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Breaking Down the Cost of an EV Battery Cell

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Cost of a lithium-ion battery cell

Breaking Down the Cost of an EV Battery Cell

As electric vehicle (EV) battery prices keep dropping, the global supply of EVs and demand for their batteries are ramping up.

Since 2010, the average price of a lithium-ion (Li-ion) EV battery pack has fallen from $1,200 per kilowatt-hour (kWh) to just $132/kWh in 2021.

Inside each EV battery pack are multiple interconnected modules made up of tens to hundreds of rechargeable Li-ion cells. Collectively, these cells make up roughly 77% of the total cost of an average battery pack, or about $101/kWh.

So, what drives the cost of these individual battery cells?

The Cost of a Battery Cell

According to data from BloombergNEF, the cost of each cell’s cathode adds up to more than half of the overall cell cost.

EV Battery Cell Component% of Cell Cost
Cathode51%
Manufacturing and depreciation24%
Anode12%
Separator7%
Electrolyte4%
Housing and other materials3%

Percentages may not add to 100% due to rounding.

Why Are Cathodes so Expensive?

The cathode is the positively charged electrode of the battery. When a battery is discharged, both electrons and positively-charged molecules (the eponymous lithium ions) flow from the anode to the cathode, which stores both until the battery is charged again.

That means that cathodes effectively determine the performance, range, and thermal safety of a battery, and therefore of an EV itself, making them one of the most important components.

They are composed of various metals (in refined forms) depending on cell chemistry, typically including lithium and nickel. Common cathode compositions in modern use include:

  • Lithium iron phosphate (LFP)
  • Lithium nickel manganese cobalt (NMC)
  • Lithium nickel cobalt aluminum oxide (NCA)

The battery metals that make up the cathode are in high demand, with automakers like Tesla rushing to secure supplies as EV sales charge ahead. In fact, the commodities in the cathode, along with those in other parts of the cell, account for roughly 40% of the overall cell cost.

Other EV Battery Cell Components

Components outside of the cathode make up the other 49% of a cell’s cost.

The manufacturing process, which involves producing the electrodes, assembling the different components, and finishing the cell, makes up 24% of the total cost.

The anode is another significant component of the battery, and it makes up 12% of the total cost—around one-fourth of the cathode’s share. The anode in a Li-ion cell is typically made of natural or synthetic graphite, which tends to be less expensive than other battery commodities.

Although battery costs have been declining since 2010, the recent surge in prices of key battery metals like lithium has cast a shadow of doubt over their future. How will EV battery prices evolve going forward?

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Electrification

Visualizing the World’s Largest Hydroelectric Dams

Hydroelectric dams generate 40% of the world’s renewable energy, the largest of any type. View this infographic to learn more.

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Visualizing the World’s Largest Hydroelectric Dams

Did you know that hydroelectricity is the world’s biggest source of renewable energy? According to recent figures from the International Renewable Energy Agency (IRENA), it represents 40% of total capacity, ahead of solar (28%) and wind (27%).

This type of energy is generated by hydroelectric power stations, which are essentially large dams that use the water flow to spin a turbine. They can also serve secondary functions such as flow monitoring and flood control.

To help you learn more about hydropower, we’ve visualized the five largest hydroelectric dams in the world, ranked by their maximum output.

Overview of the Data

The following table lists key information about the five dams shown in this graphic, as of 2021. Installed capacity is the maximum amount of power that a plant can generate under full load.

CountryDamRiverInstalled Capacity
(gigawatts)
Dimensions
(meters)
🇨🇳 ChinaThree Gorges DamYangtze River22.5181 x 2,335
🇧🇷 Brazil / 🇵🇾 ParaguayItaipu DamParana River14.0196 x 7,919
🇨🇳 ChinaXiluodu DamJinsha River13.9286 x 700
🇧🇷 BrazilBelo Monte DamXingu River11.290 X 3,545
🇻🇪 VenezuelaGuri DamCaroni River10.2162 x 7,426

At the top of the list is China’s Three Gorges Dam, which opened in 2003. It has an installed capacity of 22.5 gigawatts (GW), which is close to double the second-place Itaipu Dam.

In terms of annual output, the Itaipu Dam actually produces about the same amount of electricity. This is because the Parana River has a low seasonal variance, meaning the flow rate changes very little throughout the year. On the other hand, the Yangtze River has a significant drop in flow for several months of the year.

For a point of comparison, here is the installed capacity of the world’s three largest solar power plants, also as of 2021:

  • Bhadla Solar Park, India: 2.2 GW
  • Hainan Solar Park, China: 2.2 GW
  • Pavagada Solar Park, India: 2.1 GW

Compared to our largest dams, solar plants have a much lower installed capacity. However, in terms of cost (cents per kilowatt-hour), the two are actually quite even.

Closer Look: Three Gorges Dam

The Three Gorges Dam is an engineering marvel, costing over $32 billion to construct. To wrap your head around its massive scale, consider the following facts:

  • The Three Gorges Reservoir (which feeds the dam) contains 39 trillion kg of water (42 billion tons)
  • In terms of area, the reservoir spans 400 square miles (1,045 square km)
  • The mass of this reservoir is large enough to slow the Earth’s rotation by 0.06 microseconds

Of course, any man-made structure this large is bound to have a profound impact on the environment. In a 2010 study, it was found that the dam has triggered over 3,000 earthquakes and landslides since 2003.

The Consequences of Hydroelectric Dams

While hydropower can be cost-effective, there are some legitimate concerns about its long-term sustainability.

For starters, hydroelectric dams require large upstream reservoirs to ensure a consistent supply of water. Flooding new areas of land can disrupt wildlife, degrade water quality, and even cause natural disasters like earthquakes.

Dams can also disrupt the natural flow of rivers. Other studies have found that millions of people living downstream from large dams suffer from food insecurity and flooding.

Whereas the benefits have generally been delivered to urban centers or industrial-scale agricultural developments, river-dependent populations located downstream of dams have experienced a difficult upheaval of their livelihoods.
– Richter, B.D. et al. (2010)

Perhaps the greatest risk to hydropower is climate change itself. For example, due to the rising frequency of droughts, hydroelectric dams in places like California are becoming significantly less economical.

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Electrification

Charted: The Most Expensive Battery Metals

Battery metal prices have surged over the last year, with one tonne of lithium now worth over $75,000.

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most expensive battery metals

The Five Most Expensive Battery Metals

Battery metal markets are booming on the back of rising electric vehicle sales.

Supply chain issues and a global rush to secure supplies have skyrocketed battery metal prices over the last year. And if battery metals remain expensive, the decade-long freefall in lithium-ion battery prices might come to a temporary halt.

The above infographic highlights the five most expensive battery metals as of November 2022 using prices from Shanghai Metals Market.

How Much Do Battery Metals Cost?

Cobalt was by far the most expensive battery metal until late 2021, which was when lithium prices hit an inflection point, heading towards all-time highs.

A single tonne of lithium carbonate, one of the refined forms of lithium that’s used in batteries, now costs over $75,000, up from around $6,500 at the beginning of 2021.

MetalPrice per tonneUse in batteries
Lithium carbonate$78,009Cathode
Cobalt (refined)$46,902Cathode
Nickel$26,751Cathode
Copper$9,140Current collectors
Manganese (electrolytic metal)$2,225Cathode

Prices have been converted from yuan to USD via xe.com as of Nov. 8, 2022.

Lithium carbonate prices rose by around 496% in 2021, and have surged by over 100% year-to-date as of November 2022. Increasing EV demand and sales are driving prices from the demand side, with the lack of supply tightening the squeeze.

This year, lithium supplies have been affected by heatwaves in China, where some factories were temporarily shut down due to power shortages from drought-hit hydropower generation. From a broader perspective, it takes anywhere between three to five years for new lithium supply capacity to come online, making it difficult for suppliers to react quickly to rising demand.

Cobalt’s high cost is largely attributed to how geographically concentrated its supply is. Around 70% of global mined cobalt production comes from the Democratic Republic of Congo (DRC). Furthermore, cobalt mining in the DRC is associated with several human rights issues, including child labor.

The majority of the most expensive battery metals are used to build the cathode. The cathode is arguably the most important part of the battery, determining performance, longevity, and range. Copper is the only non-cathode material on the list. Thanks to its excellent electrical conductivity, copper is used as a current collector for battery anodes, serving as a medium for electric current and an outlet for heat.

On average, the cathode accounts for 51% of the cost of a single lithium-ion battery cell, largely due to the metals it contains.

What Does This Mean for EVs?

After falling by 89% from 2010 to 2021, lithium-ion battery pack prices are forecasted to rise this year, according to BloombergNEF.

Average battery pack prices are expected to increase from $132 per kilowatt-hour (kWh) in 2021 to $135/kWh in 2022. While the increase is small, if prolonged, it could delay price parity between EVs and gas-powered cars, which is projected to occur once prices fall below $100/kWh.

In terms of the EV transition, higher battery metal prices could ultimately end up increasing the cost of the average electric vehicle, potentially becoming a speed bump to EV adoption. Consequently, an increase in battery metal supply and the subsequent stabilization in prices will be critical in keeping EV momentum on track.

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