The limits of lithium-ion cost.

Summary

The paper considers the complex elements that impact the price and excellence of lithium-ion technology utilized in energy storage and battery systems. The significance of manufacturing expenses in this industry is underscored, with particular attention given to the complex interaction of variables that influence the cost of lithium-ion systems, predominantly denominated in dollars per kilowatt hour ($/kWh). Crucial factors to be considered include energy density, formulations, manufacturing processes, the purity of primary raw materials, and cell design. These factors significantly influence both costs and performance.

An essential approach to achieving cost reduction in lithium-ion cells is to improve their energy density. This factor has a substantial impact on their storage capacity and overall performance. Historically, energy density has been enhanced through developments in chemical formulations and manufacturing processes, enabling greater storage capacity in the same physical format without a corresponding increase in cost. Formulating the cathode and anode varieties is crucial to optimizing cell performance and attaining a greater energy density. For example, advancements in cathode formulations that are rich in nickel have led to the production of cells with a higher density. Conversely, discussions concerning anode materials such as graphite emphasize the optimization of costs via refining processes instead of choices in basic materials.

The efficacy of manufacturing processes is critical for cost reduction and product quality. Manufacturing costs are substantially impacted by supplier quality management, vertical integration in the supply chain, and variation in production yields. Moreover, performance and cost are influenced by the purity, particle size, and morphology of materials utilized in lithium-ion cells; this emphasizes the criticality of precise manufacturing processes.

Moreover, the trade-offs between performance and cost that arise from cell design considerations highlight the necessity for customized designs that account for energy capacity specifications. Costs are influenced by safety protocols and management systems, whereas efforts are made to decrease the expenditure on primary materials via mining, refining, and value-added compounding procedures.

The significance of distribution logistics in preserving cell performance and manufacturing output cannot be overstated; this underscores the criticality of efficient material utilization and conveyance in proximity to production schedules. In summary, this paper highlights the complex interplay of elements that impact the expenses associated with lithium-ion technology. It emphasizes the importance of adopting a well-rounded approach that incorporates technological progress, production efficiencies, and strategies to optimize costs.

Introduction.

The variation in manufacturing cost is a critical consideration in battery and energy storage, particularly in lithium-ion technology. Various factors influence lithium-ion cells' cost, including energy density, formulations, manufacturing processes, raw material purity, and cell design. These factors collectively impact the pricing of lithium-ion systems, with the primary metric being dollars per kilowatt-hour ($/kWh). Cost reduction strategies often focus on improving energy density, refining chemical formulations, optimizing manufacturing processes, and ensuring raw material quality and supply chain efficiency.

Equally as essential as the initial cost of the systems are the quality of the cells and the capability to deploy cell designs that permit their applications to function for the maximum practical time. For the widespread adoption of electric vehicles, it is crucial to develop a battery system that exhibits long-lasting performance beyond that of the car in which it is installed rather than simultaneously reducing the cost and quality of the cells to lower the price of the vehicle.

Increase in energy density.

One of the primary drivers of cost reduction in lithium-ion technology is the increase in energy density. Energy density refers to the amount of energy that can be stored within a given volume and weight, which is a crucial factor in determining the performance of battery applications. The ability to enhance the energy density of lithium-ion cells is a central goal in battery technology advancement.

Historically, a significant portion of cost reduction in lithium-ion cells has been achieved through advancements in energy density. These improvements have been realized through continuous enhancements in the chemical formulations used in the cells and various manufacturing processes implemented along the supply chain. Increasing energy density makes storing more energy within the same physical cell format possible without significantly increasing the cost of cell materials. This is a key factor in driving down the overall cost of lithium-ion systems, as it allows for greater energy storage capacity without a proportionate increase in cost.

Formulations

Formulations refer to the chemical compositions and structures of various components within lithium-ion cells. Cathode, anode, and electrolyte formulations have evolved over the years, and optimizing the formulations within the integrated cell increased the cell’s energy density.

Cathode formulations

Cathode formulations are specific chemical compositions designed to improve the performance of the cathode in a lithium-ion cell. In the ternary cathode types, the drive to reduce the use of Cobalt and develop nickel-rich formulations resulted in higher energy-density cells.

Other formulations, like lithium-iron-phosphate (LFP), do not use cobalt and have significantly higher cycle life. Still, due to its lower energy capacity and patent disputes between Valence Technologies and UofT/Hydro Quebec, their use was stalled (restricted to the Chinese market) until recently, when the patents expired.

The specific capacity of a formulation (the amount of energy per unit mass) is a critical performance indicator, and its approximation to the theoretical value within the operation stability constraints is a key driver in reducing cell manufacturing costs.

The emergence of compound formulations where a stable cathode material (i.e., LFP) is compounded with a material that provides higher cell voltage, as the example of Manganese (LMFP), has some impact in lowering the cell cost but is limited since the cathode material is a fraction of the cell material overall cost with significant implications in the manufacturing yield.

Production scaling of sodium-ion cathode materials could reduce the cell cost in KWh terms. Still, the applications that can benefit from sodium-ion are limited in the same way as the LMFP case.

Significant improvements can be achieved by developing different chemistries like lithium-sulfur and aluminum-air due to the current price of raw materials and the substantially increased energy capacity these formulations promise.

Anode Formulations

Anode formulations are the compositions of materials used in the anode of lithium-ion cells. There are many discussions about the graphite markets and the benefits and challenges of using natural or synthetic graphite.

Rather than considering the issues around the type of graphite and the raw materials, to optimize the cost of the anode formulations, we must consider the refining process to produce a material that optimizes the cell manufacturing process.

The development and optimization of carbon handling and processing systems can have a tremendous improvement in the cell cost since they not only offer to improve the current anode electrode manufacturing with the upgrades in tap density and compounding with silicone materials but are also critical for the development of future cell chemistries like the cathode materials in lithium-sulfur and lithiated electrodes for a variety of in-development solid-state products.

With the development of alternate chemistries, lithium metal, either as a foil or deposited in a host material, promises a leap increase in the cell energy density. The design of these electrodes faces a tremulous development path due to the cost and the lack of process-specific manufacturing equipment.

Improvements in manufacturing.

Continuous improvements in manufacturing processes are essential for cost reduction and product quality. A critical factor in this area is the manufacturing yield loss and the cell quality. Because we have a variable value output due to the production of grades A, B, C, and scrap, the development of methods, collaboration in the supply chain and logistics, and the understanding of the various dependencies in the overall manufacturing process have provided the most significant portion of the decrease in cell manufacturing cost.

Raw materials purity

The purity of raw materials is critical in ensuring the performance and safety of lithium-ion cells.

Battery cell manufacturers can’t use products with lower purity grades, and if they attempt to disconnect from the Chinese suppliers, these cell producers must accept higher prices.

Supplier quality management is critical for the cost of cells.

Effective supplier quality management and collaboration are essential for the supply chain's high standards of sustainability. The optimum condition is achieved with a very high degree of vertical integration. The characterization and definition of process dependencies along the value chain are under the management of the group responsible for product delivery and warranty. The following favorable condition is when the manufacturer and suppliers collaborate on continuous improvement and share resources and development costs.

A significant problem with the development of solid-state technologies is that competition in the start-up environment poisons the confidence of the supply chain. Unless the materials and processes are connected to the legacy production systems, there is no support. This results in companies having to develop equipment and processes outside their sphere of capabilities. For the most part, technological development is done via many bankruptcies and re-starts, probably the worst possible environment for all involved. ??

Particle size and morphology

Particle size and morphology affect the performance of materials used in lithium-ion cells. This is a critical issue that, for the most part, is overlooked. In the case of lithium-iron phosphate, the entire coating process can be done with water-soluble binders and the cathode material is produced to meet the requirements for mixing and coating. This could significantly reduce the cost and complexity of the process. However, the lack of equipment and the pre-disposition of the legacy manufacturing processes sequence has led to continuing the usage of NMP.

The companies developing cathode and anode materials are focused on using existing equipment, and the continuous improvement progress is hitting significant barriers.

Since integrated manufacturing processes can lead to greater control and cost efficiencies in cell production, developing battery-grade precursors that can be used in the vertically integrated manufacturing process will eventually drive the obsolescence of current cathode materials manufacturers.

Cathode and Anode powder production

Because the powder is used in mixing and coating, usually task-monitored processes, the repeatability of the material key performance parameters is extremely important to manage the quality of the cells, hence their cost. When processed in thousands of liter batches, a small change in some of the material’s key performance parameters (i.e., surface area) can create a significant variation in the performance of the output cells and ultimately yield poor performance in the application. In this case, the lower-cost B-grade cells suggest progress but could harm the industry if those cells end up in critical applications.

Energy costs impact the overall production expenses of lithium-ion cells. The production of cathode and anode materials is very energy-intensive and requires baseload reliability, which significantly limits the location of the manufacturing facility. These powders also present a challenge in packaging and transportation since they have relatively low tap densities.

In the absence of massive local energy availability, supply chain efficiency will suffer due to transportation costs and JIT dependencies. While China enjoys a robust supply chain and designated energy supply to the sector, the US is not developing the needed links for efficient manufacturing, and the cell manufacturing cost will be challenged.

Mixing and Coating

To a certain extent, mixing and coating are standard processes with decades of continuous development and extensive knowledge of the equipment and process capabilities. In the lithium-ion space, the limits in throughput and quality primarily depend on the operational approach and the variations of the process inputs.

The gains that can be realized within these manufacturing processes are related to yield and electrode performance. There is a significant push for the elimination of solvents in high-viscosity pastes. Still, those processes require significantly narrower variations of the inputs requiring more expensive materials and higher energy consumption.

An essential factor that substantially impacts the quality and output of coatings is the methodology employed in overseeing these procedures about quality. Given that the automotive industry serves as the principal market segment for battery manufacturing, there is a propensity to adhere to the manufacturing quality practices and standards prevalent within this sector. Although it is possible to contend that APQP, the principles outlined in ISO/TS 16949, and all relevant statistical process control measures can be implemented in the mixing and coating procedures, it is important to note that suspending a process entirely in response to observed variation is impractical in mixing and coating operations.

The need for statistical thinking and the ability to deal with variation in real time requires a significantly different approach to workforce training and manufacturing systems validation. Failure to recognize this simple operational subject is a critical barrier to decreased yields and high process Cpks.

Electrode drying

The drying process is essential to prepare electrodes for assembly in a cell. There are two fundamental functions: (1) the evaporation of the carrier solvent during the coating process and (2) the removal of moisture from the electrode.

The evaporation of the carrier solvent during the coating process is a limiting factor (coating speed) of the manufacturing process output. The process is also a significant energy user and the source of many electrode defects that affect yield loss and cell performance. Many anode formulations are cast using water-soluble binders, and significant cost reductions in both CAPEX and OPEX can be realized if the industry finds ways of coating the cathode electrodes using the same binder system.

Residual solvents from the coating process must be removed from the coatings since these solvents affect the performance of the cells. There are several approaches to removing moisture from the electrodes, but much can be done to improve the process. These improvements will help realize the changes in coating parameters and yield improvements. ?

Cell design.

Cell design impacts the performance and characteristics of lithium-ion cells. Cell designs have performance and cost tradeoffs concerning the applications they serve.

In general, relatively low-energy capacity cells assemble large battery packs when one needs the flexibility to adjust the system energy capacity within an operating voltage range by reducing the number of parallel-connected cells in the cell block. That is one of the advantages of using cylindrical cells.

The cell design has some influence on the cost depending on the cell dimensions, whatever format is used, cylindrical, prismatic, or pouch) and the electrode loadings used (energy of power). Each design has distinct advantages and disadvantages.

The lower energy capacity cells are more suitable for assembling low-capacity battery systems. Better packaging efficiency and, to an extent, lower cost can be achieved with application-specific designs.

An essential aspect of the cell design is the resulting ampacity of the terminals that have significant implications in the system's thermal management and can substantially reduce the overall system cost. In this aspect, the large-format prismatic cells have a considerable advantage since they can dramatically increase the terminal conductor's cross-sectional area without adding to the cell cost.

Safety cost

Whether an array of electrode pairs or a parallel connection between several cylindrical cells, the performance of the cell or cell block is determined by the narrow distribution and high quality of the component's key performance indicators. Ensuring that the voltage and temperature monitored accurately reflect the values of the cell or cell block is critical for the system's functionality and safety. Capacity and intricacy of the battery management system have been impacted by the dimensions and configuration of the cells. Integrated circuits capable of measuring individual cells' voltage, temperature, and impedance continue to be developed. Although these advancements will enhance the functionality and safety of forthcoming energy systems, the financial benefits will not be substantial. ?

Decrease in raw materials cost.

Reducing the cost of raw materials is a crucial goal in cost optimization. However, assuming the scaling goal, the scarcity of raw materials, and the development time gap may prevent lower costs in the market, irrespective of technological advances in mining, refining, and process integration.

Mining

Mining is the source of raw materials for battery production. The statement may look redundant, but not everyone understands the enormous effort needed to maintain a stable supply chain, much less the implications of lowering the raw materials cost.

In many areas, the depressed cost of ores is delaying investment towards increasing output or even exploration. Considering the global political stability necessary for exploration is also essential since these developments often stress existing systems and communities.

With current cell designs, quality copper substrates and lithium derivatives will lead the scarcity table, and soon become a barrier to sustainable battery costs. The developments towards extracting these materials that will maintain price stability don’t appear adequate.

Refining

Refining processes are essential to purify and condition the battery raw materials for processing. There are significant opportunities for vertical integration, and it is one of the areas that can reduce the cost.

In general, the trend is for implementing refining operations in the country where the ore is extracted since it produces the maximum benefit for the country of origin. Changes in the refining value-added chain are moving towards the creation of battery-grade materials that allow the elimination of the third-party cathode material manufacturer, allowing for the sintering of the material to be done at the control of the cell manufacturer.

Value-added compounding.

Value-added compounding may involve enhancing the properties of materials used in cells. Whether it is the production of a clad material, manufacturing cell cans, or strengthening a cathode material particle characteristics at a GWh/year scale, the process makes sense when vertically integrated into the cell manufacturing effort. These developments will become a critical factor in cell manufacturing costs and a barrier to industry newcomers.

Distribution logistics

The transformation of high-quality cells into modules, batteries, and systems is the primary objective of the energy storage industry. For the benefit of applications served by lithium-ion-based energy storage, it preferred transporting finished cells or systems to the materials used for cell manufacturing.

The efficiency of distribution logistics is essential for the supply chain of lithium-ion cells. The cell performance and manufacturing yield are directly related to the usage of the materials as close to their born-on date as possible. These times are to be measured in days or weeks rather than months or quarters.