2023 Battery Report

I had the pleasure to sit down with Yen T. Yeh, Executive Director at the Volta Foundation to dive into their 2023 Battery Report. This 300-page document crafted by 120+ specialists from 100+ institutions summarizes the most impactful findings.

With 100,000+ downloads each year, The Battery Report is by far the most-read report in the field.

If you don’t have 300-pages worth of time, here’s what you need to know.

Milestones and Emerging Battery Industry Trends

Despite what some headlines say, it’s important to look at the signal, not the noise. The past year was significant for the global battery industry, with passenger electric vehicle (EV) sales soared to over 10 million units, marking a 32% increase from the previous year, despite rising interest rates.

This growth coincided with a 25% decrease in the average price of new EVs due to competitive pricing among manufacturers. Additionally, lithium costs dropped by 80%, reducing battery cell prices by 16% to just over $100 per kilowatt-hour (and dropping significantly more at the time of writing this blog), bringing EV costs closer to those of traditional vehicles.

Technological and regulatory developments are accelerating EV adoption. Almost all major OEMs have adopted the North American Charging Standard (NACS), promoting a uniform charging infrastructure. Plans to expand manufacturing capacity by seven terawatt hours by 2030 are underway, with China leading this growth.

Beyond EVs, the Battery Energy Storage System (BESS) market is rapidly expanding, and innovations in battery chemistries like Lithium Iron Phosphate (LMFP) and sodium ion are propelling the industry forward towards sustainable energy solutions.

Battery Industry Trends and Shifts in Manufacturing and Costs

In 2023, the battery industry continued to reduce cell costs, reversing the unexpected trends observed in 2022. This progress is driven by falling raw material prices, setting a positive outlook for the coming years. According to Bloomberg New Energy Finance (BNEF), battery costs are expected to drop to $55 per kilowatt-hour for Lithium Iron Phosphate (LFP) and $65 for Nickel Manganese Cobalt (NMC) by 2028, indicating ongoing advancements in affordability for consumers.

Asia, particularly China, continues to lead in manufacturing capacity. China’s strategic investments since the early 2000s are projected to yield a manufacturing capacity of 2.3 TWh today and 4.6 TWh by 2030, far exceeding the combined output of the US and Europe. However, North America and Europe are intensifying efforts to scale up their gigafactory infrastructures, despite significant cost disparities.

It’s truly impressive that Asia has managed to cut the investment per gigawatt-hour (GWh) of battery production to about half of what it costs in the US and EU. This isn’t just about savings; it’s the result of a steep learning curve. Mastering battery manufacturing, upskilling local talent, sourcing materials efficiently, and getting factories up and running smoothly and quickly are all key. These are the things that should be top of mind for anyone in the battery industry.

Enhancing Battery Quality and Addressing Manufacturing Complexities

Precise and accurate metrology across all stages of the battery manufacturing value chain is critical. From ultrasound checks for wettability and defects to assessments of welding depth and electrode thickness, thorough characterization is fundamental to producing high-quality batteries. Batteries require exceptionally precise and accurate components, making the measurement processes crucial for ensuring top-notch end products. Battery manufacturing demands meticulous attention to detail at every stage, including the electrode production phase, which involves critical processes like mixing, coating, calendaring, slitting, and drying.

Managing electrode processes is crucial, accounting for nearly 40% of the total cost of manufacturing a battery. Feedback systems to quickly identify issues and how to fix them will be key in scaling up manufacturing faster using intelligent systems.

Without them, persistent issues in battery production are slipping through undetected due to inadequate systems for quality assurance. Factories struggle to accurately determine the quality of their battery cells, and how to remediate issues when they find anomalies. Despite “passing” checks, the true integrity of the batteries remains questionable, leading to recalls for issues such as battery connections, seal integrity, and other defects. This highlights a critical need for more robust and transparent quality control processes in the battery manufacturing industry. Failure to identify cell issues at end of line will lead to failures and recalls in the field.

Broadening Battery Applications and Key Growth Trends

Battery technology plays a role not just in electric vehicles (EVs) but also across diverse sectors including aerospace, consumer electronics, grid storage, and military applications. This versatility is underpinned by a wide range of evolving battery chemistries that cater to specific industry needs, showcasing the sector’s capacity for innovation and adaptation.

The Battery Energy Storage System (BESS) market is experiencing rapid growth, projected to reach an annual value of $150 billion by 2030. Concurrently, the sodium ion battery market is emerging as a promising alternative, undergoing extensive evaluations and advancements. Solid-state batteries continue to interest automotive OEMs due to their potential to significantly enhance electric vehicle performance. Despite a recent plateau in research publications, sodium ion research remains strong, particularly in China, which leads in global output.

Talent

Generally, salaries have continued to rise gradually across all levels. However, the funding and economic environment has tightened considerably. Both investors and public markets have adopted a more cautious stance.

Amid these challenging conditions of tighter funding and rising salaries, the question becomes: how can companies achieve more with less? This is particularly pertinent for those venturing into battery development and manufacturing. The key lies in hiring the right talent and upskilling employees who may come from parallel engineering backgrounds. It’s essential to equip teams with the ability and skills to perform electrochemical and battery-specific analysis, even if they don’t have a battery-specific background.

Explore Key Battery Industry Trends Deeper

In summary, 2023 has been a year of significant advancements and growth in the battery industry, marked by technological innovations, cost reductions, and a push in manufacturing. The Volta Foundation’s 2023 Battery Report goes into more detail, but Yen and I pulled out the highlights in our recent webinar with Voltaiq and the Volta Foundation.

Watch the full webinar recording to gain deeper insights and get up to speed with the key battery industry trends. Or download the whole report if you want absolutely everything.