Adroit Market Research - Industry Insights

It has been revealed that, lithium-ion battery prices are falling down to 14% per year, and it has also anticipated that the fall will remain the same for a longer run. Standard curve effect found that around 6% to 9% of lithium-ion battery will witness a reduction in price for every repetition of a production volume. The question is still into the frame that if lithium-ion battery will stamp the mark in the industry. This whitepaper also delivers significant substitution of cobalt in lithium battery. It also discusses about the key factors that can contribute to growing uncertainties over global cobalt supply growth and give rise to shortfalls in the provision of cobalt in the future.

A lithium-ion battery is a type of a common rechargeable battery in which lithium ions cleverly move from the negative electrode to the positive electrode during discharge to charging mode.

Keeping an understanding in a simple format, lithium-ion batteries are basically rechargeable batteries specifically used for portable electronics, with a maximum energy density, low self-discharge, and no memory effect. Lithium ion batteries is witnessed a rapid growth electric battery vehicle, and aerospace applications.

In today’s time, lithium-ion batteries stands a default choice for personal electronics and specifically for electric cars as they can deliver a potential energy density than other technologies. In early 199s after many other leading companies such as Sony, lithium ion batteries was first entered the market commercially as a new battery technology. Now in today’s market scenario, lithium ion batteries are the most preferable choice for many applications, particularly in electric vehicle.

The question raised is can lithium ion batteries upscale with increased demand?

Over million electric vehicles (EVs) is anticipated a huge demand across the globe. With the growing count of jurisdictions around the world focusing critically on the growth of EV sales, the market is expected to witness the strong escalations in lithium-ion battery demand. A recent peer-reviewed analysis found that lithium-ion battery prices have fallen down to 14 percent per year and the long-term trend is also quite clear, in a standard learning curve effect, of 6 percent to 9 percent reduction in price for every doubling of production volume.

Lithium ion battery growth trends through the lens of Tesla

Discussing the global picture, Tesla is anticipating to produce 500,000 cars every year by 2020. With an estimated average capacity of 65 kilowatt-hours per vehicle around 500,000 batteries are in demand every year at about 10 kilograms of lithium per battery, 5 million kilograms of refined lithium per year.

Moreover, as the industry is in a wild speculation, it has been estimated that the world will witness 100 Tesla-size battery production factories by 2040. This is sufficient to produce about 100 million electric vehicles every year, adding on a ton of stationary storage. If this is the case then the world would demand nearly around 800,000 metric tons of lithium by 2040.

What is Cobalt?

Cobalt is needed for LIB in the market for electric vehicles (EVs) and stationary energy storage, both with increasing global relevance in the transition to a low-carbon economy. Globally, EVs demand is expected to grow considerably as parity price is achieved with internal combustion engine vehicles (ICE). Also, it will be pushed up by pollution prevention legislation, for example in China, or efforts to decarbonize road transport, as in the case of Europe.

As long as the expansion of the use of these technologies is certain, and subject to significant growth rates, creating additional pressure upon traditional, supplementary cobalt supply will be needed, and emerging supply sources. Thus, substantial increases in mining and recycling are expected to move in line with market expectations. However, limitations to supply, resulting in production lagging behind demand or price increases, may arise for several reasons.

International cobalt prices have fluctuated significantly over the past decades. Since 2000, cobalt demand has begun to rise progressively. Strong demand for rechargeable batteries, initially used in electronic equipment, was the main driver of growth.

While prices have remained relatively stable and low since 2012 (on average 24 000 EUR/tonne), these nearly doubled to values around 50 000 EUR/tonne in 2017, reaching 65 000 EUR/tonne4 in February 2018 (S&P Global Market Intelligence, 2018).

Significant substitution of Cobalt in Lithium ion battery

A number of risk factors, including price volatility and industry concerns over supply shortages, have brought about shifts in the chemistries of rechargeable batteries, leading to a decrease in the consumption of cobalt while favoring the use of substitutes. For example, LCO containing 60 % cobalt, applied specially in electronics, has been gradually replaced by NMC, with a cobalt content of 10-30 %, NCA with 14 % cobalt and LFP with no cobalt.

On the contrary, in the EVs market, the elimination of cobalt in Li-ion batteries, although possible, has not been the preferred option, insofar as it allows for optimal performance. In EV batteries, the usage of cobalt has increased in recent years: on the one hand, structural changes at the technology level have initiated the widespread use of Li-ion batteries in the hybrid vehicles segment, traditionally reliant on NiMH batteries; on the other hand, an increasing number of automakers are choosing full NMC chemistry to achieve higher energy density, and thus longer autonomy ranges, abandoning 61 combinations of this chemistry with cobalt-free Li-ion battery technologies, namely LFP (Darton Commodities, 2016). Also (Benchmark Minerals, 2016) reinforce this idea by assigning overriding importance to cobalt-bearing NMC and NCA chemistries in the automotive sector.

Conclusion:

Lithium is believed to be a major element of choice as an anode in batteries due to its physical/chemical properties.

• The battery- and car manufacturing industry, as this reports allows predicting future lithium price developments and therefore battery prices.
• Governmental decision makers, as they show that no actions (like subsidies) have to be taken to ensure that lithium prices will fall again.

The market is about to witness “Peak lithium” , hence future research projects should focus on developing new methods of energy storage that are not based on a limited resource like lithium. In terms of economic research one could try to better predict future demand of lithium. This would probably decrease price fluctuations, hence producers could better plan when it makes sense to increase production capacities.

The scale and size of the global and European EV market and Li-ion demand varies substantially between scenarios, based on premises for deep decarburization, market expectations and business as usual considerations. Other sectors beyond EVs can be as influential in cobalt demand patterns in the future, growing more rapidly than expected.

The EU currently lags in EV batteries manufacturing, with very limited share in global Li-ion manufacturing capacity. The EU market for cobalt will thus depend on the extent to which this sector will answer a real need in Europe.

Various risks have been recognized in relation to the supply structure of cobalt, which is also rated as critical for the EU: the Democratic Republic of the Congo (DRC) is the main mining producer, accounting for 55 % of global production; approximately 20 % of DRC’s cobalt production comes from artisanal-based operations in which a prevalent and unethical use of child labor has been identified; China is the largest producer of refined cobalt, accounting for 50% of global production; and discretionary efforts to increase mining production in the short to medium term are limited by the time taken to fully develop a mining programme. These trends may increase the risk of disruption, either through supply shortages or price escalation.