ELECTRIFYING EVERYTHING IN THE 2020s

Whether related to the stock market, presidential elections or climate, December is the month to make predictions for the coming year and decade. So what battery trends should we expect for the upcoming 2020-2030 decade?

1. Lithium-ion batteries will power more applications — electrification of everything:

The 2019 Nobel Prize in Chemistry highlights the progress lithium-ion batteries achieved in the past four decades. From a laboratory experiment in the 1970s, they are now ubiquitous in consumer devices. Increasingly, they are making inroads in transportation and grid storage applications.

There is no question that the 2020s are the decade of electrification of transportation, from electric vehicles to buses and trucks. The number of available electric-vehicle (EV) models jumped from about ten in 2015 to over 75 in 2020, including categories of sports cars, sedans, SUVs and light trucks. Automotive companies and their supply chain are inexorably transforming. This will not be an easy transformation — there will be winners and losers. Car manufacturers and Tier-1 suppliers that will not adapt in the next couple of years risk becoming irrelevant. The nature of skilled labor in transportation is also transforming. Labor unions are taking notice but much training is needed for this new labor force.

Electric utilities will implement more energy storage projects on their grids — partly driven by regulations as well as the proliferation of clean-energy grids with distributed wind and solar generation.

Industrial applications with historically smaller unit volumes will benefit from the increased proliferation of lithium-ion batteries. As communities seek cleaner air, we will see local regulations banning just about anything powered by fossil fuel, from forklifts to lawnmowers.

2. Batteries will deliver better performance but with optimized compromises:

Bill Gates’ famous quote in 1981 “640KB ought to be enough [memory] for everybody” stands as a stark reminder that there is not enough of a good thing. Just like computers flourished with more computational power and memory, mobility will continue to thrive with more available battery capacity. Next-generation 5G wireless smartphones require more battery capacity. Electric vehicle drivers require longer driving ranges (300+ miles). More battery capacity means a continued drive to look for newer materials with higher energy density.

The public will become more discerning and expecting better battery warranties. Longer cycle life (lifespan) while fast charging will become a standard of performance especially in transportation.

But at what cost? Manufacturers will learn to optimize the battery’s capacity, size, cycle life and charging time to the target application or user case. Electric vehicles in fleets will have  vastly different battery designs than those for, say, residential commuters. Backup batteries used in conjunction with solar power will be even more different. Buyers of electric vehicles will learn how to make informed choices based on the battery. Much like buyers historically learned to understand the difference between 4- and 8-cylinder engines, they will become more literate in understanding the differences between kWh-ratings.

3. Battery prices will continue to decline, but at a slower pace:

The cost of lithium-ion batteries declined in the past decade from over $1,100 per kWh to $150 per kWh in 2019. Forecasters expect this figure to drop below $100 in 2023. At such levels, electric vehicles will reach cost parity with traditional vehicles using internal combustion engines (ICE) — without government buyer incentives. Driven by scale, increased volumes, and a dominant battery manufacturing based in China, standard batteries are increasingly become commoditized. Supply chains are becoming more specialized in addressing the commoditization of batteries. In an effort to improve the profitability of EV models, auto manufacturers will increasingly apply traditional cost disciplines to their battery supply chain, spanning improved manufacturing efficiencies to hedging. A few select applications in need of higher performance will benefit from new developments in advanced materials, e.g., providing higher energy density, albeit at a higher cost, but probably with limited penetration.

The risk of trade tensions with China will continue to loom over the battery supply chain. Even as lithium-ion battery manufacturing facilities come online in other parts of Asia and Europe, China will continue to dominate the lithium-ion battery supply chain, from sourcing raw materials to final assembly. The United States federal and state governments will need to formulate clear policies to address the rapid transition to a battery-centric transportation system — or risk escalating trade tensions with China around battery technologies and manufacturing.

4. Batteries will become safer in the field:

Smartphones routinely catch fire in many parts of Asia — and it’s not even headline news. That will change. That must change. The expected standard of battery safety must improve substantially, especially as larger battery capacities become available (in electric vehicles or electric grids). Efficient inspection methods at the manufacturing site and intelligent battery management systems in the field can improve battery safety by orders of magnitude.

Yet, it is sadly inevitable that battery fires will become headline news in the future before the industry invests heavily in improving battery safety, possibly even with intervention of some governments.

5. Governments will step in to regulate the recycling of lithium-ion batteries:

The industry will recognize that the recycling of lithium-ion batteries is existential to its future growth. The impact of lithium-ion batteries on the environment, from mining raw materials to disposal of depleted batteries, will be devastating if economic recycling methods are not put in place. For example, lead acid batteries are the no. 1 recycled consumer item in the United States with a recycling rate in excess of 99%. Unfortunately, history shows that governments will need to step in and regulate certain recycling targets for lithium-ion batteries.