“Mr. Lithium”: High Lithium Prices Won’t Slow EVs
Battery Capacity Concessions Necessary for Ubiquitous Adoption
During the last cycle, industry analysts, who predicted that $30-per-kilogram lithium would kill the battery industry, failed to understand the contribution the metal makes to the cost of an electric vehicle, according to Joe “Mr. Lithium” Lowry. Speaking with TDK Ventures’ Investment Director Tina Tosukhowong as part of the corporate venture capital arm’s Energy Week 2022, Lowry noted that a 100-kilowatt Tesla contains about 80 kg of lithium carbonate equivalent. Even with recent prices topping $56 per kg, the cost of lithium increases the cost of top-end EVs like Tesla’s Model 3 (starting price $44,000) only nominally. “I don’t think that’s killing demand,” Lowry said.
Of course, the price in percentage terms escalates significantly, he acknowledged, in the case of China’s Wuling (mini EV) that, he said, “has maybe a 14-kw battery and sells for $5,000. We’ve seen prices raise across the sphere, but lithium price will have a much bigger impact on the very low end.”
He said that with lithium-iron-phosphate batteries being written off by many a few years ago as suitable only for energy storage systems and buses. “You would hear people say everybody is going to be using lithium hydroxide and high-nickel batteries,” he said. “It shows how people get fixated on (following) the only path.
He said that fallacy has been corrected. “I was happy to see Elon Musk come back and say Tesla would be using more lithium-iron phosphate than high nickel in the future, and see BYD and CATL come out with new architecture for pack designs that enable more cathode in a given space, making LFP more viable. It takes a lot of the complexity out. You don’t have to worry about nickel and cobalt sourcing, so lithium becomes your main problem.”
Unfortunately, the exclusive belief in high-nickel and hydroxide led manufacturers, researchers, and entrepreneurs to invest significant time and money into those technologies to the exclusion of LFP.
“The problem now is that you’ve had a lot of decisions made,” he said. “GM says it’s going to overtake Tesla by 2025. Trust me, that’s not going to happen. GM is promising to bring out models for a price point under $30,000 with a high-nickel battery in the current raw material climate, it’s going to be a tough go. Globally, concessions are going to have to be made on battery capacity if people want to sell as many models as they say they do until the lithium problem gets worked out.”
Tosukhowong brought up alternative lithium chemistries and the various methods for increasing supply as contributors to dynamic supply chain.
“People have been talking about solid state for a while,” Lowry said. “All that means is using a solid rather than liquid electrolyte, so it doesn’t really speak to (alternative chemistries to lithium). The original lithium-ion design had metal in the anode, not lithium-oxide cathodes. There will be steady technology progress…but now, we’re mired in how to get from here to 2025 and 2027. That’s not going to be with new cathodes. I don’t see a huge innovation in cathodes being the answer in the next five years.”
He forecast that the industry will explore the high-nickel and LFP universe for the near- to mid-term. “What happens beyond that is subject to the success of innovation and the ability to make a metal that is pure enough to execute the technology. No one has yet demonstrated the capability to make lithium-metal at scale with the purity needed to fully implement solid state.”
The same scaling challenge confronts direct lithium extraction, Lowry noted. DLE technology allows the absorption of lithium from the brine, without the need for evaporation, resulting in no depletion from the aquifer or harm to the local environment. Spent brine is reinjected into the basin aquifers. It also allows collection lithium in hours or days rather than the months required for ponds to evaporate.
“There are multiple variations of DLE,” Lowry explained. “There’s a lot of misinformation. When a company says they are 10,000 times faster than ponds, that’s nonsense. Once a pond system is in steady state, it does about what happens in a lithium plant, and DLE doesn’t really have an advantage, speed-wise, on an existing pond operation. The true strength of DLE is the potential for higher quality and higher yield, but that has yet to be implemented at scale. The other big attraction is that DLE can unlock resources in locations where you can’t build ponds, because the evaporation characteristics don’t work. We see that in the United States. Standard Lithium is trying to do it in Arkansas as a byproduct from a bromine stream that has lithium in it. The first DLE success will either be in Arkansas or South America.”
While Lowry assured viewers that his is “not anti-DLE; I hope it happens.” He said the industry should not count on the Inflation Reduction Act to help the technology develop.
“I don’t see the IRA as having a big effect on DLE. People are serious about DLE and working hard on it. But you have to prove the technology at a pilot scale and demo scale before people build it out. That’s going to take three to five more years.”
While less-mature players are hyping “DLE miracles, the ones to pay attention to are those going on about their business,” he said. “Standard had an advantage, because they are pretty far along, but I’m not calling the winner.”
This is important, even in lithium-rich Argentina. Some of those assets are contained in reasonable-quality brines in geographies exhibiting less-than-ideal evaporation characteristics. “So, you really need DLE to unlock it,: Lowry said. “DLE is not a drop-in. It may work at one salar, but that doesn’t mean it will work at the next salar. It’s not like software; it’s not a commodity. It’s not a fungible good. DLE has to be customized to each different brine. People tend to oversimplify it.”
Because the various DLE technologies have not yet been proven or disproven, the potential business models being explored run the gamut. Dozens of variables will combine to determine which applications, use cases, and market strategies will prevail.
“Every business model is being employed by somebody at this point,” Lowry noted. “We’re watching it play out right now.” Because of the differences in brine composition, weather, and resource availability from salar to salar, the criteria used to judge performance of DLE also must remain dynamic.
“If you’re doing DLE in Arkansas, where it’s abundant, water use isn’t the criteria. If you’re in the Atacama or on the east side of the Andes…water can be a real problem. The other problem is how easy it is to reinject the brine into the salar. How does the process work? I’m not negative on DLE; what I’m negative on is DLE hype and the purveyors, who try to make DLE look good by saying negative things about conventional ponds. Even with working DLE, ponds aren’t going away.”
During the audience question segment, Lowry expressed the opinion that it does not matter whether DLE companies generate lithium carbonate or lithium hydroxide for battery production.
“In the current short environment, it’s more important that the product gets made a reasonable quality,” he said. “It can get upgraded if it needs to be. I believe that ultimately DLE will produce at least as good of a product as what we currently see from ponds.”
Even though (or perhaps because) the lithium industry is smaller than other mining operations, Lowry said startups do not find themselves at a disadvantage. In fact, larger, more established firms can learn a thing or two from these more nimble companies.
“Look at a company like Lithium Americas,” he said. “ They have three world-class assets and are just beginning startup on one of them with Ganfeng. I don’t think they are at any disadvantage to a Rio (Tinto). I think Rio needs to catch up with them.”
He said the industry does need to expand, with the “big four” evolving quickly into the “big 10” or “big 12.” But even then, “there is plenty of room for juniors. Money will flow to them now that car companies are finally figuring it out. Had the big miners decided lithium was attractive a few years ago, they would be dominating the industry now. They didn’t do that, so they’re going to have a learning curve too. Lithium is not a mining business; it’s a chemical business that may or may not have a mining component. At the end of the day, it’s the chemistry that makes the battery work.”
TDK Ventures’ second annual Energy Week assembled some of the greatest minds and brightest lights in the fields of renewable energy, materials science, mobility, storage, and more. Over the course of 13 sessions — fireside chats, panel discussions, spotlight interviews, and in-depth reports — TDK Ventures and the expert businesspeople, researchers, academics, and investors presented their opinions and field notes on the world’s progress in solving some of its most pressing problems. Energy Week 2022 fulfilled TDK Ventures’ mission to spotlight the best ideas and most promising technologies to inspire entrepreneurs, inventors, and investors to redouble their efforts to mitigating climate change, hasten electrification, and develop the solutions that will herald a greener, more equitable planet.
