From S&P Global Platts, October 25:
Our editors are keeping an eye on oil refining cracks ahead of winter, as well as potential demand from Asia as COVID-19-related restrictions ease. Tesla's change in battery chemistry and the International Maritime Organization's long-term emissions reduction goals are also in focus.
....2. Demand shift in focus as Tesla announces change in battery chemistry
What's happening? Tesla announced that it will shift to lithium-iron-phosphate (LFP) battery chemistry for all its standard range vehicles globally. The electric vehicle maker already employs LFP in its standard range Model 3 in China, but the rest of its portfolio is powered by batteries featuring a nickel-rich chemistry known as nickel-aluminum-oxide (NCA). Nickel-rich chemistries require lithium hydroxide instead of carbonate because the first can operate at much higher temperatures. They also provide longer driving ranges. Carbonate-based LFP is cheaper and safer, and does not use nickel or cobalt.
What's next? Shifts in battery chemistry choices imply demand changes for battery metals. Tesla's announcement is supportive of lithium carbonate—once seen by many industry participants as doomed to lose relevance as carmakers favor lithium hydroxide. Battery-grade nickel supply is expected to be very tight in the coming years, while there are also concerns over the ethnical sourcing of cobalt. It will be crucial to watch the prices of these two key battery metals amid a potential shift in demand.....
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Although we were following Elon as Iron Man closer than most, see, if interested, October 20's ""Tesla will only use iron-based batteries for standard model EVs" (TSLA)" for some of the prior posts; just as/maybe more interesting was something Platts put together on lithium last May:
"Lithium prices diverge and defy expectations as new EV trends unfold"A very smart discussion of the ins-and-outs of Li.
From S&P Global Platts, May 19:
Evolving choices around EV battery composition have altered price dynamics in the lithium market, with the two main forms, hydroxide and carbonate, now moving independently to each other, reflecting different use cases and trading patterns.
Traditionally lithium hydroxide was produced from lithium carbonate, resulting in a high degree of price correlation between the two chemicals in the market. When Australia's spodumene capacity increased after new projects came online in 2018, the spodumene production route for lithium hydroxide became dominant. The increased Australian production, which altered supply routes, combined with a slower than anticipated growth in global EV sales and changes in Chinese policy, have combined to boost demand and liquidity in the lithium carbonate market, altering the price relationship between the products.
A key driver for lithium chemical demand and prices is the changing fortunes of different battery compositions. Lithium iron phosphate (LFP) chemistry has always been cheaper versus nickel manganese cobalt oxide (NCM) and lithium nickel cobalt aluminum oxide (NCA), which require expensive nickel and cobalt. LFP is also considered safer – as less prone to thermal runaways, thanks to the absence of nickel—but the trade-off has been lower range.
Chemistry choicesThis last characteristic has been a sticking point: since one of the major barriers to mass adoption has been "range anxiety", LFP was considered by many industry participants to be a lower priority in the upcoming EV boom. It was frequently associated with low-end city cars in China, as well as electric buses or electric bikes and energy storage systems (ESS), but was seen as playing a minor role within the wider EV revolution.
This started to change with the gradual removal of Chinese EV subsidies, which lowered the incentives for local automakers to target only long-range EVs and increased the pressure to reduce costs.
The cost of an LFP battery is about Yuan 0.08/Wh, which is around Yuan0.15/Wh-Yuan0.21/Wh cheaper compared to ternary cathode materials (NCM), corresponding to a cost reduction of 65%-72%, according to ICC Sino.
Moreover, improvements on the pack design, through the cell-to-pack approach, allowed a bigger portion of the battery pack to be filled with cells which significantly increased energy density. Tesla's Model 3 Standard Range produced in the Shanghai factory featuring LFP batteries supplied by CATL have around 450 km driving range; BYD's Han model, using the so-called Blade Battery (LFP, cell-to-pack) reportedly has a 605 km range.
These are comparable to the driving ranges of cars with NCM 5:2:3 batteries at a much smaller cost. BYD, which is China's largest seller of electric vehicles and ranks only behind of Tesla globally, recently announced it will scrap its NCM technology and employ only LFP going forward.
Characteristics and contracts
Although many agree that hydroxide will be a major lithium chemical in the future, there is a consensus that carbonate still represents the majority of the market at the moment. In addition to its predominance in volume, carbonate is also easier to handle and has a longer shelf life. These characteristics allow carbonate to be more frequently traded in the spot market than hydroxide.
The biggest hydroxide buyers are battery makers in Japan and South Korea who are inherently more prone to signing long-term contracts because of the nature of hydroxide and the necessary focus on specifications....
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Now, if you will excuse me I will explore the energy intensity of roasting spodumene vs. other extraction methods. (it's pretty energy intensive, to effect the phase transformation from α-spodumene to β-spodumene you have to crank the oven up to 1050°C, then acid wash it, then roast it again at 200°C. Season to taste and wow your guests)
