Cheap, compact batteries enabled smartphones and mobile computing, and larger and more powerful batteries represent the potential technology behind electric mobility, renewable energy and the smart grid.
Above: Tesla’s lithium-ion battery cells (Source: Charged)
As is the case with all new technology, battery storage applications expand as costs decrease. Increasing demand leads to more production, which drives continued cost reductions and performance improvements in a virtuous circle.
Over the past decade, battery costs have dropped dramatically – from over $ 1,000 per kilowatt hour in 2010 to about $ 156 per kWh in 2019, according to BloombergNEF. It will come very close to the “magic number” of $ 100 / kWh which many believe will bring EVs to price parity with older vehicles and end the oil age. What factors have contributed to this rapid fall in prices?
Timothy B. Lee, who writes in Ars Technica, points out that Tesla has played an important role, not only by introducing electric cars into the mainstream, but by focusing on the importance of battery technology from the beginning. “Tesla has been a battery company as much as it is a car company,” Lee writes. “Tesla recognized the potential scale in the battery market before most other companies and has become a leading player in the network storage market.”
Tesla followed a classic technology industry strategy to start with a low volume and high cost product (Roadster) and move on to lower cost market offers (models 3 and Y). This iterative process was largely activated by decreasing battery costs. “Model S was designed and introduced about five years after the Roadster, and we saw improvements of about 40 percent on battery technology, basic chemistry, packaging of the battery pack itself,” said JB Straubel in 2014. in a Model S, nearly 85 kWh of energy storage in a package that is actually smaller than the Roadster package. “
As more batteries are produced, economies of scale come in and companies learn to streamline production processes and squeeze costs. As Lee explains, economists measure this cost reduction in terms of learning speed, defined as the percentage cost reduction for each doubling of manufacturing production. BloombergNEF estimates that the learning rate for batteries in 2019 was 18 percent. In other words, battery costs fall by 18 percent each time global battery production doubles.
Bloomberg believes the industry will reach the hit $ 100 / kWh price point by 2023. Some industry observers suspect that Tesla is already close to reaching the Grail and will make a historic announcement on Battery Day on September 15.
Above: A look at the falling costs of lithium-ion batteries (Source: Ars Technica via BloombergNEF)
It is not just cars that drive demand for batteries. Stationary storage for tool applications is a huge area of growth – Elon Musk has said that Tesla’s battery company may one day grow from the vehicle angle.
Justin Rowlatt, who writes for the BBC, agrees. “Gigantic batteries connected to our electricity networks will be central to the great renewable energy revolution,” he writes.
Professor Paul Shearing, a battery expert at University College London, told the BBC that the world is entering “an almost exponential phase of growth.” He points out that Tesla’s surprised “millionth environment battery”, which is expected to be unveiled in September, will not only be good news for EV sales. Long-lasting batteries are also important in desktop storage applications.
Storage system usage systems very of batteries. In 2017, Tesla installed the world’s largest lithium-ion battery system at Hornsdale Wind Farm in Australia, with a storage capacity of 129 MWh – equivalent to 2,000 Model 3s or 10 million smartphones. This year the site’s capacity was increased to 185 MWh. Nevertheless, it will be dwarfed by the planned Florida Manatee Energy Storage Center, which is expected to have a capacity of 900 MWh and go online by the end of 2021. It is clear that more economies of scale and corresponding price reductions are coming.
Another way to lower costs would be to lower the cost of raw materials such as lithium. Despite the horror stories you may have seen, there is no risk of flaws – lithium is abundant around the world. But it can arise as a bottleneck as mushroom demand, because the current methods of extracting lithium from salt deposits are slow and ineffective. Mr Rowlatt writes that the evaporation process used to produce lithium salts at Salar de Atacama in Chile takes months and recycles only 30% of the available lithium.
Various companies are working to develop improved processing methods. The BBC reports that EnergyX is developing a new type of nanoparticle filter, which they hope will be able to recover lithium from a saline solution with a 90% efficiency, while requiring months to days. Another innovator is Lilac Solutions, which is testing an ion exchange process on the rich lithium sets at California’s Salton Sea. Meanwhile, Tesla hopes to exploit a huge and easily exploitable lithium bottom in the so-called Lithium Valley, just a few hundred miles north of Gigafactory 1 in Nevada.
So we see that Tesla is working on several fronts to keep battery costs down. As a recently published article from Loup Ventures points out, other car manufacturers are falling further and further behind. As Gene Munster writes: “We believe that Tesla has a competitive edge in batteries that is not appreciated by investors. In the future, we expect this benefit to increase. “
In any case, Tesla’s batteries are the best in the industry – but that’s not the only benefit California companies have. Its battery supply chain is more mature and robust than other car manufacturers. Munster points out that Tesla has strong relationships with battery suppliers. Most of the company’s battery cells are manufactured by long-time battery partner Panasonic at Tesla’s Nevada Gigafactory. Loup Ventures believes that over 60% of Panasonic’s battery production currently goes to Tesla.
Above: A broad overview of battery electric vehicles that use Tesla’s Model S as an example; Note: Safter this video aired, the Model S series has increased to over 400 miles (YouTube: Bloomberg Technology)
Recently, Tesla has also begun to collaborate with China’s CATL and South Korea’s LG Chem. As if that wasn’t enough, the company is also believed to be generally working on its own battery cell design, which probably uses a new, in-house developed chemistry. With its recent acquisitions of Maxwell Technologies and Hibar Systems, Tesla has secured access to advanced battery technology that will surely lead to further cost reductions. Maxwell’s “dry electrode” manufacturing process can allow Tesla to redevelop its battery production line and save lots of money, time and factory space.
Posted by: Charles Morris; Source: Ars Technica, BBC, Loup Ventures