On top of daunting engineering issues, low cobalt prices are holding back the development and commercialization of lower-cobalt electric vehicle batteries, analysts say.
Cobalt is one of three key ingredients in nickel-manganese-cobalt, or NMC, cathodes forming part of certain lithium-ion batteries. NMC cathodes represented nearly 30% of global EV sales as of late 2018.
"The push towards NMC811 [a lower-cobalt battery] was economically driven back at US$35/lb cobalt and certainly above US$25/lb," said Caspar Rawles, an analyst with Benchmark Minerals. "But around here there's less of a push."
Cobalt prices have collapsed over the past year, dropping from over US$30/lb to under US$20/lb on the back of strong supply.
Lower-cobalt NMC811 batteries are in use and will be used in electric vehicles, analysts say. But their adoption by industry to replace higher-cobalt NMC622 batteries may be limited, or slow to come. The aforementioned numbers refer to the proportion of nickel, manganese and cobalt, respectively, in the cathode of NMC lithium-ion batteries.
Electric vehicle and battery makers are wrestling with a shift to lower-cobalt batteries in an attempt to lessen exposure to swings in the cobalt price as well as to manage supply-related risks. Most cobalt is mined in the Democratic Republic of the Congo, where it may be extracted using dubious labor sources and environmental practices in the informal mining sector.
"They are trying to get rid of cobalt, completely," said Kimberly Berman, a battery analyst with BMO Capital Markets. "And it's not necessarily a cost issue, as much as it is getting rid of all of the controversies around it."
For the NMC battery, cobalt is critical in maintaining stability — making a battery that will not easily catch fire, for example — and ensuring a long lifespan. Engineering it out of lithium-ion batteries has long been a struggle as lowering cobalt content can mean making sacrifices related to those qualities and requiring the use of costly subsystems to keep batteries in good health.
"I mean, it took a long time to go from 30% cobalt to roughly 20%," Berman said.
Berman sees the sector relying on higher-cobalt containing batteries over the next five years, avoiding lower-cobalt NMC811 batteries given the technical and regulatory hurdles. She noted that even small changes in battery composition take years for battery and automakers to work out and approve. Berman estimates that the lower-cobalt chemistry will penetrate just 4% of the EV market by 2025, a view she has held for the past two years.
"We feel like if it does happen, that it's going to require very expensive battery management systems," she said. "It's going to be for very high-end vehicles."
Rawles expects the industry to roll out the lower-cobalt batteries starting in 2021 but only in some models. "Now, that doesn't mean that overnight we'll go to NMC811," Rawles said.
Rawles noted that NMC811, or even NMC batteries less dependent on cobalt, are already in use but that they are generally found in products like power tools where battery lifespan is less of an issue. "But if you buy an EV and three years later your range is 50% of what it was, that's a huge problem," he said.
Facing those kinds of issues, industry will be cautious in its adoption of lower-cobalt NMC batteries, analysts said. Already the rollout has been slower than expected, Rawles noted.
"You know, 12 months ago, we would have said, 'It's 12 months away,'" Rawles said, referring to the use of the NMC811 battery in some electric vehicles. "And now it's still 12 months away."