Greater nickel usage, vertical integration, now major trends in EV batterymaking: Roskill

Increased nickel content in batteries will be a key trend in evolution of the electric vehicle market, as consumers demand more range at affordable prices, analysts at UK-based consultancy Roskill said.

As nickel content increases and more expensive cobalt content falls, the raw materials cost of NCM (nickel-cobalt-manganese) cathode materials decrease.

Battery chemistry was key, according to Roskill analyst Kevin Shang.

"One of the big trends up to 2025 will be that NCM cathode materials will still be the most popular choice for EV batteries due to their high energy density because they use more nickel and less expensive cobalt," Shang said in an interview with S&P Global Platts.

The trend for battery makers to reduce or remove cobalt usage will continue beyond 2025, Shang said, adding that was potentially due to pressure on cobalt supplies: more than 60% of the world's supply come from Democratic Republic of Congo, which raises red flags for some consumers.

Recycling can be expected to play a more important part of cobalt supply in future, he said.

LNMO (lithium-nickel-manganese-oxide) technology may also be cost effective for EV battery production, according to Shang.

Local supply chains

Local supply chains and larger-scale production on a regional basis were also expected to become increasingly important.

Owing to its head start, China will remain the dominant force in the EV battery business and in supply chains overall until 2030, although Europe is shaping up to be a solid contender, led by government net-zero ambitions and regulations.

The COVID-19 crisis has highlighted European and US vulnerability to interruptions in the supply of battery components, raw materials, and technologies, according to Roskill.

Still, "governments can play a massive role in coordinating upstream and downstream activities in supply chains," Shang said.

European nations including the France, Germany, Norway and the UK are moving ahead with policies to ensure an early uptake of EVs. Resources are also being pooled via the European Commission's development of the European battery eco-system, also known as the European Battery Alliance, founded in 2017.

China holds 67% of the global cathode and precursor materials market, which includes nickel, cobalt, lithium and manganese hydroxides and carbonates, according to Roskill, adding that should fall to 62% in 2030, as the EU's share grows from 1% to 14%.

The US's global share of the cathodes materials market was seen growing from 1% in 2020 to 5% in 2030, Roskill said.

Cathode manufacturers need to patent their technologies. The basic patents of the NCM materials market are seen dominated by large producers such as Umicore and BASF, although improvement patents can also be applied for, for procedures such as doping and coating.

Vertical integration

The trend to vertical integration among European cathode materials companies including BASF, Johnson Matthey and Umicore will likely counter any increase in raw materials prices, bringing lower costs and increasing competitive edge, Shang said.

Some companies in the sector are getting involved in mining, processing and recycling, to reduce their exposure to price volatility of the battery raw materials, he said.

Raw materials for battery manufacture, including nickel and cobalt hydroxide and carbonate, however come with a large carbon footprint. As the world looks increasingly for sustainable and transparent supply chains this is raising investor concerns.

Recycling will, therefore, play an increasingly important part in the development of the battery materials chain by 2030, Shang said. Battery recycling initiatives, coupled with increased use of renewable energy and other innovations, should allow European battery makers including Umicore and BASF to achieve a carbon footprint between 30% and 50% lower than their Asian counterparts, according to Shang.

Some Chinese recyclers are seeking to set up in Europe to expand their business, according to Roskill.

In stationary energy storage systems and water transport applications, LFP (lithium-iron-phosphate) technology is cheaper and more environmentally friendly than other technologies, may give a longer cycle life and is probably set to become the dominant cathode chemistry, Shang said.

Traditional lead-acid batteries are still used in stationary energy storage applications, but lithium-ion batteries have quickly gained market share, he said.

Cost-competitive manganese-rich cathodes like LMFP (lithium-manganese-iron phosphate) and LNMO (lithium-nickel-manganese oxide) will not see wide adoption until after issues with their comparatively poor cycle life are addressed, but this may occur after 2025, according to Roskill.