July 2020
Battery chemistry has once again come into the spotlight, largely thanks to Tesla, which has dramatically pivoted from its position of removing cobalt from its batteries, to becoming one of Glencore’s largest cobalt customers, signing a long term agreement to source 6,000t of cobalt per year from the miner.

Tesla has long taken a different approach, preferring NCA chemistry to the NMC chemistry utilised by other EV producers; meanwhile, Chinese producers initially focused on LFP batteries.

But what does this all mean to cobalt demand?

Although all of these batteries are referred to are lithium ion batteries, what the chemistry refers to is the make-up of the cathode, and each of the chemistries has its own advantages and disadvantages; so like many decisions, selecting a chemistry is all about compromise.

 

 

The growth of EVs in China saw the initial promotion of Lithium Iron Phosphate (LFP) batteries, promoted as the safest chemistry by the major Chinese producers CATL and BYD. Protection and subsidies for producers in China saw this become the dominant chemistry in the country for EVs, despite companies like LG Chem and Samsung manufacturing other chemistries in the country; regulations initially prevented the use of their batteries in EVs sold in the Chinese market.

These batteries are safer than other types, as they are less susceptible to the issues that cause fires such as thermal runaway and over and under voltage; as well as having a wider operating temperature range than others. But the price of this safety is that the batteries have a lower energy density than others, as well as lower voltage and power. As the name suggests, this is a cobalt-free battery, and is considered the main option to remove cobalt from the value chain. Whilst popular in China, it has failed to gain traction in other markets.

 

 

Nickel Manganese Cobalt (NMC) is the main battery chemistry used globally by EV manufacturers, and is used by the traditional automotive producers in their EV ranges. The key advantages for the adoption of this battery is high power and high energy density. This allows this type of battery to be used for both energy storage and power applications. With EVs being considered as a power application, this has driven the thinking for the adoption of this chemistry in EVs. But manufacturers have been seeking to reduce the proportion of cobalt in these batteries, primarily due to its cost.

This has led to the development of different proportions of cobalt in these batteries, from the original 1-1-1 and 5-3-2, where cobalt made up 30-33% of the cathode material to the newer 6-2-2 and 8-1-1 batteries where cobalt is reduced to 20% and 10% respectively. As a result of this, the expectation is that increasing volumes of batteries will offset reduction in cobalt per battery to drive growth in cobalt demand from this segment.

Nickel Cobalt Aluminium (NCA) has been selected by Tesla for its EVs, as this chemistry has been able to achieve the highest energy density to date of all battery types. The choice of this chemistry was driven by range, which has been one of Tesla’s marketing strategies over other EVs, however, the downside of this choice is that these batteries have a lower cycle life and power output than NMC batteries. The cobalt content of these batteries is 14%; whilst lower than most NMC batteries currently, this is still higher than the targeted 8-1-1 NMC Chemistry.

The trend globally in EV battery chemistries has been towards NMC, with the movement to lower cobalt variants seen as the main way to mitigate the expense of cobalt. The flexibility of NMC over current alternatives are expected to see this remain the dominant chemistry in the short to medium term; NMC’s main alternative, NCA, making an unexpected surge in use in EVs would not be a negative for cobalt demand, as this still consumes similar levels of cobalt. This is expected to be one of the key drivers of cobalt demand over the long-term, together with stationary battery applications (Tesla uses NMC chemistry in its stationary batteries.