Reinventing the car, episode 4
The Global Race for Battery Supply
To preserve its independence vis-à-vis Asia, Europe needs to build several gigafactories. It will be a huge industrial endeavor. This is episode 4 of our series on the future of the car and mobility.
by Philippe Chain and Frederic Filloux
Battery supply is electric vehicles’ Achilles heel. For now. The way to overcome it, and support the adoption of EVs by the public, will be a multibillion-dollar investment in cell battery production facilities.
Currently, battery electric vehicles account for about 4 percent of new car sales (e.g. in Europe over the first half of 2020). Forecasts see this share jumping to 10 percent by 2023,28~30 percent by 2030 and 58~60 percent in 2040.
Disparities between different regions will remain wide, however, as the transition will be much faster in China and Europe. The former is driven by essential concerns over clean-air and the latter by regulations and public pressure. The United States might be lagging behind for a while, before eventually picking-up. Here are some predictions by Bloomberg New Energy Finance (values include Battery EV+plug-inEV):
As the lines on these charts grow, so does the need for batteries. Adjusting the battery supply will require a substantial industrial push as the demand is expected to grow 14-fold to an estimated 1,800 GWh of annual capacity by 2030. That’s roughly the equivalent of 40 to 60 large facilities like the one operated by Tesla in the Nevada desert.
Such a massive increase brings us to two looming tensions: the imbalance in global battery production and access to critical minerals.
Right now, China owns the game.
In raw terms, by 2030, 72 percent of the EV sales will be located in Europe and China. At the same time, among the 115 large facilities scheduled to go into production by that time, 88 will be located in China. Some voices are already sounding the alarm, like Caspar Rawles, Head of Price Assessments at the research firm Benchmark Mineral Intelligence:
“While China remains the powerhouse, there are major concerns from Europe’s automotive industry over availability of high quality, tier-one lithium-ion battery cells at a mass scale as a major blocker to EV acceleration”.
In terms of complexity and scope, making batteries for electric cars has nothing to do with manufacturing electric motors. While making motors has been mastered and internalized by carmakers around the world, batteries require plants and assembly lines of a unique scale.
The term “Gigafactory” was coined by Elon Musk. The prefix refers to gigawatt-hour (one billion watt-hours) and also gives a hint of the “gigantic” size of the factory.
In 2013, barely a year after the launch of the Model S, Tesla’s founder and CEO presented the following calculus to its managers: with the goal of producing 500,000 cars per year before the end of the decade and assuming a battery capacity of 100KWh per car, Musk found that Tesla’s output was likely to absorb the entire production available in the world. At the end of his speech, he turned to the engineer in charge of battery supply and asked him what kind of plant it would take to be self-sufficient. The engineered replied: “It would be a gigantic facility.” As expected, Musk liked the idea. He ordered a full study and later decided to team up with Panasonic, at that time the largest supplier of lithium-ion batteries, to build a record-size facility — and bear half of the $5 billion investment.
Here is what Musk said in 2014 to his biographer Ashlee Vance:
“The competitors are all sort of pooh-poohing the Gigafactory. They think it’s a stupid idea, that the battery supplier should just go build something like that. But I know all the suppliers, and I can tell you that they don’t like the idea of spending several billion dollars on a battery factory. You’ve got a chicken-and-egg problem where the car companies are not going to commit to a giant volume because they’re not sure you can sell enough electric cars. So, I know we can’t get enough lithium-ion batteries unless we build this bloody factory, and I know no one else is building this thing. When will the first non-Tesla Gigafactory get built? Probably no sooner than six years from now. The big car companies are so derivative. They want to see it work somewhere else before they will approve the project and move forward. They’re probably more like seven years away. But I hope I’m wrong.”
Musk was slightly wrong on the timing of the industry’s response to the Gigafactory concept. Six years after his predictions, battery makers like LG Chem (South Korea), CATL (China), BYD Co (China), and Panasonic (Japan) operate facilities comparable to Tesla’s.
Previous episodes:
01: The car, reinvented. From scratch.
02: Your next car will be electric
03: How Tesla cracked the code of automobile innovation
Musk’s predictions were also a bit off when it comes to the size of the battery pack. At Tesla, it now stands closer to 60 KWh on average, even if the behemoth Cybertruck might have a battery pack of 250KWh — but that’s an extreme.
But he was right on the rest: the Gigafactory has proven key to ensuring the carmaker self-sufficiency. Tesla seems to be on track to produce 500,000 vehicles this year, and the Gigafactory’s capacity is expected to reach a capacity of 54 GWh, or about 8 million cells churned out every day.
As for the first Gigafactory, it is indeed gigantic: located east of Reno, Nevada, the building is 500 meters-long and covers 200,000 square meters (1.9 million sq ft.) which makes it one of the largest single-roof facilities in the world, only outpaced by airplane assembly plants.
Right now, the global supply of car batteries clearly leans in favor of Asia, especially China, which controls more than 70 percent of the global capacity:
But the landscape is evolving fast with several plant projects already in the pipeline in Europe. In Scandinavia, a Swedish company called Northvolt is scheduled to start a large factory next year for customers including Volkswagen and BMW, with another plant located in Germany scheduled for 2025. Other projects are even more ambitious like 100 GWh of capacity envisioned by the Chinese maker CATL in Germany.
One thing about this chart which shows the current projects in Europe is disturbing though
Out of the 14 projects scheduled in Europe, 10 rely on carbon-intensive electricity production with locations in Germany, Hungary, and Poland. France, which produces 88 percent carbon-free electricity mainly thanks to its 58 nuclear reactors, has only one gigafactory in the pipeline — so far.
When it comes to shedding several billion euros on an industrial facility, Germany is always more attractive, due to its industrial know-how. However, as much as I hate to say this, I suspect the labor relations in France, with its string of high profile social conflicts, is acting as a deterrent to investors. Unless there is a course correction, it could have a terrible social impact: thousands of jobs related to the making of combustion engines and powertrains will disappear and they need to be offset by the creation of thousands of jobs in battery-making.
In due fairness, I should mention the French ACC (for Automotive Cell Company), a 50/50 joint venture between the legacy battery maker Saft (now owned by Total) and the French carmaker PSA, and its plan to build a battery factory in northern France, and later the second one in Germany. The French government has recently required Renault to join this project.
Making batteries on a large scale is a power-intensive process. Here are some numbers to give an idea: the production of one kilowatt-hour of battery capacity requires about 60 kWh of raw power; a gigafactory with a capacity of 45 GWh will consume 2.7 Terawatt-hours per year. That’s the equivalent of a fourth of one single 1300MW nuclear reactor!
Therefore, trying to minimize the ecological impact is an integral part of building gigafactories. For its “Giga-Nevada”, Elon Musk envisions the plant being carbon-neutral by harnessing all the technology available like massive arrays of solar panels, wind turbines, and heat exchangers that take advantage of the desert’s temperature variations to cool both buildings and equipment.
The vast majority of European gigafactories projects aren’t likely to be that green. This is an unfortunate contradiction where Europe will massively adopt electric vehicles but create a network of gigafactories heavily reliant on the most pollution-heavy ways of producing electricity. That’s appalling as it negates a large part of the environmental benefit of the shift towards EVs.
Getting the minerals, in a responsible way.
Before we delve into this, let’s say a word about the manufacturing process of a battery cell. A cell is made of layers of various materials coiled and encased in a container slightly bigger than a standard AA battery:
Once built, the cells are compacted in a pack sealed in a sturdy aluminum casing usually located under the floor of the car to lower the center of gravity. Depending on the model, a Tesla contains between 4000 and 7000 of such cells. The whole package weighs about 300–500 kg. Other car manufacturers may use different cell formats, usually prismatic or “pouch” cells, of a significantly bigger size than Tesla, with a number of cells in the hundreds rather than the thousands; but the overall process is very similar.
The breakdown of the manufacturing process and its different layers highlights the importance of some key minerals as shown in this chart drawn from a research paper produced by the University of Technology Sydney:
Contrary to the widespread assumption, there are large untapped resources of lithium. It’s a different story for other key minerals, whether it is for raw production or refining. 60 percent of cobalt, for instance, comes from the Democratic Republic of Congo, but it is mostly refined in China. Once again, thanks to both its widespread natural resources and industrial capacity, China is poised to control the battery sector for a while as shown in this map, which as you can see shows most of the lines converge to China.
With the threat of a pandemic and disruptions hovering, no one is keen to remain reliant on China for critical supply. To some extent, there are some resemblances to the energy situation of the 1970s when oil-thirsty Western countries were dependent on the Middle East crude oil and had to endure damaging embargoes and crises.
In addition to the uncertainties of the supply chain, no states can get around the conditions in which the precious minerals are unearthed. And the picture is not pretty, with blatant human rights violations and heavy pollution in Africa, Latin America, or Southeast Asia. Pressure will be high to improve this part of the supply chain in some form.
Finally, let’s address another false idea related to electric vehicles: recycling. In short, dealing with end-of-life EVs batteries will not be an issue. First, here is the state of the recycling potential for the various mineral components:
As we can see, while there is still work to be done, it involves only a fraction of the components. The problem will be solved by the time it will present itself, and that’s ten years from now. By that time, the channels for collecting used batteries will be in place, technologies, like hydrometallurgy needed to separate and reuse the components, already exist and will be largely deployed, thanks to stringent environmental laws.
We have entered a period in which the combination of political and public awareness about environmental urgency will no longer be seen as a hindrance to economic development but as a fundamental underpinning of it. In ten years, electric cars lasting hundreds of thousands of miles with nearly no maintenance will be the norm. This will be made possible by batteries, which will be greener as electricity production will transition, at different paces, to low carbon. There is no shortage of arguments that let us take an optimistic view.
Philippe Chain
& Frederic Filloux
In Episode 5, we will explain how software —car’s OS, multiple onboard firmware—will change everything in the car.
