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Electric Vehicle War "Lithium Travels the World"
Oct , 25 2022

While the world's Electric Vehicle manufacturers are busy building Electric Vehicles, there is also a battle that is kicking off, that is, the battery-building battle. Why is this automaker's battery battle so important? Who has a better chance of winning? How did this war in the auto industry play out?

BYD, which started as a battery company, has a very important advantage of making its own batteries, and this advantage is seen in the eyes of its peers. Especially in the epidemic era when there is a shortage of logistics everywhere, the shortage of chips and batteries has become two important components stuck on the neck of the car factory. Which car factory does not dream of realizing battery freedom?

Since a few years ago, car manufacturers have started to announce the construction of batteries one after another, and the recent battery-making movement has become more and more popular. Tesla first announced in 2015 that it would start building its own batteries. In terms of research and development, Tesla is also constantly developing new battery technologies. In 2015, it began to cooperate with the team of Professor Jeff Dahn of Dalhousie University in Canada. The newly developed lithium battery claims to have a lifespan of one hundred years

In addition to American automakers, European automakers eager to complete the comprehensive new energy policy requirements by 2030 are also busy making batteries.

Of course, as far as automakers are concerned, in addition to being busy transforming and building new energy vehicles, it is no longer easy to enter new fields to build batteries. But setting up a battery factory is not the most difficult thing. The most difficult, and will become more and more difficult, is to obtain raw materials. In addition to lithium, nickel, cobalt, etc., graphite is also a scarce resource needed to make lithium batteries. Taking graphite as an example, S&P Global Platt predicts that by 2030, the demand for graphite will triple, and it will become a $50 billion industry.

Among the battery types of new energy passenger vehicles, lithium batteries account for the vast majority, lithium iron phosphate batteries account for 52.5% of the total installed capacity, and ternary material batteries account for 45.8%. The McKinsey report predicts that global demand for the related lithium carbonate will rise from 500,000 metric tons in 2021 to 3-4 million metric tons in 2030.

The battery raw material is the bottleneck of the car factory's profitability! For the entire industry, raw materials may become the biggest bottleneck in the production of batteries and even Electric Vehicles. The current supply cannot keep up with the development demand in the next 5 to 10 years or even longer. Not only is the mining and processing of these minerals relatively complex The process, that is, investing a lot of money and setting up factories for mining and processing, also requires a long period of time, and there is no way to quickly keep up. Moreover, the reserves of these important resources are very limited, and it may be difficult to meet human needs for a long time.

Stanley Whittingham, the inventor of lithium batteries and the 2019 Nobel Laureate in Chemistry, even said that in the next five to ten years, the raw materials used to produce lithium-ion batteries will be exhausted. Because everyone is scrambling for resources, the prices of these raw materials have skyrocketed. For example, from January 2021 to April 2022, lithium carbonate rose from 50,000/ton to 500,000/ton. This has already begun to affect the manufacturing costs and profit margins of car manufacturers.

In order to grab lithium resources, GM is even willing to prepay nearly 200 million US dollars to the company Livent to ensure its own lithium supply. Because of the increase in cost, Volkswagen needs to invest an additional 10 billion euros to ensure that the six factories produce the required raw materials (the Volkswagen battery factory produces lithium batteries). UBS also predicts that SK Group, the world's fifth-largest battery producer, may also lose $760 million this year because its raw materials are too expensive.

Electric Vehicle manufacturers have invested heavily in the R&D and manufacturing of lithium batteries, but they still cannot keep up with the consumption rate of global lithium battery capacity reserves. Global demand for lithium-ion batteries has surged to 400GWh in 2021 from 59GWh in 2015, and will jump another 50% in 2022.

One view is that the new energy vehicle market is finally cultivated, and it cannot end up being a wedding dress for the upstream resource side. Another point of view is that although the price of lithium has risen to crazy levels, in fact, the earth is not lacking lithium, but the process of mining and refining at this stage is too slow, and this process will definitely accelerate in the next few years. .

Therefore, the automotive lithium battery war seems to be an increasingly expensive arms war, but if it is as Whittingham predicted, humans can only seek other battery solutions because there are no raw materials, is there any replacement? Lithium batteries have become an indispensable device in daily life, and are widely used in mobile phones, computers, wearable devices, new energy vehicles and other fields.

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