact quote, there are a few tweaks (removing vehicle introductions) so the answer was not too obvious. Drumroll please... This was written on April 12, 2013. 

Even though this is 10 years old, it reads like an article written today. There has been a massive amount of investment into battery research and manufacturing over the last decade, but the demand has been outgrowing the supply. 

The above quote came from The Motley Fool's blog site, but you can no longer find it there. Luckily the Wayback Machine still has an archive of it. Full credit to the author, Alexander MacLennan aka TulipSpeculator1, for spotting this trend so far before it was apparent to everyone.

Why does this matter? The goal is EVs for everyone, whether it's personal vehicles, public transportation, or rideshare; with all of this powered by renewable electricity. However, there are a couple obstacles. 

Why Are EVs Expensive? Batteries! 

EVs have far fewer parts than internal combustion engine (ICE) vehicles. This makes EVs quicker to build; making EV automobile factories more productive.

EVs are easier to design, you don't have to plan around transmissions, drive shafts, large engines, fuel lines, fuel tanks... 

So if EVs have fewer parts and the factories are more productive, why are EVs more expensive? The batteries. Today, batteries are the most expensive component in most electric vehicles, but there's good news on this front.

Battery Prices are Dropping 

The good news is that battery prices are dropping. 

You can see on the graph above, from 2010 to 2020 EV battery prices dropped by over 88%. This is a huge change. This is what allowed Tesla to move from selling $100k Model S and X to selling Model 3 and Y at about half the price, while still making a profit.

This trend is what will allow EVs to become more affordable and replace the vast number of gas vehicles on the roads over the next decade. 

Boom and Bust

Unfortunately, 2022 looks like a year that will not continue this downward battery price trend (as I write this, final numbers are not yet available). The legacy automakers have woken up to EVs; they will not cede the electric market to the upstarts. So now they are trying to ramp up their EV production volumes. This has meant increased competition for battery factory capacity, resulting in price spikes throughout the battery supply chain, from raw materials, to refined materials, to finished goods. 

Here's a chart showing EV sales. Each one of these vehicles has Lithium-ion batteries. Most of these vehicles have thousands of pounds (and thousands of dollars worth) of battery cells.

Via @skorusARK

This increased price does have a silver lining. This price spike will draw in more investments, the production capacity will grow, and then battery prices resume their downward price trend, but now with more production than ever before.

Better Living Through (Battery) Chemistry

Battery technology has been improving each year by 5 to 7 percent. This is true for cutting-edge battery chemistries, but it's also true for older battery chemistries. 

More research funding than ever before is going into battery technology. This includes research into Lithium-Air, Lithium-Sulfur, and solid-state batteries to name a few. One of these might turn out the be the battery of the future, but today there are two general categories for high-production Lithium-ion cells. These are Iron-based chemistries such as Lithium Ferrophosphate (LFP) and Nickel-based such as Nickel Manganese Cobalt (NMC) and Nickel Cobalt Aluminum (NCA).

Each manufacturer has their own twist on the recipe with different dopants, membranes, electrolytes, and the like. But to stay competitive, any advancement made by one will be answered with an analog by the others. 

Most EVs today are made with Nickel-based Lithium-ion battery cells. However, Iron-based batteries are lower cost, have high safety, low toxicity, long cycle life, and more heat tolerance. If Iron-based batteries have all of these advantages, why are Nickel-based batteries currently dominant in the EV market? The answer is weight. 

Paying The Iron Price

Iron-based Lithium-ion batteries are heavier than Nickel-based batteries per unit of energy storage. When the batteries are used in a mobile device (like cars or smartphones), this additional weight is a problem. Heavier batteries take more energy to move, which requires more batteries... this negative feedback cycle limits the practical range of an electric vehicle that is powered by Iron-based batteries.

Improvements to Iron batteries are slowly unwinding this negative feedback loop. Lighter Iron batteries (improved gravimetric energy density) are allowing these batteries to be used in vehicles with a significant range. For one example, Tesla makes a Model 3 Standard Range Plus variant that uses Iron-based Lithium-ion cells in its battery pack. This car has a range of 253 miles. A 253-mile range EV can fulfill many people's driving needs.  

Iron-based batteries are also finding their way into utility-scale storage and backup power applications. For these stationary use cases, the heavier weight is not a significant penalty. But, more importantly (from the EV perspective), this means the Nickel-based cells (that were once used in these stationary applications) are now available for long-range EVs.

Today, Iron-based cells are about a quarter of the battery market and their share is growing. Iron cells are expected to be about half of the market by 2028. This will help make EVs more affordable.

Closing the Loop

The other mega-trend that will help bring EVs to all is recycling. Today, Nickle, Lithium, and other materials must be mined to make batteries for EVs. The good news is that the packs in each EV that going onto the roads today will be able to be recycled into new batteries. Unlike gasoline cars that have an unquenchable thirst for drill baby drill; EVs will reach a steady state.

One of the best aspects of recycling is that it can be done locally. Today, the materials in EV batteries make the equivalent of several trips around the world before being delivered to a final customer. Battery materials recyclers, on the other hand, will be located near battery manufacturers. Reducing these material road miles will reduce the price of new batteries.

 

Better Batteries: The materials in EV batteries are highly recoverable. Two things to consider: one, the average lifespan of a vehicle is 12-14 years; two, EV batteries have been getting better by 5% to 7% each year. Adding these two together means that when an EV that's seen a dozen years or more gets recycled, the materials in there will be able to power ~two similar range new EVs. Batteries that use half the amount of materials will cost less. 

When there's a river of end-of-life EVs coming off the roads, recycling this high-grade material will be cheaper than mining virgin raw materials. This will further help drive down EV prices. This provides a positive feedback loop: more EVs on the road, supplying more recyclable materials, making EVs more affordable, which puts more EVs on the roads. This is how we get to "EVs for Everyone." 

fin