Innovation in battery technology has been a key driver of the EV revolution.
Increased energy density (longer vehicle range) and lower cell costs (consumer affordability) continue to fuel that innovation.
To date, most improvements have been achieved through pack/cell design and improvements in cathode materials.
These will continue to be important near-term, especially as raw material prices experience unprecedented volatility. But the next paradigm shift for batteries looks set to be in advanced anodes.
The full report outlines some of the key debates below and analyses the next generation of EV battery technologies.
Some of the debates are summarised as follows:
High-Nickel vs. LFP vs. High-Manganese — Lithium iron phosphate (LFP) has made significant market share gains as a low-cost cathode material, and we expect it continue to do so until 2025. Layered metal-oxides (NMC) look set to retain the greatest market share due to superior performance and better recyclability. Toward the end of the decade, high-manganese battery chemistries should come to mass market.
When Will Solid-State/Li-Metal Play a Role? — Advanced anodes are the next frontier in battery innovation, while most energy density & cost improvements to date focused on cathode chemistry and pack design. A meaningful shift in advanced anodes from graphite to high-performance synthetic graphite to high-content silicon to eventually lithium metal, could unlock energy densities of 500 Wh/kg (likely enabling 500 mi+ vehicle range). Solid-state systems will make use of these advanced anodes. Citi analysts think the road to commercialization for these technologies will be challenging, but those that can scale with existing manufacturing techniques and achieve cost parity could have success.
Can Anything Disrupt Lithium? — Given the imperative for lithium supply to scale with battery manufacturing to meet OEM EV penetration targets, Citi analysts say they often hear questions about the viability of replacement technologies for lithium.
Many of the next generation batteries, e.g., Li-metal, will use even more lithium. Combination batteries blending LFP and Na-ion batteries may improve fast charging and low temperature performance (Na-ion) but with the cost of reducing the system energy density even further (LFP). Other transformative technologies (lithium-air, lithium-sulfur, multi-valent batteries) will likely take several decades of innovation.
|Historical Battery Costs (Real $/kWH)
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Source: Citi Research, BNEF
Next Wave of EV Adoption Driving Battery Technology Landscape
Electric vehicles have continued to gain traction with China leading the way, nearing ~30% penetration rates. Europe is not far behind with ~15% penetration estimated in 2022 with the US being laggards. Recent OEM announcements have seen aggressive near- and long-term targets shape the demand story. The next wave of demand will require both incremental technology shifts and disruptive innovation to drive performance, cost, and safety improvements.
|Cathode Raw Material Prices (Li Carbonate, left axis ($k/t) & Ni & Co Sulfate, right axis ($k/t))
|© 2022 Citigroup Inc. No redistribution without Citigroup’s written permission. Source: Citi Research, Bloomberg
Safety concerns may drive the next wave of innovation
Lithium-ion battery safety continues to be a growing concern for mass adoption. Due to the use of flammable liquid electrolyte, LIBs are prone to thermal runaway leading to EV batteries failing catastrophically and creating fires that are difficult to extinguish. Battery failure events threaten passenger safety.
Safety will always be at the front of technology innovation. In current state of the art, battery makers have focused on separator technology, impact resistant & fire suppressing battery housings.
In some separators, a lower melting point polyolefin is placed between higher melting point polyolefins or ceramic coatings. If dendrites form and penetrate the separator, the inner layer will melt as thermal runaway begins and serve as a shutoff mechanism. Some batteries may add additional housing elements to prevent battery penetration and serve as an extra protective layer when fires happen.
When innovating for safety, companies have zeroed in on the flammable liquid electrolyte. Some companies are working with proprietary non-flammable or self-extinguishing electrolytes. Along the same lines, companies may target electrolytes and interfaces that suppress dendrite formation, one of the leading causes of a battery short circuit.
Optimizing for other performance parameters
While safety, affordability, and vehicle range will continue to be the focus of the next wave of EV penetration, there are other features that may require trade-offs when innovating for new battery technology.
Fast-charging capabilities could be a trend to encourage long-term adoption.
Cycle life will also be of critical importance, with EVs batteries trying to match the typical ICE vehicle lifetime. Today, most EV batteries have a life expectancy of 15 to 20 years and typically have a cycle life of 1,500-2,000 cycles. The main criticism of advanced anodes like lithium metal and high-content silicon is swelling that leads to degradation and loss of capacity. To date, most advanced anode cells have yet to achieve cycle life > 1000 – energy density gains may not be realized if these do not meet auto OEM targets. Cycle life may become even more important if vehicle-to-grid (V2G) becomes prevalent, as cars will need to charge/discharge multiple times. However, V2G will require coordination with utility companies and consumers alike and is unlikely to take hold this decade.
The full report also looks in more detail at cost and performance trade-offs and also looks cathode types for EVs- layered lithium metal oxides and olivine metal phosphates. For more information on this subject, please see the full report here if you are a Velocity subscriber Global Materials - Global Battery Technology Roadmap
Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click here.