KEY POINTS:
- As Tesla plans next-generation electric vehicle batteries, focus is turning to lithium iron, not the lithium ion that has been the fundamental chemical engineering science powering EVs to date.
- Elon Musk’s car company and GM, among other auto companies, want much longer-range and more durable battery cells.
- New battery technology is possible, allowing cars to go 400 miles or more between charges and lasting as long as 1 million miles. That could spur EV sales the same way the first 100,000-mile warranties on gas cars once did.
- Eliminating the rare, expensive and controversial element cobalt from batteries is among the biggest aims.
The future of the auto industry may boil down to the difference made by a single letter: R. As in, the difference between a lithium-ion battery, like those found in today’s electric vehicles made by Tesla and others, and the lithium-iron phosphate batteries coming soon to market.
As Elon Musk’s Tesla has been talking up new battery technology development as part of the lead-up to the company’s first-ever Battery Day for investors, Wall Street is buzzing about the difference the next generation of batteries may make. Vehicles with lithium-ion batteries, also used in cellphones, are expected to give way over the next few years to cars and trucks made with lithium-iron phosphate and other chemistries. This will cut costs, extend vehicle ranges to 400 miles or more between charges and enable batteries to last as long as 1 million miles.
Reducing Tesla’s own costs and spurring mass adoption of EVs remain critical priorities for Tesla, as echoed in a message from Musk to employees on Monday (6-29-20) saying it would be a challenge to break even right now.
The new technology will change the experience of owning a car, whether a Tesla or one made by rivals like General Motors, which is also working on new battery technologies, analysts said. In particular, the extremely long life of batteries soon to hit the market are likely to mean the batteries hold their value well enough to be resold when owners trade in their cars, possibly for use storing solar electricity for homes. And the next-gen batteries’ long lives may let them be used in ridesharing businesses that demand cars that can take the pounding of near-continuous use.
“If you’re talking about batteries that can last twice as long for the same price, it completely changes the math for the consumer,” says Wedbush Securities analyst Dan Ives. “Iron phosphate batteries are safer, and they can have second or third lives as electricity storage.″
Musk recently said its Battery Day is tentatively scheduled for September, the month and day to which Tesla recently pushed back its annual shareholder meeting. Originally, both events had been planned for June.
“We want to leave the exciting news for that day, but there will be a lot of exciting news to tell,” Musk said on the company’s first-quarter earnings call. “I think it would be one of the most exciting days in Tesla’s history.”
Efforts to reduce the use of cobalt have been ongoing for a few decades already, and Tesla has made significant. But one of the major advantages of building batteries with cobalt is how easily it allows complex chemical structures to be engineered.
Lithium-iron phosphate, meanwhile, has never proved to be efficient in the space constraints of an electric car — it was originally designed for the grid storage market due to its energy density profile. But its chemistry is suited to fast-charging and cost efficiency because it does not rely on cobalt.
Battery experts are very curious to learn about the breakthrough Tesla has had, and believe the company could raise the profile of the lithium-iron phosphate approach in the EV market. The key difference in the lithium-iron phosphate batteries is that they do not need to use cobalt, a rare and expensive element that is a big part of the high cost of electric vehicle batteries.
Cobalt prices have tanked during the global economic downturn, declining from as much as $95,000 per ton in 2018 to $30,000 this year, but it remains key to bringing down battery costs. Cobalt is by far the most expensive element in a lithium-ion battery.
Canning cobalt is one of the biggest elements of cutting the cost of batteries below the $100/kWh threshold that is a rough proxy for making electric vehicles as cheap as those powered by internal combustion engines. Today’s batteries cost about $147/kWh, down from about $1,000 in 2010 and $381 in 2015.
There is a limit to the price improvements to come from reducing just cobalt, and that’s because the pricing differential between cobalt and nickel has narrowed in recent years. Tesla’s primary EV battery technology is NCA (based on nickel-cobalt-aluminum oxide chemistry). Most of the auto industry uses an NMC (nickel-manganese-cobalt) battery chemistry. But with nickel an important part of both approaches, reductions in cobalt alone can’t drive continued step changes in pricing.
It is going to be hard to get below $100 per kilowatt with current nickel-cobalt chemistry. Tesla realized they can’t just get rid of cobalt.
Current battery technology, including NMC, remain a contender to reach the million-mile threshold, but won’t be able to do so on a cost-effective basis with today’s nickel concentrations. Nickel currently ranges in price from roughly one third to as much as one half the price of cobalt. With lithium-iron phosphate, which does not require nickel or cobalt, lab research shows there is a possible pathway to drive pricing down to as low as $80/kWh.
In the laboratory it is becoming clear that it is possible to make a battery that is a long-lived asset, and the next-generation battery technology can achieve the million-mile potential in the next five years. That would not only be a game changer for EVs, but for the energy grid storage market, which lithium iron phosphate technology was originally designed to supply. A major ramp in production would benefit the cost equation for both markets.
Lithium-iron phosphate and its upgraded versions will have a major role in the future of EVs and fundamentally change large-scale energy storage.
Read the complete story at cnbc.com
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