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Although low prices are making life difficult for manufacturers, especially outside China, demand remains strong for stationary storage devices and electric vehicles (EVs), according to IDTechEx.
The supply of raw materials, including nickel, from deposits such as the Sorowako mine in Indonesia is a major driver of global battery prices. | Image: Images ©2024 Airbus, CNES / Airbus, Maxar Technologies, Map data ©2024/Google Maps.
UK-based research firm IDTechEx has published a 10-year outlook report for the global lithium-ion battery industry, which predicts the market could exceed $400 billion by 2035.
The report points to continued strong demand for the stationary energy storage needed to feed intermittently generated renewable energy into grids and for electric vehicles, supported by policies such as European Union emissions rules and the US Anti-Inflation Act.
According to Alex Holland, research director at IDTechEx, global demand will also be driven by technological advances in areas such as solid-state devices, silicon anodes, optimised cell design and improved battery management systems. Holland predicted that technological advances through to 2035 will make batteries safer, more energy-dense, faster to charge and longer lasting, although it will be difficult for prices to fall further than they do in the current oversupplied market.
Battery price fluctuations in recent years, driven primarily by the availability of raw materials such as lithium, nickel and cobalt, will make it difficult for new entrants to enter the battery manufacturing market, especially outside China and other parts of Asia where established companies dominate.
According to Holland, strong battery-driven lithium demand and nickel and cobalt shortages in the supply chain could add as much as $60/kWh to the cost of an “NMC 811” battery in 2022, referring to devices with cathodes composed of 80% nickel, 10% manganese and 10% cobalt.
This surge in the price of active materials for lithium ferrophosphate (LFP) battery cathodes – previously an attractive option due to their affordability – has prompted Chinese manufacturers to increase their production capacity to meet domestic demand and led to overcapacity in 2023 and 2024. With lithium, nickel and cobalt contributing around $20/kWh to the price of NMC 811 devices in 2024, the price of LFP cathode materials has fallen to as low as $5/kg in 2024, according to Holland, in an article published on the IDTechEx website.
Battery makers that cannot compete with the economies of scale, cheap labour and favourable supply chains found in China and elsewhere in Asia will struggle to secure sufficient margins in the current oversupplied market, says IDTechEx’s Holland, as witnessed by the recent struggles of Swedish company Northvolt and the European Union’s decision to impose tariffs on Chinese electric vehicles, which are cheap in part because of the price of battery materials. |
