Lithium price rally opens door for sodium-ion batteries

Soaring lithium prices and an imminent global shortfall will give sodium-ion batteries their chance to make an entrance, with multiple battery-makers expecting to start commercial production of sodium-ion batteries in 2023.

Though sodium batteries will have a limited effect on lithium demand in the short term, the technology marks the first serious competition to the lithium-based batteries that form the backbone of the energy transition.

Skyrocketing lithium prices have eroded battery-makers' profitability, accelerating efforts to develop alternative batteries from cheap and abundant sodium. Sodium-ion batteries do not contain any lithium, nickel or cobalt, and they can recharge faster than lithium batteries and perform better in low temperatures. For battery anode materials, sodium only costs 0.7 Chinese yuan per watt-hour, compared to more than 0.9 yuan/Wh for lithium-based batteries, according to MySteel Global.

Sodium-based battery chemistries could also potentially alleviate supply bottlenecks amid geopolitical tensions. A dozen battery-makers and startups are developing the technology, and leaders such as China's Contemporary Amperex Technology Co. Ltd., or CATL, are ready to begin mass production in 2023.

"Battery-makers are sending a message to the market that their products do not necessarily rely on lithium, and they have alternatives much more abundant than lithium," Jared Zhu, consulting project manager at the new energy department of Shanghai Metals Market, said in an interview.

However, electric vehicles remain the primary market for rechargeable batteries, and sodium batteries could be too heavy to make a dent in that market, as they are better suited for stationary applications and lower-end EVs. This niche technology could curb lithium demand by no more than 3%-5%, Zhu said.

Ready for industrialization

The industrialization of sodium-ion batteries provides a partial solution to address supply tightness, Meng Xiangfeng, a senior executive at CATL, said at the 2022 China Auto Forum on Nov. 9.

In addition to sodium's low cost and abundance, sodium-ion batteries are nonflammable, more insulated from temperature changes and charge faster.

Sodium-ion battery technology is not brand-new: It emerged alongside lithium-ion battery technology during the oil crisis in the 1970s, but sodium batteries were overlooked as their larger size makes it harder to develop suitable cathode materials.

Now the battery supply chain appears ready for the industrialization of sodium batteries in 2023.

Zeng Tao, China International Capital Corp.'s executive director and head of alternative energy and utilities research, expects sodium-ion batteries to be commercially available in two-wheelers in 2023 and installed in larger EVs and energy storage systems in the near future. Sodium-ion batteries will replace lithium manganese oxide, or LMO, and lithium-iron phosphate, or LFP, batteries in two-wheelers, given the cost advantage, according to consultancy MySteel Global.

CATL is in talks with some passenger vehicle clients and will start commercial production of sodium-ion batteries in 2023, executives told investors Oct. 21. Chinese startup HiNa Battery Technology Co. Ltd., backed by Huawei Technologies Co. Ltd., plans to open the first phase of its sodium-ion battery plant in Anhui province by end-2022, with an annual capacity of 1 GWh.

California-based Natron Energy Inc. plans to mass-produce sodium-ion electrodes and cells in Clarios International Inc.'s 600-MW lithium-ion plant in Michigan in 2023. France's Tiamat Energy plans to begin marketing sodium-ion technology in 2023 and to ramp up to 6 GWh by 2030.

Indian refining giant Reliance Industries Ltd. acquired British sodium-ion battery startup Faradion Ltd. in late 2021 as part of efforts to build a 50-GWh battery manufacturing facility in India by 2027.

Sodium-ion batteries' penetration rate in electrochemical energy storage may reach about 10% and, in the longer term, may reduce overall lithium demand by 10%, Zeng said.

Sodium's shortcomings

Sodium is not a perfect replacement for lithium. Its energy density is lower than that of mainstream LFP and nickel-cobalt-manganese, or NCM, batteries. The energy density of CATL's first-generation sodium-ion battery is up to 160Wh/kg, while some lithium-ion cells reach over 300 Wh/kg.

The cycle life of sodium-ion batteries is still shorter than mainstream LFP and NCM batteries. Sodium-ion batteries can be recharged 1,600-1,800 times, while LFP batteries can last 2,000 charge cycles, according to data from MySteel Global.

These shortcomings will limit sodium-ion battery applications in high-end EVs and the energy storage market, China International Capital Corp.'s Zeng said.

The sodium-ion battery supply chain also lacks capacity for large-scale production. "The shipment of sodium batteries will be relatively limited in 2023, due to the capacity bottleneck of the industrial chain," Zeng said.

Alice Yu, senior analyst at S&P Global Commodity Insights, said the industry needs to overcome the challenges of scaling up its supply chain from mine to battery production to car. "It needs to establish a tailored mine-to-end-user supply chain, and that takes a lot of time," Yu said.

Potential long-term threat to LFP

Even if lithium prices retreat in the longer term, the cost of sodium-ion batteries is expected to be lower than that of LFP batteries, the cheapest common EV battery in today's market, according to Zeng.

CATL aims to make sodium-ion batteries with energy density exceeding 200 Wh/kg. This would pose a threat to LFP batteries, but it is still theoretical, Commodity Insights' Yu said.

Analysts ultimately believe lithium will remain the king of battery metals.

"There might be substitutions for lithium in stationary storage, but for mobile applications, it'll be very difficult to escape lithium," David Deak, president of battery metal advisory firm Marbex LLC and former chief technology officer of Lithium Americas Corp., said at the 121 Mining Investment conference on Oct. 26.

"Lithium is not only the lightest metal in the periodic table," Deak said. "When you couple it with other elements to make a battery, [it] has the highest electric chemical potential, which means the energy-to-weight ratio of lithium basically is unchallenged in terms of the elements in the periodic table."

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