Battery recycling: long division?

Recycling lithium batteries could be worth $100bn per year by 2040 while supporting electric vehicles’ ascent. Hence new companies are emerging to recapture 95% of spent materials with environmentally sound methods. To be practical, the technology still needs to be proven at scale, battery chemistries must stabilize and cheaper alternatives must be banned. Our 15-page note explores what it would take for battery-recycling to get compelling.

Battery recycling: the economics?

This data-file models the economics of recycling spent lithium ion batteries, taking in waste cells at end-of-life, and recovering materials such as cobalt, nickel, manganese, copper, aluminium, lithium and steel.

It currently looks challenging to generate acceptable IRRs without charging a disposal fee in the range of $1,700-2,000/ton. Although this could change through improved chemistries and more highly automated processes.

Inputs are based on patents and technical papers. Please download the data-file to stress test costs and other economic variables.

Nio: EV-charging breakthrough?

Nio is a listed, electric vehicle manufacturer, headquartered in Shanghai, founded in 2014, that IPO-ed in New York in 2018. It has partnerships with CATL and Sinopec.

The company opened its first battery swap station in Shenzhen, in 2018, which has since expanded to 200 battery-swap stations. The 2-millionth battery swap was completed in March-2021.

The Power Swap station 2.0 is scheduled to be rolled out in mid-2021, lowering the swap time to under three minutes, and carrying 13 battery packs.

We have reviewed ten of the company’s patents. We conclude it has a genuine moat in swappable batteries, which could only have been built up by an auto-maker that controls the vehicle and battery designs, as well as the battery swapping stations.

StoreDot: battery breakthrough?

StoreDot is developing “extreme fast-charging” batteries for electric vehicles, using a proprietary range of nanomaterial additives. It claims its prototype cells can charge 5-6x faster than conventional lithium ion.  The company is based in Israel, has raised over $130M, and secured backing from BP, Daimler and Samsung.

This data-file assesses 10 StoreDot patents from 2019-20, using our methodology for evaluating early-stage technology breakthroughs. Thus we have scored the specificity and intelligibility of StoreDot’s core technology. Our conclusion are laid out in the data-file.

Lithium: global demand forecasts?

This data-file estimates global demand for lithium under our roadmap to net zero, and integrating with our oil market models. The data are disaggregated across electric vehicles, new vehicle types, consumer electronics, grid-scale batteries and conventional material uses.

Demand for lithium has already trebled from 23kTpa in 2010 to 65kTpa in 2020, while we see the ascent continuing to 500kTpa in 2030 and almost 2MTpa in 2050.

90% of demand in the 2040s is driven by transportation, especially electric vehicles. Categories such as ceramics, glasses and lubricants, which historically comprised one half of the market are crowded out.

There are sufficient lithium resources globally to meet this ascent, with 14MT of reserves and a 10-year reserve replacement ratio of 1000%. A 50% reserve replacement ratio should suffice to deliver our forecasts out to 2050.

Short notes on the market follow in the final tab of the data-file.

Oil demand: the rise of autonomous vehicles?

We are raising our medium-term oil demand forecasts by 2.5-3.0 Mbpd to reflect the growing reality of autonomous vehicles. AVs eventually improve fuel economy in cars and trucks by 15-35%, and displace 1.2 Mbpd of air travel. But their convenience also increases total travel demand. This 20-page note outlines the opportunity and leading companies.

CO2 from electric vehicles versus ICEs and hydrogen?

This data-file tabulates the CO2 intensity of producing and charging lithium ion batteries for automotive use, split across 10 different components, informed by the technical literature. Producing the average EV battery emits 9T of CO2 (chart below).

Electric Vehicles should nevertheless have c50% lower emissions than gasoline vehicles over their entire useful lives, assuming equivalent mileages. Although we see gasoline vehicles’ fuel  economies improving.

Manufacturing EVs has an energy deficit, which means the ascent of EVs could increase net fossil fuel demand all the way out to 2037 (note here).

This data-file can be used to calculate the crossover point, which comes after around 3.5 years and c50,000 miles (chart above). The numbers will vary as a function of grid composition, technical improvements and vehicle specifications.

US Air Passenger Miles and Fuel Economy?

This data-file tabulates statistics on the US aviation sector, from the Bureau of Transport Statistics, to compute the fuel economy of US air travel, per plane-mile and per passenger-mile.

In 2019, 10M US flights carried 930M passengers 1.1 trn passenger-miles. The latest data in the file run to February-2020. The latest date in the file run through the end of 2020, and show flights down 40%, passengers per flight down 40% and total passenger miles down -65% for 2020.

Fuel economy per passenger mile has risen at a 2.8% CAGR since 2003. Flight numbers have fallen by -0.4% pa and flights have become 0.8% longer.  But load factors have improved by 0.7pp each year, spreading 0.5 plane miles per gallon across more passengers. Low load factors worsened fuel economy by c40% in 2020.

Electric trucks: what battery sizes?

This data-file models the possible battery sizes in a fully electric semi-truck. Lithium ion batteries up to 15 tons are considered, which could deliver 2,500 miles of range, comparable to a diesel truck.

However, large batteries above c8-tons in size detracts around 10% from the fuel economy of electric trucks, and may cause trucks to exceed regulatory weight limits, lowering their payload capacities.

4-6 ton batteries with 700-1000km ranges and 5-8% energy penalties may be best, and would likely add $110-170k of cost at 2020 battery costs. 

Our roadmap to decarbonize trucking most prefers carbon-offset diesel, then hybridization with super-capacitors, then electric semi-trucks, and least prefers hydrogen trucks.

Electric vehicle charging: the economics?

This data-file models the economics of electric vehicle chargers. First, we disaggregate costs of different charger types across materials capex, labor capex, permitting, fees, opex and maintenance. Next we model what fees need to be charged by the charging stations (in c/kWh) in order to earn 10% IRRs.

Economics are most favorable where they can lead to incremental retail purchases and for larger, faster chargers.

Economics are least favorable around multi-family apartments, charging at work and for slower charging speeds.