Battery technologies: market drivers, challenges and future R&D opportunities

  • By David Buckley
    • Mar 12, 2024
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Battery technologies: market drivers, challenges and future R&D opportunities

The battery technologies market has the potential to enter an exciting period of growth. According to a recent report from McKinsey and the Global Battery Alliance, the annual demand for lithium-ion (or Li-ion) batteries is predicted to grow by around 27% to reach around 4,700 GWh by 2030.

Unsurprisingly, batteries for the transport sector (e.g., electric vehicles or EVs), will drive much of the demand. A separate analysis from Statista found that EV sales are expected to reach 17.1m vehicles in 2028 (broken down to 13.5m for EVs and 3.6m for plug-in hybrid EVs). That’s a 61% increase from 2023, where expected EV sales are set to hit 10.6m (broken down to 7.7 for EVs and 2.9m for plug-in hybrid EVs).

The value chain is expected to increase by as much as ten times between 2020 and 2030, reaching annual revenue as high as $410 billion. Notably, 13 out of the top 15 original equipment manufacturers (OEMs) have announced plans to ban internal combustion engine (ICE) vehicles and achieve new emission-reduction targets.

But meeting the market demand isn’t without its challenges – some of them significant, such as supply chain shortages. In this article, we explore the factors behind what’s driving the market, the blockers hurting progress, and where the current opportunities lie for innovative R&D breakthroughs that can help overcome these challenges and power an electric future.

Battery technology market drivers

Recent international tensions and conflicts, most obviously the Russo-Ukranian War, have emphasised the importance of battery technologies.

Environmental targets, many of which are legally binding, are also propelling the market. Ireland’s Climate Action Plan has led to an ongoing electrification process and the phase-out of traditional ICE vehicles.

New technologies (specifically including green industries) can also drive enterprise and tackle poor productivity, as well as create opportunities for jobs and upskilling.

Of course, it’s not just the government driving this change. Despite some near-hysterical tabloid articles about EVs, there is evidence that points to an increasing climate consciousness among Irish consumers. 

Battery technology industry blockers

Despite its promising prospects, the battery technology market faces several significant hurdles that threaten to slow its progress. These obstacles span across the whole supply chain, from mining to manufacturing. Two of the biggest challenges include the potential environmental impact of mining and refining as well as supply shortages and price volatility- both of which we explore in more detail below.

Environmental impact of mining and refining

A long-standing challenge facing the battery technology industry lies in the mining and refining of raw materials. Lithium, cobalt, nickel, manganese and graphite (key components of most batteries) are extracted from the earth through intensive mining operations. This process can lead to environmental degradation, biodiversity loss, hazardous waste creation, and contamination of water, air, and soil. For instance, lithium is a toxic metal: through the process of brine mining (where lithium is extracted from underground saltwater reserves) there is the risk that contaminated water could threaten humans and animal biodiversity.

Moreover, mining operations are often perceived to have detrimental effects on the quality of life in local communities (especially when it comes to accidents or health hazards caused by pollution). According to a report from the European Parliament, communities often worry about the local economy and a potential loss of income. They also fear that the damage caused by mining could be irreversible, impacting not just the environment and rural landscapes, but also private property and infrastructure.

This is even though new mines can create new infrastructure and services, including roads, high-speed internet cables, shops, restaurants and social services, which both the new mining workforce and existing residents can use.

Supply shortages and price volatility

The battery technology industry is also plagued by supply constraints, leading to price volatility that hinders market growth. 

The limited availability of raw materials, such as lithium and cobalt, poses a difficult challenge. These materials are not evenly distributed worldwide and, in many cases, are available in politically unstable regions, leading to supply disruptions.

Equipment shortages can also pose problems. The specialised machinery required for battery manufacturing is often expensive and in short supply, particularly in regions without a strong manufacturing base.

Furthermore, the industry’s growth is constrained by a need for more skilled labour. As the sector expands and evolves, there’s a growing need for workers with expertise in areas like mining, electrochemistry, materials science, and engineering. However, there’s a shortage of such skills, slowing down recruitment and expansion.

Additionally, certain companies or countries might engage in anti-competitive practices, such as dumping or monopolistic control over resources, further complicating an already tricky situation.

R&D opportunities for battery technology

Research and development will be crucial not just for improving the technology, but also for helping to drive consumption habits and societal acceptance and adoption of EVs. As such, key areas of R&D focus include improving performance, making the manufacturing process more efficient and tackling environmental and safety worries.

For improving performance, engineers and scientists are looking at how to increase battery range, decrease charging time, all while addressing safety concerns. New active material chemistries, such as solid-state batteries, are also under investigation as a solution for delivering superior performance. These are key improvements that will all help to ease any remaining consumer anxiety around buying EVs.

Developing new, lightweight, low-cost, and sustainable materials, like Li metal anode to replace graphite, is also in progress.

As well as this, researchers are exploring new alternatives to conventional lithium-ion batteries. According to the IEA, Li nickel manganese cobalt oxide (NMC) commanded a 60% market share in 2022, followed by Li iron phosphate (LFP) at 30%, and nickel cobalt Al oxide (NCA) at 8%.

Enhancing manufacturing productivity is also a major focus, aiming to streamline production and reduce costs. This includes research into improving OEMs’ production lines, vehicle design and increasing the agility and adaptability of gigafactories.

Recycling is another critical area of focus, with initiatives aimed at repairing, reusing in other second-life applications (such as storage), and extending battery lifespans.

Beyond the batteries themselves, R&D breakthroughs can lead the way in helping the mining industry reduce its environmental footprint and promote more sustainable practices. For example, developing more efficient extraction and processing techniques that use less water and energy, thereby reducing greenhouse gas emissions.

Supporting battery technology development

At Leyton, our R&D experts are helping to push the boundaries of what’s possible in the battery technology market. We’re working within key battery tech sectors, including mining/refining, design, modelling, manufacturing (cell production to packaging) and battery recycling to help identify research and development activity that qualifies for valuable R&D Tax Reliefs. This tax relief can then be reinvested in hiring and training new staff, expanding facilities and buying new equipment – all of which drives more R&D.

Are you working on innovations in the battery technology industry? Speak to one of our experts to find out more about how we can support your R&D efforts.

Author

David Buckley

Consultant Manager

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