There is no doubt that the electric vehicle (EV) revolution is underway, with many global auto manufacturers outlining plans for EV growth all the way to/up until 2050.
However, there are many questions surrounding the pace of EV growth. Can current battery technology support this growing demand? Will supply challenges with battery raw materials, including nickel, cobalt, and lithium, act as a handbrake on the EV revolution? Are EVs really green? Where do efforts need to be focused if EVs are to maintain their current environmental advantage over ICE cars?
A shift in battery chemistry on the cards?
According to the Wood Mackenzie Power & Renewables report ‘The Future of Lithium-Ion Batteries: Demand, Technologies and Investments’, NMC 111 (consisting of equal parts of nickel, manganese, and cobalt) will no longer be the dominant lithium-ion battery chemistry in the EV market by 2019. As it stands, we expect other types of NMC chemistry, including 532 (5 parts nickel, 3 parts manganese, and 2 parts cobalt) and 622 (6 parts nickel, 2 parts manganese, and 2 parts cobalt) to start gaining market share in the next couple of years.
In the market currently, a selection of battery vendors are using 532 in their EV battery packs. Additionally, NMC 811 (8 parts nickel, 1 part manganese, and 1 part cobalt) utilises 75% less cobalt than NMC 111 does – a factor many automakers and battery manufacturers find appealing due to issues surrounding the mining of cobalt in the DRC. Not only does this battery chemistry ease the supply risks and ethical concerns arising from high cobalt use, it also provides far superior energy density over the traditional NMC 111 chemistry and thereby reduces overall materials costs.
We forecast that NMC 811 will begin to pick up market share over the coming years, although adoption may be slow given issues with thermal stability and cycle.
Wanted: Nickel miners
Even before the surge in EVs, nickel’s long-term fundamentals were looking tight. Nickel has seen several years of low prices and under-investment. New demand from EVs and energy storage creates a widening supply gap through the 2020s – and there seems to be little appetite for new investment in nickel projects.
Solid-state battery technology very promising
Solid-state battery technology offers a much higher energy density, therefore combatting a number of issues surrounding current liquid-electrolyte-based lithium-ion batteries, including flammability and cycle life.
The first half of 2018 has already been promising for solid-state battery technologies, with approximately $400 million invested from the likes of automotive giants Toyota and Mercedes Benz. As this technology matures and developments are made, Wood Mackenzie Power & Renewables’ research forecasts that solid-state devices will achieve commercial viability post-2025. By 2030, they will make up the majority of the EV battery technology mix. As more electric vehicles enter the market, technology vendors must achieve a delicate balance. On the one hand, automotive OEMs want cheaper and lighter batteries, but on the other hand, there are inherent limitations on lithium, cobalt, and nickel supplies. This creates an interesting opportunity for new technology startups that are working on advanced solutions, ranging from new anodes and cathodes to recycling or repurposing batteries. In the coming years, these alternatives will increasingly play a bigger role.
Power sector transformation crucial for EV appeal
Globally, the transportation sector contributes over 20% of all greenhouse gas (GHG) emissions. Of this, the road sector accounts for more than 80%, and demand is increasing, driven by rapid urbanisation. EVs offer a solution to meeting this demand while reducing carbon emissions from the transport sector to address climate change. But, with the move towards electrification, how much better for the environment is an EV?
According to Wood Mackenzie’s latest research on mobility transition, ‘How Green is an Electric Vehicle on a Well-to-Wheel Basis?’, a typical mid-size EV can generate up to 67% lower greenhouse gas emissions than a gasoline internal combustion engine (ICE) car on a well-to-wheel basis. This involves everything from how the fuel is produced to where the crude oil is sourced, from the mileage of the car to how the electricity is produced, even how the energy use is associated with vehicle and battery manufacturing and charging. These factors, as you would expect, differ from country to country.
According to our analysis, based on the existing electricity generation mix in developing economies such as China and India, an EV can only displace up to half the greenhouse gas emissions of an ICE gasoline car.
The most crucial factor in sustaining the current advantage for EVs is decarbonisation of the power sector. As gasoline ICE vehicles become more fuel efficient, the power mix must comprise more renewables for EVs to remain GHG competitive. Currently, the power sectors in the UK and US are 30% less emissions-intensive than markets in Asia. A greater share of renewables in the power sector would also require battery and energy storage devices to tackle intermittency and ensure grid stability. For climate change enthusiasts and regulators, electrificationof transport is a useful remedy to tackle air pollutants and GHG emissions, and fulfill Nationally Determined Contributions (NDC) pledges as a result. Only time will tell if power sector decarbonisation will go hand-in-hand with EV cost reduction and adoption.
“We forecast that NMC 811 will begin to pick upmarket share over the coming years, although adoption may be slow given issues with thermal stability and cycle.”