Six weeks or so into a new year and developments in the EV-battery and lithium space continue even faster than in 2021, or so it seems from the almost daily string of announcements and other reports.
From engine development, to recycling, to battery demand and supply, new factories, higher production and talk of multi-billion-dollar plans, the pace of change in vehicle development and making (of all types) is nothing short of astounding.
GM, Ford, Renault, Nissan, Tesla, Rivian and the entire Chinese industry are just some of the companies making rapid adjustments to their way of doing things.
Some of the moves are radical, as Japan’s Nissan Motor has shown in the past month with reports of a significant change in direction for its huge research and development budget.
Tokyo reports say Nissan has become the first major carmaker to shift its research and development spending from the development of new internal combustion engines in all its major markets (except the US) to an increased focus on electric vehicles (EVs).
Other car majors might be doing the same as Nissan, but it is happening in a more discrete fashion
While it will still be researching hybrid technology (like Toyota), Nissan’s move makes it the first major Japanese automaker to go down the EV route.
Japanese carmakers are very conservative companies so the radical nature of Nissan’s decision can’t be underestimated. Nissan in effect has put itself out there in front of the mighty Toyota.
Media and industry reports from Japan say Nissan has already stopped developing petrol engines for sale in Europe.
The spending in the US on petrol engines will be directed towards pickup trucks, where Nissan continues to see solid demand for its key models such as the Titan and the Frontier.
Nissan will phase out development of petrol engines for the Chinese and Japanese markets. But it will continue to develop engines for hybrid vehicles, as Toyota has been doing (because it has the most to lose if hybrids are replaced by EVs).
Toyota revealed plans in December to attack the EV market directing with a reported budget of $US70 billion over the next decade or more, while continuing to pay attention to hybrids (as a form of insurance?).
Japanese car makers have long favoured hybrids over BEVs or battery electric vehicles (even though the Nissan Leaf was an early BEV first appearing in 2010).
Given that the move away from the comfort of ICE engine technology towards BEV technologies is an enormous shift but Nissan does have the background in EVs that other car makers are still growing.
Nissan currently spends around $US4.3 billion a year on research and development, with most of that investment going toward petrol engines and cars. The carmaker will now use this money to EVs and other new technologies.
The move comes as restrictions on vehicle emissions tighten worldwide as governments look to expand production and sales of EVs (which will mean more batteries and higher demand for battery metals such as lithium, nickel, copper and cobalt).
New Euro 7 emissions standards (in the EU) will probably go live in 2025. One media report said that Nissan believes these rules will raise the cost of developing internal combustion engines to unsustainable levels.
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Nissan’s move to all but abandon petrol powered (or ICE – internal combustion engine – powered) technology feeds into the plans for the joint ventures they, Renault (Nissan’s alliance partner) and Mitsubishi Motors are planning to drive their push deeper into EVs.
The companies say they will spend 23 billion euros ($US26 billion) on the transition to cleaner vehicles over the next five years, increasing the number of common platforms for electric vehicles (EV) to five from four.
The companies say these platforms will be used to build a combined EV line-up of 35 vehicles by 2030.
They also said that by 2026 80% of all their models (petrol and EVs) would share common platforms, compared with 60% now.
It raises the question of when Nissan’s move on the direction of R&D spreads to its partners.
(Renault owns 43.4% of Nissan, which in turn has a 15% non-voting stake in the French car company and 33.3% of Mitsubishi Motors’ issued shares).
The money promised by Renault, Nissan and Mitsubishi Motor comes from funding they announced last year.
Nissan said in November it would spend 2 trillion yen ($US17.6 billion) over five years to accelerate vehicle electrification, including on EVs and hybrid gasoline-electric cars.
In June, Renault unveiled a five-year, 10-billion euro ($US11.2 billion) EV strategy with a plan to launch 10 models and to have EVs account for 90% of all models by 2030.
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Meanwhile trade reports this week say General Motors has decided to step up its already ambitious plans to produce and sell more electric trucks and Cadillac’s sport utility vehicles in particular.
Reuters and some trade press suggest the US car giant plans a sixfold boost to production of this year and next of these key EV types.
GM CEO Mary Barra told investors after last week’s quarterly results release that the company now aims to deliver 400,000 EVs in North America during 2022 and 2023.
Most of the deliveries would happen in 2023 as much of this year will be devoted to finishing the outfitting of new factories and a slow build-up of production volumes.
GM now reportedly intends to increase production of its electric trucks and a new battery-powered Cadillac SUV to a total of 46,000 vehicles this year, up from a previous plan to build just 7,000.
GM is also expected to re-start production of its Chevrolet Bolt EVs. Bolt production has been halted while GM replaces batteries in existing Bolts under a multi-billion-dollar recall.
“As we have said, we have announced battery cell and assembly capacity investments that will give us more than 1 million units of EV capacity in North America by the end of 2025,” GM said in a statement on Tuesday, Reuters reported.
“We now have teams working to accelerate all of our upcoming EV launches, and our target is to deliver 400,000 EVs in North America over the course of 2022 and 2023.”
Output of Hummer and Chevrolet Silverado electric trucks is now planned to be around 21,000 21,000 (from the new EV-making factory in Detroit), up from the previous plan to build just 3,800 vehicles.
GM has reservations for nearly 59,000 GMC Hummer EV pickups and SUVs more than 110,000 of the electric Chevrolet Silverado pickups due to start production next year.
Rival Ford has already boosted its ambitious plans for the next two years by expanding its EV production capacity to 600,000 vehicles a year by 2023.
Ford began shipping electric Transit vans this week, and is aiming to begin delivering electric F-150 Lightning pickups in a couple of months.
It has orders of 200,000 for the F-150 Lightning after stopping taking new reservations late last year.
Global mined lithium production hit a record high in 2021 of 100,000 tonnes (excluding the US) according to the authoritative US Geological Service’s preliminary annual report on commodity production in the US and around the world.
The USGS said that was a 21% increase over 2020’s 82,500 tonnes and was driven by global demand which jumped a faster 33% last year to an estimated 93,000 tonnes, compared with 70,000 tonnes in 2020.
“Lithium supply security has become a top priority for technology companies in Asia, Europe, and the United States,” the USGS said in something of an understatement.
And the report shows Australia’s current domination of the market – “Four mineral operations in Australia, two brine operations each in Argentina and Chile, and two brine and one mineral operation in China accounted for the majority of world lithium production,” the USGS said which put Australia’s share around 55% last year.
As well there were smaller operations in Brazil, China, Portugal, the United States (just one brine operation, according to the USGS) and Zimbabwe contributed to world lithium output last year.
Actual production and demand data from the US is not disclosed because it is “company proprietary data”, as the UGC put it.
More likely disclosing the data would show just how poorly placed the US is meet the surge in demand for the metal from the evolving EV sector.
In fact the US is not equipped for the stepped up demand from the likes of Tesla, Rivian, GM, Ford, VW, Toyota, BMW and other car EV and ICE majors. That’s why these companies have been doing deals with producers in Australia, Europe and elsewhere (such as BHP’s nickel sulphates deal with Tesla).
“The only lithium production in the United States was from one brine operation in Nevada.,” the USGS pointed out.
“Two companies produced a wide range of downstream lithium compounds in the United States from domestic or imported lithium carbonate, lithium chloride, and lithium hydroxide. Domestic production data were withheld to avoid disclosing company proprietary data.
“One domestic company has recycled lithium metal and lithium-ion batteries since 1992 at its facility in British Columbia, Canada. In 2015, the company began operating the first U.S. recycling facility for lithium-ion vehicle batteries in Lancaster, Oklahoma,” the USGS pointed out.
“About 25 companies in North America and Europe recycle lithium batteries or plan to do so. Partnerships between automobile companies and battery recyclers have been made to supply the automobile industry with a source of battery materials.”
These companies figure it will be easier to source lithium from batteries made with metal imported from countries such as Chile, Argentina, Australia and China, that look for the mineral and establish discrete mining and processing operations.
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According to UK-based research firm LMC Automotive, the US car market is seeing more and more carmakers increasingly heading towards battery-powered EVs
“Looking back to 2000, buyers in the US ‘only’ had a choice of 235 unique models across 37 brands. Fast forward to 2021, and that number has increased to just below 330 models from 43 brands – an average increase of 4 models per year. Over the next five years, that number is expected to skyrocket by nearly 17 new entries per year, with the number of models in the market increasing to over 400 – approaching double what was available to consumers in 2000, LMC said.
Part of this growth can be attributed to established automakers like GM, Hyundai, and VW fragmenting their showroom as they transition from ICE to BEV models. Also helping to propel the model growth over the next five years is an influx of 18 new brands dedicated to BEVs, with that number seemingly growing every day.
“Fifteen of those BEV brands are start-ups looking to take advantage of the open gate to entry that the EV movement – and a new administration and regulations – has afforded.
“Backed by big dollars and even bigger aspirations – and aided by a somewhat less complex vehicle development process – these BEV start-ups also come with little brand equity and a high degree of cost and risk, factors that historically have closed the gate on those who wanted to enter this market.
LMC said in a January, 2022 report that “From Arrival to Workhorse and Canoo to Rivian, these start-up EV automakers are projected to have close to 40 models available for Americans.”
“While most of these upstart brands are not expected to surpass sales of over 50k units annually over the next five years, they do pose a risk to established automakers in terms of market share loss, if only because of the sheer number of choices that fall outside of their brands.
“The influx of start-ups should be a boon for production in North America, as we see these manufacturers adding over one million units of capacity over the next five years; Rivian will account for over 50% of that. But the high degree of risk also flows into production as we see the utilization of those plants, based on expected demand, at just 30% – a sobering reality check to the big dreams.”
For comparison, Tesla last year produced just under 1 million EVs in the US and China and will lift that close to 1.5 million with new plants in Texas and in Germany, as well as expanded output from its Californian and Shanghai plants.
A separate report (issued earlier this month) from LMC points to the rapid take up of battery powered EVs last year.
LMC says the global light vehicle battery market doubled in size in 2021 to 289 GWh. “Over half of global demand was from vehicle production in China. BEVs accounted for 87% of demand, and this share continues to rise.”
LMC says one-third of 2021’s BEV battery market was supplied by Chinese giant, CATL, now the leading cell supplier having overtaken Panasonic and LG Chem, thanks to its success in the booming Chinese market.
“Although almost three-quarters of the market continued to be dominated by those three suppliers, the cell supply chain became increasingly diversified, with OEMs sourcing from multiple suppliers, and hitherto small suppliers in China moving up the rankings and establishing extremely ambitious global plans for expansion.
“One-quarter of BEV battery capacity, and a quarter of lithium usage in batteries, was consumed by Tesla. Next came Volkswagen Group, but with only half of this figure,” LMC said.
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And finally, Glencore has made its EV metals approach a bit clearer. It already is a significant (but controversial) supplier of cobalt, it has copper (such as Mount Isa in Australia) and some nickel (in Australian, Canada and Europe). Now it has revealed plans to move deeper into recycling.
Glencore says it has linked with electric vehicle (EV) battery start-up Britishvolt to build a new plant to recycle lithium-ion batteries in the UK.
The plant will be built at the site of a Glencore operation in Northfleet, east of London and is set to launch next year, with the long-term aim of being 100% powered by renewable energy.
The deal is the third major step the Swiss mining giant has taken in the past weeks towards tapping into the further recycling sector. In late January, it partnered up with Moroccan mining company Managem to produce cobalt from recycled battery materials at a plant near Marrakech.
Glencore also announced it would expand its Britannia Refined Metals plant in southern England, which has historically been a leading re-user of lead-acid batteries found in combustion-powered cars.
Glencore and Britishvolt have been working together since they inked a long-term cobalt supply deal last year, and the mining giant reportedly has a shareholding in the new company.
The new project will be Glencore and Britishvolt’s first battery recycling facility in the UK and will have the capacity to take in at least 10,000 tonnes (10 million kg) of lithium-ion batteries a year, including manufacturing scrap from Britishvolt.
Britishvolt started the £2.6 billion ($US3.5 billion) battery plant in 2021 and last month the UK government backed the project with an unspecified amount from its Automotive Transformation Fund.
In fact Glencore is responding to the growing understanding that recycling will be an increasingly important source of battery grade material, according to a report earlier this month from the UK’s Advanced Propulsion Centre’s Technology.
The report found that re-processing scrap from the scale up of UK battery gigafactories could generate up to 20,000 tonnes of cathode active materials that can be reused, capable of making 7GWh of new batteries, equivalent to 100,000 cars.
By 2040 recycled battery waste from end-of-life vehicles could supply enough cathode materials to produce 60GWh of new batteries.
Cathode active materials make up ~50% of the total cell cost, containing critical metals that can be harvested from production scrap and retired batteries.
Battery producers can build a viable circular value chain to benefit from recycled material feedstock. These can be produced at a lower carbon footprint than mined materials.
The EU Battery Regulation proposes that from 2030, all new batteries must contain 4% Nickel, 12% Cobalt and 4% Lithium, by weight, from recycled materials, with higher targets from 2035.
Even though the UK is now longer in the EU, the latter’s regulations will dominate EV/battery production and development thinking in coming years because of the much larger market.
Not many Australian investors would know about those rules on the use of recycled materials in new batteries. That will trim demand for new-mined metals.
It is definitely something investors should keep in mind as the EU policy spreads to other countries.
