Battery Innovation, Part I: The Current State of Things

The landscape of energy storage innovation is forging ahead at a terrific pace. 

Over the last decade, lithium-ion battery costs have plummeted by 10x while their use has continued to expand. Advancements in energy storage and battery technology have underpinned the consumer electronics revolution and are driving the electric vehicle revolution as we speak.

These advancements will also be a core part of the upcoming power grid revolution. But does that mean the innovation has plateaued?

Lithium-Ion Batteries Have Become Increasingly More Available

Consumer electronics single-handedly thrust lithium-ion batteries into the limelight. Their widespread adoption brought them to scale with ease.

And after Tesla used laptop batteries wired together to create their first EV battery pack…well, EV batteries emerged as their own market opportunity. 

In terms of scale and production capacity, this gives lithium-ion a massive advantage. Couple that with current lower costs and bankability, LI batteries are today’s choice for current large-scale stationary battery systems and technologies, though we think this will change in the future with the advent and scale-up of other technologies. 

LI Batteries are One Part of a Multi-faceted Solution

It’s tempting to assume that we’ve overcome most of the technological challenges in battery innovation and that lithium-ion is the clear winner. 

After all, batteries are going to be commoditized just as solar PV panels were, right? Surely the remaining value capture will fall on software solutions that build off of and use existing battery systems.

While this assumption can be packaged and wrapped up with a nice little bow, it only tells one piece of a much larger story. The true solution is multi-faceted and takes a handful of very real challenges into account. 

Major Battery Improvements are Still Needed

For battery innovation to continue to positively impact various industries, we need to be able to tackle two core truths about the current state of things:

There is no one size fits all solution. Given the myriad of battery use cases and applications, battery innovation needs to account for varying, industry-specific criteria. Optimizing battery design will allow manufacturers to meet the demand for a range of variables, such as power, energy, cycle life, and calendar life. 

And that’s just to name just a few. 

Major scaling and supply chain challenges await us. China is currently the global leader in lithium battery production, holding more than 75% of the global manufacturing capacity. Contrary to what one may assume, however, China produces less than 25% of the raw materials that go into battery cells. 

Still, China is seeking to dominate the industry through aggressive industrial policy and massive scale, much like other types of renewable energy technology. They are currently building new battery gigafactories at the rate of one per week. Meanwhile, the United States pales in comparison—they’re only building a new factory once every 3-4 months1

Other manufacturing centers share this significant disconnect between the supply of raw materials and where battery cells are manufactured.

 Forecast lithium-ion battery manufacturing capacity expansion, source Benchmark Mineral Intelligence.

As new manufacturing capacity is built around the world, sourcing raw materials and the chemicals that makeup battery cells will become a major strategic issue. Especially considering we are poised to stress—if not overwhelm—current supply chains for many of the input materials. 

So how is lithium-ion technology already being improved and what implications does this have for the supply chain and manufacture of advanced batteries? Join us for Part II, where we’ll discuss just that. 

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