Years ago, the great automotive “chicken or egg” debate centered on which technology would lead the way: the electric vehicle or the charging infrastructure.
Now it’s all about the lithium battery, as automakers like Tesla, General Motors, Daimler, Toyota, Nissan, and BMW cut deals for large scale battery production. They’re also seeing huge potential in the energy storage capacity available through the lithium battery packs they’re already building on their own or through supplier alliances.
There's been a wave of developments on the lithium battery front — both in terms of higher capacity for longer range electric vehicle driving and for energy storage as a serious revenue source for automakers. Lithium miners in Australia and Canada are seeing their stock prices climb, as demand for electric vehicles grows due to increasingly stringent government mandates and burgeoning interest in long-range, affordable EVs like the Chevrolet Bolt and Tesla Model 3.
Forecasts of expected demand for long-range EVs have lifted lithium carbonate prices more than two times the level reached in 2015.
Tesla CEO Elon Musk may be losing his popularity with shareholders and analysts as costs rise to meet aggressive Model 3 production targets, but interest is still quite strong from battery technology suppliers. One of them, Australian mining company Kidman Resources Ltd., will supply Tesla with lithium hydroxide through a joint venture with Chile’s giant Sociedad Quimica y Minera de Chile SA. Kidman will supply Tesla through its planned refinery in Western Australia for an initial three-year period, which could extend to more three-year agreements.
The Tesla deal has stirred up a good deal of interest. Kidman said on Thursday it was in talks with other “globally significant” parties seeking supplies of refined lithium.
Tesla’s major battery supplier, Panasonic, last week announced it will be extending its agreement with the electric carmaker. Along with producing battery cells for Tesla in Japan and jointly with the company at the Gigafactory in Nevada, Panasonic said it could jointly produce battery packs with Tesla in China.
Earlier this month, Tesla registered to establish a wholly owned company in Shanghai, according to a Chinese government’s website. The company plunked down 100 million yuan ($15.8 million) to register the new Chinese company. Tesla’s registration includes technological development and services on EVs, auto parts, batteries, energy storage facilities, and solar panel products. It may be ideal for setting up its second Gigafactory with Panasonic.
Along with German automakers preparing to become Tesla-competitive in luxury EVs and more affordable electric models, several upscale startups are being followed by auto analysts. One of them, led by car design chief Henrik Fisker, is based more on the strengths of the battery than on the beauty and power of the scheduled-for-launch Fisker EMotion. Fisker, who headed the now-bankrupt Fisker Automotive and its Fisker Karma plug-in hybrid luxury sportscar, is ready to go to the next phase with what he calls a three-dimensional solid-state battery.
The new company, Fisker Inc., says that its EV batteries will have three-dimensional electrodes with 2.5 times the energy density of current lithium-ion batteries. That will deliver a first — a 500-mile driving range with charging times that can go as low as one minute.
"Our chief scientist is an expert on solid-state batteries," Fisker said. "He has done, shall we say, the 2.0 of solid-state batteries.”
Japanese auto giant Toyota also believes in solid-state batteries leading the EV revolution in the next decade. But it won’t be happening overnight, with 2030 being a more realistic timetable for seeing mass production for Toyota’s EVs powered by solid-state batteries.
There is also a growing number of clientele on the energy storage side of the business. While Tesla Energy has set the benchmark with its Powerpack product, Nissan and BMW have taken steps forward in advancing the technology.
Japanese automaker Nissan just confirmed the UK launch of the home solar-plus-storage product that it first unveiled in February. The company said it will provide a great opportunity to expand its current base of 880,000 solar homes in the UK.
The UK is also seeing another energy storage product from a global automaker. Vattenfall, a major European energy company, has connected 500 BMW i3 batteries to the Pen y Cymoedd onshore wind farm in Wales. It makes for the largest co-located installation in the UK.
During its recent first quarter shareholder earnings call, Tesla reported that its Energy Storage business grew 161 percent in Q1 over Q4 2017. The company predicts that its energy storage business will triple this year. Along with the successful Hornsdale project in South Australia, Tesla Energy is working on deals in other parts of the world such as the U.S. Similar relationships may be established with Consolidated Edison in New York, and Xcel Energy and PG&E in California.
Gross margin on the energy generation and energy storage business improved, Tesla reported.
Oil giant BP also sees the growth potential in the EV battery market. Its BP Ventures subsidiary has invested $20 million in StoreDot to develop a new battery technology capable of charging an EV in as little as 5 minutes.
BP has installed more than 70 EV charging stations at retail locations in several countries. The company has also invested $5 million in FreeWire, a maker of mobile EV charging systems.
By John LeSage for Oilprice.com
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