Rather than conventional car companies catching up, right now Tesla appears to be increasing its advantage by moving further upstream in the battery chain and very likely to move into cell manufacture.
Nevertheless European, Korean and some USA companies are investing heavily in electric vehicles, but Japan is running down a blind alley chasing a risky and possibly dead end hydrogen strategy.
As Australia imports lots of Japanese branded cars we are likely to lag global EV adoption for a bit, but then the Japanese brands may start to lose market share.
The investment in battery pack capacity continues with the IEA (International Energy Agency) estimating enough capacity in 2022 for 12 million EVs per year. Other forecasts have strong growth beyond that, but let’s get to 2022 first.
Very exciting new battery chemistry based on single cell cathodes is likely to result in a far longer life for battery cells, significantly improving economics for electric cars and stationary batteries. Tesla is likely to move to these cells shortly, but the technology is “open source” so others will get there too. Eventually.
Fast charging is moving ahead very quickly with a proposed standard for Asia up to 0.9 MW (400 Km in 5 minutes)!! This would kill the battery if done regularly but for occasional use is likely to be fine.
Policy in Australia at both Federal and surprisingly State level remains utterly hopeless despite a growing body of international experience about what works and despite the fact that Australia is an oil importer.
What is the point of the Government buying $100 million of oil and leaving it in the USA for 2 years? What problem does that solve?
Australia is so bad, maybe it’s an opportunity
It’s no secret that Australia’s national vehicle emission standards, and policies towards decarbonizing transport are completely non existent. It’s a total embarrassment.
At a State/city level there is some modest progress with electric bus trials in Brisbane and in the ACT.
As usual in NSW there are lots of announcements but little visible action. In general as the Electric Vehicle Council of Australia [EVCA] 2019 annual report stated:
“For this report, the Electric Vehicle Council collected data on state electric vehicle policies. This revealed that there are only minor commitments to the electrification of road transport from governments at this level “
ITK last looked at Electric vehicle policy back in August, 2016. As far as I can see, and in terms of formal policy, only a little has changed. Yet the technology has moved on apiece. And from this technology move two things are becoming clearer:
Lithium battery technology still offers quite a decent amount of technology and economic improvement.
Kind of related. A few years ago with hedge funds leading the cry the industry narrative was that as soon as conventional car companies got serious Tesla would be run over.
Now it’s becoming clear that Tesla, particularly through its move into battery and then cell design and manufacture, is developing a substantial competitive advantage.
There is still no other electric car that comes close to Tesla in terms of mass market appeal. Consider Volkswagen which is betting billions in investment in EVs. Car magazine has a review of VWs EV prototype. It’s well worth a read.
Clearly the prototype is not yet the finished article in terms of conventional car characteristics such as handling, wind noise, wooden low speed ride etc. Front legroom a bit compromised etc. All niggly things but they add up.
And, in my opinion, despite the investment it’s hard to make it work for the money.
The battery is 50% of the cost and other than purchasing power, VW, as yet, has no competitive advantage in batteries.
Charging – the move to high power DC
DC chargers bypass the AC/DC converter in the car providing DC power directly to the battery. A 50 KW (440 amps @ 12 v) can provide 400 km of range in 80 minutes.
Good, but still too slow for me if I am driving 800 km, Sydney to the North Coast.
At 150 kW I’m under 30 minutes and it’s starting to feel like a normal trip, even if I only do it twice a year.
Tesla’s Supercharger V2 can now run at 150 kW. 150 kW is not a trivial amount of power, apparently the conductive pins at the connection point require cooling, and of course there is a reasonable amount of electricity infrastructure required.
1000 of those chargers operating all at once, easy to imagine at Easter on the Pacific Highway is 150 MW.
But the next step is 15 minute charging which is getting close enough to be tolerable, although there would still be a queue. The easy way to get to 15 minutes is to double the voltage to say 800 v.
In China, which after all is at the forefront of EVs, a new standard and plug are being developed that will be 1500 V x 600 A 0r 0.9 MW, an incredible amount of input power. At that point 400 km range is a 5 minute charge.
I don’t own an EV but I have plenty of experience with lithium batteries and I am confident that excess heat is the fastest way to shorten a battery life.
Excess heat comes from three main sources (1) drawing too much current from the battery relative to its size (2) over charging or storing the battery fully charged for extended time frames (3) over discharging the battery. In my opinion with current battery technology fast charging too often will impact battery life.
But occasionally it should be fine. And the reality is most EVs will be charged over night at home. Basically you want to stay under 5C on a regular basis.
However the bigger point is that an EV is not like an Iphone where for the first few years you get a new model every year because the feature list grows so much.
EVs are consumer durables with a 5 year life cycle and so in a sense for Australia to have waited for the technology to mature a bit may be no bad thing.
Battery chemistry. Single crystal cathodes
Battery chemistry and performance is like power electronics a very specialist area and lithium battery chemistry is a fast moving area. ITK is usually pretty cautious about hyping new technology, but….
Now it seems likely that new chemistry greatly extending lithium battery life and therefore improving EV total cost of ownership is ready for primetime. If the battery is like new after 8 years the resale value of the car will be higher.
From what I read battery degradation in EVs is presently estimated as a range reduction of about 2.3% per year. Most folk can live with that anyway.
Even so its known that Tesla has a new battery chemistry coming and this stems from its very likely move into its own cell manufacture.
As I read it the key to the new cell is primarily a better cathode manufacture specifically a “single crystal” cathode.
As reported on Electrek in August 2019, a quote from the research paper:
“We present a wide range of testing results on an excellent moderate-energy-density, lithium-ion pouch cell chemistry to serve as benchmarks for academics and companies developing advanced lithium-ion and other ‘beyond lithium-ion’ cell chemistries to (hopefully) exceed. These results are far superior to those that have been used by researchers modeling cell-failure mechanisms, and as such, these results are more representative of modern Li-ion cells and should be adopted by modelers. Up to three years of testing have been completed for some of the tests. Tests include long-term charge-discharge cycling at 20, 40, and 55°C, long-term storage at 20, 40, and 55°C, and high precision coulometry at 40°C. Several different electrolytes are considered in this LiNi0.5Mn0.3Co0.2O2/graphite chemistry, including those that can promote fast charging. The reasons for cell performance degradation and impedance growth are examined using several methods. We conclude that cells of this type should be able to power an electric vehicle for over 1.6 million kilometers (1 million miles) and last at least two decades in grid energy storage”
As I read it the advantage of the single crystal cathode is its far greater resistance to cracking under discharge stress. When cracks happen there are reactions in the cell and the anode gets coated with the byproducts.
Think about it and assume the authors of this Journal published paper, (ie refereed by independent academics) by a pioneer in the industry are correct. That’s it, game over.
The key graph from the research paper is:
The purple line at the top shows the cell capacity around 90% after over 4000 cycles at 20C and over 20 years life at 100% DOD. These numbers are way, way different to what today’s cells provide.
I’m certainly no chemist but I’ve been following lithium battery chemistry for over 15 years and alert readers may see the quote refers to “pouch cell results” (4.2 v) and more fragile, as compared to traditional 18650 and 21700 cells.
However, pouch cells, AKA lithium polymer are 4.2 v as opposed to the 3.6 v of LFP round cells.
That extra voltage translates to proportionately higher energy and power density.
As an aside that’s why pouch cells are used in Radio control aircraft, a hobby of mine for many years and one that provides many examples of the many things that can go wrong with lithium batteries when put under extreme stress, (eg drawing 7 Kw of power at 200 amps from 375 g of battery).
If there is a first glance disadvantage to these cells it’s the continuing use of cobalt, but much less so. Compared to the 21700 round cell. energy density could improve by say 35%.
As exciting as this news is for EVs, it’s just as exciting for batteries in stationary storage suggesting very long life times, even less space taken and a general improvement in economics.
Increasingly, I can see storage batteries being cost competitive with pumped hydro in the 8-10 hour storage market, never mind all their other advantages.
Australia will have to do something
The car market is global. Even companies like South Korea and Japan sell more vehicles outside their home market than inside. For instance less than 25% of Toyota sales are in Japan, < than 20% of Hyundai sales are in Korea. China is probably an exception and maybe India.
In general what’s happening to rules and regulations in Europe and in North America will determine what manufacturers sell. That’s if they aren’t overtaken by disruptors like Tesla.
And what are these companies doing?
Volkswagen which has around 11% of Europe car sales and about a 5% market share in Australia is investing around US$66 bn in electric vehicles (Euro 12 bn per year). That’s a lot.
Hyundai states it will invest US$87 bn over the next 5 years, probably 50% more than VW “to enhance its leadership in vehicle electrification, autonomous driving and mobility services, said Euisun Chung, Executive Vice Chairman (EVC) of the Group, in Seoul.”
Hyundai is No 3 in the Australian market with 6.3% market share in 2019.
The ICCT a great resource
For anyone interested in what works or doesn’t work in Electric vehicle policy, and I might as well be talking to myself because clearly no Government is actually interested, a good starting point is The International Council on Clean Transport [ICCT].
This body has about a US$9 m budget and publishes a wide range of analysis in a reasonably timely, and to my eyes, useful fashion
Capital city policy responses
For instance in November 2019 there was a briefing which noted that 25 large cities were responsible for 42% of cumulative EV sales through 2018.
They then show the electric charge points in each city noting that say Shenzen has 60,000 EV charge points more than all the capitals of Europe and the USA combined.
Basically, I conclude you want about 2000 points per million people or say 10,000 points in Sydney. Sydney probably has about 200 points, so a bit of a way to go.
In terms of infrastructure Shenzen requires 30% of parking spots in new residential buildings/public buildings to have chargers and the rest to be “EV ready”. San Fransico requires EV circuity to supply all parking spots in new residential.
Then there are non financial incentives. So for instance in California Zero emission vehicles [ZEV] can for 3 years drive in the equivalent of bus lanes. In many cities there are parking incentives for EVs.
Shared fleets: in Shenzen 99% of 22,000 taxis were electric. All Uber vehicles in London are to be electric by 2025 and 9000 electric black cabs by the end of 2020.
Then there are buses. So a good table in the note summarises what these large cities are doing.
Are China’s car companies moving up the ranks?
The following, using a list originally put together by “Brandon” shows the world’s top 25 car companies ranked by enterprise value (market capitalisation plus net debt).
On the metric of Enterprise value, Tesla is presently comparable with Daimler, BMW, Ford and General Motors.
However, it’s useful to appreciate that of the top 11 companies, about half are at least somewhat constrained by their debt levels as shown by debt:equity. In Europe, in my view, higher debt levels are acceptable because debt financing is more like equity. In the USA less so.
I’ve listed my quick opinion of each company’s EV focus. From Australia’s point of view what I note is that Japan has 44% of the Australian market. Weirdly Japan has next to no interest in Electric Cars. I think this is because the Japanese Govt believes that hydrogen is a better solution.
As most people know Toyota made a great start with the Prius but in the last couple of years has given up.
We can also see that Chinese car manufacturers are moving up the global list in terms of valuation albeit its one area they are still small by global standards.
So in ITK’s view electric cars are going to outpace hydrogen cars for years to come and Japan is barking up the wrong tree pursuing hydrogen.
It’s silly really because Japan has good battery technology and hydrogen will most likely have to be imported to Japan at vast transport cost.
But maybe I’m missing something.
Battery factory investment – big but how big?
One forecaster, that I for once do not subscribe to, Benchmark Minerals apparently forecasts global capacity sufficient to produce 2 TWh of batteries per year by 2028 enough for say 40 m EVs of which about 70% will be in China and 17% in Europe.
ITK has a deep distrust of capacity expansion forecasts in any industry and we like to see the money first. Making announcements is the easy part. Naturally the IEA is more conservative.
Its forecast is a more moderate 600 GWh by 2022 but still 3X higher than what was available in 2017.
That’s about 12 million EVs per year at full capacity and compares with 2.2 million production in 2019 (about 2.5% of global car sales).
If, and it remains a big if, the announced capacity is built on the time frame announced it almost guarantees that batteries will be cheaper as either there will be economies of scale or there will be large amounts of spare capacity, or both.
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David Leitch is a regular contributor to Renew Economy. He is principal at ITK, specialising in analysis of electricity, gas and decarbonisation drawn from 33 years experience in stockbroking research & analysis for UBS, JPMorgan and predecessor firms.