On 31 January at Battery Sumit 2023, Andrew Miller, COO of market research and consulting company Benchmark Mineral Intelligence (London, UK), gave a presentation entitled 'BUILDING SUPPLY CHAINS FOR THE LITHIUM ION ECONOMY'. A summary is presented below.

Demand for lithium-ion batteries is expected to increase rapidly over the next decade due to the rapid uptake of electric vehicles. This creates new supply chain risks, particularly with regard to raw and refined battery materials. To reduce this risk, we need to focus more on supply chain localisation and battery recycling, in addition to vertical integration and strategic partnerships throughout the supply chain.

A key component of electric mobility is the battery pack. In recent years, rapid technological advances coupled with increased production have improved the performance of batteries for EVs, most of which are now less expensive to produce. This is a reaction to a temporary price spike over the last two years due to the high cost of raw materials and the shortage of semiconductors.

The cost of a battery is strongly influenced by the cell technology used, the production location and the price of raw materials. Cell costs account for about 75% of the total cost of a battery pack. Materials such as cathode and anode active materials account for 70% of the cost of each cell, while raw and refined materials such as cobalt, nickel sulphate and lithium salts account for more than 30% of cell costs. The battery market is expected to show a CAGR of 30%, with total annual capacity reaching more than 3,000 GWh by 2030.

However, this can only be achieved by further reducing the production cost per kWh. So can OEMs and cell manufacturers continue to reduce the cost of batteries in the coming years? Apart from cell chemistry and design, there are other ways to reduce costs. Examples include increasing module size and reducing the number of modules per pack, and improving manufacturing techniques to reduce CAPEX and OPEX. These measures could reduce costs by approximately USD 30-40 per KWh.

As EVs become increasingly popular worldwide, the biggest growth is expected in Europe, where more than half of all car sales are expected to be EVs in 2030 - twice as many as in North America (29%). In China, EVs are expected to account for 38% of vehicle sales in 2030.

If battery manufacturers are to successfully meet the surge in demand for EVs, they will need to evolve their supply chains. Most of the processes in use today date back more than a decade, when batteries were used in household appliances rather than EVs. At the production level, a more integrated approach between metallurgy and chemistry will contribute to security of supply and cost reduction. In addition, a more regionalised and collaborative approach to the multiple processes of battery production will improve sustainability, reduce geopolitical risks and reduce costs.

Strategically, OEMs and battery manufacturers need to increase their involvement in the upstream supply chain to reduce risk. This can take many forms, ranging from long-term supply contracts to partnerships or even investments. Major EV OEMs, cell and CAM manufacturers are already aiming for a high level of vertical integration and are increasingly involved up to the mining stage. Occupying a key control point in the supply chain provides a strong competitive advantage, but requires a high level of commitment. The ability to simulate upstream LiB supply networks is critical to developing a winning battery strategy.

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（Iruniverse Marcin）

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