Lithium-ion Batteries to Drive the Future of the Automobile Industry

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Researched by Industrial Info Resources (Sugar Land, Texas)--In Japan, one cannot go anywhere without spotting a hybrid vehicle, such as the Toyota Prius or Honda Insight. The Prius, released in 1997 in Japan, was ranked as the country's top-selling car for the 16th straight month in August, which saw domestic vehicle sales reaching more than 22,000 cars.

Sales of hybrid electric vehicles (HEVs) and electric vehicles (EVs) have been boosted by government incentives and tax breaks. However, sales are expected to take a small downward turn as government incentives ended September 30.

The lack of incentives and tax breaks may keep the lower-priced Honda Insight and expensive EVs from gaining on the Prius. The Insight was the first HEV to debut in the United States, beating both the Prius and the Chevrolet Volt. Despite the early debut of the Insight, the U.S. held half of the 800,000 globally registered Priuses by the end of 2009, despite being plagued by recalls and quality-control problems.

Mass production of the Mitsubishi MiEV, one of Japan's first commercially available EVs, began last year. Currently, 2010 sales are projected to be about 4,000 vehicles, and the vehicles are becoming an increasingly common sight. When purchased with the now-expired government incentives, the price of the MiEV was $30,000, compared to $43,000 with the incentives. In March 2011, Nissan plans to release its EV model, the Leaf, though it may have trouble meeting sales targets because of the Leaf's $40,000 price tag. Regardless, Nissan estimates that at least 6,000 will be sold in 2011.

Though Japan leads the industry in HEV technology, China is looking to up production of its own EVs and HEVs to 500,000 per year by the end of 2011. Last year, China had an EV and HEV production capacity of a little more than 2,000 per year. China, looking to reduce pollution and curb emissions, is also looking to get a jump on the EV industry, bypassing the gasoline-powered industry. Korea is looking to become the fourth-largest EV market by 2015. So far, the EVs that have been released in the country have been low-speed models, though Hyundai plans to release its130-kilometer-per-hour capable i10 EV next year. Samsung-Renault and GM Daewoo have announced release plans for their EVs, as well.

Though make and model are important, the EV and HEV markets boil down to rechargeable batteries. HEVs and EVs currently on the market use nickel-metal hydride batteries (Ni-MHB), which account for more than 95% of the market, but the lithium race is slowly pushing them into disuse, mainly because inefficient weight, caused by cell amount and energy density. The battery pack of a first-generation Toyota Prius consisted of 38 Panasonic prismatic Ni-MHB modules with a total of 228 cells. As Ni-MHB technologies progressed, a second-generation Prius battery pack was still cell-heavy with 168 cells in 28 modules. Despite cell reduction, first and second generation Prius battery packs generated slightly more than 200 volts (V). Lithium-ion batteries (LiB) are nothing new. The first LiBs were developed in the 1970s, and Sony released the first commercial cells in 1991. LiBs have higher energy densities, usually twice as much energy per pound as Ni-MHB. They are also smaller, lighter, and more compact, delivering just as much power as previous batteries, making EVs more financially possible for the average consumer.

Since trickling into the market, LiBs have diversified over the years, each type possessing its own pros and cons. For small cells, such as those used in mobile phones and laptop computers, cobalt dioxide is the most popular choice for electrode material. Many Japanese and Korean companies, as well as Chinese companies, manufacture cobalt dioxide LiBs, but they are rarely, if ever, used in EVs. Cobalt is very expensive, currently listed at $38,300 per ton on the London Metals Exchange (LME). Its high rate of reactivity gives it a high electrical potential, which poses a general fire threat when accompanied with graphite anodes because of the high oxidation rates of fully charged batteries.

Nickel-cobalt-manganese batteries (NCMB) are less difficult to produce, but tend to have shorter life spans because of manganese's high solubility in the electrolyte solution. These batteries, however, are still on the expensive side. Though manganese, priced at $3,100 according to the Northern Miner, is much lower in cost compared to cobalt, nickel is listed on the LME at $23,195 per ton. One great advantage that NCMBs possess is the ability to fine-tune the cell with the addition or subtraction of nickel or manganese; the cell can be tuned to either have higher voltage or greater energy density, but not both. Because of the hazards and cost of NCMBs, experimentation with lower-cost aluminum, priced at $2,293 per ton according to the LME, has shown a lot of promise and produces results near that of manganese. The use of aluminum also reduces the threat of fires.

Mitsubishi Chemical Corporation, part of Mitsubishi Chemical Holdings Corporation (TYO:4188) (Tokyo, Japan), deals in the production of all the basic LiB components, however, cathode material is the newest addition to its arsenal. It started mass-producing nickel-cobalt cathode material last year and will complete its first round of expansions, scheduled to bring the plant's total capacity to 1,600 metric tons per year, by the end of the fourth quarter. For more information on Mitsubishi Chemical's cathode material production site expansion, see September 13, 2010 article - Mitsubishi, Other Companies Boost Investments in Lithium-Ion Battery Cathode Production.

Manganese oxide spinel batteries (MnOB), on the other hand, are lower in cost than batteries that use cobalt. The three-dimensional crystalline structure of the cathode material increases surface area and promotes better ion flow between electrodes as well. Unfortunately, they are subject to lower energy densities and require more cells to generate enough power. Iron phosphate batteries also have a promising future. They are less costly than batteries that utilize cobalt, but they face the same problems as MnOBs, requiring en masse quantities of cells. Despite the large quantities needed, they are more stable and pose less of an oxidation threat than batteries containing cobalt.

Known for being Korea's leading polyvinyl chloride manufacturer, Hanwha Chemical Corporation (SEO:009830) (Seoul, South Korea) is shifting gears to include iron phosphate cathode material in its business sphere. Hanwha is aiming at an initial production capacity of 600 metric tons per year when the company's new manufacturing facility becomes operational in early 2012. For more information on Hanwha's new cathode material plant, see September 20, 2010, article - Hanwha Chemical's Newest Business Venture Plugs into the Future of Electric Vehicles.

Lithium is fairly inexpensive on its own. According to Roskill Information Services, the price of one ton of lithium in 2008 was listed at $5,500, though the price had doubled since 2004. The price of lithium is expected to jump within the next 10 years as demand increases during the inevitable lithium race, which is poised to gain momentum as the demand for more environmentally-friendly technology rises. Most of the world's lithium is obtained from Chile, China and Bolivia. China, which has domestic lithium reserves of more than 1 million tons, produces about 3,000 tons of lithium per year for industry. Because Chinese lithium is extracted through traditional mining techniques, mining is often more expensive than recovery of lithium from salt lakes through evaporation in South America. China, in response, is turning its eyes to Afghanistan's new-found lithium deposits, which rival Bolivia's proven reserves of more than 5 million tons. The Chinese government has expressed strong commitment to the future of the EV and HEV markets. Afghani lithium, to be recovered from salt lakes as well, could provide China with a cheaper means to becoming an EV/HEV powerhouse.

Korea is looking not only to create its own resource network to alleviate dependence on imports, but also to gain a foothold in the future of LiBs. The country lacks many domestic resources and has formally decided to develop a pilot lithium-recovery plant in Gangnueng. The Korea Institute of Geoscience & Mineral Resources, along with POSCO ICT Company Limited (SEO:022100) (Pohang, South Korea), an engineering branch of Korean steel giant POSCO (NYSE:PKX) (Pohang), has developed a technique that extracts lithium from seawater, considered to be a massive untouched quarry. The project's feasibility, however, relies on whether or not the lithium demand will outstrip reserves in the future. If China attempts lithium recovery in Afghanistan, the Korean plant, planned to produce an initial 30 metric tons per year, could be rendered uneconomic because of high operating costs.

LiBs are composed of three basic components: an electrode comprised of an anode and cathode, a separator film between the electrode elements, and an electrolyte solution. Electrodes of rechargeable batteries, such as LiBs, switch polarities depending on charge flow; an anode, which is typically negative in a primary battery, is positive if the LiB is recharging, while the cathode, typically positive in a primary battery, is negative. Separator films serve to keep electrode material separated and allow the lithium ions to move freely between cathode and anode through the electrolyte solution. Companies focus on the production of one component or another, all, or a combination.

The price of graphite has remained steady over the past five years, hovering around $2,500 per ton. It is the current choice of anode material, though silicon is steadily becoming a more stable alternative. Despite this trend, Hitachi Chemical Company Limited, under Hitachi Limited (NYSE:HIT) (Tokyo), is currently in the midst of additions that will boost its anode-quality MAGE graphite production by more than 10,000 metric tons per year. The new additions, which are scheduled for completion in 2014, will further Hitachi's foothold in the world market, which currently stands at 45%. For more information on Hitachi Chemical's anode material additions, see July 19, 2010, article - Hitachi to Increase Anode-Quality Graphite Production.

While Mitsubishi Chemical enjoys 25% of the world market share in electrolyte production, many smaller companies are taking advantage of the LiB boom through expanding existing electrolyte solution plants. Electrolyte solutions are typically composed of lithium salts dissolved in organic solvents and provide the medium in which lithium ions travel between cathodes and anodes. Several small companies in both Japan and Korea are investing nearly $300 million in plants or line additions to boost electrolyte production by an additional 5,400 metric tons per year by 2012. Japan's market for LiB electrolyte solution is expected to reach $500 million in sales by 2020, while battery material production is expected to become a $10 billion industry.

As far as battery cell production, companies across Japan and Korea are preparing for the first waves of demand. In Japan, Mitsubishi Motors Corporation (TYO:7211) (Tokyo), through its subsidiaries, is boosting production of its MiEV LiBs to 6 million cells within the decade, enough to power close to 70,000 EVs per year. Since Sanyo Electric Company Limited became a consolidated subsidiary of Panasonic Corporation (NYSE:PC) (Osaka, Japan) in December of last year, Panasonic has made a bold goal: to have 40% of the EV and HEV markets by 2020. Sanyo, which currently holds 20% of the LiB global market and is currently the largest manufacturer, supplies batteries for the Daihatsu Mira EV and now plans to invest more than $2 billion to boost LiB production by 2012.

With the help of NEC Corporation (TYO:6701) (Tokyo), Nissan Motor Company Limited (TYO:7201) (Yokohama, Japan), is eyeing 20% of the global EV market. Automotive Energy Supply Corporation (AESC) (Zama, Japan), a joint venture of Nissan and NEC, and NEC Energy Devices Limited (Sagamihara, Japan) have have LiB-manufacturing facilities under construction, with line additions and expansions already planned. All batteries produced by AESC and NEC Energy Devices will be used in Nissan's Leaf. When the facilities are fully completed in 2018, Nissan will have steady 325,000 cars' worth of LiB units to utilize in the Leaf or other EVs.

For more information on the Nissan Leaf LiB production facilities, see September 27, 2010, article - Automotive Energy Supply Prepares for Nissan's First Electric Vehicle and September 21, 2010, article - NEC to Expand Sagamihara Lithium Ion Battery Facility for Nissan.

South Korea is on top of the rechargeable battery sector, as well. Japanese, South Korean and Chinese companies control more than 90% of global production. Japan has about 50%, while China's share in the market rose to 25% last year. South Korea is just behind with 18% with Samsung and LG at the helm. "Battery 2020 Project," which aims to tip the scales in South Korea's favor by supporting domestic manufacturers, will inject almost $13 billion into the LiB sector over the next 10 years. SK Energy Company Limited, part of SK Holdings Company Limited (SEO:003600) (Seoul), is about to begin construction on a $1.5 billion LiB plant aimed at producing 500 megawatt-hours of batteries by 2012. All of SK's batteries will be supplied to Hyundai and utilized in the new i10 EV.

Samsung SDI Company Limited (SEO:006400) (Seoul) is looking beyond Asia and has struck a deal with Robert Bosch GmbH (Gerlingen, Germany) to provide the BMW group with batteries. Although it is already the world's largest LiB manufacturer after Sanyo, Samsung and Bosch are hoping to gain control of at least 30% of the LiB market by 2015. LG Chem Limited (SEO:051910) (Seoul) has also looked beyond providing for domestic demand. Though behind Japan by a decade, LG Chem already has a sizeable foreign client list, providing LiBs to Chongqing Changan Automobile Company Limited (SHE: 000625) (Chongqing, China) and General Motors Company (Detroit, Michigan), as well as Hyundai. LG is also in talks with Ford Motor Company (NYSE:F) (Dearborn Michigan) and is aggressively working to expand its technology and business.

Lithium-ion batteries have existed in the electronics market for a formidable amount of time; cell phones, laptops, medical tools, and cameras benefit greatly from the higher capacities and lighter weights. With scalable applications and the potential to reduce the world's dependence on petroleum-powered vehicles, LiBs are poised to power the future of the automobile industry.

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