Since Elon Musk, CEO of Tesla Motors, announced that he
intends to build a US-based $5bn Gigafactory, capable of
producing thousands of batteries for electric vehicles (EVs),
the critical materials supply chain has come alive with
Unsurprisingly, this so-called
Gigafactory has been one of the main talking points at this
years Lithium Supply & Markets conference, which took
place in Montreal, Canada, in May.
In his opening address, Chris
Berry, founder of House Mountain Partners in the US, said that
the news has, breathed life into the critical minerals
According to Musks ambitious
plans, the factory would require 25,000 tpa lithium compounds,
the battery cathode material, on top of current market volumes.
This would fulfil Teslas pledge to produce 500,000
lithium-ion (Li-ion) batteries by 2020.
This, Berry said, is the
disruption the lithium industry has been waiting
However, while most at the
conference agreed that Teslas announcement will be
positive for the industry, some were more conservative in their
Jon Hykawy, president and director
of Canada-based research and consultancy firm, Stormcrow
Capital Ltd, told IM on the side-lines of the
conference that he believes the lithium industry is getting too
excited about the Tesla announcement, but this is not really
surprising considering the remarkable things Tesla has achieved
Hykawy explained that EVs are
expensive by virtue of the fact that the batteries are still
expensive, and they are going to remain expensive owing to the
scale already built into batteries.
The decreases in cost
associated with the scale that youd expect from Tesla
when its firing on all cylinders is going to be fairly
muted compared to the decrease in battery costs weve
already seen, Hykawy told IM.
What we need is for fuel
costs to move up and battery costs to move down. That
combination could move us into an environment when we see the
kind of sales that Tesla is hoping for, he added.
During his presentation on
opportunities and threats in the lithium industry, Hykawy also
outlined that there are other options out there for EV and
hybrid vehicle manufacturers.
One of these options is fuel cells,
which convert chemical energy from a fuel into electricity
through a chemical reaction with oxygen or another oxidising
One company looking at using
hydrogen fuel cells in its EVs is Toyota, which says that fuel
cells are cheaper to produce and more efficient.
However, Hykawy outlined to
IM that while fuel cells come with these
advantages, as well as being able to offer a more specific
output, they also come with a drawback in that they are not
suited to varied output.
Fuel cells are very good at
operating at a specific output, acting as a constant source of
power. What you dont want it to do is to vary the output
rapidly, like when you reach a stop light and have to go from
standstill to full acceleration, he told
Hykawy further explained that while
others are looking into fuel cells as an option for EVs and
hybrids, lithium is almost guaranteed to feature in these
vehicles in future.
The ideal arrangement is for
a fuel cell to be attached to a battery to absorb those shocks
and effectively give you the advantages you need in a system
with a smaller fuel cell, a less expensive fuel cell, one that
can handle varied output. This will also protect operating
life, Hykawy explained.
Whether you see fuel cells
coupled to lithium batteries, or just lithium batteries on
their own, or lithium batteries coupled to a small gas engine
acting as a generator, is almost irrelevant. Youre going
to see lithium batteries used in some way, he added.
Unless you have another
technology that comes in and completely undercuts existing
technology, or that far out performs existing technology, then
youre going to use lithium, he further added.
Further, while many are focusing on
the EV revolution as the main driver of lithium demand, the
lithium market doesnt have to wait for the electric
vehicle to show up.
According to Hykawy, there is
already significant amount of work going into using lithium as
a cathode material as well as using lithium-titanate as an
anode material, replacing graphite.
The advantage that gives a
battery is that it is capable of producing a lot more power, it
also becomes capable of producing charge much more quickly so
it can be charged far quicker, Hykawy told
You can take some of these
lithium-titanate anode batteries from a state of essentially
dead-empty to fully charged in about 10 minutes. That gives you
a significant advantage in terms of those who are concerned
about their EV running out of charge, he added.
Under a basic calculation, Hykawy
said that if you replace all of the graphite in batteries with
lithium-titanate, you are basically talking about adding two
thirds of current demand to the lithium market.
This obviously wont happen overnight, and would
simply be too much for the industry to cope with from a demand
side, however it would be a nice problem to
have, Hykawy concluded.