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Fat Tail

	The Great Battery Disruption

Wednesday, 19 April 2023

Quick summary: Batteries play a crucial role in the energy transition. With the battery industry focusing on improving current lithium-ion batteries but also working on alternatives, there’ll be a lot of disruption in this industry, which keen-eyed investors can seek to capitalise on…

Solar panels, wind turbines, electric vehicles…

For all this, one technology will play a pivotal role: batteries. Batteries allow us to store excess electricity to then be used when needed.

And batteries are going to be a massive business. The size of the global battery market is expected to grow more than fourfold between 2021 and 2030, to reach close to US$424 billion.

Of course, the dominant battery at the moment is the lithium-ion battery.

But this is a decades-old technology. What’s more, lithium-ion batteries need massive amounts of critical materials, like cobalt.

So there’s been plenty of efforts to improve lithium-ion batteries to decrease charging times, increase capacity, and make them cheaper.

For instance, recently, the Illinois Institute of Technology — working with the US Department of Energy’s Argonne National Laboratory — said it’s developed a ‘lithium-air’ battery design that could boost energy density to four times that of lithium-ion batteries. This would allow for much longer driving ranges and, so they say, even one day, power a plane and long-haul trucks.

But there’s also been much work done in replacing lithium-ion batteries all together.

Chinese company Contemporary Amperex Technology Co (CATL), for example, had some big news this week on this front…

The battery race is on

If you haven’t heard of CATL, it’s the biggest lithium-ion battery manufacturer in the world.

Earlier this week, the company released some interesting news that it’ll be installing sodium-ion batteries in EV models made by Chinese automaker Chery.

As you may have guessed, sodium-ion batteries are made with sodium, a material that’s found in salt that’s cheap and abundant.

So, this would make these batteries cheaper to produce than lithium-ion batteries. Sodium-ion batteries also have some other advantages, like the fact that they work better in cold climates.

Traditionally, the problem with sodium-ion batteries has been energy density. That is, these batteries need to be bigger than lithium-ion batteries to get the same amount of charge. It’s why, along with the fact that there are worries about how many times we can charge these batteries, there’s always doubt as to whether these batteries could be used in electric vehicles where space is compact.

CATL has been working on developing these batteries for a while, and unveiled their first-generation sodium-ion battery pack in July 2021:
At the time, the company said the sodium-ion battery could achieve up to 160Wh/kg in energy density, lower than lithium iron phosphate batteries (LFP), which companies likeTesla have started to use in their standard range models since they’re cheaper and use no cobalt.

But CATL said that the next-gen sodium-ion battery would pass 200 Wh/kg and that it would start building a basic industrial chain by this year.

There aren’t too many details out yet, but if this is true, sodium-ion batteries could start competing with lithium-ion batteries in the lower-range end of the market.

CATL isn’t the first to use sodium-ion batteries in a car either.

In late February, Hina Battery built a test vehicle using sodium-ion batteries.

And CATL isn’t the only one with big plans for sodium-ion batteries. BYD also has plans to mass produce sodium-ion batteries this year for its Qin EV, Dolphin, and Seagull models.

What’s interesting is that CATL says it’s also discovered a way to mesh both sodium-cells and lithium cells, which could mean a battery that has the best of both worlds. That is, lower costs, performs well in cold weather, and with better range.

As I say though, there isn’t too much info out there yet, and building and scaling up battery supply chains isn’t easy.

But the fact that the largest battery manufacturer in the world is going to be installing sodium-ion batteries in EVs is very exciting news indeed.

In particular, in electric vehicles (EVs), where the battery makes up most of the costs, cheaper batteries will allow for cheaper EVs and more EV adoption.

If this all holds, it could be a game changer for EVs.

The future of batteries is unwritten

There’s plenty of disruption coming to the battery industry.

Not only in EVs, but also in stationary storage. Lithium-ion batteries are getting disrupted with sodium-ion batteries and flow batteries, to name a couple.

While lithium-ion continues to be the battery of choice, as you can see, things could change very quickly in this space. It’s all ripe for disruption.