Automotive lithium-ion (Li-ion) battery demand increased by about 65% to 550GWh in 2022, from about 330GWh in 2021, primarily as a result of growth in electric passenger car sales, with new registrations increasing by 55% in 2022 relative to 2021.
Lithium iron phosphate (LFP) cathode chemistries have reached their highest share in the past decade. This trend is driven mainly by the preferences of Chinese OEMs. Around 95% of the LFP batteries for electric LDVs went into vehicles produced in China, and BYD alone represents 50% of demand. Tesla accounted for 15%, and the share of LFP batteries used by Tesla increased from 20% in 2021 to 30% in 2022. Around 85% of the cars with LFP batteries manufactured by Tesla were manufactured in China, with the remainder being manufactured in the United States with cells imported from China. In total, only around 3% of electric cars with LFP batteries were manufactured in the UnitedStates in 2022.
LFP batteries contrast with other chemistries in their use of iron and phosphorus rather than the nickel, manganese and cobalt found in NCA and NMC batteries. The downside of LFP is that the energy density tends to be lower than that of NMC. LFP batteries also contain phosphorus, which is used in food production. If all batteries today were LFP, they would account for nearly 1% of current agricultural phosphorus use by mass, suggesting that conflicting demands for phosphorus may arise in the future as battery demand increases.
With regards to anodes, a number of chemistry changes have the potential to improve energy density (watt-hour per kilogram, or Wh/kg). For example, silicon can be used to replace all or some of the graphite in the anode in order to make it lighter and thus increase the energy density. Silicon-doped graphite already entered the market a few years ago, and now around 30% of anodes contain silicon. Another option is innovative lithium metal anodes, which could yield even greater energy density when they become commercially available.
The variability in price and availability of critical minerals can also explain some of the developments in battery chemistry from the last few years. NMC chemistries using an equal ratio of nickel, manganese, and cobalt (NMC333 or NMC111) were popular until 2015. Since then, cobalt price increases and concerns affecting public acceptance of cobalt mining have contributed to a shift towards lower-cobalt ratios, such as NMC622, and then NMC811, which are nevertheless more difficult to manufacture. In 2022, the price of nickel increased, reaching a peak twice as high as the 2015-2020 average. This created incentives to use chemistries that are less reliant on nickel, such as LFP, despite their lower energy density.
Beyond those materials, global commodity prices have surged in the last few years, as a result of supply disruptions in the wake of the Covid-19 pandemic, rising demand as the global economy started to recover, and Russia''s invasion of Ukraine in February 2022, among other factors.
The effect of increased battery material prices differed across various battery chemistries in 2022, with the strongest increase being observed for LFP batteries (over 25%), while NMC batteries experienced an increase of less than 15%. Since LFP batteries contain neither nickel nor cobalt, which are relatively expensive compared to iron and phosphorus, the price of lithium plays a relatively larger role in determining the final cost. Given that the price of lithium increased at a higher rate than the price of nickel and cobalt, the price of LFP batteries increased more than the price of NMC batteries. Nonetheless, LFP batteries remain less expensive than NCA and NMC per unit of energy capacity.
The price of batteries also varies across different regions, with China having the lowest prices on average, and the rest of the Asia Pacific region having the highest. This price discrepancy is influenced by the fact that around 65% of battery cells and almost 80% of cathodes are manufactured in China.
For more information on the climate impact of SUVs, refer to the IEA''s 27 February 2023 commentary on the subject.
For more information on the future of supply and demand of critical minerals, refer to the Energy Technology Perspective 2023 report.
Technology Readiness Level (TRL) provides a snapshot of the maturity of a given technology. It has 11 steps ranging from initial idea at step 1 to proof of stability reached at step 11. For more information, refer to the IEA Clean Technology Guide.
For more information on the climate impact of SUVs, refer to the IEA''s 27 February 2023 commentary on the subject.
For more information on the future of supply and demand of critical minerals, refer to the Energy Technology Perspective 2023 report.
Technology Readiness Level (TRL) provides a snapshot of the maturity of a given technology. It has 11 steps ranging from initial idea at step 1 to proof of stability reached at step 11. For more information, refer to the IEA Clean Technology Guide.
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