Every industry has been disrupted by an era marked by macro-economic volatility, geopolitical instability, and accelerating innovation. Yet, for companies across the battery value chain, these transformational trends are converging to create very unique challenges and opportunities.
From mining and material production to manufacturing, gigafactory development, charging and storage infrastructure, and recycling processes, several shared issues emerged at the RBC Capital Markets Global Battery Value Chain Conference.
1. Accelerating investment at scale
The conference delved deeper into the challenges of raising capital for the large-scale investments that are needed to urgently scale the battery value chain. The construction of gigafactories, in particular, demands substantial upfront investment to cover construction costs, equipment procurement, and operational expenses.
Gigafactories are cornerstones to achieving grid stability, cleaner transportation and net zero emissions goals. But the capital required for land, construction, machinery, and technology is both staggering and challenging to raise. Successful gigafactories like Northvolt have secured long-term contracts with automakers for battery supply.
Not every gigafactory can replicate this model at an early stage, but investors recognise these facilities are pivotal to meeting surging consumer demand for EVs and sustainable energy supply, and to aligning with increasing regulatory standards on emissions. Deterrents to gigafactory construction – from supply chain disruptions to permitting delays – are also being tackled to accelerate progress and unlock the revenue streams investors seek.
As for the role of government support across the wider battery value chain, the Inflation Reduction Act remains the benchmark, providing tax credits for energy storage systems, and making investments in the battery industry more attractive in the United States. This has led to increased capital flow into the sector, driving innovation and growth – and sending a wake up call to the European Battery Alliance on the pivotal role of public sector support.
2. Navigating OEM requirements
Elsewhere, the conference explored how the battery value chain is grappling with a delicate balancing act: achieving efficient mass production while accommodating the unique demands of Original Equipment Manufacturers (OEMs) in the rapidly evolving electric vehicle (EV) industry.
With ambitious EV production targets, OEMs rely on a steady battery supply chain. Suppliers at every touchpoint must deftly manage scalability, lead times, and production efficiency to meet these demands.
Each OEM also brings distinct EV battery specifications, sizes, and chemistries to the table, along with unique requirements to ensure vehicle safety, performance, and longevity. Rigorous quality control processes and coordinating with suppliers to manage lead times and ensure material availability – often for just-in-time manufacturing to minimise inventory costs – is critical for seamless operations.
3. The impact of battery passports
As the global demand for EVs continues to surge, the battery value chain faces another pivotal challenge: balancing rapid production growth with responsible and sustainable practices. Addressing the environmental impact of the battery industry – ensuring minerals are ethically mined, workers are treated fairly, and environmental impact is minimised – is not just a desirable goal; it is an imperative consideration.
Starting from February 1, 2027, all EV and industrial batteries over 2 kWh sold in the EU market will be required to have a unique battery passport retrievable using a QR code. These passports will play a crucial role in ensuring compliance with regional battery regulations, promoting sustainability, enhancing transparency across the global battery value chain – and potentially levelling the playing field with China.
4. Surging demand for EV charging infrastructure
Contrary to negative news coverage, the EV market continues to grow significantly year-on-year. However, the current economic climate, combined with media commentary, has raised questions around affordability, range, charging and residual values. Far from being obstacles, these conversations are opportunities to increase consumer awareness and understanding.
The fact that demand for rapid charging stations outstrips supply, indicates growing market potential and enthusiasm for EVs. As charge point operators continue to deliver customer-friendly charging infrastructure, consumer confidence will only grow stronger.
Bringing more scale to Europe’s EV charging network is not only important for the battery value chain, but also for the overall growth and sustainability of the EV ecosystem. Today, the majority of demand for EV charging in Europe is private, whether at home or in company parking lots. Over time, however, the proportion of public charging activity will increase, ensuring the successful adoption of electric vehicles on a large scale.
5. New battery-grade materials and technologies
The need to rapidly increase the production of battery minerals and metals also remains imperative. The requirement for nickel is projected to triple from its current volume, while copper production is anticipated to increase from 25 million metric tonnes to 40 million.
Even if current supplies seem adequate, the window to increase production is narrow, as starting a new mine and getting it to the production stage can take up to 15 years.
This tightening market for battery minerals, while leading to a heightened need to navigate supply chain complexities, also presents a clear opportunity to accelerate investment in alternative battery materials, technologies, and solutions.
Ongoing research aims to enhance battery chemistries and technologies, improving capacity, charging speeds, and cost efficiencies that will consumers longer EV travel distances and extended grid storage.
Reducing the need for critical materials will be critical for supply chain sustainability, resilience, and security. Accelerating innovation in advanced battery technologies that require smaller quantities of critical minerals will be key, as will measures to support the uptake of vehicle models with optimized battery size.
Lithium-ion batteries are expected to be the name of the game for the next decade. However, Sodium-Ion batteries, an alternative to Lithium-Ion, are also gaining attention due to sodium’s abundance and environmental friendliness, and their potential to be cheaper and safer with similar energy density.
Solid-state batteries are another exciting innovation in this space. Unlike traditional lithium-ion batteries, they use solid materials (such as ceramics) instead of liquid electrolytes, and can potentially increase energy density and improve EV range while reducing charging times.
6. Creating a circular battery economy
Second-life batteries and battery recycling are just as pivotal in lessening environmental impact. These batteries, once used in electric vehicles or energy storage systems, still house valuable materials like nickel, cobalt, and lithium. Repurposing them extends their usefulness far beyond their initial application (such as electric vehicles or energy storage systems), reducing the need for new primary extraction, production and waste.
Investors clearly remain engaged with rapid advancements across the battery industry, recognising the potential for significant value creation in accelerated progress. Strong management, operational efficiency, reduced costs, competitive advantages and predictable revenue streams and will be imperative at a company level.
However, this year’s conference also underscored that the key to closing the loop on a sustainable, scalable and circular battery industry lies in close collaboration at every link in the chain.
