An unpredictable future for the European electric vehicle battery industry
Lithium: the new white gold of batteries
Lithium-ion batteries (LIB) are experiencing exponential growth in the transport sector (both small and large mobility) and for renewable energy storage, which are key issues for Europe’s ecological transition. This growth is expected to continue in light of the announcements of the ban on the sale of thermal vehicles by 2035.
For the past 10 years, the main technologies in the electric vehicle battery (EV) market have been lithium-ion batteries with the positive electrode (Nickel Manganese Cobalt), progressively evolving from 111 to 622 and then 811 (the numbers represent the percentages of Nickel Manganese Cobalt in order). The challenges associated with these batteries are numerous:
- NMC batteries contain critical raw materials (CRM) for the European Union (EU), such as cobalt, lithium, and natural graphite. These materials are critical due to their significant economic importance, as well as the geopolitical situation of the supplying countries and their extraction conditions in those countries.
- They pose a safety risk due to their flammability. The higher nickel content in NMC 811 batteries improves their performance but also increases thermal instability.
To compete with NMC, many car manufacturers have announced plans to switch to technologies LFP (Lithium Fer Phosphate). Ces batteries sont moins performantes que les NMC mais permettent de limiter les couts, l’usage de métaux critiques ainsi que les risques de sécurité.
In July 2023, the European Parliament and the Commission approved the new regulatory text on batteries, replacing the applicable directive from 2006. This new text aims to regulate the complete life cycle of batteries and to integrate their development into a circular economy approach. It specifically addresses issues such as the conditions for material extraction (due diligence) and their criticality, and most importantly, the end-of-life of batteries (Collection and sorting, second-life reuse, recycling for closed-loop reuse of metals, and the integration of minimum percentages of recycled materials in batteries).
This text also requires the declaration of the carbon footprint of batteries placed on the European market, as well as the calculation rules finalised by the Joint Research Center (JRC, the European Commission's science and knowledge service).
To date, the entire regulatory text and the calculation methodology developed are primarily based on the NMC and LFP technologies. The same applies to all the announcements in Europe and internationally, which are multiplying:
- "White Gold" Rush: Development of lithium mines in France and Portugal
- Inflation Reduction Act in the United States: A plan that provides tax credits for investments and production in electric vehicles and batteries
- Announcement of around fifty gigafactory projects and recycling plant projects with a capacity of 645 kT of batteries by 2030 in Europe, with processes tailored for lithium-ion batteries
Given the critical challenges, economic costs, safety, and environmental impacts, the battery industry, particularly in Europe, has quickly invested in R&D projects to find solutions to bypass these issues. Several avenues are being explored: LFP for cost, solid-state for safety, organic active materials or X-ion batteries for criticality, etc. Among all these solutions, discussions surrounding a lithium-free technology have been highly prioritised.
The sodium-ion battery: an emerging technology
After investing in NMC technology, Swedish battery developer and manufacturer Northvolt announced in November 2023 the commercialisation of their first industrial sodium-ion battery with a capacity of 160Wh/kg, developed in collaboration with Altris.
The battery is made with abundant materials available on global markets, such as iron and sodium. It also features a hard carbon anode and a cathode based on Prussian blue (a derivative of the famous Prussian blue paint pigment). This composition is expected to reduce dependency on China for raw material supplies.
Although not yet ready for electric vehicles, this new technology, which does not rely on critical materials (lithium, nickel, cobalt, and graphite), could disrupt the global battery market dynamics. The global leader in lithium-ion battery production for electric vehicles and energy storage, CATL, has announced plans to produce sodium-ion batteries capable of reaching up to 200Wh/kg. With comparable capacities to NMC and LFP technologies, sodium-ion batteries represent an inherently more sustainable and cost-effective alternative to their competitors. However, since sodium is three times heavier than lithium, mass density poses a major technical constraint for its application in electric vehicles.
The year 2023 was marked by a dramatic drop in lithium prices. According to Benchmark Minerals, a consulting firm specialising in the lithium market and other raw materials, its price fell below 100 dollars/kWh (compared to 130 dollars/kWh in November 2022).
The main cause? Overproduction of batteries in China, which has exceeded global demand, leading to a decrease in demand, compounded by numerous lithium deposits being discovered, including 6Mt in India.
It is in this context that the sudden arrival of Northvolt's sodium-ion battery on the market is likely to overthrow lithium and further reduce its value.
All of this has significant consequences. Indeed, it could challenge certain investments and projects, such as the development of lithium mines in Europe and the construction of recycling plants, which are primarily based on lithium battery deposits.
The risk would be to replicate the same situation encountered by the Solvay Group in 2016. The rare earth recycling workshops from energy-efficient light bulbs were shut down in the cities of Saint-Fons and La Rochelle in France, following the arrival of LED light bulbs on the market.
How can we prepare to protect our industries from these drastic changes? Strengthening our technological monitoring and fostering exchanges between European countries may be necessary. What strategies should be adopted to ensure Europe's resilience capacity?
The example of Northvolt illustrates that technological advancements can lead towards a sustainable model for the environmental performance of our future mobility services.