China battery price war could soon make electric cars cheaper. Here’s how
China battery price war could soon make electric cars cheaper. Here's how The Driven
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The Cost of Electric Vehicles (EVs) and the Sustainable Development Goals (SDGs)
The main cost of an electric vehicle (EV) is its battery. The high cost of energy-dense batteries has meant EVs have long been more expensive than their fossil fuel equivalents.
But this could change faster than we thought. The world’s largest maker of batteries for electric cars, China’s CATL, claims it will slash the cost of its batteries by up to 50% this year, as a price war kicks off with the second largest maker in China, BYD subsidiary FinDreams.
What’s behind this? After the electric vehicle industry experienced a huge surge in 2022, it has hit headwinds. It ramped up faster than demand, triggering efforts to cut costs.
But the promised price cuts are also a sign of progress. Researchers have made great strides in finding new battery chemistries. CATL and BYD now make EV batteries without any cobalt, an expensive, scarce metal linked to child labor and dangerous mining practices in the Democratic Republic of the Congo.
Economies of scale and new supplies of lithium make it possible to sell batteries more cheaply. And the world’s largest carmaker, Toyota, is pinning its hopes on solid-state batteries in the hope these energy-dense, all but fireproof batteries will make possible EVs with a range of more than 1,200km per charge.
How are battery makers cutting costs?
The largest market for electric and plug-in hybrid vehicles is China. But demand for EVs here has eased off, dropping from a 96% surge in demand in 2022 to a 36% rise in 2023.
As a result, battery giant CATL has seen its profits fall for the first time in almost two years.
One of the best ways to create more demand is to make your products cheaper. That’s what’s behind the cost-cutting promises from CATL and BYD.
You might wonder how that’s possible. One of the key challenges in shifting to battery-electric cars is where to get the raw materials. The electric future rests on viable supply chains for critical minerals such as lithium, nickel, copper, cobalt and rare earth elements.
Until recently, the main EV battery chemistry has been built on four of these, lithium, nickel, manganese and cobalt. These are also known as NMC batteries.
If you can avoid or minimise the use of expensive or controversial minerals, you can cut costs. That’s why Chinese companies such as CATL have all but monopolised the market on another chemistry, lithium iron phosphate (LFP) batteries.
These batteries are cheaper, as they have no cobalt. They have other benefits too: a longer usable life and less risk of fire than traditional lithium battery chemistries. The downside is they have lower capacity and voltage.
The recent price cuts come from a deliberate decision to use abundant earth materials such as iron and phosphorus wherever possible.
What about lithium? Prices of lithium carbonate, the salt form of the ultra light silvery-white metal, shot up sixfold between 2020 and 2022 in China before falling last year.
Despite this, battery prices have kept falling – just not by as much as they otherwise would have.
The world’s huge demand for lithium has led to strong growth in supply, as miners scramble to find new sources. CATL, for instance, is spending A$2.1 billion on lithium extraction plants in Bolivia.
Growth in lithium supply is projected to outpace demand by 34% both this year and next, which should help stabilise battery prices.
Battery options are multiplying
China’s battery makers have cornered the market in lithium iron phosphate batteries. But they aren’t the only game in town.
Tesla electric cars have long been powered by batteries from Japan’s Panasonic and South Korea LG. These batteries are built on the older but well established NMC and lithium nickel cobalt aluminate oxide (NCA) chemistries. Even so, the American carmaker is now using CATL’s LFP batteries in its more affordable cars.
The world’s largest carmaker, Toyota, has long been sceptical
SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 7: Affordable and Clean Energy | 7.2: Increase substantially the share of renewable energy in the global energy mix by 2030 | – |
| SDG 9: Industry, Innovation, and Infrastructure | 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes | – |
| SDG 12: Responsible Consumption and Production | 12.2: By 2030, achieve the sustainable management and efficient use of natural resources | – |
| SDG 13: Climate Action | 13.2: Integrate climate change measures into national policies, strategies, and planning | – |
| SDG 15: Life on Land | 15.2: Promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests, and substantially increase afforestation and reforestation globally | – |
1. Which SDGs are addressed or connected to the issues highlighted in the article?
SDG 7: Affordable and Clean Energy
The article discusses the cost reduction of electric vehicle (EV) batteries, which contributes to making EVs more affordable and promotes the use of clean energy in transportation.
SDG 9: Industry, Innovation, and Infrastructure
The article highlights the progress made in battery technology and the efforts to cut costs, which are related to innovation in the EV industry and the development of sustainable infrastructure.
SDG 12: Responsible Consumption and Production
The article mentions the use of new battery chemistries that avoid or minimize the use of expensive or controversial minerals, such as cobalt, promoting responsible consumption and production in the EV battery manufacturing process.
SDG 13: Climate Action
The adoption of electric vehicles powered by affordable batteries contributes to reducing greenhouse gas emissions and mitigating climate change, aligning with SDG 13.
SDG 15: Life on Land
The article mentions the need for sustainable management of critical minerals used in EV batteries, such as lithium, nickel, copper, cobalt, and rare earth elements. Sustainable management of these resources is important for preserving biodiversity and ecosystems on land.
2. What specific targets under those SDGs can be identified based on the article’s content?
Target 7.2: Increase substantially the share of renewable energy in the global energy mix by 2030
The cost reduction of EV batteries promotes the adoption of renewable energy sources for transportation, contributing to increasing the share of renewable energy in the global energy mix.
Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes
The progress in battery technology and the cost-cutting efforts in the EV industry align with the target of upgrading infrastructure and retrofitting industries to make them sustainable, with the adoption of clean and environmentally sound technologies.
Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources
The use of new battery chemistries that avoid or minimize the use of expensive or controversial minerals, such as cobalt, contributes to achieving the sustainable management and efficient use of natural resources in the EV battery manufacturing process.
Target 13.2: Integrate climate change measures into national policies, strategies, and planning
The adoption of electric vehicles powered by affordable batteries is an example of integrating climate change measures into national policies, strategies, and planning, as it helps reduce greenhouse gas emissions and mitigate climate change.
Target 15.2: Promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests, and substantially increase afforestation and reforestation globally
The mention of the need for sustainable management of critical minerals used in EV batteries, such as lithium, nickel, copper, cobalt, and rare earth elements, relates to promoting the implementation of sustainable management practices for natural resources.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
No specific indicators are mentioned or implied in the article that can be used to measure progress towards the identified targets.
4. SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 7: Affordable and Clean Energy | 7.2: Increase substantially the share of renewable energy in the global energy mix by 2030 | – |
| SDG 9: Industry, Innovation, and Infrastructure | 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes | – |
| SDG 12: Responsible Consumption and Production | 12.2: By 2030, achieve the sustainable management and efficient use of natural resources | – |
| SDG 13: Climate Action | 13.2: Integrate climate change measures into national policies, strategies, and planning | – |
| SDG 15: Life on Land | 15.2: Promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests, and substantially increase afforestation and reforestation globally | – |
Copyright: Dive into this article, curated with care by SDG Investors Inc. Our advanced AI technology searches through vast amounts of data to spotlight how we are all moving forward with the Sustainable Development Goals. While we own the rights to this content, we invite you to share it to help spread knowledge and spark action on the SDGs.
Fuente: thedriven.io
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