Lithium: the new gold?

A strange thing happened last year. For the first time in ten years, the prices of battery packs for the automotive sector were rising again (+7%). Since 2010, the costs have been gradually sinking, nearing the mark of 100 dollars per kWh, the projected tipping point for BEVs to reach cost parity with conventional cars running on petrol. Several causes were negotiating this unsuspected turn, though one of them wasn’t quite a surprise: the skyrocketing price of lithium, one of the core battery components.

Small portion, high price

Ever wondered how much lithium the battery pack of an EV contains? Naturally, one would expect it to be relatively high, as it is the most talked about metal in automotive batteries. However, in a pack of 100 kWh, only 10 kg is lithium, five times less than graphite. The problem is not that there’s no abundance of lithium (you can find it in several places around the globe) we’re just not digging up enough of it. And with demand rising, this sticking point creates inflated costs. Though the peak has cooled recently, the price of lithium rallied fiercely to an all-time high last year.

This white powder is the key component of a battery pack - it allows electrons to flow between a positive and a negative side. And, with few exceptions, it is found in every electric car on today’s market. Because of its weight, size and high energy density, it was the easiest metal to use and scale up. The shadow side is that only a handful of countries produce and refine it. The big five - in hierarchical order - are: Chile, Australia, China, Argentina and the USA.

Automotive refineries?

The list makes one thing clear. As Europe has the most ambitious electrification program in the world, this part of its industrial future is currently in the hands of foreign trade. As the race towards the electric car is on and continuing at full speed, we will need fifteen times more lithium each year to satisfy the needs of cleaner mobility. Aware of this challenge, the EU has kickstarted projects to bring battery factories and lithium mining to its soil. For the latter, big deposits in Portugal, France, Germany, and Sweden are under investigation or development. But there’s a catch. Constructing a battery factory only takes four to five years, for a mine, its is seven to eight years. So we’re a bit late to the party.

Car makers aren’t miners, but this could change. Their vulnerability towards this critical availability has ensured that all the big groups have secured preferential contracts with mining groups to secure their supply - having learned from the crisis caused by the chip shortage. But some of these brands have already shown interest in taking one step further.

Setting up comprehensive mining activities may be a stretch too far, but as the bottleneck is in refining battery-grade lithium, it isn’t unlikely that car makers will construct their propriety refineries through partnerships. Similar strategic moves are witnessed in the field of e-fuel production. No car maker ever spawned its own energy arm producing oil, but the electric switch is changing that approach.

New technologies on the block

Next to the geological solution of excavating lithium locally, battery companies are pushing the development of alternative chemistries. Each solution has its own benefits and drawbacks, but at least they are not dependent on lithium as a feedstock. The two most important paths for researchers are sodium-ion and solid state - though there are more involved.

Sodium-ion packs are the most promising for the short run. The world’s biggest battery manufacturer CATL has announced them for practical use in vehicles by the end of 2023, but in China some cars already use them succesfully. Sodium-ions are more sustainable, safer and cheaper than lithium-ions, while they use widely available critical materials. However, because they offer lower range and a shorter lifecycle they have been overlooked. But as many of their components overlap with lithium-ion packs, they can use the existing structures and aren’t complex to scale up.

That’s not the case for solid state batteries. As the name unveils, these use a solid instead of a liquid ion, translating into a more stable and safer behaviour. But, in contrast to sodium-ion batteries, they are difficult to scale up. Experts don’t expect a complete industry chain before the end of the decade. Note also that some solid-state batteries still make use of lithium for the active material (but this can easily be replaced by other metals). The big promise of these packs is that they are light and powerful.