Diversification of the Battery Material Market

Summary:

The lithium-ion battery market is vibrant, and the upcoming decade will set the course how Europe will deal with the growing demand for electrochemical energy storage. This rapidly growing market environment is accompanied by a steady technological evolution of battery active materials. The triumph of the lithium-ion battery started with consumer electronics and now moves on to the transport sector, in which automotive applications will have the highest absolute demand for battery capacity in the near future. The falling prices and the broad availability of the batteries will eventually enable further applications like electric trains, marine vessels and even aircrafts, but also stationary energy storage systems will become more affordable and available. For each individual use case there are specific battery performance requirements, to which a certain (cathode) material may fit best.

LFP is a suitable candidate for stationary and high-power solutions, while Ni-rich cathode materials are a good choice for automotive and high-energy applications. A look at a typical battery cell bill of materials (BoM) shows that the cost are especially driven by expensive cathode active materials (CAM), which explains the growing popularity of the inexpensive LFP with a material cost advantage of up to 20% compared to NMC-811. Safety and price risks that may come with Ni-rich materials could become a tipping point that leads to a faster adaption of LFP or Mn-rich NMC alternatives. The latter is the most recent development trend that is also driven by a material cost reduction through minimizing the content of expensive cobalt and nickel. Various material producers, cell manufacturers and automotive OEMs are currently considering LFP as low-cost material, Mn-rich layered oxides or spiels for the mass market and Ni-rich NMC for the remaining high-performance applications. Other cell components such as anodes and electrolytes will also become more application-specific and therefore diverse, but this will not have the same social-economic impact as the cathode materials, which require multiple raw materials, some of which are considered critical in the EU.

From the perspective of European companies that are trying to enter the battery market, the diversification of cell chemistries can be a chance to develop new materials and build IP around it. Cost leadership and a secure raw material supply will be challenging to achieve, but certain product strategies with differentiators such as customized, sustainable, or next-generation materials could be viable. Battery innovation is mostly based on novel materials, so research and development with focus on economically feasible solutions based on uncritical raw materials is necessary. The new materials can become the winning chemistry in an emerging battery market and conversely, new use cases will require and bring forth adapted materials. This interplay between technology and market will create more opportunities for material-based innovation and keep up the steady technological evolution of lithium-ion batteries.