Raw material costs to limit battery price decline: AABC

Prices for battery metals will limit the scope for further declines in the cost of electric vehicle (EV) batteries, although the automotive industry sees lower battery prices as necessary for mass EV adoption, delegates heard at the Advanced Automotive Battery Conference (AABC) in Strasbourg, France.

The average cost in China of a lithium nickel-cobalt-manganese (NCM) battery fell to $174/kWh last year, and an average lithium iron phosphate (LFP) battery fell to $145/kWh, said Mark Lu, certified senior analyst at the Industrial Technology Research Institute (ITRI) of Taiwan. The Chinese government is targeting battery costs of $150/kWh as it defines policies to encourage large-scale uptake of EVs.

The total cost of a battery pack is likely to remain around $150/kWh, said Christophe Pillot, director at France's Avicenne Energy. Technical developments are creating some performance efficiencies so that slightly less metal will be needed, but raw material costs alone are not expected to fall much below $75-80/kWh.

Prices for lithium, nickel and cobalt are subject to supply volatility, and taking the lowest and highest levels for the past 10 years indicates costs of $10-67/kWh, said Kurt Vandeputte, senior vice-president of the rechargeable battery materials business unit at Belgium's Umicore.

If the EV battery market grows to 500GWh by 2025 from 150GWh in 2018, demand for cathode materials would increase to 850,000t from 300,000t, Vandeputte said. An EV battery contains around 35kg of lithium, 25kg of nickel and 12kg of cobalt, with the nickel content set to rise as producers substitute some of the cobalt. Tight supply of nickel sulphate is expected to lift prices from $10/kg in the coming years.

At estimated long-term prices of $12/kg of lithium carbonate equivalent, $25/kg for nickel and $30/kg for cobalt, the cost of NCM cathode materials would be around $26-28/kWh depending on the ratio of metals used, Vandeputte said.

Some contracts to supply battery cells to original equipment manufacturers are slightly below $100/kWh, delegates heard. These prices mean cell manufacturers are selling at a loss, said Stephanie Schenk, senior research analyst for automotive and assembly industries at McKinsey.

"The intrinsic value of metal prices is big compared with the total price," Vandeputte said. Long-term fixed price contracts below the cost of production are "a starting error", he added. "I would like to see how all companies in the value chain are going to integrate further. A cathode material company only doing cathode will not work — it will not find the growth it would need for the next decade."

Developing ways to put electronic components inside battery casings and using semiconductor switches and wireless technologies to replace some parts and cabling would go some way to reducing the cost of the vehicle, said Marco Thoemmes, head of development in electrics and electronics HV storage systems at German carmaker Audi. "The battery is the most important component; it's about 30pc of the cost of an EV."