Batteries & charging infrastructure

Batteries

EV battery demand is rising quickly, with 2021 shipments 94% higher than in 2020. By 2030, EV battery demand grows to 3,486GWh in the Economic Transition Scenario. Manufacturers have announced plans totaling 4,151GWh of annual capacity due by 2025. China still dominates, but capacity is growing in other regions.

The timing for achieving battery pack prices below $100/kWh on a volume-weighted average basis has become less certain, as raw material prices have significantly impacted costs over the last 12 months. If raw material prices remain elevated or climb further, this could delay the timeline by a couple of years, out from 2024 in most markets. However, introduction of new cell chemistries and manufacturing equipment and techniques will help to continue to bring costs down. Simplified pack designs for battery-electric vehicle platforms also contribute.

Automakers have significantly grown their commitment to LFP (lithium iron phosphate)-based chemistries, which we now expect to account for 42% of battery demand by 2023, including through variations such as LMFP (lithium iron manganese phosphate), where the addition of manganese will further improve energy density.

New EV battery chemistries will continue to be adopted in an effort to provide longer ranges or lighter packs. By the end of the decade new chemistries using more manganese, such as NMCA and NMC (96Ni), will become prevalent to reduce pressure on nickel.

Battery materials

The supply of lithium, cobalt, manganese and nickel chemicals suitable for lithium-ion batteries could be tight this decade under our Economic Transition Scenario. New refining facilities and investment will be required. Higher

prices and new technologies should help the market respond to this need.

The total demand for lithium surpasses 2.4 million metric tons lithium carbonate equivalent (LCE) in 2030, up 259% from current demand. Companies have invested in the chemical convertors that produce carbonate and hydroxide, while ignoring upstream raw material extraction. This has led to a squeeze in the upstream market driving lithium prices up over the last 18 months. These high prices will lead to the development of new projects, which should lead to prices easing over the next 12 months due to more supply becoming available to meet demand.

About $5.4 billion is needed to ensure the building of 400,000t LCE in lithium raw material supply, a volume that is currently in the pipeline for 2021-2025 but not yet financed. For the chemical convertors, an additional 100,000t LCE carbonate and 300,000t LCE hydroxide capacity planned by 2025 still needs at least $8.4 billion to be successfully developed.

Nickel demand reaches about 1.5 million metric tons in 2030. Current nickel sulfate capacity will grow from 534,000 metric tons nickel equivalent this year to 626,000 metric tons nickel equivalent in 2030.

The announced capacity of upcoming nickel sulfate projects will only be enough to meet demand up to 2023. Building refineries is a faster process than developing new mines, which require between 2-5 years of development time. Hence, most refinery or chemical companies do not make capacity addition announcements beyond the five-year time horizon. By 2023, as demand grows, we expect the announcement of new refinery additions to increase. This will help to keep the nickel sulfate market in balance to 2030.

Our Net Zero Scenario requires huge increases in battery raw material supply by 2050. Without large-scale battery recycling, cumulative lithium, nickel and cobalt demand exceeds currently known reserves over this period. However, with recycling there is the prospect of an almost-fully circular battery industry by mid-century.

To test the long-term implications, we have created two chemistry-mix scenarios. Our base chemistry mix relies heavily on the current generation of nickel-based and LFP cathodes, while our progressive chemistry mix uses next-generation cathodes that use fewer or less expensive raw materials.

In order to keep demand in balance for lithium, nickel and cobalt, a range of approaches will be needed that will require governments, automakers, cell manufacturers, miners and recyclers to work together. These include the need for dense public charging networks, new cell chemistries, widespread recycling and investment in new mining and refining capacity. New extraction technologies and sustained high prices could also change known reserves.

"A range of approaches can help alleviate long-term battery material supply constraints, including more investment in mining and refining, investments in new cell chemistries, widespread recycling, and more public charging infrastructure to help reduce battery pack sizes."

Electric Vehicle Outlook 2022, BloombergNEF

Automakers will switch battery chemistries to reduce their reliance on metals associated with higher prices or supply concerns. Over the last three years automakers have revised their battery chemistries to decrease their reliance on cobalt due to challenges pertaining to child labor in the Democratic Republic of Congo and rising prices.

BNEF’s demand forecast for cobalt has also decreased over the last three years in line with automakers’ targets. Some automakers have switched entirely to LFP batteries while others have reduced their cobalt exposure as seen in the transition from NMC 622 to NMC 811 (denoting different ratios of nickel, manganese and cobalt in the cathode).

This effect highlights how market participants can act to overcome predicted raw material shortages or rising prices. High prices like that being experienced today not only drive investments in new supply, but also induce demand-side substitution. Battery raw materials are thus likely to undergo the same cyclical fluctuations as other commodity markets in the long term.

Charging infrastructure

Between today and 2040, the cumulative investment in charging infrastructure exceeds $1 trillion globally in the Economic Transition Scenario and $1.4 trillion in the Net Zero Scenario. By this time between 340 and 490 million chargers are needed across all locations globally, with the total dominated by home chargers. Chargers outside the home account for between 42 and 59 million chargers by 2040, depending on scenario.

"EV charging infrastructure is a trillion dollar market opportunity over the next 20 years, but the pace of installations needs to accelerate rapidly."

Electric Vehicle Outlook 2022, BloombergNEF

Fast chargers deliver 50% of electric vehicle energy demand and account for 60% of all charging investment by 2040, but are less than 3% of total connectors. The charging network evolves over time to support more commercial vehicles such as electric vans, buses and trucks. The advent of autonomous vehicles will also affect the charging technologies used.

A big push is needed to scale up the industry quick enough so charging infrastructure is installed in time to support the expected electric vehicle fleet. The US faces one of the most difficult challenges, requiring a six-fold increase in average annual public charging installations over the next four years from those in 2021 to meet our outlook.

The needs of private car drivers will vary as many mass-market EV drivers are less likely to have access to home charging. The number of EVs per public charge connector rises to between 30 and 45 in most markets from between 5 and 20 EVs per public charge connector today, as use of charging infrastructure and average power delivery rises.

The total charging capacity needed in 2040 equates to about 6-7kW per EV in total, and 1-3kW for public charging alone, depending on scenario.

The investment to build an extensive charging network is still small in comparison to the size of the electric vehicle market, and in comparison to the subsidies that are currently distributed to other areas. Governments should consider moving subsidies to support network roll-out.

Our case study modelling the U.K power system indicates that it costs $1,800 per electric vehicle for the cumulative investment between 2020 and 2040 in charging infrastructure, installation and the related grid upgrades to support the extra electricity demand from electric vehicles. The grid upgrades make up 30% of costs.

More vehicles with vehicle-to-grid (V2G) capability are coming. V2G is attractive to governments and grid operators as it can increase renewable generation, lower emissions, and reduce power system costs. The charging and vehicle technology is becoming more widely available but it will be complex to create a business model that distributes value evenly across participants and incentivizes drivers to take part.

Oil and gas companies are getting more involved in public charging infrastructure, but still stand to lose significant revenues to private charging as EVs take off. Other revenue streams, such as hardware sales, installation and charger maintenance, will not make up the shortfall.