Infographic: Explaining the Surging Demand for Lithium-Ion Batteries
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Explaining the Surging Demand for Lithium-Ion Batteries

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The Battery Series
Part 3: Explaining the Surging Demand for Lithium-Ion Batteries

The Battery Series is a five-part infographic series that explores what investors need to know about modern battery technology, including raw material supply, demand, and future applications.

Presented by: Nevada Energy Metals, eCobalt Solutions Inc., and Great Lakes Graphite

The Battery Series - Part 1The Battery Series - Part 2The Battery Series - Part 3The Battery Series - Part 4The Battery Series - Part 5

The Battery Series: Explaining the Surging Demand for Lithium-Ion Batteries

The Battery Series - Part 1The Battery Series - Part 2The Battery Series - Part 3The Battery Series - Part 4The Battery Series - Part 5

Explaining the Surging Demand for Lithium-Ion Batteries

In Parts 1 and 2, we examined the evolution of battery technology as well as what batteries can and cannot do. In this part, we will tackle demand in the rechargeable battery market, with a major focus on the rapidly growing lithium-ion segment.

For many decades, lead-acid batteries have been the most important rechargeable batteries in our lives.

Even in 2014, about 64.5% of all revenues in the rechargeable battery market were from lead-acid sales, mainly to be used for automotive starters.

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Why?

Despite not being the most energy dense batteries, lead-acids are proven and can supply high surge currents. They are also extremely cheap to manufacture, costing around $150 per kWh of energy capacity.

Enter Lithium-Ion

The first lithium-ions were not cheap. In fact, early batteries produced commercially in the mid-90s typically costed upwards of $3,000 per kWh of energy.

Luckily, the cost of lithium-ion batteries has come down dramatically, making it the battery of choice for consumer electronics throughout the 2000s. And recently, scientists have made even more progress, opening the lithium-ion to many more applications, namely in electric vehicles.

In 2008, analysts estimated that lithium-ion battery packs costed $600-$1,200 per kWh, but this range would drop to $500-800 per kWh over the following four years. Tesla now claims that a Tesla Model S battery cost is $240 per kWh and that the expected cost for a Model 3 is $190 per kWh.

At $240 kWh, lithium-ions become competitive with $3/gallon gas. At $150, they are even competitive with $2 gas.

Giant megafactories such as Tesla’s Gigafactory 1 will also help bring economies of scale to lithium-ion production, making them even less cost-prohibitive. Soon battery packs will cost closer to $100 per kWh, which will make them essentially cheaper than all gas-powered vehicles.

Demand for Lithium-Ion Batteries

Major advancements in lithium-ion battery technology have been a game-changer. Cheaper, more-effective lithium-ions are now taking over the battery market.

In 2014, lithium-ions made up 33.4% of the rechargeable battery market worldwide, worth $49 billion. By 2025, it is estimated by Bernstein that the rechargeable battery market will more than double in size to $112 billion, while lithium-ion’s market share will more than double to 70.0%.

The key driver? The automotive segment.

In 2010, the automotive sector was a drop in the bucket for lithium-ion battery sales. Five years later, automotive made up more than $5 billion of sales in a sector worth nearly $16 billion.

The EV Goes Mainstream

In 2015, almost half a million cars were sold in the US with an electric drive component.

14% of these sales were battery electric vehicles (BEVs):

  • 71,000 Battery EVs (14%)
  • 43,000 plug-in hybrids (9%)
  • 384,000 hybrids (77%)

= 498,000 electric drive vehicles

But as a part of total US auto sales, BEVs still made up less than 1% of sales:

  • 71,000 battery EVs (0.4%)
  • 43,000 plug-in hybrids (0.3%)
  • 384,000 hybrids (2.3%)
  • 16,900,000 gas/diesel sales (97%)

However, in the near future, this is expected to change fast. By 2040, approximately 35% of all global sales will be BEVs.

This will put electric vehicle sales at close to 40 million per year globally, meaning a lot of energy will need to be stored by batteries. Bloomberg New Energy Finance expects that at this point, that electric vehicles will be pulling more than 1,900 TWh from the grid each year.

How much is 1,900 TWh? It’s enough to power the entire United States for 160 days.

And to meet this demand for lithium-ion powered vehicles, a massive amount of battery packs will need to be manufactured.

Part 4 of The Battery Series looks at which materials will be needed to make this possible.

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Energy

Charted: 40 Years of Global Energy Production, by Country

Here’s a snapshot of global energy production, and which countries have produced the most fossil fuels, nuclear, and renewable energy since 1980.

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The Biggest Energy Producers since 1980

Energy was already a hot topic before 2022, but soaring household energy bills and a cost of living crisis has brought it even more to the forefront.

Which countries are the biggest energy producers, and what types of energy are they churning out? This graphic by 911 Metallurgist gives a breakdown of global energy production, showing which countries have used the most fossil fuels, nuclear, and renewable energy since 1980.

All figures refer to the British thermal unit (BTU), equivalent to the heat required to heat one pound of water by one degree Fahrenheit.

Editor’s note: Click on any graphic to see a full-width version that is higher resolution

1. Fossil Fuels

Biggest Producers of Fossil Fuel since 1980

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While the U.S. is a dominant player in both oil and natural gas production, China holds the top spot as the world’s largest fossil fuel producer, largely because of its significant production and consumption of coal.

Over the last decade, China has used more coal than the rest of the world, combined.

However, it’s worth noting that the country’s fossil fuel consumption and production have dipped in recent years, ever since the government launched a five-year plan back in 2014 to help reduce carbon emissions.

2. Nuclear Power

Biggest Producers of Nuclear Energy since 1980

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The U.S. is the world’s largest producer of nuclear power by far, generating about double the amount of nuclear energy as France, the second-largest producer.

While nuclear power provides a carbon-free alternative to fossil fuels, the nuclear disaster in Fukushima caused many countries to move away from the energy source, which is why global use has dipped in recent years.

Despite the fact that many countries have recently pivoted away from nuclear energy, it still powers about 10% of the world’s electricity. It’s also possible that nuclear energy will play an expanded role in the energy mix going forward, since decarbonization has emerged as a top priority for nations around the world.

3. Renewable Energy

Biggest Producers of Renewable Energy

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Renewable energy sources (including wind, hydro, and solar) account for about 23% of electricity production worldwide. China leads the front on renewable production, while the U.S. comes in second place.

While renewable energy production has ramped up in recent years, more countries will need to ramp up their renewable energy production in order to reach net-zero targets by 2050.

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Energy

What is the Cost of Europe’s Energy Crisis?

As European gas prices soar, countries are introducing policies to try and curb the energy crisis.

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What is the Cost of Europe’s Energy Crisis?

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Europe is scrambling to cut its reliance on Russian fossil fuels.

As European gas prices soar eight times their 10-year average, countries are introducing policies to curb the impact of rising prices on households and businesses. These include everything from the cost of living subsidies to wholesale price regulation. Overall, funding for such initiatives has reached $276 billion as of August.

With the continent thrown into uncertainty, the above chart shows allocated funding by country in response to the energy crisis.

The Energy Crisis, In Numbers

Using data from Bruegel, the below table reflects spending on national policies, regulation, and subsidies in response to the energy crisis for select European countries between September 2021 and July 2022. All figures in U.S. dollars.

CountryAllocated Funding Percentage of GDPHousehold Energy Spending,
Average Percentage
🇩🇪 Germany$60.2B1.7%9.9%
🇮🇹 Italy$49.5B2.8%10.3%
🇫🇷 France$44.7B1.8%8.5%
🇬🇧 U.K.$37.9B1.4%11.3%
🇪🇸 Spain$27.3B2.3%8.9%
🇦🇹 Austria$9.1B2.3%8.9%
🇵🇱 Poland$7.6B1.3%12.9%
🇬🇷 Greece$6.8B3.7%9.9%
🇳🇱 Netherlands$6.2B0.7%8.6%
🇨🇿 Czech Republic$5.9B2.5%16.1%
🇧🇪 Belgium$4.1B0.8%8.2%
🇷🇴 Romania$3.8B1.6%12.5%
🇱🇹 Lithuania$2.0B3.6%10.0%
🇸🇪 Sweden$1.9B0.4%9.2%
🇫🇮 Finland$1.2B0.5%6.1%
🇸🇰 Slovakia$1.0B1.0%14.0%
🇮🇪 Ireland$1.0B0.2%9.2%
🇧🇬 Bulgaria$0.8B1.2%11.2%
🇱🇺 Luxembourg$0.8B1.1%n/a
🇭🇷 Croatia$0.6B1.1%14.3%
🇱🇻 Lativia$0.5B1.4%11.6%
🇩🇰 Denmark$0.5B0.1%8.2%
🇸🇮 Slovenia$0.3B0.5%10.4%
🇲🇹 Malta$0.2B1.4%n/a
🇪🇪 Estonia$0.2B0.8%10.9%
🇨🇾 Cyprus$0.1B0.7%n/a

Source: Bruegel, IMF. Euro and pound sterling exchange rates to U.S. dollar as of August 25, 2022.

Germany is spending over $60 billion to combat rising energy prices. Key measures include a $300 one-off energy allowance for workers, in addition to $147 million in funding for low-income families. Still, energy costs are forecasted to increase by an additional $500 this year for households.

In Italy, workers and pensioners will receive a $200 cost of living bonus. Additional measures, such as tax credits for industries with high energy usage were introduced, including a $800 million fund for the automotive sector.

With energy bills predicted to increase three-fold over the winter, households in the U.K. will receive a $477 subsidy in the winter to help cover electricity costs.

Meanwhile, many Eastern European countries—whose households spend a higher percentage of their income on energy costs— are spending more on the energy crisis as a percentage of GDP. Greece is spending the highest, at 3.7% of GDP.

Utility Bailouts

Energy crisis spending is also extending to massive utility bailouts.

Uniper, a German utility firm, received $15 billion in support, with the government acquiring a 30% stake in the company. It is one of the largest bailouts in the country’s history. Since the initial bailout, Uniper has requested an additional $4 billion in funding.

Not only that, Wien Energie, Austria’s largest energy company, received a €2 billion line of credit as electricity prices have skyrocketed.

Deepening Crisis

Is this the tip of the iceberg? To offset the impact of high gas prices, European ministers are discussing even more tools throughout September in response to a threatening energy crisis.

To reign in the impact of high gas prices on the price of power, European leaders are considering a price ceiling on Russian gas imports and temporary price caps on gas used for generating electricity, among others.

Price caps on renewables and nuclear were also suggested.

Given the depth of the situation, the chief executive of Shell said that the energy crisis in Europe would extend beyond this winter, if not for several years.

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