Nickel Manganese Cobalt (NMC) chemistry has long been the industry standard, but scrutiny over the use of, and supply chain risks associated with the critical materials it requires has fuelled a shift in thinking towards other technologies – namely Lithium Iron Phosphate (LFP) and Sodium (Na) based chemistries. While LFP and sodium-based chemistries use fewer critical materials than NMC, there are other significant factors that need to be considered before making a switch, not least energy density, weight, and overall cost.
In 2019 we launched the first-of-its-kind battery value chain describing the process of making a lithium-ion battery. The 2019 value chain represented a single chemistry (NMC). The battery chemistry world has evolved since 2019. Now, in 2023, we wanted to revisit this to have a look at what chemistries are now available and how that changes the value-add from EV batteries. It was also important to reflect upon the innovation in different battery technologies by providing value chains for two lithium-ion and sodium-ion chemistries.
There has been a lot of reporting on the critical minerals crunch and the search for the materials which go into batteries. Does using one chemistry over another help mitigate some of those supply chains? This is something that we look at in the report, but the answer is not a simple ‘yes.’ For example: if you go for sodium-ion, you might think you can completely eradicate critical minerals from your supply chain but that might not be the case. If you go for nickel rich NMC you can reduce the amount of cobalt, a critical mineral with well documented supply chain issues, but nickel is also on the UKs critical minerals watchlist.
Considering all of the research, our report identifies that, in order to place the UK battery industry in a strong position to succeed in this arena to 2030 and beyond, the automotive industry should secure a stable NMC chemistry supply chain to mitigate against higher costs and potential supply chain strains, while high-volume manufacturers should invest in LFP chemistry. Research and development into sodium-based battery technologies should be considered alongside these too and would require further investment, as there is potential for automotive use cases.
There are complex market dynamics that will be driving battery chemistry strategy decisions. We have already seen from manufacturers such as Tesla, a move towards LFP batteries, while in China the likes of BYD and Chery are starting to commercialise sodium-ion batteries. The picture for the UK automotive industry remains unclear, but what is clear is that there is still plenty of room for innovation, and chemistry diversification could support longer-term sustainability of the sector.
Our insight report also examines the potential use for each chemistry as the battery technologies develop, and how the advancement of the overall vehicle classes themselves and consumer trends might change how manufacturers think about the associated battery chemistry they use for each vehicle type.
Sodium-ion looks like an interesting solution. Potentially low cost and less reliance on critical materials with turbulent supply chains. However, there is a long way to go with research to develop cells that meet the sort of performance that would be needed to get a foothold in the UK automotive market. Without significant demand signals, will the supply chain be built? It looks like sodium-based battery cells will only account for a very small percentage of all cells made in Europe in 2030. Will lithium-based chemistry supply chains remain at the forefront, preventing sodium chemistries from getting a foothold or is disruption on the horizon?
Two further areas that will be of consideration for manufacturers are how the obligations they have regarding end-of-life battery recycling will shape their decisions, and how EU and UK rule changes will impact their ability and responsibilities in this area.
This latest release from APC is just one in an ongoing series of regular industry insight reports from APC’s Technology Trends team, all of which are available for free on our website.
You can download the Automotive Battery Value Chain Insight report here.