Are Batteries Enough to Fulfill the Industry’s EV PROMISES?

In the latter half of the 19th century the first electrically driven motor cars were developed and in the early 20th century these motor cars, even as they were slowly replacing the horse-drawn carriages of the time, themselves were driven into oblivion by the Internal Combustion Engine (ICE) cars. ICE has ever since been dominating the roads in the world and riding on which the global economy rose spectacularly. After nearly a century and a quarter of its unparalleled dominance, there is an amazing turn around. The vanquished electric motor vehicle is now reborn as the modern day “EV” and is raising the heat to melt the ICE and eventually evaporate them into thin air.

The new avatar and its grand welcome around the globe is happening on the back of two significant developments that almost unfolded simultaneously: the birth and evolution of the mobile phones and the Frankenstein monster that took birth from the slender exhaust vents of the ICEs and the towering chimneys of the power plants that began running amok around the world with ever greater ferocity.

The sharp growth in the mobile phones, laptops and mobile power tools threw open huge opportunities and the search for batteries with even better performance lead to the moving the Lithium-ion Batteries (LIB) languishing in the small confines of labs to the market place of the world in 1992 by Sony. The many tinkering in the LIB chemistry over the last quarter century led to the dramatic fall in LIB price and enhanced performance. Present day phones for example weigh between 160 and 200 grams with the battery weighing just a fifth and the talk time ranging between 8 and 20 hours.

It was also in the nineties, the ever rising adverse impact of climate change culminated in the “Kyoto Protocol” to combat the calamitous impact of Green House Gas (GHG) emissions. Environmentally sensitized states like California and countries like Germany began tightening their tail pipe emission laws. Sensing a huge opportunity in clean transportation two young engineers, Elon Musk was not one of them, founded Tesla in 2003. In less than a year the visionary Elon Musk took over the reigns as a Co-founder and Chairman and made Tesla an iconic company that it is today. His vision to drive EV transition in the world caught the fancy of the world and the clean transportation efforts quickly caught on like Californian fire. Major nations including India began putting in place ambitious EV targets in a move towards clean mobility transition. India set an ambitious 2030 EV target: 70% commercial vehicles, 80% two-wheelers, 40% buses and 30% cars. This was backed by the Production Linked Incentive (PLI) Scheme ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’. That meant a staggering 156mn tons reduction in oil consumption and an opportunity to standby the Paris summit to reduce greenhouse gas emission, by 30-35% below 2005 levels by 2030. In July this year the EU announced its plans to ban the sale of ICE vehicles by 2035 in an effort to reduce net GHG emissions by 55% from 1990 levels. The US and China, the prime drivers of the EV market have their own ambitious electro-mobility plans.

With mounting pressures from regulators to meet climate targets global automakers themselves are rushing to announce their deadlines to phase out ICE and shift to 100% EV manufacturing. In 2020 the global sales of EVs, all with LIBs, touched 3mn. It is projected that the sales will touch 12mn by 2025 and 31mn by 2030. No wonder the demand for LIBs are booming. The current global capacity of the transportation energy storage dominated by Lithium Nickel Manganese Cobalt (NMC) type is estimated at 455 GWh and is expected to reach 1,447 GWh by 2025.

CEEW-CEF in its report “Financing India’s Transition to EVs” has forecast that India’s EV battery demand would reach 158 GWh by FY30 and the International Energy Agency’s (IEA) in its India Energy Outlook 2021 projects that India could have 140-200GW of utility-scale standalone battery storage by 2040, potentially a third of world’s storage capacity by then. Such a massive ramp up in demand around the world will call for global co-operation and efforts to meet the many manufacturing challenges in scaling up production to Terra Watt (TW) levels in the coming years.

The modern EV industry is just a two decades old and is being put on an extraordinarily “fast pace” to displace the ICE industry. The mature ICE industry developed a robust system driven manufacturing process, quality systems across the industry, common standards, customer focus and more, over the century of its dominance.

For the infant EV industry, the battery, key to its success is still evolving. Innovations around cathode and anode materials, electrolyte and even separators keep inundating the EV landscape with ever greater promise. The current effort at dispensing Cobalt, a material scarcer than Lithium and restricted to few geographies and moving from liquid to solid electrolyte are some examples. In this context, the observation of Chris Berry, an independent battery metals analyst and president of House Mountain Partner cannot be more succinct: “The evolution of battery chemistry is the biggest unknown in many ways”.

Among the other hurdles in ramping up LIB production is the fast emerging scenario of global LIB raw material shortage especially Lithium and Cobalt and the consequent rise in prices.

Supply chains will be another major bottleneck with most of them located in China. According to Bench Mark Mineral Intelligence, 80% of chemical refining, 66% of cathodes and anodes and 73% of Lithium ion battery cells are based in China. (Chart below).

China’s share of production 2019

Any supply disruption could have detrimental impact on not just ramping up battery manufacturing in existing facilities but in adding new capacities. The current semiconductor chip shortage that is hitting hard car production in millions and the mobile electronic devices in tens of millions is a wakeup call to prepare for any such unexpected circumstances in battery manufacturing.

Battery quality and its ability to deliver on all the parameters critically depend on the quality of cathodes, anodes and other critical components. With very little entry barrier, many of the components available in the market cannot be trusted for its quality. Sourcing components from tier-1 suppliers amidst rising demand would pose serious procurement challenges.

Even in a fully commissioned plant, there are many manufacturing challenges. For example a typical EV cars has about 5000 to 6000 LIB cells and there would be twice as many welds interconnecting them. Damage to even a single cell out of the 12000 odd welds, will impact the range and life of the battery. With so many subsytems, each one presenting its own manufacturing challenges, the process quality has to be stringent. With the stiff delivery deadlines and yet to evolve quality systems, ensuring high reliability would be a major challenge. Expensive recalls of cars in hundreds of thousands to fix defective batteries would need to be avoided, as the nascent EV industry would be hit hard.

Bridging the gap between the shifting demands of the OEMs and the constraints in accommodating them in battery design will consume significant time. Every change effected has to be tested and validated and many feedback cycles may be needed to arrive at an acceptable solution which could be fitted into a flexible factory automation system for mass manufacture.

Cars, expensive investments as they are, are built to have a service life of about 15 years. With the battery industry prone to discarding inefficient and no longer viable technologies assuring EV customers of easy replacement of batteries over the car’s life would need to be handled in an efficient manner.

The transportation storage industry is indeed faced with many challenges and is on the learning curve and the answer to the question if there would be enough batteries is more than obvious.

It is very likely that EVs would end up having the same flexibility in the achieving the targets as GHG, its parent. The battery storage industry in the meanwhile will move on, trying to meet the demands, all the while bringing in ever more refinements and finding solutions to all the challenges. It will attain maturity levels surpassing the ICE industry at a fraction of the time and be capable of delivering high performance EV batteries in scale sufficient to meet the demand.

- Venkat Rajaraman, Founder and CEO, Cygni