Comment by Simon Moores, CEO, Benchmark
Megatrends are macroeconomic, geostrategic and geopolitical forces that shape our long-term futures on a global scale.
They do not come along often and are usually discussed from the perspective of what is to come rather than what is actually playing out in front of us today.
Yet we can say with confidence now that the megatrend of our times, the energy storage revolution, has arrived.
And it is lithium ion battery powered.
Pure electric vehicles on our roads are now a part of our daily lives. Battery storage backup utilising solar energy, while in its infancy, is no longer a rare sight or an abstract discussion.
Lithium ion batteries are now a mainstay of the political discourse around the world.
Senators are talking about them, the White House has made them policy and the gigafactory has become a symbol of a country’s economic ambition.
We have come so far since 2015 when Benchmark Mineral Intelligence was formed with the mission to create and maintain supply chain prices and data on the lithium ion battery to electric vehicle supply chain.
In the last eight years, Benchmark and the industry have moved from being niche to being now firmly in the mainstream.
The lithium ion battery market has grown an order of magnitude in this time period from 70 GWh in 2015 to a 614 GWh market in 2022 to a market now worth one hundred billion dollars this year.
Powered by the rise of the gigafactories, we have witnessed these super-sized battery plants go from just the Tesla Gigafactory in 2014 to 314 at various stages of production, construction and planning assessed as of May 2022.
In 2022, lithium ion battery demand is growing at its fastest ever rate and is on course for 50% year-on-year growth.
While EVs remain the driver of this growth accounting for 79% of lithium ion battery demand, we are for the first time seeing energy storage systems (ESS) really start to make a demand side impact, doubling to over 30GWh/year.
The raw materials fuelling these gigafactories have also witnessed a coming of age moment.
Lithium supply has increased nearly three-and-a-half times and will be over a 600,000 tonne industry in 2022 – the first time it has topped the half a million tonne mark.
Cobalt demand from the battery industry will reach over 70% of total global volume in 2022, the highest proportion of demand of any of the battery minerals, followed closely by lithium.
Nickel sulphate supply, the battery chemical needed by the lithium ion battery industry, will approach 500,000 tonnes in 2022, more than a 3.5x increase over a 5 year period.
Graphite remains the highest intensity mineral in the lithium ion battery by weight with over 570,000 tonnes of natural flake to be consumed in 2022.
Yet, consumer demand for electric vehicles surpasses our ability to supply them.
Waiting times for EVs are lengthening, a lithium ion battery shortage is hitting many automakers, and, most crucially, key raw material prices are at all time highs.
Lithium ion batteries are becoming harder for EV makers to get their hands on for the first time in the Giga-era and the problem is not going away anytime soon.
This has left EV makers revising a supply chain strategy that has served the auto industry for two generations and leaving majors to consider whether they need to invest all the way upstream into mining.
More solid investments into raw material refining have recently occurred through General Motors and VW, but a trend is yet to emerge.
For the next decade, physical supply of key battery raw materials is king – it will make or break automakers’ trillion dollar EV plans.
If you do not physically own the raw material mine level assets, you simply will not have complete control over your EV destiny for at least the next 10 years.
Once the automotive industry realises that it not only lacks dominion over the battery supply chain but is, at present, subordinate to it, then the energy storage revolution will come of age.
Until then we can celebrate the fact that it has arrived but must take note that the greatest challenges of scaling the supply chain, from mine to cell, are just beginning.
