Global Demand For Batteries Is Increasing, But Is The Supply?

McKinsey & Company released an illuminating report and subsequent article about the future of EV batteries, titled “Battery 2030: Resilient, sustainable, and circular.” The report shows that global demand for electric vehicles (EVs) – and by extension EV batteries – is on a path to skyrocket in the coming decade. 

Unfortunately for car manufacturers, battery demand forecasts have been underestimating the future market size. In 2019, a report by McKinsey and the Global Battery Alliance (GBA), and Systemiq titled A vision for a sustainable battery value chain in 2030 projected a market size of 2.6 TWh with an annual growth of 25% by 2030. Today, those projections are closer to a 30% annual growth rate by 2030 and a market size of 4.7 TWh – a sizeable difference that indicates the market could reach a value of more than $400 billion. 

The expected growth is largely due to both regulatory pushes towards EV adoption by various governmental agencies (specifically in Europe, India and the U.S.) and consumer preferences towards EV vehicles – especially seen in China, which is projected to account for up to 40% of lithium-ion battery demand by 2030. 

While EV adoption is essential to hit sustainability targets, the current battery market is unprepared to meet demand. McKinsey’s report predicts that at least 120 to 150 new battery factories will need to be built between now and 2030 globally to help meet the expected demand. Furthermore, the report puts an emphasis on upcycled and recycled batteries to help meet demand due to finite mining resources. 

Currently, the recycling segment of the battery industry is relatively small. Companies like RecycLiCo Battery Materials Inc. AMYZF are pioneers in the field, and the opportunity for recycling companies to dominate the market in the near future is high. 

RecycLiCo is a battery materials company that focuses on recycling and upcycling lithium-ion batteries. It has created a patented, closed-loop hydrometallurgical process that can capture up to 100% extraction of lithium, cobalt, nickel and manganese used in batteries and integrate the materials into the remanufacturing of new batteries.

The McKinsey report highlights the importance of localized battery supply chains that eliminate or reduce the need for international outsourcing. Companies like RecycLiCo would be instrumental in taking end-of-life batteries and using its patented process for manufacturing new batteries without needing to leave the local supply chain.

RecycLiCo is experiencing success with this bespoke and local manufacturing model. A Korean cathode manufacturer used RecycLiCo recycled-upcycled precursor cathode active material to create battery cells. The test showed RecycLiCo’s cathode performed at the same level as existing cathodes that use mined materials; this demonstrated the future commercialization potential of recycled and upcycled battery materials to create battery-ready materials like cathodes. 

RecycLiCo also announced they signed an agreement with Sonid Inc, a Korean electronics manufacturer. Both companies are hoping to join forces to establish a lithium-ion battery recycling facility to advance RecycLiCo’s patented technology. Establishing a recycling battery manufacturing site in Korea would help provide carmakers with the necessary technology to meet EV demands. 

This type of circularity and independence from mining sites would prove advantageous in the coming years as global demand for EV batteries grows but raw materials become more limited, car manufacturers have to hit sustainability quotas, or car manufacturers are hoping to use recycled materials to help cut costs. In all scenarios, recycled and upcycled batteries seem to be a huge play in the growing EV battery market. 

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

Featured photo by JUICE on Unsplash