The faltering march of the gigafactories

Rising energy costs, disruptions in the supply of equipment components, hikes in the cost of raw materials and potential shortages have delayed giga-projects across Europe in 2022.

Some major projects seem to have stalled almost completely.

In December, for example, Volkswagen postponed a decision on where to build a battery gigafactory in eastern Europe. And in January Britishvolt’s gigafactory at Blyth in England went into administration after a long tangle with raising enough finance.

Rescue packages from the UK government were being discussed as Energy Storage Journal went to press.

In Europe — see other parts of the cover story — two defining situations have hampered the continent’s giga dreams: the introduction of the Inflation Reduction Act in the US with its tax breaks and China’s extension of subsidies to its battery manufacturers.

But other factors are also in play.

One commentator points to the overall lack of expertise in creating, managing and operating these giga plants. “There is only a finite amount of talent to go round,” he says. “So in one sense it will make sense to consolidate this expertise in partnerships.”

There’s also the post-Covid recovery where the shortage of materials has hit price expectations. “In 2020, it was thought EVs would hit price parity with ICE vehicles around this year or next,” says one industry commentator. “But increasing battery prices have put paid to that.

“It could happen by 2026, or even 2025 though,” he says. “As massive battery gigafactories start to come online and supply ramps up dramatically.”

Simon Michaux, associate professor of geometallurgy at the Geological Survey of Finland believes that gigafactories need to be part of larger thinking.

The supply of lithium, cobalt, nickel and graphite will not be enough to manufacture enough renewable units to replace the existing fossil fuel based system, of which batteries make up a large proportion.

“The simple solution is to make batteries out of another material set such as fluoride, sodium, zinc or even silica,” he says. “These don’t have the same supply shortage problems.”

A UK perspective

Stephen Gifford, chief economist at the Faraday Institution in the UK, regards the energy and supply chain crises as short to medium-term issues: “Geopolitical risks and disruption to global supply chains after the pandemic have resulted in rising commodity prices,” he says.

“Average battery costs had fallen by around 80% since 2013 but increased for the first time in 2022, with a 7% increase in real terms”

Meanwhile, in the UK alone, there is a demand forecasted of 22,000 tonnes of cobalt, 135,000t lithium carbonate equivalent and 170,000t nickel under a projection of 196 GWh of UK EV battery production.

Gifford does not believe current market issues and supply bottlenecks will affect the gigafactory industry in the longer term given, for example, the transition to net zero by 2050 in the UK and ending of new ICE vehicle sales by 2030.

“With global commodity prices increasing, the market for EV batteries has begun to move to lower cost chemistries to remain competitive, particularly lithium iron phosphate,” says Gifford.

Shortening the battery raw materials supply chain, or finding ways to minimize the use of certain minerals because of availability or expense, has become a priority

The current production of raw materials is far from sufficient.

Globally, in 2040 there is projected to be demand for around 520kt cobalt, 3,000kt lithium carbonate equivalent and 4,000kt nickel under a projection of 5.9TWh of global EV battery production.

One analyst predicts that: “there should be demand for 100GWh and five large gigafactories in the UK by 2030, with each producing 20GWh per year of batteries. By 2040, demand rises to nearly 200GWh and the equivalent of 10 gigafactories.”

However, says Gifford, “There are more than enough resources to supply the manufacture of EV batteries to 2050, giving time for the EV battery recycling industry to become widely established.”

When assessing planned cell capacity figures, not all that capacity will come online, with many gigafactories projects unable to produce the quantity and quality of cells right for the market, says Benchmark Minerals analyst, Evan Hartley.

Lithium is the key raw material causing significant supply disruption and driving up cathode and cell prices.

Some cathode manufacturers in China are reporting recent failures to receive deliveries of material from long term supply contracts, having to resort to the tight spot market.

Demand is outpacing supply, with new lithium mines taking longer to achieve viable production than downstream projects.

Gifford says that global production of lithium and cobalt will need to increase by six times and three times respectively up to 2040. However, nickel supply does not need to increase to the same degree.

Hartley says some companies are shifting their battery materials business towards localization, and vertical integration. “Cities such as Debrecen in Hungary provide an example of these strategies; now host to a number of projects planning to produce pCAM, cathode material, cells, and EVs, increasing supply chain integrity,” he says.

“However, as energy-intensive operations, we are beginning to see gigafactory plans hit by energy price crises, with multiple cell producers in Europe for example, either delaying plans, or reconsidering the location of

Gifford says that global production of lithium and cobalt will need to increase by six times and three times respectively between to 2040. However, nickel supply not need to increase to the same degree

LIFE AFTER LITHIUM — ALTERNATIVE TECHNOLOGIES

planned gigafactories, with countries offering subsidies to counter rising energy costs now more likely to be favoured.”

Geopolitics is also key to gigafactory success with preferential treatment such as the US tax breaks from the Inflation Reduction Act moving markets. “Since the act was announced, North American pipeline capacity has grown significantly, with many of the companies scaling up their plans from Japan, and South Korea,” says Hartley, “while the large tier 1 Chinese producers have been excluded from the market.”

Recycling

Reducing reliance on battery raw materials is part of gigafactory strategy. Consequently, there are moves to overcome the difficulties in recycling EV batteries.

Unfortunately, says Gifford, current end-of-life battery processing techniques do not optimize or maximize the recovery of all of the materials contained in EV batteries.

Making better use of resources and minimizing the amount of raw materials being sourced to manufacture is an imperative for battery production. That includes an increase in recycling.

There are limits to the performance improvements that can be expected from Li-ion technology.

“Next generation battery technologies such as solid-state, sodium-ion and lithium-sulfur offer exciting opportunities for EVs but also for applications in marine, rail, aviation and heavy goods transportation,” says Stephen Gifford, chief economist at the Faraday Institution. “Solid-state batteries are expected to be the next successor to lithium-ion batteries, offering a step-change in energy density, range and safety advantages.

“Sodium-ion batteries have a much lower cost than lithium and solid-state batteries, making them an attractive next generation technology. Simpler manufacturing techniques are needed, with inexpensive and naturally abundant materials used.

“Sodium-ion batteries are well suited for future large-scale stationary storage applications, particularly where large amounts of storage are required to help balance electricity grids with a high supply of renewables.

“They have potential usages in low-cost and low-performance vehicles, particularly micromobility vehicles such as e-bikes, e-scooters, two-wheelers and three-wheelers.

“Lithium-sulfur batteries offer greater gravimetric energy density than lithium-ion, and are cheaper to make. These should open up new markets and have a transformative effect on aerospace applications, such as drones, high altitude satellites and unmanned aerial vehicles.

“For the moment, lithium-sulphur cells suffer from short cycle lives and research to solve these challenges is underway.”

The Faraday Institution’s LISTAR project led by University College London is looking at how to fix this.

Key steps suggested by Gifford include: ensuring that EV batteries are designed in a way that enhances recycling; ensuring that EV batteries are designed with second-life applications in mind; use policy and regulation to help to manage environmental impacts; encourage investment in the infrastructure for recycling lithium-ion batteries from EVs; and to consider government support.

“What a gigafactory looks like in 20 years will depend on the type of batteries being manufactured, particularly whether there has been the successful development of alternatives such as solid-state and lithium-sulphur batteries,” says Gifford.

Multiple cathode and cell producers have versatile production lines capable of switching focus in line with demand — between different NCM cells, or between NCM and NCA, says Hartley:

“As battery technology evolves, we will continue to see versatile production lines brought online, or further investments into existing facilities to redesign the manufacturing process, as the development of existing infrastructure will be cheaper and more efficient than new gigafactories for new technology.”