"The end product cannot be cheaper than the sum of all the raw materials"
Thinking about battery prices for current battery technology and the next generation of tech to come, and opening up more of our research products.
📈📉 Thinking about battery raw materials prices
I attended the STEER Launch Workshop at Stanford this week and got to listen to a talk by Adrian Yao, Founder & Team Lead, and it prompted me to finish this article I had sitting in our drafts for a while. In his opening talk, Adrian talked about the importance of assembling cost curves for every single component in battery systems and modeling/projecting overall product costs over the years and factoring in historical learning rates, all in the name of making decisions on what to build.
On a separate occasion, I had a conversation a few weeks ago with a leading US manufacturer, who said: "The end product cannot be cheaper than the sum of all the raw materials."
The takeaway is understanding costs is key in making decisions, which is why we spend so much energy crafting our analysis and producing monthly assessments reports of battery component prices based on raw materials market prices. We are posting monthly standalone price reports sharing all this information with you. ❤️
For this article, we dissected the cost structures of popular battery technologies and next-gen technologies with the bill of materials data from Argonne National Lab.
It also brought thoughts on how next-generation materials would stack up vs today’s technologies. We took solid-state electrolytes as an example - our exploration led us to a 2016 paper from the Institute of Energy and Climate Research (IEK) in Forschungszentrum Jülich about manufacturing solid-state electrolytes, specifically Li7La3Zr2O12 (LLZO, a garnet-type solid-state electrolyte). The design they used in their exercise is a Li metal anode, solid-state LLZ electrolyte, a mixed LLZ/LCO cathode.
To make LLZO, the paper states resource demand to be:
15.4 kg La + 2.9 kg Li + 9.2 kg ZrO2 per kWh (lab production scale)
2.26 kg La + 0.56 kg Li + 0.74 kg ZrO2 per kWh (industrial production scale)
In a 60 kWh vehicle, roughly: 136 kg La + 34 kg Li + 44 kg ZrO2
These numbers are based on their own solid-state battery production process at IEK where they use a solid-state electrolyte and a mixed LLZO-cathode slurry1.
A mix of LiOH·H2O, La2O3, and ZrO2 is processed to form LLZ powder.
This powder is then combined with organic solvents and additives to produce an electrolyte slurry.
Separately, LiCoO2 and LLZ powder are mixed in equal proportions to create a cathode slurry.
These slurries are then spread using a micro tape casting line and heated.
20% of the material is wasted during the cutting process.
The ideal production scenario assumes full machine capacity, the largest batch sizes, 30% less energy use, and an electrolyte thickness of 30um.
By incorporating IEK's findings and some simplifications/assumptions, we translate the volume of materials into our price model and estimate LLZO battery pricing at both production and lab scale based on IEK‘s numbers, using Intercalation pricing research from Oct 2023.
These are raw materials costs per cell and do not include things like plant, labor, equipment, assembly, testing, and other costs ➜ these can be expected to add some significant % to the raw materials costs to make up the full cell, and vary hugely per manufacturer/site. This is in line with pricing from October 2023 once you factor in additional costs.
The inherent value of raw materials sets a baseline for the end product. While innovation continually pushes the boundaries of what's possible in the battery industry, the immutable laws of economics persist. Understanding the balance between raw material costs and end product pricing remains paramount for manufacturers, investors, and consumers.
We are producing monthly assessments reports of battery component prices and sharing all this information with you. ❤️
References and interesting reads for raw material content by cell types:
Li metal anode: Research Progress of Anode-Free Lithium Metal Batteries
The deep dive - Lithium-ion Battery Cells: Cathodes and Costs
🌞 Thanks for reading!
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The percentage of world production is based on numbers in 2012, which is quite different now e.g. Roughly 130,000 tons per year of Li in 2022 (70,000 tons in 2012); >54,000 tons per year of La (35,000 in 2012), etc. However, the main numbers we’re looking at are g/kWh of certain materials required. These numbers are from 2015 so a bit out of date, but hopefully, the story stands.