Reducing the Battery Materials Supply Risk

July 11, 2023

Chris Borroni-Bird

Battery electric vehicle (BEV) adoption is taking off for a variety of reasons. Battery cost per kWh of energy stored has dropped 10-fold since 2010. Driving range has increased, making range anxiety less of a concern, particularly for households having Level 2 charging and several vehicles. Government regulations in key vehicle markets and automakers rethinking the electrical architecture to support software-defined vehicles also are stimulating an expanding choice of consumer EVs.

With increased EV adoption comes concern for the environmental and human rights impact associated with battery materials mining and processing as well as national-security concerns. Supply volatility, given the huge investments and long-term return, make battery production susceptible to price spikes, as seen in 2022 with lithium and nickel, for example.

Some automakers are responding to these risks by localizing supply, locking in long-term battery pricing, forming JVs with battery manufacturers and investing directly in mining operations to access key battery metals. Similarly, OEMs are motivated to eliminate the need for rare-earth magnets in electric motors.

In addition, on the vehicle side, automakers are working to improve vehicle energy efficiency, as well as battery pack efficiency with strategies such as cell-to-pack or cell-to-vehicle assembly, bypassing module-based battery design. Recent nickel price spikes and improvements in lithium iron phosphate (LFP) also have led automakers to consider a dual approach, offering LFP for entry-level vehicles and NMC (lithium nickel manganese cobalt) for premium versions so that instead of the usual power-performance difference between entry and premium levels, vehicle range also will be a differentiator. And automakers always hold hope for a lithium-ion battery breakthrough, such as the solid-state electrolyte version that might double energy density and reduce battery costs by around 30%. This might be realized in production by 2030. Recycling could meet 6% of annual EV materials demand by 2030 and become a significant source over time.

What more can be done?

Heating and cooling passengers more efficiently is an effective way to increase vehicle range –or to downsize the battery for a given range. Auxiliary HVAC innovations that do not require forced air are needed, particularly because quieter HVAC operation also improves comfort and reduces noise. Solar panels can help to lower cabin temperatures when parked, reducing ancillary HVAC loads; Toyota, for one, claims its bZ4X solar panel roof adds more than 1,000 miles (1,606 km) of annual range, extra power that could be exploited to reduce battery size.

Putting a value on such efficiency innovations historically has been justified by needing to meet CAFÉ regulations and avoid fines. Automakers developed a “cost-per-pound-saved” metric for internal combustion engine (ICE) vehicles and because efficiency improvements can reduce battery mass and cost, a similar calculation can be made for BEVs. The difference with ICE vehicles is that a risk premium also should be added to this calculation, because reducing the battery size and the amount of required battery materials will reduce the automaker’s vulnerability to availability and price spikes. If automakers quantitatively assign a benefit for this risk reduction, then more efficiency innovations could be justified.

Other strategies that might reduce battery materials risk rely on reducing consumer range anxiety that drives the “need” for large batteries. If consumers can reliably and comfortably recharge at public facilities, this might reduce the perception that BEVs must have >300 miles (>483 km) range. Automakers should invest in a charging infrastructure that is readily available at all times, offers a variety of charging methods and creates a pleasant user experience — all simultaneously enhancing their brand.

If these needs truly can be met, it could be possible to market BEVs with 200 miles (322 km) of range. This would make the vehicles more affordable to purchase and operate because they would be lighter and cost less to recharge. Because the materials related to EVSE charging infrastructure do not generate the same issues as battery materials, this paradigm shift would significantly ease national-security and environmental concerns and reduce automaker vulnerability to battery materials scarcity, especially as one considers 2035 EV sales projections, where 10 times as much battery material may be required per year. The potential for reducing international conflict and creating more business certainty should be embraced by national governments and the automotive industry, but mechanisms need to be created for assigning a monetary value or government incentive.

Some BEVs, such as Ford’s Lightning ProPower, have bi-directional charging capability that can power an entire home and California has recently introduced a bill requiring all BEVs to have V2G bidirectional capability starting in 2027. Bidirectional charging and a common communications protocol could let vehicles directly charge each other. Because there will be many more BEVs than public charging stations, this should increase the ubiquity of charging, and help to alleviate range anxiety, particularly for apartment dwellers who might not have access to “home” charging. Recharging another vehicle generates revenue for the owner when the vehicle is parked, but persistent bi-directional charging could reduce battery life.

For now, BEV owners tend to be affluent and have another vehicle with > 300 mile range; 200 mile BEVs can be used for local driving, and for occasional longer trips, the household’s ICEV can be used. However, as BEVs become more affordable, they may become the household’s only vehicle. The third approach to reducing range anxiety may require some kind mobility subscription service. Several Premium OEMs currently offer subscription packages that allow customers access to many vehicles – but not on the daily or weekly basis that could make this a practical solution for single-BEV owners.

New options exist for commercial fleets

Tires are optimized for a variety of parameters, but there still can be a justification for winter tires that have a special formulation to assist traction on icy roads. A similar strategy for batteries might extend battery life if ambient-temperature effects on cycle life can be decoupled. A temperature-specific battery would not have to accommodate wide temperature fluctuations and a fleet operator might, under certain situations, swap batteries out and maintain two sets of batteries, despite operational complexity and significant overhead. Conversely, in locations where the temperature is reasonably constant throughout the year, the battery chemistry can be optimized for that location because fleets, unlike most personal vehicles, may have well-defined geographic operation.

Or different vehicles in the fleet may have different batteries if they operate in different climates. In other words, because of their tighter operating domain and closely regulated maintenance routines, fleet vehicles may present an opportunity to optimize battery selection rather than be constrained to using the same batteries as personal vehicles. Moreover, the well-defined daily usage patterns and charging infrastructure availability could enable lower energy density, less-expensive battery chemistries.

Consider EVage, an Indian EV startup developing and manufacturing commercial electric trucks and buses in micro-factories. It selected Toshiba’s Lithium Titanate batteries (LTO) over LFP and NMC chemistries because it offered the lowest-cost solution despite having a higher initial cost per kWh. This was possible because the battery needed to store only 15 kWh, sufficient for 50-km (31-mile) range. Fast-charging twice during the day and slow charging overnight could enable the vehicle to meet daily driving needs, but requires that the battery can be cycled 10,000 times while operating safely in a year-round hot climate. This combination of requirements (fast charging, long cycle life, safe performance at high ambient temperatures and well-defined charging protocols) led to a small LTO battery providing the lowest-cost solution with highest vehicle efficiency and payload capability.

An emerging battery chemistry that can reduce dependence not only on nickel and cobalt but also on lithium, whose availability may even be the most challenged, is the sodium-ion battery. This uses widely available, less expensive materials and can use similar production processes as lithium-ion batteries. Contemporary Amperex Technology Co. Ltd. (CATL) – currently the world’s largest battery manufacturer – recently produced a sodium-ion battery for evaluation. These batteries are less energy-dense, but as with LTO batteries, this need not be a barrier to usage, particularly for urban EV fleets.

For electric buses that operate on fixed routes and have a charging opportunity at the same location at the end of the route, wireless EV charging (WEVC) could allow buses to have a smaller battery but still meet daily driving needs for performing the route multiple times. The business case for this depends on ensuring a sufficient number of buses can exploit the same WEVC charging pad at different times to maximize its utilization. In this way, the aggregate fleet battery cost-savings and higher efficiency (due to smaller, lighter batteries) can justify the cost of WEVC infrastructure.

In the Class 8 heavy duty truck segment, a competing electrification solution is the hydrogen fuel cell (HFC). For applications with high payload and range requirements plus minimal downtime, HFCs may be a superior solution to battery-only energy storage, although emerging fleet deployment of battery electric trucks with charging infrastructure installation could make adding HFC vehicle servicing and infrastructure complexity unappealing to existing battery electric fleets. In either case, it might reduce supply-chain risk if heavy duty truck OEMs do not compete for materials with automakers that have attractive economies of scale and may secure priority sourcing.

How cities can drive BEV innovation

Some metro areas are considering banning private vehicles (not only ICEVs) from their city centers in order to release car-parking space, reduce pollution, noise and accidents and to make it more “livable” by encouraging active modes of transport (walking, cycling) and public transport.

When most vehicles are banned from city centers, innovation can skyrocket. Vehicles will still be needed for moving people and goods (for last-mile, assisting the disabled, during bad weather, etc.) but they won’t need to meet FMVSS requirements and will have far more modest range and speed requirements consistent with geo-fencing in pedestrian-rich environments. This could enable a much wider choice of vehicle structural materials – such as recycled plastics – that promotes a circular economy, as well as necessitating a drastically smaller battery that can obtain much of its daily energy needs from a solar panel roof, for example.

The combination of low vehicle mass, speed and range means that a 5 kWh battery could deliver more than 50 miles (80 km) of driving range, and with fast charging once or twice during the day, it should be possible to meet daily driving needs for city-center operation. This is a far more affordable and environmentally friendly solution than using conventional automobiles; it’s a duty cycle that could be met with a wide variety of battery chemistries, helping battery materials supply chains become more resilient.

It is politically challenging to ban vehicles from city centers, but it would stimulate development of ultra-small vehicles that can be manufactured from locally available materials and even from plastic to reduce landfill. It would also generate local employment with high-value vehicle design, development and manufacturing jobs.

To diminish risk, diminish demand

The smart approach to reducing battery materials supply-chain risk is to lessen demand for those materials. This is true on environmental, human-rights and national-security grounds. Procurement and supply organizations can treat this risk like an insurance agency and incentivize decision-makers inside their companies to find creative ways to tackle it as part of reinventing mobility. This could be achieved by educating consumers on range requirements, putting a dollar-per-pound-saved premium on risk reduction, pursuing more efficient vehicle designs, developing and applying different batteries for different use cases and locations, and viewing charging infrastructure and mobility subscriptions as competitive differentiators.

Dr. Chris Borroni-Bird is co-author of Reinventing the Automobile: Personal Urban Mobility for the 21st Century, with Dr. Larry Burns and the late Prof. Bill Mitchell (MIT Press, 2010). He has led advanced automotive-related activities at Chrysler, GM, Qualcomm and Waymo including the development of several IWM concepts at GM, including 2002 Autonomy (the first “skateboard” concept), and the 2010 EN-V. He holds 50 patents, many related to the GM Autonomy ‘skateboard’ platform concept. He is currently an advisor to EVage and McKinsey & Co. and is the founder of Afreecar LLC, where he consults on future mobility and creating a novel e-kit solution for the developing world.

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