VOLKSWAGEN COULD TRIGGER A GOLD RUSH IN BATTERY MANUFACTURING

By Piero Facchin

Inflation has not been kind to batteries. After more than a decade of remarkably steady declines in the price of lithium-ion batteries, the trend reversed last year.

The increase was small but significant. New technologies tend to follow a similar path on the cost curve, and batteries were no exception. But delays in material supply and growing demand added another $12 to each kilowatt-hour of capacity, according to a Bloomberg NEF study.

Just a few years ago, experts surveyed by Bloomberg NEF expected total battery pack prices to fall to $100 per kilowatt-hour by 2024. Now, the same survey indicates that the industry won’t reach this milestone until 2026.

For the automotive industry, which has largely based its short-term decarbonization goals on lower lithium-ion battery prices, the rise is bound to add pressure to their bottom line. Automakers have invested hundreds of billions in new plants, expecting demand to match the surge in supply. Higher battery costs could threaten these investments.

That’s why battery manufacturers and automakers have been working overtime to cut costs. GM and Stellantis have invested in mining companies, and Ford has signed an agreement with battery recyclers to help guarantee stable supplies, all with the aim of controlling spending on raw materials, which account for a significant proportion of overall battery pack costs.

Manufacturers have also been nibbling away at margins, cutting the cost of non-cellular components to save a few dollars. But these costs only account for around 30% of the total, and have not been enough to counter the effects of higher material and manufacturing costs for cells.

This makes last week’s Volkswagen news significant. The German automaker announced that, together with printing press manufacturer Kœnig & Bauer, it had succeeded in dry-coating the cathode and anode materials of a lithium-ion battery. With its $218 million acquisition of Maxwell Technologies, Tesla was able to dry-coat the anode but not the cathode. The Volkswagen process change could save the company hundreds of millions of euros annually, according to the German automaker.

Volkswagen will no doubt keep this breakthrough to itself, although several startups such as AM Batteries and LiCAP Technologies, have their own approaches to dry coating. Whether their techniques work on a production scale remains to be seen, but Volkswagen’s announcement could prompt competitors to rush to secure their own dry coating technologies.