Rapid EV battery investment expected

 Lithium-ion demand will grow almost 10-fold during the next decade, IDTechEx forecasts.

But can supply meet this demand?

IDTechEx technology analyst Dr Alex Holland checks how in the newly updated report Li-ion Batteries 2020-2030.

Automotive manufacturers globally are pledging to electrify their fleets.

Volkswagen aims to produce 1.5 million EVs by 2025 and has entered a joint venture with Northvolt to build a 16GWh Gigafactory in Germany to ensure supply.

Details of new and expanded li-ion capacity in Europe are being announced regularly, as the need for electrified transport becomes clear.

Comparing the announcements for li-ion factories to be located in Europe before 2018 and in 2020, provides a stark example of how quickly investment has entered the li-ion market and Europe’s desire to control some portion of production.

Despite this, most of the capacity in 2020 is in China and owned by Chinese companies.

Much of this comes from lesser known Chinese companies offering LCO and LFP batteries for consumer electronics and e-bike applications.

These batteries are rarely qualified for electric cars, trucks or buses. But EVs, where performance requirements are most demanding, already make up the majority of demand.

Though total li-ion production capacity outweighed demand in 2019, IDTechEx estimates the largest manufacturers, including the likes of LG Chem, Panasonic, Samsung and CATL (excluding Tesla and BYD), did not have the combined production capacity to meet li-ion demand from EVs.

This provides some perspective on the various reports of auto manufacturers struggling with battery supply.

Short-term, a deficit of li-ion batteries suitable for EVs may continue. However, with considerable investment into gigafactories, which can take more than two years to build and come online, cell production is not expected to stifle EV growth past 2021/22.

Cell production capacity is unlikely to be responsible for supply constraints, but raw materials are a different question.

Bringing a new mine online can take five to 10 years but the relatively low lithium, cobalt and nickel spot prices being seen may not incentivise the necessary investment, posing valid questions as to whether sufficient investment is taking place to meet mid-long term battery demand.

Visit www.IDTechEx.com/Lithium or contact Research@IDTechEx.com for more on the report.