The lithium-ion batteries in electric vehicles (EVs) present very different material demands at the cell- and pack-level compared with the internal-combustion engine (ICE) vehicles they replace.
Whilst ICE drivetrains heavily rely on aluminium and steel alloys, Li-ion batteries utilise a lot of materials such as nickel, cobalt, lithium, copper, insulation, thermal interface materials, and much more at a cell- and pack-level.
The markets for these materials will see a rapid increase in demand that would not have been present without the take-off of electric vehicle markets. At The Armchair Trader we believe this is going to be a major investment theme in 2021 and beyond.
This is born out by latest data from specialist IDTechEx, which has released a report on materials for electric battery cells and pack, looking ahead to the development of this critical industry over the next decade.
Battery cell materials
OEMs are changing the way they make batteries. Improvements to energy density are one key consideration but also the sustainability of the materials used.
Many materials involved have questionable mining practices or volatile supply chains. One such material is cobalt, which in addition to being very expensive, has its supply and mining confined mostly to China and the Democratic Republic of Congo. As a result, OEMs are trending towards higher nickel cathode chemistries like NMC 622 or NMC 811 in some new models.
Up until 2018, the Chinese electric car market was predominately using LFP cathodes. This has now transitioned such that, as of 2019, only 3 % of cars utilized LFP batteries. However, Tesla [TSLA] has now introduced the LFP Model 3 made in China, which could upset this trend.
Additionally, LFP is used extensively for markets like Chinese electric buses. Despite the reduction in market share of materials like cobalt, the rapidly increasing market for electric vehicles will drive demand for cobalt and many other materials drastically higher over the next 10 years.
Improvements in pack level density
Whilst the energy density improvements of Li-ion cells might be the most prominent battery improvements in the public eye, we are also seeing an increase in pack-level energy density at a greater rate than just cell-level improvements. Manufacturers are improving their battery designs; the mass of materials being used around the cells is steadily being reduced, allowing for a lighter battery pack or more cells to be used for the same mass.
The choice of materials for several pack components also affects these improvements. More interest is being paid to composite enclosures for light-weighting, fire-retardant materials, thermal interface materials, and much more.
The thermal management strategy also impacts these choices; with increased energy density and consumer demand for fast charging, thermal management has to be more effective but also present a smaller and lighter package. Several materials see a decrease in utilization per vehicle, but this is often overshadowed by the rapidly growing market for EVs.