The global manufacturing capacity for new lithium-based batteries is growing, as epitomized at The Battery Show in September 2022. Omdia discusses our main takeaways from the conference.
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Summary
The global manufacturing capacity for new lithium-based batteries is growing, as epitomized at The Battery Show in September 2022. This analyst opinion provides a discussion of Omdia’s main takeaways from the conference, which was held in Novi, Michigan.
The battery market is growing globally, driven by EVs
The global battery market is growing fast, driven mainly by the electric vehicle (EV) industry. EVs use primarily lithium-based batteries, which offer improved performance, higher energy density, faster charge times, a longer lifecycle, higher operating temperatures, lower weight, and smaller footprint.
These are the same battery technologies used for energy storage systems (ESS) and uninterruptible power supplies (UPS), so it is no coincidence that the data center industry is benefiting from all the research in the EV industry. There are differences in the performance and type of the specific chemistries based on the application, like EVs, ESS, and UPS, but in general, the manufacturing facilities are the same.
Technological challenges remain
While there currently is substantial R&D happening in the battery industry, new lithium-based batteries are facing barriers, including the following:
- Decisions for the best battery chemistry based on the application (e.g., nickel manganese cobalt [NMC], lithium iron phosphate [LFP], and others)
- Raw materials supply-demand, including mining (e.g., lithium, nickel, and cobalt)
- Component availability (e.g., cathode, anode, separator, and electrolyte)
- Processing and manufacturing capacity
- Recycling
- Training, maintenance, and operations
Expect significant public and private investment
Governments worldwide are working to support the lithium battery supply chain and innovation since there is a significant growth projection for high capacity batteries for EVs. For example, the US government is incentivizing local battery innovation and production. The recent bipartisan infrastructure law (Infrastructure Investment and Jobs Act) provides about $7bn for battery material processing, component/cell manufacturing, and recycling, plus another $7.5bn to build out a national network of EV chargers. At the same time, private industry players such as automobile manufacturers are making significant investments in EVs, including new assembly plants and battery factories.
China controls the lion’s share of battery components
It is worth mentioning that China is currently leading the mining and manufacturing capacity for lithium-based batteries. The country started building the required infrastructure to support these technologies more than a decade ago.
According to a keynote session at The Battery Show, at a component level, it is estimated that China currently controls 63% of the cathode share, 84% of the anode share, 66% of separators, and 69% of electrolytes. New development activities will increase China’s share of these components to 84%, 91%, 76%, and 75%, respectively. As a comparison, US shares are approximately 0.7%, 0.6%, 3%, and 7% for the same categories, with no or few facilities under development.
These circumstances leave the rest of the world with vulnerabilities in the primary supply chain (e.g., lithium, nickel, and cobalt), mineral refining and processing, domestic battery material production, and recycling market (it is estimated that less than 5% of lithium ion batteries are recycled annually). To overcome these challenges, more investments and policy intervention are needed to increase domestic demand and production (including gigafactories) for new lithium-based batteries.
Innovation is ripe
A lot of innovation is happening within the battery sector. Specifically, the use of artificial intelligence (AI) techniques for battery behavior and lifetime prediction takes advantage of the multiple sensing devices and large amounts of high quality data being collected.
Bottom line
New battery chemistries are being developed, and Omdia expects the battery landscape to change in the next few years, contributing to a more sustainable future with zero emissions. As highlighted in other Omdia reports, the data center industry is adopting new technologies to improve design, construction, and operations while being more sustainable. Energy storage is an integral part of this process.
Appendix
Further reading
“Finding the low hanging fruit through data center operational maturity levels” (September 2022)
2022 Trends to Watch: Data Center Physical Infrastructure (December 2021)
“Smart grid ready UPS for an even more sustainable data center” (August 2021)
“Data center risk assessment: A decision-making tool” (July 2021)
“Data centers: Energy consumption is all about workloads” (June 2021)
Author
Moises Levy, PhD, Senior Principal Analyst, Data Center Physical Infrastructure, Cloud and Data Center Research Practice
