The growth in popularity of electric vehicles in China alone, even if it’s a trend not followed anywhere else in the world, is enough to drive the automotive market to make fundamental changes to the way it manufactures cars as well as the raw materials and fuels it uses.
The China Association of Automobile Manufacturers says sales of new energy vehicles – which includes hydrogen – reached 507,000 units in 2016, representing an increase of 53 per cent compared with 2015.
In the previous year, the increase was similar. The steep upward trend seems to have taken off in 2014, according to analysis by Bloomberg.
More than 28 million cars were sold in China in 2016, so electric – or new energy – vehicles still represent a very small percentage of that figure.
But the key figure is probably the increase – if it continues on its current growth trajectory, the new energy vehicle market will be bigger than petrol and diesel vehicles within a couple of decades.
The Chinese way
Against this background, it’s no surprise that Volvo has decided to go all electric and hybrid for its future vehicles from 2019, because it’s owned by Geely, a Chinese auto maker.
And as more and more politicians decide to get on board the alternative energy bandwagon, it’s prompting big oil companies to examine the challenge to its dominance of the auto fuel market.
One of the reasons why the “new energy” vehicles market is taking off is that the technologies for hydrogen fuel and the electric batteries is making unprecedented progress.
Until now, both hydrogen and electric batteries were expensive to manufacture – both in terms of the continuous manufacturing, in the mining of the raw materials, and in terms of the discrete manufacturing, in the making of the final product.
But that’s changing now, and will only get cheaper as economies of scale come into play – as more alternative energy vehicles are sold, both the continuous and discrete manufacturing chains will become more cost-effective; that is, they’ll bring greater returns on investment.
Numbers are the key
According to a report by Bloomberg, electric vehicles will account for 54 per cent of new car sales by 2040.
The main reasons for the growth will be tumbling battery prices, which are set to fall by more 70 per cent by 2030.
By 2040, the switch to electric vehicles will displace 8 million barrels of transport fuel per day, which is just under 10 per cent of daily global consumption of oil, and add 5 per cent to global electricity.
That’s mostly in western countries, where Bloomberg forecasts electric vehicles to reach similar prices to conventional cars by 2025.
In China, the authorities – and it seems the industry as well – expect all car sales growth to come from the electric vehicles sector.
Hydrogen fuel cells are also making inroads into the auto market, but the obvious stigma is that the fuel is thought of as inherently dangerous by the general public, and some say it may take longer for that type of vehicle to find mass market acceptance.
Batteries, meanwhile, are projected to cost less over time – from $300 per kilowatt hour today to $73 by 2030, according to Bloomberg.
In comments to the New York Times, Colin McKerracher, the head of advanced transport analysis at Bloomberg new energy finance, says: “Our forecast doesn’t hinge on countries adopting stringent new fuel standards or climate policies.
“It’s an economic analysis, looking at what happens when the upfront cost of electric vehicles reaches parity. That’s when the real shift occurs.”
The motherlode
If electric vehicle do indeed take over the auto market, the mining of lithium will grow way beyond its current levels, and perhaps become of strategic importance, similar to oil and gas.
The countries with the world’s largest production of lithium are:
- Australia – 14,000 tonnes
- Chile – 12,000 tonnes
- Argentina – 5,700 tonnes
- China – 2,000 tonnes
- Zimbabwe – 900 tonnes
- Portugal – 200 tonnes
- Brazil – 200 tonnes
The companies which produced lithium used to be small in number, something of an oligopoly, but as the raw material has grown in commercial importance, so has the number of companies prospecting for it and finding it.
Now, some of the main companies mining and producing lithium include the following – with the big three at the top:
- Albemarle
- Sociedad Quimica y Minera
- FMC
- Sichuan Tianqi Lithium
- Jiangxi Gangfeng Lithium
- Lithium X Energy
- Orocobre
- Galaxy Resources
- Nemaska Lithium
- Lithium Americas
- Bacanora Minerals
- Altura Mining
- Lithium X Energy
- Red River Resources
- Pure Energy Minerals
- Sirios Resources
- Rock Tech Lithium
- First Lithium Resources
- Dajin Resources
- Tianqi Lithium
Having listed quite a few lithium mining companies, expert market observers say that the top three – Albemarle, SQM and FMC – produce 90 per cent of all lithium on the market.
And of those big three, Albemarle recently obtained permission to expand its production of lithium at its Australian mine, called Greenbushes, which it says is the world’s largest active lithium mine.
It has the largest hard rock lithium reserve, and contains the highest concentration of lithium oxide available of any active mine.
John Mitchell, president, lithium and advanced materials for Albemarle, says: “This project is integral to our announced lithium expansion plans so that we can meet the growing needs of our customers.
“The expansion of the mine and ore upgrading facilities is a key deliverable in our supply strategy to grow total combined lithium carbonate equivalent production to approximately 165,000 metric tonnes a year early in the next decade.”
The expansion is intended to more than double the lithium carbonate equivalent capacity at Greenbushes from 80,000 metric tonnes a year to more than 160,000 metric tonnes a year, from 2019.
Proton packs
While one may think of big companies like Tesla, Nissan or even Apple when they think of batteries for use in devices, most of them use proprietary designs which are not available on the open market.
In fact, features such as battery life and charging systems are increasingly becoming differentiators or unique selling points for such high-profile companies.
But there are a number of companies which provide battery technologies on the open market, even though some may be very closely aligned with their main clients.
Some of the companies manufacturing batteries include:
- A123 Systems
- AESC
- Altairnano
- Axeon
- Coslight India
- Guoxuan High-Tech
- Axion Power International
- Bosch
- Boston Power
- E-One Moli Energy
- Electrovaya
- EnerDel
- Johnson Controls
- Lian Innovative
- Li-Tec
- NEC
- Canbat Batteries
- Panasonic
- Primearth EV Energy
- Rexnamo Electro Batteries
- Samsung
- Sanyo
- SK Innovation
- AESC
- Thunder Sky
- K2 Energy Solutions
- Valence Technology
- LG Chem
- SB LiMotive
- GS Yuasa
- XALT Energy
- Electeca
The global market for lithium ion batteries is expected to reach $50 billion to $80 billion, depending on which market report you look at.
As well as automotive, the other sectors driving the growth are the industrial sector, consumer technologies, and the power grid energy storage market, among others.
