Decarbonizing the EV Battery Supply Chain
Altering manufacturing processes and using a much higher percentage of low emission energy can help the battery industry get greener rapidly, according to a new McKinsey & Co. report.
A report from consultants at McKinsey & Co. strikes an optimistic tone that major reductions in carbon emissions from the electric vehicle battery supply chain can be attained in the next five to 10 years.
The recently released report, authored by five members of the firm’s Automotive and Assembly Practice, said that production of the massive lithium-ion batteries currently favored by OEMs account for 40% to 60% of total production emissions. “Making batteries can generate as much emissions as producing all the other materials that go into making an EV ─ or even more,” the authors noted.
Producing the body of an EV or an IC engine vehicle results in five to 10 tons of CO2 emissions, the report said. But the authors estimate that “producing the average EV battery today emits up to 100 kg (220 lb.) of CO2 emissions per kWh,” or more than 7,000 kg (7.7 tons) of CO2 for a typical 70-kWh battery. That’s 40% more than a typical car that gets 22 mpg emits in a year, according to the U.S. EPA.
Four primary areas of change
Overall, the report recommends that battery manufacturers focus on four areas for the biggest potential change:
- Mining and refining
- Active material production
- Components and logistics
- Cell manufacturing
SAE Media spoke about the report with Andreas Breiter, a leader in McKinsey’s Center for Future Mobility. He said that much of the gain could come from the development of the 200-plus battery gigafactories — depending on their size — that must be built to meet global industry demand.
He said two of the largest factors that could help new factories produce lower carbon emissions are energy supply — the report cites “low emission electricity” for all four focus areas — and location. “New gigafactories help if you put those in places where there is carbon neutral or at least carbon-friendly energy, because energy is a big part of the carbon footprint,” Breiter said. “The second part is that it helps if we build those factories more locally, which is the trend we now see. So these factories [now] are often not co-located with the OEM assembly plants, but they are at least in the same region, so for example, [a location in] the same state or just across the state border. And that reduces the transportation and means we don't have to ship across the country or from overseas. Manufacturing relatively locally helps in that sense, quite a lot.”
Breiter said the momentum appears to be growing beyond the automotive industry for cleaner electricity. “Semiconductors are going toward decarbonization,” he noted. “And the auto OEMs themselves are doing the same. They are now tracking, very closely, carbon in the whole supply chain. I think it's just a general trend for all of those industries combined, if they demand renewable energy sources, and also have a certain willingness to pay for that. Because there is value in that. I think then then definitely, yes, that could actually have a big pool for more renewables.”
A competitive advantage
The report stressed that decisions by OEMs on a range of factors including design choices, vehicle types and target ranges join the two factors above as major possibilities for near-term improvement. It also said that increasingly, manufacturers see low-carbon battery production as a competitive advantage, with “some leading players aiming to cut emissions below 20 kg (44 lbs.) CO2 per kWh.” That’s 10 times less than the current highest-emission OEMs.
Among the other “quick wins” the report said the industry could realize were:
- Cell manufacturing: Most non-electric emissions currently come from the electrode drying process, the report stated, which requires temperatures between 122 degrees (50 C) and 320 degrees (160 C). That temperature is achieved, generally, by burning natural gas. Switching to electric heat sources, as well as using dry coating “or switching from conventional binders such as polyvinylidene fluoride to water-soluble alternatives, could significantly lower energy consumption and cost.”
- Recycling: The report said that with hundreds of new factories coming online, the amount of scrap produced would finally make recycling a cost-effective endeavor. “The carbon footprint of recycled battery materials is typically four times smaller than that of other raw materials,” the authors wrote.
- Chemistry: The report observed that nickel-manganese-cobalt (NMC) batteries have a 30% to 40% higher energy density, “while lithium-iron-phosphate (LFP) cells have a longer expected charging-cycle lifetime and, on average, 15 to 25 percent lower carbon emissions.” The report suggested this is due to fewer embedded emissions in the cathode.
One potentially controversial area the report discusses in in battery size/vehicle range. The longest-ranged EV currently can travel more than 405 miles (662 km) on a single charge. And in 2022, the number of EV models available with a range longer than 300 miles (483 km) tripled. But it’s well known that the average daily driving distance for U.S. commuters is less than 40 miles (64 km). The report calls that delta a plainly underused resource.
“One radical way to reduce emissions would be to build smaller battery packs tailored more toward consumer needs,” the report suggested, citing that in China, the best-selling EV in 2021 was the Wuling Hongguang Mini EV, with a 14-kWh battery and a range of 75 to 106 miles (121 to 171 km).
Breiter said that there is a segment of the industry where the range of current products matches the use-case: “If you look at the range of all of those last-mile delivery vehicles, which are now being electrified, those never have such a long range as passenger cars,” he said. “Last-mile delivery vehicles are often specified with a range starting at about 100 miles (161 km). This is completely sufficient for the use case. And those cars are driving all day through the city,” Breiter said. He added that it would take concerted communications efforts from the industry, media and government to make the case that would, hopefully, convince consumers to ask why they want to pay for such unused range.
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