Lithium ion battery costs: materials and manufacturing?

Lithium ion battery costs range from $40-140/kWh, depending on the chemistry (LFP vs NMC), geography (China vs the West) and cost basis (cash cost, marginal cost and actual pricing). This data-file is a breakdown of lithium ion battery costs, across c15 materials and c20 manufacturing stages, so input assumptions can be stress-tested.

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This data-file disaggregates the materials used in lithium ion batteries and their costs. The breakdown covers 25 categories (e.g., lithium, nickel, graphite), across 10 different battery chemistries (e.g., NCA, NMC, LFP and others, chart below).

Materials Used in Different Lithium Ion Battery Chemistries

Materials costs of lithium ion batteries can be calculated by comparing our mass balances above with the costs of different input commodity prices. Materials were 10% of the cost of a lithium ion battery in , 50% in , and as much as two-thirds during the commodity price spikes of , when 8 of the 14 materials in our build-up rose to new ten-year highs. Over the past ten years, the cost of input materials has risen at a 3% pa CAGR.

The chart below shows the material costs of lithium ion batteries compared with the total cost of battery packs, estimated by BNEF. The comparison shows that it may be hard to continue the pace of deflation from the past decade without materials &#;thrifting&#;, while materials pricing is going to dictate the future trajectory of battery costs.

Lithium ion battery costs breakdown between materials and manufacturing

Manufacturing costs of lithium ion batteries are 45% electrode manufacturing (the largest line is coating and drying), 30% cell finishing (the largest line is formation) and 25% cell assembly. There is a full build-up across 20-lines in the data-file, based on the capex costs of highly specialized equipment, electricity prices, O&M costs and required returns.

LFP battery chemistries are a contender that can eliminate the use of nickel, manganese and cobalt. This comes at the expense of c20% lower energy density than NMC cells. It is not that the cells are heavier, but that LFP batteries run at 3.2V, versus others at 3.6V. Although some evidence also suggests LFP cells have lower battery degradation rates.

The scale-up of Chinese manufacturing is the other major cost improvement taking place in global battery supply chains. Full-cycle manufacturing costs can be 50% lower than in the West, while cash manufacturing costs are c60-75% lower again, which is relevant amidst China&#;s history of overbuilding capacity in other value chains such as solar and PV silicon. We published a deep-dive report into Chinese LFP battery costs in Sep-.

Future energy density of lithium ion batteries will double in the s and can ultimately quadruple, using heroic assumptions, per our separate data-file here. We have also summarized all of our research into different batteries in the energy transition.

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China's oversupply of batteries is further impacting global prices, creating both challenges and opportunities for the battery industry and related sectors.

Despite falling prices, battery demand is projected to increase ninefold by , driven by growing adoption of electric vehicles and renewable energy storage solutions.

Lithium-ion battery prices have dropped significantly due to increased production and decreased demand, with cathode prices being the most significant factor in overall battery costs.

Battery metal prices have struggled as a surge in new production overwhelmed demand, coinciding with a slowdown in electric vehicle adoption.

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As Visual Capitalist's Bruno Venditti details below, Lithium prices, for example, have plummeted nearly 90% since the late peak, leading to mine closures and impacting the price of lithium-ion batteries used in EVs.

This graphic uses exclusive data from our partner Benchmark Mineral Intelligence to show the evolution of lithium-ion battery prices over the last 10 years.

More than Half of the Battery Price Comes from the Cathode

Lithium-ion batteries operate by collecting current and directing it into the battery during the charging process. Typically, a graphite anode attracts lithium ions and retains them as a charge.

During discharge, the cathode draws the stored lithium ions and channels them to another current collector. The circuit functions effectively because the anode and cathode do not come into direct contact and are suspended in a medium that facilitates the easy flow of ions.

Currently, 54% of the cell price comes from the cathode, 18% from the anode, and 28% from other components.

Declining Prices

The average price of lithium-ion battery cells dropped from $290 per kilowatt-hour in to $103 in .

In the coming months, prices are expected to drop further due to oversupply from China.

Despite declining prices however, battery demand is projected to increase ninefold by , with the battery industry&#;s total capital expenditure expected to nearly triple, rising from $567 billion in to $1.6 trillion in .

If you enjoyed this post, be sure to check out this graphic that ranks the top lithium-ion battery producing countries by their forecasted capacity in .

By Zerohedge.com

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