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Mid-Nickel",103.5,99.73,3.78,13.78,6.78,[518,519,520,522,524,526,528,530,532,534,536,538],{"date":213,"value":512},{"date":216,"value":513},{"date":219,"value":521},99.19,{"date":222,"value":523},96.02,{"date":225,"value":525},98.23,{"date":467,"value":527},99.24,{"date":329,"value":529},101.29,{"date":339,"value":531},87.61,{"date":341,"value":533},92.44,{"date":344,"value":535},90.96,{"date":347,"value":537},92.24,{"date":350,"value":539},95.09,{"id":541,"uuid":542,"name":543,"slug":544,"full_slug":545,"content":546,"relatedArticles":939,"relatedVideos":940},112474307008826,"eb3c4f23-d941-4648-80b5-22353d367583","What has driven battery cell costs below $100 per kWh?","what-has-driven-battery-cell-costs-below-100-per-kwh","article/what-has-driven-battery-cell-costs-below-100-per-kwh",{"_uid":547,"date":548,"tags":549,"editor":550,"content":560,"excerpt":917,"featured":50,"reporter":918,"_editable":922,"component":923,"seo_title":543,"categories":924,"visibility":931,"author_company":49,"featured_image":932,"seo_description":917,"author_full_name":49,"author_job_title":49,"formattedDate":937,"formattedArticleDate":938},"215fe291-54b2-4a9d-8182-31a51e34da66","2019-07-22 00:00",[],[551],{"slug":552,"name":553,"content":554},"matthew-bird","Matthew Bird",{"job_title":555,"image":556,"bio":558,"linkedin":559},"Senior Editor - Supply Chains & Data Visualisation",{"filename":557},"https://a.storyblok.com/f/287943243085208/512x512/14738033ec/matthew-bird.jpeg","Matthew writes, edits and produces content for Benchmark Intelligence and Benchmark Source across the whole mine to grid supply chain. He also acts as a liaison to the press. He has a PhD in electrochemistry from the University of Nottingham.","https://www.linkedin.com/in/birdmatthew/",{"type":561,"content":562},"doc",[563,571,577,586,591,596,601,606,611,616,621,626,633,638,643,648,655,664,669,674,679,686,691,696,701,708,713,718,723,730,735,740,745,750,757,762,767,776,781,786,791,796,801,806,813,818,823,828,833,838,843,848,853,858,863,871,876,881,886,893,898,903,912],{"type":564,"attrs":565,"content":567},"heading",{"level":566,"textAlign":49},4,[568],{"text":569,"type":570},"Since 2014 the cost of producing a battery cell has more than halved despite raw material price rises. Here, Simon Moores looks at how the lithium ion battery industry can continue to drive costs down and add even further economic impetus to the energy storage revolution","text",{"type":572,"attrs":573,"content":574},"paragraph",{"textAlign":49},[575],{"text":576,"type":570},"Breaking the $100/kWh lithium ion battery production cost barrier was once seen as the watershed moment for electric vehicles (EVs).",{"type":572,"attrs":578,"content":579},{"textAlign":49},[580,582,584],{"text":581,"type":570},"Despite the goalposts now shifting to a $100/kWh battery pack, Tesla and Panasonic’s achievement of producing a cell for under $100/kWh at Gigafactory 1, according to new ",{"text":583,"type":570},"Benchmark Mineral Intelligence ",{"text":585,"type":570},"data, cannot be underestimated.",{"type":572,"attrs":587,"content":588},{"textAlign":49},[589],{"text":590,"type":570},"LG Chem, CATL, Samsung SDI, and SK Innovation are all behemoths in the global battery landscape that are expanding capacity and number of plant locations, yet it’s Panasonic’s partnership with Tesla that is some distance ahead.",{"type":572,"attrs":592,"content":593},{"textAlign":49},[594],{"text":595,"type":570},"The ability for the duo to produce its 2170 Nickel-Cobalt-Aluminium (NCA) cell at below $100/kWh, when the 2019 industry average for automotive grade cells ranges from $115-130/kWh, is the blueprint that the world’s battery majors are now seeking to replicate.",{"type":564,"attrs":597,"content":598},{"level":566,"textAlign":49},[599],{"text":600,"type":570},"Raw Material Costs",{"type":572,"attrs":602,"content":603},{"textAlign":49},[604],{"text":605,"type":570},"The battery industry only really began forensically dissecting the cost of its raw materials during the times of surging demand.",{"type":572,"attrs":607,"content":608},{"textAlign":49},[609],{"text":610,"type":570},"Between 2016 and 2017 battery demand from China, bolstered by a ramping-up Tesla, surged with a lack of a supply response. This forced the prices of lithium and cobalt up in almost identical fashion – by four times.",{"type":572,"attrs":612,"content":613},{"textAlign":49},[614],{"text":615,"type":570},"In 2019, while prices have subsided to around half of the peak levels of May 2018, they are still, in lithium’s case, much higher than historical pre-battery era levels.",{"type":572,"attrs":617,"content":618},{"textAlign":49},[619],{"text":620,"type":570},"While the cobalt component is actively being reduced in Nickel-Cobalt-Manganese (NCM) cathode chemistries such as 523, 622 and 811, it is still the most volatile in price component of all battery raw materials.",{"type":572,"attrs":622,"content":623},{"textAlign":49},[624],{"text":625,"type":570},"The only real way to truly manage cobalt’s price is through long-term, fixed contracts or by reducing cobalt’s use by accelerating the advent of 811 and NCA, which averages lower cobalt than 811.",{"type":572,"attrs":627,"content":628},{"textAlign":49},[629,631],{"text":630,"type":570},"It won’t be news to many with interests in the supply change to read that auto majors and battery producers are not fans of cobalt. Whether it be Tesla, BYD, Volkswagen or BMW, numerous companies have publicly spoken of their dislike of the cobalt and are actively",{"text":632,"type":570},"reducing its use at a cell level.",{"type":572,"attrs":634,"content":635},{"textAlign":49},[636],{"text":637,"type":570},"Tesla reduced its consumption of cobalt in a vehicle by 60%, with an average of 11kg per vehicle during the Roadster and Model S (2009-12), to 7kg in the Model S II and Model X era (2016-2018), to approximately 4.5kg following the launch of the Model 3.",{"type":572,"attrs":639,"content":640},{"textAlign":49},[641],{"text":642,"type":570},"However, despite these decreases, growing production numbers will lead to aggregate cobalt consumption increasing.",{"type":572,"attrs":644,"content":645},{"textAlign":49},[646],{"text":647,"type":570},"As such, for the foreseeable future even at lower cobalt, higher nickel chemistries, auto manufacturers will be exposed to cobalt’s price volatility.",{"type":572,"attrs":649,"content":650},{"textAlign":49},[651,653],{"text":652,"type":570},"This reduction in cobalt will see nickel’s role in the supply chain – and share of cost within the battery cell – increase dramatically",{"text":654,"type":570},"as higher-nickel cathode chemistries, such as NCM 811, are adopted.",{"type":572,"attrs":656,"content":657},{"textAlign":49},[658,660,662],{"text":659,"type":570},"As things currently stand, the volume of nickel sulphate – battery grade nickel – consumed in lithium ion cells (we exclude NiMH here) is a relatively small percentage of the approximately 2.3 million tonne nickel market, which is dominated by stainless steel. Of the battery raw materials ",{"text":661,"type":570},"Benchmark ",{"text":663,"type":570},"focuses on, nickel is coming from the lowest base and will see the greatest percentage increases in demand as higher-nickel battery cell production comes online.",{"type":572,"attrs":665,"content":666},{"textAlign":49},[667],{"text":668,"type":570},"Lithium, the immutable raw material in a lithium ion battery, has done relatively well at managing its longer-term industry price with long term contracts and partnerships between miners and chemical makers coming to the fore.",{"type":572,"attrs":670,"content":671},{"textAlign":49},[672],{"text":673,"type":570},"A long-term lithium price target for automotive manufacturers has to be between the $10-14/kg range, as price spikes to $20/kg and beyond undermine confidence in the supply chain, especially as their EV sales increase from hundreds of thousands to the millions.",{"type":572,"attrs":675,"content":676},{"textAlign":49},[677],{"text":678,"type":570},"As with each battery raw material, there are nuances within the lithium story and debate remains over the direction and competitiveness of lithium carbonate’s and lithium hydroxide’s value chains as battery chemistry continues to develop.",{"type":572,"attrs":680,"content":681},{"textAlign":49},[682,684],{"text":683,"type":570},"The structure of the lithium market is changing and will continue to change, as",{"text":685,"type":570},"there is a potential for a shift away from lithium carbonate as the primary chemical of choice in cathodes.",{"type":572,"attrs":687,"content":688},{"textAlign":49},[689],{"text":690,"type":570},"Away from cathode materials, which account for 50% of per kWh cell costs, the industry also has to be wary of the quality and availability of graphite anode.",{"type":572,"attrs":692,"content":693},{"textAlign":49},[694],{"text":695,"type":570},"Compared to that of other battery raw materials, the graphite industry has flown under the radar but is still a major part of the bill of materials for cell equating to anywhere between 10-20% of costs.",{"type":572,"attrs":697,"content":698},{"textAlign":49},[699],{"text":700,"type":570},"Electric vehicle manufacturers have long desired anode material at between $4-6/kg but the industry average has sat much higher in the $8-12 range for natural coated spherical graphite and $12-20 (and sometimes even higher) for tailored synthetic graphite anode.",{"type":572,"attrs":702,"content":703},{"textAlign":49},[704,706],{"text":705,"type":570},"This is the next great challenge for the battery megafactories. While much focus, exploration and investment has flowed into",{"text":707,"type":570},"the cathode side of the business, the anode and graphite supply chain has relied on Chinese expansions.",{"type":572,"attrs":709,"content":710},{"textAlign":49},[711],{"text":712,"type":570},"As a result, China produces 100% of natural spherical graphite anode material. Production of natural flake graphite – the feedstock used to ultimately produce spherical graphite destined for battery anodes – is predominantly produced in China, although there have been signs of increased production in East Africa.",{"type":572,"attrs":714,"content":715},{"textAlign":49},[716],{"text":717,"type":570},"Silicon is also beginning to play its part.",{"type":572,"attrs":719,"content":720},{"textAlign":49},[721],{"text":722,"type":570},"Additions of 4-6% of silicon into a graphite anode has yielded some capacity benefits but also additional cost. In theory silicon anodes would provide much greater energy density than their natural graphite and synthetic graphite cousins.",{"type":572,"attrs":724,"content":725},{"textAlign":49},[726,728],{"text":727,"type":570},"However, there are many barriers to achieving this and we will likely see these developments first play out in smaller battery",{"text":729,"type":570},"applications. The only real way for battery makers to feel the benefits of silicon is to make anode above 80% silicon – and this is many years away.",{"type":564,"attrs":731,"content":732},{"level":566,"textAlign":49},[733],{"text":734,"type":570},"Market prices v deal-making",{"type":572,"attrs":736,"content":737},{"textAlign":49},[738],{"text":739,"type":570},"In only a handful of years, battery producers have gone from minnows of the supply chain with little purchasing power to the biggest buyers of these speciality minerals and chemicals.",{"type":572,"attrs":741,"content":742},{"textAlign":49},[743],{"text":744,"type":570},"For example, a battery producer in 2014 may have been negotiating for 1,000 to 3,000 tonnes of lithium hydroxide. Now the deals are well into the double-digit-thousands each year.",{"type":572,"attrs":746,"content":747},{"textAlign":49},[748],{"text":749,"type":570},"All major battery producers are now pushing for that special deal below market price, particularly if they have an auto OEM on their side.",{"type":572,"attrs":751,"content":752},{"textAlign":49},[753,755],{"text":754,"type":570},"This situation is only going to intensify, together with contracts becoming longer",{"text":756,"type":570},"thus giving the battery producer more protection from volatility, more predictability of future costs and confidence in future expansions – a virtuous circle.",{"type":564,"attrs":758,"content":759},{"level":566,"textAlign":49},[760],{"text":761,"type":570},"Scale and Expertise",{"type":572,"attrs":763,"content":764},{"textAlign":49},[765],{"text":766,"type":570},"Scale has been another crucial factor in driving down cell costs.",{"type":572,"attrs":768,"content":769},{"textAlign":49},[770,772,774],{"text":771,"type":570},"The rise of the lithium ion battery megafactories – as ",{"text":773,"type":570},"Benchmark Minerals ",{"text":775,"type":570},"has consistently outlined in its Global Battery Arms Race thesis and when we spoke at the US Senate – has allowed economies of scale to play its part.",{"type":572,"attrs":777,"content":778},{"textAlign":49},[779],{"text":780,"type":570},"While this is not as important as the price of raw materials, it is indirectly responsible for helping drive down these raw material costs as outlined in the previous section.",{"type":572,"attrs":782,"content":783},{"textAlign":49},[784],{"text":785,"type":570},"Before 2014, lithium ion battery plants were an order of magnitude smaller, geared to supplying smart phones rather than batteries the size of the chassis of your car.",{"type":572,"attrs":787,"content":788},{"textAlign":49},[789],{"text":790,"type":570},"These plants were measured by megawatt-hours (MWh) rather than gigawatt-hours (GWh).",{"type":572,"attrs":792,"content":793},{"textAlign":49},[794],{"text":795,"type":570},"Yet since Tesla’s Elon Musk announced the Nevada Gigafactory 1, a global battery arms race ensued to build enough capacity for the pending wall of demand from electric vehicles.",{"type":572,"attrs":797,"content":798},{"textAlign":49},[799],{"text":800,"type":570},"It has shifted the entire landscape of the lithium ion battery industry – the cornerstone of the energy storage revolution.",{"type":572,"attrs":802,"content":803},{"textAlign":49},[804],{"text":805,"type":570},"It’s widely believe that 15GWh is the sweet spot for battery plant economies of scale, however this has not stopped the world’s biggest battery makers pushing well beyond 30GWh for a single plant and, in CATL’s case, up to 100GWh at its site in Ningde, China which it later downgraded to 50GWh for its IPO.",{"type":572,"attrs":807,"content":808},{"textAlign":49},[809,811],{"text":810,"type":570},"Security of battery cell supply and the added benefits of having this all in one location will ensure that lithium ion battery",{"text":812,"type":570},"capacities continue to increase.",{"type":572,"attrs":814,"content":815},{"textAlign":49},[816],{"text":817,"type":570},"The sheer supply chain influence that these megafactories will continue to have is defining the global trade flows of battery raw materials, cathode and anode products.",{"type":572,"attrs":819,"content":820},{"textAlign":49},[821],{"text":822,"type":570},"The battery megafactories will create localised ecosystems attracting cathode, anode, separator and other suppliers to the area, helping further reduce logistical cost for the entire supply chain.",{"type":572,"attrs":824,"content":825},{"textAlign":49},[826],{"text":827,"type":570},"For example, a 50GWh NCM battery megafactory will require annually (approximately):",{"type":572,"attrs":829,"content":830},{"textAlign":49},[831],{"text":832,"type":570},"Super-battery plants will force their suppliers to rethink their entire strategy and a more efficient upstream of the supply chain will result.",{"type":572,"attrs":834,"content":835},{"textAlign":49},[836],{"text":837,"type":570},"The battery industry can be roughly split into three tiers in a pyramid structure, with the top tier of producers occupied by the behemoths of the industry such as Tesla, Panasonic, Samsung and LG Chem.",{"type":572,"attrs":839,"content":840},{"textAlign":49},[841],{"text":842,"type":570},"The second has major battery companies such as BYD, SK Innovation and CATL. Finally, the third tier has a number of companies such as GEELY and Farasis, with many of the new Chinese producers sitting within tier 3.",{"type":572,"attrs":844,"content":845},{"textAlign":49},[846],{"text":847,"type":570},"Typically, the higher the tier of manufacturers the more stringent qualification is for raw materials, with higher quality and specification requirements, large sample sizes, and longer qualification times.",{"type":564,"attrs":849,"content":850},{"level":566,"textAlign":49},[851],{"text":852,"type":570},"Movement of battery plants to low cost jurisdictions",{"type":572,"attrs":854,"content":855},{"textAlign":49},[856],{"text":857,"type":570},"Before the rise of the battery megafactories, most plants making tier one and tier two cells were based in Japan or Korea.",{"type":572,"attrs":859,"content":860},{"textAlign":49},[861],{"text":862,"type":570},"These batteries were made on a small scale and with higher labour and energy costs than China – the new location of this mass capacity.",{"type":572,"attrs":864,"content":865},{"textAlign":49},[866,867,869],{"text":583,"type":570},{"text":868,"type":570},"now has 1,956.6GWh of lithium ion battery capacity in",{"text":870,"type":570},"the pipeline by 2028. Last year there were 46 operational battery megafactories globally, but by 2023 almost double this figure – 90 – will be operational. By this point the megafactories that were operational in 2018 will have ramped up their operations even further, again adding pressures to demand.",{"type":572,"attrs":872,"content":873},{"textAlign":49},[874],{"text":875,"type":570},"China dominates now and is set to for the next decade. For instance, 70% of the 1,956.6GWh battery megafactory capacity in the pipeline is in China. Last year alone, 68% of the world’s 292GWh capacity was based in China.",{"type":572,"attrs":877,"content":878},{"textAlign":49},[879],{"text":880,"type":570},"Those plants outside of China will have to seek vertical integration and/or longer term fixed contracts with EV producers. It is unlikely that for safety and logistical reasons it would be efficient to ship gigawatt hours of battery cells from Asia into North America, for example, therefore localisation of battery production will continue.",{"type":564,"attrs":882,"content":883},{"level":566,"textAlign":49},[884],{"text":885,"type":570},"How low can lithium ion battery cell costs go?",{"type":572,"attrs":887,"content":888},{"textAlign":49},[889,891],{"text":890,"type":570},"Keeping the cost of lithium ion batteries",{"text":892,"type":570},"consistently low will demand expert supply chain management. This will take time to manifest itself in for auto space for an industry used to dealing with commoditised products.",{"type":572,"attrs":894,"content":895},{"textAlign":49},[896],{"text":897,"type":570},"The speciality nature of most battery raw materials means that the nuances needs to be fully understood and that the quality of the lithium, graphite, cobalt and nickel runs right through the supply chain into the battery, the EV and the auto OEM brand.",{"type":572,"attrs":899,"content":900},{"textAlign":49},[901],{"text":902,"type":570},"Consistent awareness of these high-risk specialities of lithium, cobalt, graphite, and nickel is the only way OEMs will be able to effectively manage their battery costs.",{"type":572,"attrs":904,"content":905},{"textAlign":49},[906,908,910],{"text":907,"type":570},"At ",{"text":909,"type":570},"Benchmark Mineral Intelligence",{"text":911,"type":570},", we often get asked: how low can lithium ion battery cell costs really go?",{"type":572,"attrs":913,"content":914},{"textAlign":49},[915],{"text":916,"type":570},"This will almost entirely depend on management of the raw material costs. The price of lithium, graphite, cobalt and nickel will have to be high enough to incentivise new supply yet low enough to keep driving cell costs down.","Since 2014 the cost of producing a battery cell has more than halved despite raw material price rises. Here, Simon Moores looks at how the lithium ion battery industry can continue to drive costs down and add even further economic impetus to the energy storage revolution Breaking the $100/kWh lithium ion battery production cost barrier […]",[919],{"slug":552,"name":553,"content":920},{"job_title":555,"image":921,"bio":558,"linkedin":559},{"filename":557},"\u003C!--#storyblok#{\"name\": \"article\", \"space\": \"\", \"uid\": \"215fe291-54b2-4a9d-8182-31a51e34da66\", \"id\": \"\"}-->","article",[925,928],{"slug":926,"name":927},"batteries","Batteries",{"slug":929,"name":930},"critical-minerals","Critical Minerals","private",{"id":49,"alt":933,"name":933,"focus":933,"title":933,"source":933,"filename":934,"copyright":933,"fieldtype":935,"meta_data":936,"is_external_url":51},"","https://a.storyblok.com/f/287943243085208/2dcf038bae/bm-battery-cell-being-handled-e1563796545672-581080a8e75.png","asset",{"alt":933,"title":933,"source":933,"copyright":933},"Jul 22, 2019","22nd July 2019",[],[],1782229537415]