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Lithium mining (International Battery Metals).png International Battery Metals
Lithium demand currently outstripping supply, battery expert says.

Experts: Headwinds Won’t Knock EV Adoption Off Course

Sam Jaffe, vice president of battery solutions at E Source Companies, says, “The price of lithium has been so expensive for so long that it is starting to affect the end price of batteries.”

The outlook for electric vehicles and batteries continues to be upbeat, according to presenters at the Advanced Automotive Battery Conference held earlier this month in San Diego.

Sam Jaffe, vice president of battery solutions at E Source Companies, warns of material shortages and high prices but nevertheless expects battery demand to grow to 3.4 TWh by 2031, up from a projected 550 GWh in 2022.

“Cell revenue will reach $280 billion,” he says. “The vast majority of cells will be going into transportation, and the vast majority of those ($159 billion) will be going into cars.” 

An estimated 98% of batteries in E Source’s forecast are lithium-ion.

AABC logo.pngConcerning lithium pricing, Jaffe reports: “Short term, the market is in crisis. The price of lithium has been so expensive for so long that it is starting to affect the end price of batteries. There have been lithium price squeezes before, but it's never gotten to this point.”

In 2022, according to Jaffe, automotive cells have been priced at $140/kWh.

While he predicts cell prices will fall to $110/kWh by the end of 2023, he warns: “Medium term, we see a severe mismatch between lithium extraction capabilities globally and demand for batteries. Thus, cell prices will increase again to $136/kWh in 2025 and $140/kWh in 2026 before falling back down.”

By the end of the decade, E Source predicts, cell prices will fall below $100/kWh to $98/kWh in 2029 and $95/kWh in 2030, then $91/kWh in 2031, says Jaffe (pictured, below left). Of the 3.4 TWh demand total in 2031, the consultancy estimates 2.2 TWh will be installed in cars, up from 393 GWh in 2022. 

Sam Jaffe E Source.jpgTracking some 400 individual BEV and PHEV models, E Source expects OEMs in Asia and the Pacific to account for 897 GWh of automotive battery demand, followed by Europe and North America at 638 GWh and 617 GWh, respectively.

In North America, it is projecting BEV/PHEV sales will reach 8.4 million units in 2031 – 45% of new car demand – up from 1.3 million units in 2022.

Jay Hwang, senior research analyst at S&P Global Mobility, predicts global cell production capacity will grow to more than 4 TWh by 2027 including 2 TWh in China, 1.5 TWh in Europe and 600 GWh in North America. Elsewhere, S&P estimates 300 GWh will be mostly located in Japan and South Korea, with small volumes in India and Southeast Asia.

Hwang further predicts production capacity of active anode materials will grow to 3.1 million tons in 2027, up from 660,000 tons in 2021. Capacity utilization is projected to increase to 75%, up from 65% in 2021. More than 90% of production will be earmarked for electric cars and medium and heavy-duty commercial vehicles, he says.

For active cathode materials, S&P Global Mobility estimates capacity will grow to 8.8 million tons, up from 1.3 million tons in 2021. Hwang predicts the utilization rate for cathode materials is higher than for anode materials but doesn’t provide data. He notes North America will witness a 36% shortfall in cathode materials, meaning battery suppliers will have to turn to imports for more than one-third of production. The shortfall in Europe will be 23%, he says.

Hwang says in 2028 China will still account for 65% of global cathode production and between 70% and 80% of anode production. Europe and North America combined will account for 15% of cathode production and an even smaller percentage of anode production.

The message is clear, according to Craig Rigby, vice president of technology at battery manufacturer Clarios: “The problem is that all roads lead through China. China has done an incredibly good job at building out their infrastructure and supply chain. The majority of materials, whether it’s cathodes or anodes, are processed and provided by China to the rest of the industry.

“We’ve got to follow with industrial policy of our own,” he says, noting U.S. suppliers currently capture only 30% of the value chain in battery production. 

Among global automakers making presentations, Ford and GM were both bullish about their EV programs and the market in general. Ted Miller, manager of battery cell research and advanced engineering at Ford, says the automaker plans to ramp up North American production capacity to 2 million BEVs in 2026, focusing on its Mustang Mach-E, Transit EV and F-150 Lightning programs, while jointly investing $11.4 billion with SK Innovation in three U.S. battery plants. 

Ford expects to begin battery production at those sites, two in Kentucky and one in Tennessee (pictured, below), in 2025. In Europe, the automaker’s target is 1 million electric vehicles in 2030 while it plans to go “all electric” in 2035. 

FordFord Blue Oval City.jpg

GM, meanwhile, is committed to scaling up BEV production capacity in North America to 1 million units by 2025. To achieve this target, Tim Grewe, director of electrification strategy and cell engineering, reports the automaker has locked up the raw materials it needs through 2025.


 

 

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