Li-ion supply chain investment needed to grow EVs

Growth in the lithium-ion battery (LIB) market has historically been due to consumer electronics, but now EV adoption will drive it.

So says IDTechEx technology analyst Dr Alex Holland following the release of his report The Li-ion Battery Supply Chain 2020-2030.

Subsidies in countries such as Norway and China have encouraged EV sales, but a 2019 slowdown in growth rate was mainly due to subsidy restrictions announced by China.

Nevertheless, rapid EV growth is forecast during the coming decade, Holland says.

Global emissions targets will force a shift to zero-carbon transport with several countries presenting timelines for the ban of internal combustion engine (ICE) vehicles.

Various auto manufacturers have also announced aggressive EV sales targets for the 2020s and continuing battery price falls will allow EVs to reach price parity with their ICE counterparts, which will a create huge demand for EVs, Holland adds.

“This forecasted growth in EVs focusses attention on the LIBs that power them – can we produce enough of them and is there enough material to meet demand?”

Recent investment across the LIB supply chain has been significant and this will need to continue, he says.

Raw material extraction and processing will be under increasing strain to meet demand, and uncertainty over long-term supplies of raw material remain, Holland adds.

In 2018, Chinese battery companies Contemporary Amperex Technology ltd (CATL) and GEM formed part of a consortium to establish additional nickel smelting and processing facilities in Indonesia. In 2019, Indonesia brought forward restrictions on the export of nickel ore to encourage further investment from the steel and LIB industries, causing an increase in the nickel futures price.

The potential impact of material price volatility is discussed in the IDTechEx report.

Nickel will be an important metal for LIBs and the move by CATL and GEM is one example of companies securing long-term supply of raw materials.

Investment in cell and battery production has also been significant. For example, several gigafactories have come online or are being constructed in Europe to allow EV manufacturers greater control over the LIB production process.

IDTechEx’s report discusses whether enough battery production is being brought online to meet demand. This increasing scale at which batteries are produced can help bring battery prices down further, the report presenting a price forecast through to 2030.

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