You're listening to Redefining Energy. Your co hosts from Berlin Girard Reid and from
London Laurence Segalem. Today on Redefining Energy, we're going to talk about battery
chemistries Lauren. Yeah, and there's a lot of alphabet soup sure is NMC,
LFP, go on and on and on NAD Yeah, yeah, absolutely
yea. But first of all, from our partner, Equina Capital is a
sustainable investment company headquartered in Hamburg, Germany. Equia Capital Investment realizes such as
clean energy, sustainable infrastructure, energy efficiency and growth private equity on behalf of
its clients. Yes, job, this is not a single day where we
see new accronemes and we get absolutely totally lost and there are ka factories announced
all over the place. Now, we did a few months ago it is
at ninety two who was extremely popular with Simon Moss, where we talked about
everything that's upstream, the gear factories and now we're gonna open the doors of
the gear factories and see what they are producing. Absolutely because at the end
of the day, the real technology is in and around the chemistrtion for our
listeners, The Global ev says this year would reach fourteen million, So that's
up thirty five percent. Y're on, yea. But the energy stationized storage
it's even more spectacular, screwing at fifty percent yea. It means that as
stationarized storage started, they just put EV batteries into stationized storage, which created
a lot of problem and now we're going to start discussing a possible divergence of
those two markets. Absolutely. Well, well, it's time to bring our
guests. Carmack Holoid is Managing director at Electrious Energy Hong Kong base Litia,
my own technology and EV advisory business and carmack twenty year career as Litchar my
own industry spect He is, in my opinion, one of the most knowledgeable
guy on that topic and pushes his violence. Guy. Let's bring him on.
Komack, welcome to the show. Thank you, Lauren. Lauren,
could you pronounce Komack second name please for me rather than just as yes.
I could try, But is that rich like you? So it's like it's
two against one this morning, Karmack. You'll have to give it to him,
go on, okay, which is absolutely not what job told me yesterday.
No, because I gave you the English person of it, which is
alterous because I wanted you to say that smaller but you didn't. You know,
very good, Laura, very good. Okay, let's dive in.
We brought you in because you know opinion, you're one of the best experts
in batteries, but whisky history. You're based in Hong Kong. You go
visit the factory, you see all those suppliers going on. It's an absolute
booming market. So my first question is what's the state of play where at
the middle of twar twenty three, you know what big trends do you see?
Oh my god, it's changing month to month, Laurent. I don't
think this time last year we'll be talking about sodium mine for example, big
trend coming up out in China. We're talking about China extending the EV subsidies.
At the end of last year they revoked the subsidies and we didn't see
it coming. But in response to some of the policy moves in Europe and
US, China had to keep the momentum going in their EV industry. Yeah,
months and month are even week to week in the battery industries. EV
industry SS major news, new factories, new technologies and new applications. I
don't know where to start. Really, Can we start with evs? Because
if I look at my AVA, my second EV Yeah, and what's happened
is I've seen it doubling in the range of these vehicle US and probably a
half and at the cost you're now what sort of four hundred kilometer range?
I'd love to you de tell me when are we all going to be driving
cars that have a range of a thousand kilometers? But if you move to
China tomorrow and by a GAC apparently you can charge it in eight minutes eighty
percent and drive a thousand kilometers. What's really big trend interesting laurent As,
and it kind of comes up naturally is China was going to be seen as
a battery export the rest of we are going to compete against China battery production.
But now they're ev exporter and the amount of EVS day, export,
months and month is growing doubling almost quarter over quarter. Finding new markets byds
here now for sale in Europe. So they're quite aggressive going into international markets
and they're being well accepted. The new level of competitive is on the automotive
level. Now the established oms will have to not only team of battery makers,
but Chinese EV makers. And do you think that BYD is virtually integrated,
But you know you've got some other which are pure battery players like Kettle.
Do you think their long term business model is also going to make cars
or buy OEMs or continue to just DELIVERO batteries. Yeah, they've already tried,
so they kind of late to the party. They're missed the boat c
ATL. They have invested in a number of car companies, not just EV
companies that established Chinese care companies that Changan CTL over twenty five percent of that
company now and have developed with Changan a veto. I think the NAMEBV brand
is so you've got the overall automotive brand. And then they split down subsidiaries.
So they're trying to get into the market follow what BYD down, But
BYD was more natural progression. They built ICs as well in the beginning,
the transferred quickly pivoted to evs and to build their own batteries now BYD or
and lithium mining as well. It is an avalanche of vertical integration going on.
But they definitely by the's best positioned and by top EV seller in China.
Second globally. Not sure cetail be able to catch them with their recent
investments. Com Can I ask you a little bit about the Chinese automobile market
there, because it has been for years the Volkswagen was the biggest player in
the market, and you saw on the last quarter that's what's now happened is
BYD has become the biggest player and Volkswagen is in trouble. But actually,
what's for me, it is really interesting, is Volkswagen seems to be and
the conventional automobile manufaction across the Western world seemed to be technologically behind. Now
the Chinese EV guys, and I'm sort of going, how can this happen?
How can you be Volkswagen looking at this. You're in that care market
here, number one, your senior competitors. I think guys just been sleeping
or am I reading too much into what's going on in the market, they've
been sleeping. I think we all remember the data Volkswagen stepped into the EV
business. I mean, that's too long ago, and now they're all in.
I'm in this industry about fifteen years, only five years years ago.
Investors are asking me our EV is really gonna be saying it's really gonna be
a market for evs, and just so much has change. But then in
China Volkswagen business is a little different to their global operations. They don't compete
on the EV level. It's molly I see. You know, every taxi
in China was or is Volkswagen Jetta of some description or Santana I think the
brand there is, and they had an opportunity to basically convert the entire Chinese
taxi fleet to evs. And that's what BYD did in Shenzen, all the
taxis in Shenzen or by D evs, and just outside Shenzen they have massive
charging I don't know if you describe in stations or ultra parks, just parking
lots just with thousands of taxis charging. And they developed that infrastructure, you
know, ten years ago. If we take a step back to kiking about
the EV market, So last year to twenty two was ten million. This
year the predictions are fourteen million, and of course if you look at the
curve they make any sense, you know, we're going to go to twenty
or something. Of course, depending on the market. I mean you get
no way on one side, and probably make it cool on the others.
But you see it as a trend that really can be stopped. Quarter of
a quarter EV sales are down twenty twenty three. There's many factors that can
slow it down, but it can't be stopped. The big stumbling block GAG
Page one twenty twenty three in China was the policies, the subsidy extensions which
are coming in again. China and the rest of the world needs to change
from government support to market consumer driven. And I thought we were at the
stage of consumer driven, but these heavy subsidies and incentives in the US have
changed the whole market dynamics again, throwing a bit of a spanner in the
works. Because Europe EV sails it down as well. Penetration is kind of
state static because OEM's and many players in the battery supply chain don't know where
to go better to do business in US get a lot of the tax incentives.
Europe is still chart and a stick. So can we just talk a
little bit about the future of batteries and how you see it, who's the
winners, who the losers, what chemistries are are there, etc. Good
question, and a lot of people want to know that answer. Sure,
I'm of the opinion lithium mine is here for the next thirty forty fifty years
at least. So lead acid is one hundred and twenty years old, even
older, but in industrially used that lithium mine has gone from lab to where
we are today in about forty years. After forty years, we're just really
applying it industrially and finding perfect applications for energy storage EVS. And I just
don't see any reason to develop a new battery technology, not that there's any
out there that can possibly compete with litimine because the difficulties we have setting up
litimine factories, supply chains, mining raw materials. It will be the same
for any other chemistry, but will be forty years behind. I like to
go a bit into the chemistry of batteries. So everybody three four years ago
was just talking about nickel cobald very dense batteries, and of course it's sold
LFPs and you mentioned earlier sodiumyan. So how do you see the technological trend
not only comparing those three niculfpn and sodium, but also inside each vertical how
much the technology of each is improving. Because probably we'll talk about solid state
or not. But I'm interested in the comparison of the three parallel chemistry and
what's happening inside each chemistry. I'm in the view that we need to pick
a chemistry, are a few chemistries and go with it so we can establish
the supply chain scale quickly. The constant reinventing of CATO chemistry is see nickel
manganese cobalt are switching to little manganese oxide LMO or switching to cobalt free,
which all have different reasons behind it. But if we have too many multiples
of NMC chemistries, then the supply chains just become longer, they become more
complex. What the EU is looking for standardization and that will help along the
whole supply chain. Basically, if you can standardize the chemistry, the batteries,
the battery pack, then we can come to circularity more and have a
more circular economy where it's much easier to recycle these materials. When you have
complex supply streams into recycling space, efficiencies drop, recovery rates drop, things
fall through the cracks. So I'm of the view that we need to settle
on a particular chemistry go with that. For the next decade while we build
out the industry. And in terms of why are we constantly upgrading are improving
the chemistries, is that we're trying to get higher energy density cars so we
can have longer range. But you know, we're more or less at the
ceiling across all those chemistries in TRADITIONALLYTIAMNE battery, which is the liquid based electrolyte,
and you mentioned the solid state which is totally different, but we're more
or less at the ceiling for traditionally etim mine batteries. We're going to make
in incremental improvements, as you've seen from Tesla, which is basically driving the
industry even in terms of battery performance and CTL. It's the engineering now that's
making the improvements. What's the cell format? Tesla come up with the forty
six eighty format, which is about three times bigger than the twenty one seven
hundred which are using now, and that's changed the whole industry. Now every
other battery maker is trying to make forty six eighty. Then we see CTL
doing cell to pack instead of cell to module, so reducing the weight.
And then we have tested doing cell to chassis, so making a battery part
of the infrastructure and support structure of the car. So the biggest provenance and
energy density and range in the last eighteen months are coming from innovations and the
engineering side, not on the chemistry side. Comic, can I just ask
one question, which is just sitting around sodium mine. What's your thoughts on
that sodium mine? You know, I'm trying to avoid it for the last
year or so, hoping it would go away because you guys are in this
space as well. It's just impossible to cover everything that you're doing, everything
from batteries to the energy markets, oil and gas. You know, it's
it's impossible to cover, and I was hoping it would go away. Fortunately
it hasn't. Sodium mine chemistry is as old as lithium mine. In fact,
the original inventor is good Enough, who just passed away recently, was
also working on sodium and at the same time as he was developing lithium mine,
so there were both chemistries are running concurrently forty years ago. The reason
the focus shifted forwards lithium mine was the high energy density compared to sodium mine,
and this application was the original research was focused on developing our batteries through
the Defense Department who wanted extreme high energy density. But sodium mine chemistry is
well understood, it has been commercialized in a very small scale. Sodium mine,
in my opinion, will find a niche market. There is I think
over one hundred and fifty gig in one hours of planned capacity in China,
so China's again we might fall behind again. China is rolling out sodiu mine.
Outside China there there's nothing happening. So if sodium mine is successful,
then will be dependent on China for sodiomine batteries. Sodium mine chemicals the uses
hard carbon on the anode side. They're developing layered oxides similar to NMC on
the cathode side. We're still going to be beholding to China if we do
roll out the sodium mine. The sodium mind basically happened overnight. Who was
mentioned last year. Now there is two sodium mine evs available in China to
buy today. Chinese government is really behind integrating sodium mine int the grid storage
applications and that was originally seen as main outlet for a sodium mind. But
THETL quite confident they can increase the energy density of sodium mine batteries. Or
mixed sodium mine one of the future developments and batteries is normally you just have
an NMC battery pack or LFP battery pack. So you blend the character sticks
of both, you get a high energy density, you get better winter performance.
So they're blending the batteries together, and so details already doing a mixing
sodium mind batteries with NMC batteries. They could find a role in niche markets
for sure. So you talk about dunct and of course density is very important
because that will open new markets. If I understand on one of the measure
of density is what a w pukuilo? Is that correct? What our per
kilograms? Okay, so can you explain a bit where we are now in
term of sodium LFP NMC solid state if ever exists, because of course that
might open market like aviation or trucks or other things. So give us a
bit of numbers here. We're doing really well in terms of increasing energy density
of batteries. So the overall goal of research and development of lithiumine batteries is
to get to five hundred one hours per kilogram. That is the maximum we
hope to get out of traditional lithiumiine battery chemistry. The theoretical energy density is
about seven hundred and fifty eight hundred one hours per kilogram. That's the theoretical.
Once you start adding batteries onto foils and you put the components together,
you just lose a lot of energy density. So we're pretty close to three
hundred one hours per kilogram right now with NMC lithiumine batteries on the cell level.
When you get the pack level, it dropped about two twenty. That's
basically we'll give you you mentioned earlier. You're at about four hundred to six
hundred kilometers of range with about three hundred one hours per kilogram on the cell
level. LFP is about half that, so it's about one fifty one seventy
one hours per kilograms. Then you get half the range cutting edge of that.
So there's a company in China called Goshen. They've developed a two hundred
and ten one hour per kilogram close to NMC, which I mentioned was two
seventy three hundred pack levels to twenty, and they did that by another iteration
of LFP, which is LMFP, which is listing manganese iron phosphate being developed
meant. On the LFP side, this is all new as well, just
basically happened over the last eighteen months where there's a constant battle between the battery
makers to get one up on the competition. So where we're at now in
LFP is that the industry is shifting towards LMFP for EV applications. There's no
particular reason to do it. For energy storage applications. China's invested a lot
and Chinese companies in LFP production. There's going to be an unbelievable amount of
LFP batteries and LP materials coming out of China in the next few years.
There's like five million tons of LFP cathode production planned. We're compared to NMC.
I think ANIMC is like only about a million over the next few years,
so tons. So the market's going to be just just's gonna be.
LFP just dumped into the market in the next few years. Not sure if
that's going to change the outlook. So we're mentioning at NMC and LFP for
evs. Outside China, NMC is still the main chemistry. All the Korean
battery makers and Japanese battery makers use NMC type materials. The European OEMs,
even though they say they're going to LFP or different versions of it, are
still predominantly integrating NMC batteries into their cars. Same in the US. So
if a lot of cheap LFP does plunge into the market in the next two
or three years, they'll be interesting to see if that will change the technology
of choice for the OEMs outside China. If you look at the way a
conventional automobile producer competes, I mean, they really compete in terms of the
quality of their internal combustion engine, and at one point I thought the battery
was a commodity, but I'm beginning to think, well, maybe that's not
the case, because actually what you will probably end up doing is, let's
say the lower cost battery is going to the LFP batteries generally they give less
performance, and then you've got an NMC battery which is a bit more expensive,
gives a bit better performance, better range. But I would have assumed
this is going to be even other chemistries which will be more expensive but give
you much better performance in terms of acceleration, in terms of power, and
in terms of range. And so that's how these comm manufacturers will compete in
the futures. Am I seeing this right wrong? How do you see it?
That's exactly how I see it too. So what's the difference going to
be between a Ford battery pack with LFP and a Mercedes battery pack with the
same LFP. So how do you change the premiums? You get the same
engine essentially, and it's going to be same with NMC the you know,
for they're going to source NMC from SK, maybe BMW FROMSK for example,
they're not why do you paint the extra one hundred thousand for there's going to
be differentiate the asition on the premium end in terms of going to more exotic
chemistries. I think Lauren mentioned earlier maybe solid state on the high end premium,
but it won't give you any benefit in terms of power or performance.
It'll just give you a range and maybe one of the other than range.
The other area that OEM's compete on is charging time, and that's engineering,
not just chemistry. Even though chemistry plays a big parrot hook charge the character
quickest is is more or less out. They're competing right now. We talk
a lot about EVS, but of course the segment which is growing fast and
probably even faster if it's sessionary storage. Until recently they would just put EV
batteries in the sessionary storage. But now, of course it looks like the
technologies are going to diverge. Or am I thinking wrong here? Yeah,
it's already happened in China. But I always make the point there's not a
single energy stores specific giga factory announced outside China. All focused on evs might
change in the near future, but in China they're big battery makers and Tier
two are building energy stores specific giga factories. There is a divergence already.
You have LFP, but not all LFPs the same. There's EV great lef
there's energy storage are a great LFP because you want more storage. Where evs
they'd make a thinner electrode so you could charge a quicker move the electrons in
and out quicker. But the thicker it is, the slower it takes.
But for US energy storage, thicker electrodes you get more ions in their per
kilogram more or less. Yeah, we're seeing the divergence. Chinese government against
mandated LFP only for energy storage LFP in terms of lithium ione so no NMC
and so the all the Chinese factories basically can only build LFP packs and that's
what's going to be available to the global customers. I'm LFP it's going to
take out if it's not already has taken over energy storage, even though NMC
is in the US is kind of holding its own energy storage but not growing.
But is it still the same suppliers? I mean, do we see
the same names or did you four see some certain companies just do ESS For
instance, there are certain Chinese companies that do just the ESS. Yeah,
yeah, outside channel really can't think of one that just makes cells for for
energy storage. You do have the solar companies now moving in as well,
right into yeah, train a solar making batteries as well. Yeah, yeah,
that's right. There's a bit a bit of change in America. Before
the Chinese use to send the cells or export to cells, and then there'd
be integrators in Europe and US who would put into the containers whatever way they
choose to package the cells for the market. Now the Chinese are sending the
whole energy storage units as is. Let's kind of changed the market in US
and Europe. So before in US especially they have to work with integrators still
cells where now they can just buy power packs from BYDCATL and install right in
the ground. The energy storage market is still evolving. Who are going to
be the main players in terms of deployment, how the system is going to
use. The containers have already changed before. There has been a number of
incidents in the US. Before there were walking containers where you do all the
maintenance inside the container. Now there's no walking containers. It's all external access.
That's changed over the last year or so. So it's still evolving.
Comic I asked you just about pricing and how you see that going forward.
Maybe talk about pricing you see in the market today at the cell, on
the pack level, and what you see going forward. It's been a very
tough year on pricing for EV packs, EV modules, battery packs, battery
modules for energy storage still very expensive. Energy storage cells more expensive than EV
cells, And when the price of lithium crashed during the year, the price
of the cells didn't go down. They continue to either stay even or even
slightly increase. That the really drive down to cost because of the availability of
cells was still a little issue end of last year. In the beginning of
this year quality cells that is yeah, but metal pricing, yes, her,
lithium is on a roller coaster. Never see anything like it. The
forecast for lithium price, if you listen to the Chinese, it goes lows
twenty thousand USD a ton. If you listen to some other pundits or analysts,
they see it going to be eighty thousand USD a ton, and that's
over like the next six months. So be brave man to be make a
prediction where lithium is going to go. But come explain that to me,
because like if I look at the case of solar we also had like last
year, it's very difficult at JR hands and solar cells. And then what
happens is silicon prices go down and then suddenly the market is down twenty percent,
right, So why are you not seeing that in the whole battery space.
There's a bit more going on in the battery space. It's metals trading,
there's companies stockpiling materials, so there's inventories of batteries that's still need to
be disposed of, these inventories of lithium. So the lithium price was down
because there was high inventories of lithium or concentrate. In China, we're always
worried about, well could we ever catch up to demand. So China in
twenty twenty two went nuts in building out nickel output from Indonesia, nickel processing
from Indonesia. Then we had the lithium. They started developing the lipidolite,
then electro life factories, the whole supply chain. Lfp I said there's going
to be a lot of out of pepoint the market. They really ramped up
capacity so much in twenty twenty two that it supply overtook demand. Cormack in
order to conclude, how do you see the battery market in the next say,
three to five years in terms of tech prices, consolidation growth. Where
are we heading over the next five years? Is the landscape is going to
be totally different. Today We're going to have US battery plants, We're going
to have European battery plants, and there's a risk if all that does come
on the line. There's a big worry in the market and ctl are very
worried about it. It's going to be oversupply of batteries. Even today,
there is an oversupply of batteries coming out of China. What also is having
kind of mentioned it earlier, it likes a BYDS vertic integration building battery plants.
There's a number of other Chinese EV makers who are also Hang on a
second, it's almost easier to build the batteries than the EV and they're pouring
money to building battery plants as well. Volks back and doing the same,
Testler doing the same. The landscape might look a lot different. The biggest
battery makers might be Om's five years time well commack. It's an excellent way
to conclude, and as usual, when you took to specialists like you,
the overall picture is much more complex than when you read those consultant reports.
Thank you very much for coming onto the show. Thank you, guys,
reappreciate the invitation. I was like, all right, it was really great.
Thank you. It's great. That's a lot to cover, a lot
to cover. Yeah, it's complex and exciting. Yeah, a job.
I hope you we have this podcast because we bring so much great guests and
learn so much. It's fantastic. Oh, I agree. I suppose.
I think the thing that I took out of it is the innovation, the
quality improvements, the performance improvements and the cost reductions are going to continue,
right, It's just the beginning of the journey. But I also like the
fact that he was also pushing towards a standardization of those chemistries and not having
to reinvent, not to be too innovative in chemistry because that that industry impact
and of course recycling impact. So at some point does chemistry we need to
studilize. The other thing that he I was saying as well, and it
goes back to starting my own belief to now, which is it's a little
bit like the solar space. There was lots of different solar technologies out there
fifteen twenty years ago, and actually today there's one that dominates and it dominated
fifteen years ago, and that the silicon. He's sort of saying the same
thing. In batteries. There will be alternatives, check the sodium or something
like that that might go in to stationary storage. But really the future it
here, and that's what I take. Also, I suppose what's interested for
me and all of it. I just look at in terms of range of
a car getting very close to a thousand kilometer range, right, you know,
and if you're a thousand kiomonal range is at a game over for an
internal combustion engine, right, it really is. That's what I took out
of it. I'm really person goes the EU and the US are putting all
their eggs in the nickel cobal chemistries. And now it seems that China is
going really LFP all the way. And there was one piece that I listened
to from the JOLLOI podcast epis at one sixty five with the Unitial of R
with the chief commercial officer at nine one is the only EDFP expert outside China.
Very interesting. So they are trying at No. One to do some
NFPs, but all the wisest in the West, I think they're dropping the
ball on on that technology. Well listen, I think we've dropped the ball
full stop on batteries. You think of it like this, you think,
just give me the name of one large scale producer from the Western world.
There isn't. They might be coming, but they're not there yet. There's
not one in the top ten. And actually, look, it's not going
to be a pure play. It's really Vatican integration. It's going to be
falsifigen. Who's gonna produce batteries, it's gonna be with the recent news about
Chuck Wald and Rover, let me cut across you, because I have no
doubt that they're going to produce the packs. That's clear for me. But
the cells, I don't believe this. I don't. I don't believe we
can compete in the cells unless you do something. You know, you have
to get a really huge scale to compete with the CTLF you really do,
or an LG or even a Panasonic. Do you see anybody doing that really
on the cell side. Look, there's a lot of I'm not going to
say second tier, but Chinese company chasing CTL whether it's the CALP, the
Gotcha on the EV and those people might do jo adventure with Western m of
course, and that's what they do. I mean, that's what don But
still, even if the set is produced in Europe, what actual components will
come through China? They come through the Chinese value chain let's call the Asian
value chain, because it's not just China, it's the South Koreans and the
Japanese are still in the game a little bit as well. So yeah,
but what really is clear is I go back to the what we have to
learn from the Asians in the West is you need to be more and before.
So that means you need to be really big and you need to move
before your competitors. And we haven't learned that in the West. Where after
and smaller. That's what we do in the West, after and smaller.
Right, It's just like, so can't compete. You can't compete because you're
going to put politictionism. So it's going to be called a job and adjustment
border. It's going to call the IRA So that's how you rebalance. And
look, maybe we're further and after and smaller, but we need for security
reasons and job reasons. We need those industry at home. And even if
the Batwists are not as good, we catch up. Okay, fine Batwistle
will always be two years behind the Chinese. But you know it's okay,
Well, we can get into a philosophical debate about that realm, but another
time, right, And by the way, we are both product of globalization.
You are a Frenchman living in London. I am an irish Man living
in Germany. That's the world I grew up on. That's where I like,
do I really want to have protectionism everywhere? And restrictions. No,
but listen, that's the way we seem to be moving. Yeah, ebbs
and flows. I guess. Anyway, let's get lost and that that's another
day's discussion. Okay, yeah, we thank come back from coming on the
show with our legacy and dear friends. Absolutely brilliant. I talk to you
in two weeks time, look forward to my friend. Thank you for listening
to Redefining Energy. Don't forget to rate the show and subscribe on Apple Podcasts,
Spotify, or the platform of your choice.