What the COVID crisis accelerated, the terrible situation in Ukraine is speeding up further. The realization that reliance on imported oil and gas needs to diminish as we pivot towards an electrified future. A future that needs to be realized from renewable resources.
This is obviously a benefit to StoreDot, as we’re on the brink of mass producing extreme fast charging batteries for future electric vehicles. But anyone in the battery ecosystem also needs to be cognisant of the need to localize our own supply chains.
Even before COVID, the whole concept of globalization was being put under stress. In turn, pushing up prices of raw materials and the finished products. Not by a small margin either. Leading analysts estimate that a typical 58 KWh cell pack for an electric car now costs $8000, a rise of $1500– with that extra cost typically putting around 3% onto the list price. Projections indicate that for every 20% rise in battery prices will add 4% to the price of a car.
This goes against what should be the natural order of nearly all consumer goods: that the combined forces of increased supply of batteries and increased demand for electric vehicles and energy storage will force prices down. This so-called ‘Greenflation’ could slow that demand, slowing the trajectory towards a zero-emissions world.
This situation is also throwing up the unpalatable fact that the global battery industry needs to get its house in order, not relying on a widespread supply chain to underpin future growth. Ukraine, for instance, is a major source of nickel, a key component for batteries. Most processed graphite and lithium still come from China. Shortages and price rises for any of these key ingredients will squeeze things further. A 40% price rise in just nickel, will add 4% to the cost of battery cells. Add in more cost increases for raw materials and price rises quickly spiral.
Batteries need dozens of materials, and if just one of those is lacking, it can halt whole production line – which of course this has ramifications all the way along the supply chain, right up to consumer.
The key word going forwards must be ‘localized’.
The purest form of localization is, of course, a properly vertically integrated model. Northvolt, which has just announced its third battery Gigafactory in Northern Europe, is a great example of a company protecting itself with the security of a local supply of key components.
Battery makers can insulate themselves further by boosting their in-house abilities to alter chemistries to accommodate shortages in certain raw materials. It’s a given that complex battery chemistries for automotive use can be altered to optimize range or performance. But they can just as easily be changed to mask supply chain constraints, for example a shortage in nickel or natural graphite.
The resurgence of LFP technologies is as viable alternative adequate proof of this phenomena. No one is arguing that LFP offers the same range as NMC batteries but their lower energy density and subsequent lower reliance on precious metals makes them around 13% cheaper per KW. Properly packaged in the way that a company like BYD has achieved with its Blade battery packs (cell-to-pack) they can also overcome energy density deficiencies.
That’s why we at StoreDot are thinking beyond fast charging batteries. We consider the entire battery ecosystem, from cells, to packs, to vehicles, to the end user. The supply chain issue will continue to ripple for many years to come and so we will spread our bets. We can apply our extreme fast charge silicon-dominant technologies to many cathode chemistries and form factors. We have patents that create ‘self-healing’ cells, that repair in the background without drops in performance and we are working hard on advanced ‘cell to pack’ systems. We’re offering automotive manufacturers and pack designers more flexibility and more opportunities to adapt when changes are required including supply chain constraints.
Above all, while we know that our ‘100in5’ battery cells will answer an unmet need when they are mass manufactured in 2024, we also all need to take more actionable steps towards a localized supply chain.
