CMU study concludes lithium market fluctuations unlikely to impact Li-ion battery prices significantly
A new study by a team from Carnegie Mellon University’s College of Engineering has found that even large increases in lithium prices are unlikely to increase significantly the cost of batteries or battery packs for end users such as vehicle manufactures or consumers—although some manufacturers may see reduced profit margins. The study comes against the backdrop of a more than doubling of global lithium prices over the last 6 months.
The Carnegie Mellon University researchers, whose study was published in the Journal of Power Sources, analyzed multiple lithium-ion battery chemistries and cell formats to see whether extreme lithium price variations would have a substantial impact. They found that the use of more expensive lithium precursor materials results in less than 1% increases in the cost of lithium-ion cells considered. Similarly, larger fluctuations in the global lithium price (from $0 to $25/kg from a baseline of $7.50 per kg of Li2CO3) do not change the cost of lithium-ion cells by more than 10%.
Lithium ion battery powered electric vehicles are a reality, and with this comes much public and academic speculation concerning the importance of lithium availability and market price. Despite substantial cost reductions in recent years (59-70% per kWh between 2007 and 2014), lithium ion batteries are still significantly more expensive than the Department of Energy target of $125/kWh by 2022. Precursor materials are a dominant contributor to battery mass and cost, and it is suggested in some corners that lithium prices will prove to be a crucial factor in the cost of battery storage. Some investors believe that inexpensive lithium is one key to reducing device and system costs, while others believe that increased demand will draw geopolitical and economic concerns about access to supply on par with current concerns about oil.
In both cases, it is assumed that extreme fluctuations in the lithium market could have a dramatic effect on the manufacturing cost of lithium ion batteries, and the corporate value proposition of these devices. Furthermore, both lithium supply shortages and extreme price variations are frequently used as justifications for research on alternate cation electrochemical energy storage technologies such as sodium, magnesium, and potassium based systems.
Here we show that even substantial increases in lithium costs will have relatively small (<10%) increases in total manufacturing costs per kWh at the cell level. We also comment on the impact this change in manufacturing cost could impact automotive lithium ion battery manufacturers.—Ciez and Whitacre
For the analysis, Rebecca Ciez and Jay Whitacre selected two prismatic cell designs and two lithium-ion battery chemistries, both based on Argonne National Lab’s BatPaC model. Cathode chemistries were lithium manganese oxide spinel (LiMn2O4) and lithium nickel cobalt aluminum oxide (LiNiCoAlO2); anode materials were graphitic carbon in cases.
From the BatPaC models, they constructed a bill of materials and broke down the costs of the cells. From this, they calculated the stoichiometrically balanced combinations of precursor materials used to make both the cell cathode and electrolyte (1.2 M LiPF6), the only cell elements containing lithium.
They used lithium carbonate (Li2CO3) as the baseline estimate and compare it to combinations using lithium hydroxide (LiOH)—approximately 15% more expensive per mole of lithium content.
They then performed a sensitivity analysis to determine the influence of large fluctuations in the lithium carbonate price. They specified a lower cost bound of $0 per kg, and an upper bound of $25/kg from a baseline of $7.50/kg—a reasonable approximation of the recent lithium price.
The analysis showed that using more expensive lithium hydroxide is unlikely to have a significant impact on the cost of batteries—less than 1% increase in the overall cost of the cells in $/kWh. The analysis of the market fluctuations in the lithium carbonate price also showed that even if Li2CO3 were to be completely free, the reduction in cost per kWh is relatively small, 3% or less for all four batteries considered.
… lithium price increases of more than 300%—from $7.50/kg to $25/kg—would not lead to commensurate increases in battery costs; the maximum increase in the cost per kWh for the four batteries considered is less than 10%. To have even a 15% increase in cell costs, lithium prices would have to be much higher—between $36 and $87/kg—depending on the specific cell chemistry and format. These prices are unsustainably high, and would trigger other lithium producers to enter the market, increasing supply and reducing prices to the ocean removal cost.—Ciez and Whitacre
Although the narrow profitability margins of Li-ion manufacturers will lead to concerns about securing the rights to lithium resources, securing these rights alone will not significantly reduce the cost of cells to consumers. In the long-term, the CMU team concluded, additional lithium resources can be captured to provide the materials necessary to continue expanding production volumes of lithium ion batteries.
Lithium is plentiful, and our current sources are not the only sources of lithium—they are merely the cheapest. If prices do quadruple, it becomes, in principle, economical to extract lithium from sea water.—Jay Whitacre
The paper also addresses a secondary issue: some investors urge researchers to come up with alternatives to lithium due to shortages. While there are many other reasons to pursue different battery chemistries, access to lithium resources is not one of them, Whitacre said.
This work was supported by a National Science Foundation Graduate Research Fellowship.
Rebecca E. Ciez, J.F. Whitacre (2016) “The cost of lithium is unlikely to upend the price of Li-ion storage systems,” Journal of Power Sources, Volume 320, Pages 310-313 doi: 10.1016/j.jpowsour.2016.04.073