From China to Tesla: How Battery Prices are Changing the EV IndustryChina's CATL Plans to Slash Battery Costs for EVs by 50%. Credit: techxplore.com

Electric vehicles (EVs) have always been hindered by the high cost of their batteries. Until now, they have been more expensive than traditional fossil fuel cars. However, this may soon change as China's CATL, the world's largest maker of batteries for electric cars, has announced plans to slash the cost of its batteries by up to 50% this year. This comes as a result of a price war with the second largest maker in China, BYD subsidiary FinDreams.

The electric vehicle industry experienced a surge in 2022, but has since hit headwinds due to oversupply. In response, efforts have been made to cut costs, resulting in the promised price cuts from CATL and BYD. This is also due to advancements in battery chemistry, with researchers finding new ways to create batteries without using cobalt, an expensive and scarce metal linked to child labor and dangerous mining practices.

Apart from this, economies of scale and new supplies of lithium have made it possible to sell batteries at a lower price. Even the world's largest carmaker, Toyota, is getting in on the action by pinning its hopes on solid-state batteries, which are energy-dense and virtually fireproof. This could potentially increase the range of EVs to more than 1,200km per charge.

The largest market for EVs is China, but demand has eased off, resulting in a drop from a 96% surge in 2022 to a 36% rise in 2023. This has caused battery giant CATL to see a fall in profits for the first time in two years. To generate more demand, companies like CATL and BYD are striving to make their products more affordable.

However, one of the biggest challenges in shifting to battery-electric cars is sourcing raw materials. This is where China has an advantage, as they have all but monopolized the market on a cheaper battery chemistry known as lithium iron phosphate (LFP) batteries, which do not use cobalt. This has led to a decline in the use of expensive or controversial minerals, resulting in lower costs.

Despite a sixfold increase in the prices of lithium carbonate in China between 2020 and 2022, battery prices have continued to fall. This is due to the strong growth in lithium supply, as miners race to find new sources. For instance, CATL is investing A$2.1 billion in lithium extraction plants in Bolivia. With the projected growth in supply outpacing demand, battery prices should stabilize.

Apart from China, other countries are also making headway in the battery market. Tesla, for example, uses batteries from Japan's Panasonic and South Korea's LG, while Toyota is now focused on making solid-state batteries a reality. These batteries do not use liquid electrolytes, resulting in faster recharging times and a range of 1,200km before recharge.

In response, China's battery manufacturers and government are working to catch up with Toyota on solid-state batteries. With various battery chemistries competing for dominance, it is likely that different options will be needed for different types of vehicles, such as prime mover trucks or city runabout EVs. In fact, electric aircraft will require batteries with a high power density, which is currently being researched by CATL.

In conclusion, the battery revolution is still in its early stages. With advancements being made in various battery chemistries, such as sodium-ion, iron-air, and liquid metal batteries, the future of EVs looks bright. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Alton Shaffer
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