Ade Thomas:
Welcome to EV Y, the eMobility podcast that asks the bigger and better questions of the EV industry.
Ade Thomas:
Hello, and welcome back to EV Y, the eMobility podcast that asks the tricky questions on trending topics in the eMobility industry. I'm your host, Ade Thomas, and every episode, I'll be asking expert guests to delve into the what, how, and crucially, the why of the eMobility sector.
Ade Thomas:
Today's episode is all about the central subject of batteries. Not only are they the key component of EVs, making up nearly 40% of the costs, but batteries are also the subject of contentious debate, uncertainty and some misinformation. So today we're going to be discussing sustainability in the supply chain and life cycle of batteries, and how that can be scaled up for a growing mass market. So our question in today's podcast is how can OEMs secure local sustainable battery supply?
Ade Thomas:
To help answer that question. I'd like to introduce our guest speakers for today. Firstly, from EY, James Nicholson, and James is a partner in advanced manufacturing and mobility at EY, and is also passionate about the sustainable long-term value of the sector. And I'm delighted to say our featured guest is Professor Pam Thomas, CEO of the Faraday Institution. Pam is an accomplished academic research leader and distinguished scientist.
Ade Thomas:
James, Pam, thank you so much for joining us today on the EV Y podcast. To start us off, I'd like to ask you both why you are in the eMobility sector and the batteries side of things in particular. James, what brought you into this area?
James Nicholson:
My background is primarily automotive, and I spent most of my career working with OEMs across Europe and here in the UK. So for me, a lot of the passion comes from making sure that the UK still has a really significant role to play in the future of automotive and the future of its wider industrials, and so batteries play a really key part in that.
Ade Thomas:
Thank you very much indeed. And Pam, what about you? What brought you into the world of battery technologies?
Pam Thomas:
I came from a long career in academic science. I'm a physicist myself, a materials physicist. I've always been working on functional materials, and when I saw the role of the CEO of the Faraday Institution come up, it just seemed like a perfect step for me, because it couldn't be more important and relevant to be managing research in this space on a national project at the moment. That's how I came into it.
Ade Thomas:
Well, thank you very much indeed, Pam. Its super interesting to hear both of your backgrounds there. Thanks very much indeed for joining us on this EV Y podcast. So now we'll hear from one of our listeners. We've had a question come in from Brian Fisher, who asks: is there any real-world data on the battery-life effect of rapid charging yet, or is it still too soon to know? Pam, maybe this is one more directed to you, with your science and technology background.
Pam Thomas:
Yeah, so its still early days, of course. I mean, there haven't been that many electric vehicles around for long enough to be collecting huge amounts of data. So yeah, your listener's correct in asking, is it too soon to tell? But what I would say is that the more rapidly a battery is charged, the more stress we're putting on the system, the whole of that complex electrochemical system that lies at the heart of the power generation. So its always going to be the case that as we move to more and more rapid charging, its going to be of real significance to how the battery degrades and how long a lifetime it has, and indeed its relevance to the safety.
Pam Thomas:
So whilst I would say I'm not currently aware of a data bank that gives the answer to the question, its really important to understand that relationship between fast charging and degradation and lifetime and safety of the batteries, which is why we've got our current research. Certainly the next generation needs to be faster charging at higher power rates, and that needs to be brought into the research at the earliest stage.
Ade Thomas:
James, anything to contribute from maybe a more business perspective on battery degradation and lifetime use?
James Nicholson:
Yeah, I think Pam's absolutely right. I'm not aware of any really firm empirical data sets either, but we can see some movements in the industry. As we've focused as an industry heavily on things like power identity, so the amount which translates into range for the car and the speed of charging, we've transitioned towards what we call high-nickel battery materials. And they're great for certain attributes, but you do suffer from the length of lifetime and the number of cycles these batteries can be recharged.
James Nicholson:
But we've seen over the last few months OEMs really pick up their interest looking back at an older technology called LFP, which, while it has this lower energy density and potentially lower range, actually has a better lifetime. For example, if I'm running a fleet of delivery vans, I'm probably more concerned on total cost of ownership over the lifetime of that fleet. There's certainly some anecdotal evidence that the industry is well aware of this issue, and is indeed looking back at slightly older technologies.
Ade Thomas:
Thank you very much indeed, both of you, for those opening gambits in answer to our listener question. We'll be answering a listener question every episode, so do send yours in to evsummit@green.tv. So now moving on to the main part of the podcast today and the debate around batteries, James, perhaps an opening gambit question for you. There are huge levels of investment support needed to create an indigenous battery manufacturing base. Can you give us EY's take on that, please?
James Nicholson:
There's obviously huge working-capital implications and sustainability implications of making something on one side of the world, and then shipping that high-value asset across the other side of the world. So its not necessarily economically viable to have one global supply chain. And secondarily, but really importantly, if the upstream supply and the conversion and the industry behind it is not sustainable, then there's increasing debate about whether we've just pushed the carbon problem and the sustainability from upstream into the supply chain.
James Nicholson:
So we've seen, as I say, over the last three years, the emergence of regional supply models. So in Europe, you've seen a plethora of new battery factories emerge, both from the incumbent Asian suppliers putting plants in Europe and also a number of startups here in Europe. So I think there's something like 25 live battery-factory projects going on in Europe, and that comes on a higher cost base.
James Nicholson:
But ideally what we are looking for is, can we find something that's sustainable, that has a better landed cost, better overall economics, getting the battery closer to the car, and what's going to be needed for that to happen? And in short, what it means is huge amounts of capital, as you say, and with that, government support to prevent any market failure. Its going to need some protection, both in terms of tariff and localization regulation, but also in terms of environmental regulations and things like the battery passport.
James Nicholson:
And critically, its going to need really strong engagement from all the players. The battery is not just another commodity group. OEMs, car makers, can't just do engage and buy off the shelf like it were an axle or a tyre. They're going to have to encourage the investment community to deploy this capital, to give some certainty to it, and its actually in their interest to help grow that supply ecosystem. So they need to change their engagement models, and they know that: sometimes to create long-term partnerships sometimes to take investments in those emerging battery companies, and sometimes, indeed, to actually play directly in the battery supply chain themselves. So we're seeing lots of different tactics by different car makers, but for most, this has worked its way up their board's priority list and now sits very, very high. So we expect a lot more dynamic change in the coming years.
Ade Thomas:
And Pam, looking at the subject of investment through a science and technology prism, what do you see as needed in terms of the investment in that science and technology base?
Pam Thomas:
Thank you. So obviously, I'm not an economist. I'm a scientist, and I'm interested in how research can really help these questions. I mean, clearly there are batteries that are fit for purpose for light domestic vehicles driving around on the roads today, and there may be people, indeed, people in government, who think, therefore, the problems are solved. I mean, inward investment to build giga-factories in the UK has already happened with the Nissan factory in Sunderland. We've got Britishvolt coming as a startup in that part of the world, and so on, and it may be thought that, okay, its job done; the investment's there, and with the sustainable supply chain in mind, we're looking at being able to build the batteries close to the motor-car producers as well, so what's there left to do?
Pam Thomas:
But if you look at it from a research perspective, of course, I mean, we're never finished in our improvements. There's a next generation of batteries that we need to be researching at present in terms of their recyclability, their sustainability, ethical sourcing of minerals, resilient supply of minerals, so on and so forth. And now these are going to be the batteries of the future, and its quite difficult to get investment in the very early stages of that research.
Pam Thomas:
So its really essential for bodies like us in the Faraday Institution both to have our research programmes, and then to have a commercialization proposition so that we can take those discoveries in the laboratory and bridge them across to when there's going to be an industry ready to do that next-generation manufacturing of those new technologies. So its very much still an evolving landscape. There's been a first stage where we've got to the technology that we have now, and we've got inward investment in the UK to develop that technology on these shores, but there's an awful lot more to do. I mean, we're really at stage one of the revolution in terms of battery technology and its potential for investment and for earning billions from it in UK economic impact in the future.
Ade Thomas:
Thanks, Pam, and we'll come onto sustainability in a moment, but just to look further into that investment piece around that notion there, you've just raised power of new technologies coming on-stream. James, back at the EY ranch, are you seeing friction in the investment community around new battery technologies, or does the dynamism and excitement of the eMobility sector help to pull those investment funds in for new technologies?
James Nicholson:
I think there are two open questions on that. The first is governments and investors are looking at the first-order effect, which is can we make them in the region in Europe and the UK? And so capital is flowing towards that, but its often flowing towards the incumbent, large, existing major players who have a track record, who are perhaps less risky, and then what we're building is the industrial capacity, the factories, essentially, and some of the logistics and the supply chain behind that. And that's okay. That's necessary in the short to medium term, and its critical for the OEMs and the car makers to get that capacity locally sourced.
James Nicholson:
The issue with it is it doesn't bring the IP with it, and this is where Pam's work is so important. As economies across Europe, we have to make sure that the research and development that goes on in universities and places like the Faraday Institute commercialises and becomes sticky. Otherwise, what we're doing is just subsidising or investing in contract manufacturers, essentially, arms length-
PART 1 OF 4 ENDS [00:13:04]
James Nicholson:
manufacturers, and that's not sticky. The problem with those is, if the economic shift, those factories can go with them. If the factories go with them, we can lose our grip on the wider car industry. That's the first point.
James Nicholson:
The second point is, is because the technology is so fast-moving and, in some cases, nascent. This is essentially a question of project finance. This is high risk, high technology evolution. People aren't quite sure of the economics, so you're seeing some of the investment communities trying to decouple things and saying, "Well, I understand the buildings and the physical assets and the tangible." That's okay. That's infrastructure. But this other stuff, this R&D going into commercialization, going to high margin projects and technologies and products, that's more complex, and so we need to educate the investment community and the government supporting this to help them understand what the risk profiles look like, find different investors. I think that's still got a little bit of a way to go.
James Nicholson:
You're still seeing equity markets in Europe being quite conservative. A lot of the investments coming in is strategic institutional investors from players in the industry already, and governments trying to address the market failure. What we're not yet seeing is the financial markets come with really good understanding of the technology and the economics across it. So a bit of a way to go on that, I think.
Ade Thomas:
Thanks so much indeed, James. Let's move on then to the key question of sustainability. Sustainability obviously underpins the shift to immobility and is a really important question with the battery side. Is sustainability a key driver in the transition of new battery technologies? What's your take on that? James, maybe you'd like to answer that one first.
James Nicholson:
I think its absolutely critical. For all of us, if we go out and buy a car and the car has a green sticker on it and credentials to be electric but we're unsure where the battery came from, what the use of materials, what the impact on society is providing those materials look like, then there's going to be question marks, and I think the speed at which we adopt those electric vehicles is going to slow or stutter. Its also just the right thing to do.
James Nicholson:
Sustainability is going to be embedded in expectations from the customer. The OEMs are increasingly aware of its importance and the role they play if they're going to provide long-term value back to their shareholders and they're going to be serious about their ESG credentials. It needs to come to life in the form of, did the materials and their conversion flow across the supply chain in a sustainable manner? Was the energy used, and some of this is really energy intensive, was that renewable or sustainable energy rather than old-fashioned dirty energy? Have we thought about what happens when the battery reaches the end of its life? Rather than continually mining these sometimes quite rare scarce materials, can we get the high value materials back out of the batteries and put them back into the value chain?
James Nicholson:
This is going to make in the short term, at least, these things more expensive, so there's going to need to be some protection around that in the form of regulation, and I mentioned earlier the battery passport. This is about giving the customer, the consumer of it, also the signal for the car maker the ability to say, "We know where this came from. Yes, it may be a little bit more expensive because we've used more expensive forms of energy or better sourcing maps, et cetera." But it counts for something. This is genuinely sustainable and its long-term and it will improve the effect that the car industry has on the planet, the environment, and on society.
Ade Thomas:
Thanks, James. Pam, maybe you could answer the sustainability question looking around the need for regionalized local supply. What are your thoughts on that?
Pam Thomas:
Sustainability is clearly really important to this whole technology. There's no point having it carbon-free at the tailpipe if you've used much more carbon, for example, in the manufacturer of the EV in the first place.
Pam Thomas:
If you look at the lifecycle analysis of electric vehicles, what one can see is that, over the lifetime, they will only use a third as much carbon in total. That's even taking into account the manufacturing. Clearly, with an electric vehicle, one has not only to manufacture the car body. There's the battery as well. In the first place, their carbon footprint is larger than a conventional internal combustion engine vehicle. However, over the lifetime of driving, then by our estimates in The Faraday Institution, by 2025, you've already crossed over the point at which the electric vehicle is greener than the ICE. By the end of its driving lifetime, 10 years later, it will have used only a third amount as much carbon across the whole of that lifecycle analysis from mining through manufacture to use. Then, of course, there's the recycling point at the end.
Pam Thomas:
Its clear now that one should only be investigating new technologies and researching new technologies where that recycling at the end of the life of the vehicle can be achieved and be achieved in a green way. Its not green cycling just to shred the batteries into black powder, and then send that to be incinerated or buried in China, which is currently what the industry is doing.
Pam Thomas:
Along all of those stages of the lifetime of an electric vehicle, we can green up what we're doing, and we need to do that. Clearly, as James said, having green electrons in the first place. The electrons that charge the vehicle coming via renewables, as we do have in great parts in the UK, we have fantastic offshore wind as a renewable source, that's going to power the Sunland battery plant. There'll be green electrons generated by offshore wind powering the battery factory to make the batteries and the EVs, and so you start off there in a very good position in terms of having a low carbon footprint. Actually, our estimate in The Faraday Institution is that making a battery EV in Britain in 2025 will be 8% less carbon than the average European footprint, and a whopping 24% better than Germany, which has still got a lot of coal-fired power stations in their electricity system.
Pam Thomas:
The UK has got a lot to look forward to in getting that whole ecosystem right from the green electrons in to the recycling out. Researchers within our projects are working on aspects of the technology on all of those stages along the pathway.
Ade Thomas:
Thanks so much, indeed. Let's pursue, if we can, that sense of regionalized and localised manufacturing facilities. Why is it so important for gigafactories to be regionalized around a local supply? James, would you like to have a first go at that question, please?
James Nicholson:
Yeah. I think there are a few points on this. I think that, first and foremost, it can cost a lot to type up a lot of working capital to have a battery made a long way away that is then a valuable asset that, as a car maker, you've now bought, and then it takes a long time to ship that, clear it through customs, get it unloaded, get it to the side of the vehicle plant and put it in the car. And you don't recover that money until you've sold the car, so the working capital tie off, its a long cycle, so you save working capital and money with it by making that battery closer to where you make the car.
James Nicholson:
The second is that point around tariffs and global trade protection, which is if, as we've seen with the European union, they start to put strong localization requirements around the battery in order for it to qualify for its free trade agreements, then you need a certain amount of content to be locally sourced. Otherwise, you'd have to pay a tariff on the car. Again, that changes the economics for car makers.
James Nicholson:
One point is around trust, which is visibility of the supply chain. As we mentioned briefly earlier, you need to know where the materials come from and the conversion processes that we used. As car companies ramp up their efforts on this and start looking away from just the landed cost to the overall, the other metrics of the battery, so the environmental impacts and the social impacts, they're mapping out their supply chains and making sure they're fully transparent so that they know where these things come from. To have that transparency, a lot of the time, you need to localise it as well.
James Nicholson:
There are a few points, some economic, some ESG-related, that are driving the need to localise quite quickly. But its not there yet. We're building up the cell production of manufacturing, but the supply chain behind it, there's still a supply shortfall. Its quite significant in things like the [inaudible 00:22:26] and the [inaudible 00:22:26] production that goes into these batteries.
Ade Thomas:
From a science and technology perspective, Pam, presumably that localised production is a whole lot more sustainable. Is that right?
Pam Thomas:
Well, yes. It seems like an obvious consequence of having local production of the components of the battery, that it would be more sustainable than otherwise. However, one has to look at the cost as well in terms of the economics of sourcing non-earth abundant minerals locally. It just simply might not be possible, versus where they come from elsewhere in the world. The ethics of the mining, for example, of minerals like cobalt, the cost of mining lithium carbonate in different parts of the world and compare that with the cost of importing it into the UK. Its not as simple as just saying, well, if we happen to have a small resource of, for example, lithium carbonate in [inaudible 00:23:31], that's obviously more sustainable than importing it from elsewhere in the world. It depends on the cost of getting it out of the ground and the environmental impact of that mining in that particular place.
Pam Thomas:
I think we have to, whilst recognising that there's lots of benefits in local supplies and that local supply chains at which James has just very eloquently pointed out, we do have to recognise that the distribution of these elements around the world hasn't been created with our supply chains in mind and they happen to be where they happen to be. We have to look at it in a global sense, at the way we can all do that in the most sustainable way as we go forward with this project towards electrification.
Pam Thomas:
Its a global project, so we need to collaborate on it. But yet, at the same time, there are massive wins economically for different countries competing against each other. I think that's just an inevitable tension. Its rather like the inevitable tension we have in scientific research, where if you look at The Faraday Institution, for example, we're doing a national project. We're having universities that traditionally compete against each other working together towards the mission for the UK in having these battery targets met. However, their natural inclination would be to compete for their likely economies. That's really the horns of the dilemma that we have as a world in trying to get to this net zero.
Ade Thomas:
Yeah. Interesting point on the serendipity of geographies. We can all look forward to seeing the new lithium mines on our holidays in Cornwell here in the UK, can't we?
Pam Thomas:
Yes, that's right.
Ade Thomas:
Perhaps, James, one of the EY offices in London is sitting on a rich seam of lithium. Who knows? But to continue the theme of sustainability and looking at recycling, do we need to look at recycling to regain those precious elements from the batteries that we make? Pam, would you like to have a first take on that question, please?
Pam Thomas:
Yeah. Well, I think that's absolutely key. We know that we have a finite supply, wherever it comes from in the world, and therefore we should be doing our utmost to recover these precious elements from the batteries at their end of life. That...
PART 2 OF 4 ENDS [00:26:04]
Pam Thomas:
The batteries at their end of life. And I mean, that might sound like it should be trivial, but in fact, its a very complicated project, because batteries do not end life in the same state as they started life. I mean, if all we had to do, as it were, dismantle a pristine battery, that might be something that would be a very surmountable problem. But these batteries would actually have been abused, in terms of the fact that they have been driven probably beyond their recommended life and treated in ways by the average motorist that are not exactly the optimum ways of treating the battery according to the technical book as it were. So they may have been in accidents, they may have been in all sorts of situations, run at higher temperatures than they should have been and so on.
Pam Thomas:
And therefore you have, actually every battery itself, a new case in terms of recycling. And so the way, as I said earlier, this has been treated in the past as well, so the best thing we can do with them then is to throw them all into an enormous shredder and reduces them to black powder, which we then get rid of in various rather unsustainable ways. So the project, for the researchers, is really around how the whole life cycle of the battery can be monitored so that the recycling can be designed in a bespoke way for every battery that comes through the whole process. And all the monitoring and the data that that is collected will tell the end-of life-recycler what this battery has gone through on its journey to the recycling plant, and will then inform how that particular unit is then safely taken apart and the elements recovered.
Pam Thomas:
And there are projects around the world looking at the best way of recycling and recovering elements. And then of course, the other way of looking at this is, well, don't bother to take it apart, but use it in a second-life application, like in a stationary grid storage application until really there are no electrons left coming out of it. Which again, gives it greener credentials, but then you will still have the battery left that you have to get rid of in the very end. So we have projects in the Friday Institution that are looking at ways of safely taking batteries apart and recovering the elements inside, rather than just shredding them. But very much these are future technologies, and they need to be adopted. And probably they need to be adopted also in production so that we're recovering elements from scrap, in manufacturing and so on, and that sustainable manufacturing is very much key to particular companies. I think I could mention Britishvolt here, who are coming in to look at creating gigafactories in the UK.
Ade Thomas:
I like your notion there of surmountable problems, Pam, it sounds like it could perhaps be a research paper from EY, surmountable problems in the mobility sector. One to work on James. Are you doing any work on the business of recycling at EY?
James Nicholson:
Yes, we are. I mean, should we recycle? Obviously there's benefits abounding on that, on being able to recapture and reuse these rare materials. I think on the plus side, we've got a little bit of time on our side. The reality is that we don't have the installed volume, there's not enough batteries that have been into a car, been through its useful first life and come out again, to support recycling plants at scale on an economically-positive basis. So we need that installed base to build up. So we've got a little bit of time until we have the number of batteries that need recycling. And that's useful, because we need the technology to mature a little bit. There are some great technologies and some very nascent technologies that look promising, but we're trying to get things like the nickel and the manganese and the cobalt back out of these batteries at the end of the first life.
James Nicholson:
And this is where it gets really interesting, and Pam touched on this. You can see a divergence between the families of batteries and the types that we use; its nuanced, they're not all one types. So you've got these high-nickel, high-power, high-energy density batteries. And these are the ones that contain all of those precious metals. Now they're perhaps at the moment, they look like they're going to be less good in a static storage second-life application, they're just not as well suited to it at the moment. And that's good because in that instance, you go, "Well, I'll recycle those at the end of first life or soon they're after, and I'll get the metals back." But some of these other batteries, what we call L FP and those types of families, they're probably better suited to a second life. And that's okay too, because they don't contain quite the value of metals in lithium and what's essentially fertiliser, and so they can find their way to a second life.
James Nicholson:
And in that instance, recycling probably has less economic sense, but we still have that end-of-life issue, which you've got to scrap it down, turn it into a black mass and do something with it, I don't know, turn it into a road surface or something. So, there are reasons to be positive, there's a little bit of time, but its not one problem for all batteries, I think its quite a divergent picture.
Ade Thomas:
At the moment, battery prices are hovering around just sub 40% of the overall cost of a vehicle. Projections are that that's going to drop quite substantially to around 20% in 10 or so years time. What are your thoughts on that? And do you think that reduced cost base is going to happen? And if so, will that be a flip to the sector?
James Nicholson:
I think there are... There's been lot of positive advance on battery price, and quite a steep decline in what we call the cost per kilowatt hour, so how much you pay for the power that comes out of the battery. And that's brought it closer to parity with the internal combustion engine. Its not there yet, but its getting there. Its also worth saying that as we transition away from all the volume of the internal combustion engine, there's a strong chance that components that go into those are going to get more expensive as the volumes go down. So the internal combustion engine cars are going to get more expensive. The price curve, the cost curve, is driven primarily by things like energy density and manufacturing excellence. And we've made great progress and there's lots of reasons to be positive around that. We're getting better at making these batteries.
James Nicholson:
We're getting better at assembling the supply chains and the processes in the factories that make them. And there's good reason to believe there's continued benefit there. We're also improving the technology, Pam will speak to this, no doubt, where we're increasing this energy density with better materials in the cathode and the high-nickel materials, and things to come like solid state and silicon anodes. These are all reasons to be positive. There is one cloud on the horizon, and that's it. We've got an ever increasing reliance upon elements such as nickel, cobalt, lithium, manganese, and copper, indeed that go in the plates in these batteries. And for a while now, a lot of those commodities, those metals have had suppressed prices. And they've had to climb to a level where people are willing to put the mines and the refineries in place to generate the materials that go into the batteries.
James Nicholson:
And there's a strong chance that this demand goes up, and those things become quite rare, quite scarce; we could see some of those raw material and refined material prices continue to lift. And that's going to put a pinch point on the cost of the bill of materials that go into these cells. And with it, that could lift the price to the car maker and eventually the consumer.
Ade Thomas:
Pam, what are your thoughts on the materials, science perspective, and wider technology around battery costs?
Pam Thomas:
Yeah, so there's still a lot of work to be done in the material science and the chemistry and the engineering of battery packs. So its not solely the chemistry that's inside, the elements that are inside, there's also all the engineering that goes around that, and there can be huge improvements in battery performance. I heard about an example from a manufacturer that I can't name, a couple of weeks ago, where they've actually had a 40% improvement in the efficiency of their battery from the way they've packed the elements, the components of the battery together inside the space that they have and the way they've mounted those and the thermal management around them. So its not all the chemistry, there's engineering improvements that can be made all the time as well. We should notice that the cost of a lithium battery pack has fallen by over a factor of 10 in the last decade.
Pam Thomas:
So it was over $1,000 on average in 2010, and by 2018, even it was down to under $200, and its gone down further since. So there has been a massive decrease in cost in that decade. To get that kind of further reduction again, is going to take some real breakthrough technologies. And James mentioned a couple, like going to solid-state batteries, for example. And to answer his pinch point about the supply of these important elements like nickel and manganese and so on, the way to address that of course, is to change the chemistry, is to go away from the high-nickel cathodes and so on. James mentioned lithium iron phosphate, LFP, that goes away from the high-nickel cathodes, but then you're going into a lower power density. So we've got to break through on the twin-track of getting rid of those elements such as manganese and nickel, and getting the power.
Pam Thomas:
So that's the real breakthrough-research question, to do both those things at once, which will keep the cost down and keep the resilience of the supply chain up at the same time. So its quite a conundrum, and you may find that you have batteries that are horses for courses, you'll have different batteries in the McLarens and the Lamborghinis from the batteries that you have toddling around in the city cars. And that's a whole landscape that we've got to keep an eye on and play inside, and get the right battery to the right application.
Ade Thomas:
Very good, thanks both. I think in summary, this podcast feels like a school report for materials, investment, manufacturing, sustainability, doing well, but still lots of rooms for improvement across the sector, which I suppose is the opportunity and the space that we're all in. So thank you very much indeed. Both hugely interesting and very insightful. Pam Thomas, James Nicholson, thanks very much indeed. To end every episode, we highlight an exciting and innovative hyper-fast growth company in the sector. Today, our guest is Graham Hoare, President of Global Operations at Britishvolt. Graham, Britishvolt have taken off at an incredibly rapid rate. Could you tell us a little bit more about that trajectory please?
Graham Hoare:
Hello, Ade, and hello everyone. Britishvolt is a company that's only 18 months old, but now valued at over a billion pounds. And its been one hell of a journey. Employees starting at employee one and two, now growing to over 125, but with a trajectory up to 3,000 by 2023, as we start to work on our first gigafactory that will be based in the Northeast of the UK. Its been an amazing story, actually, a story that's leveraged the backdrop of the UK ecosystem for lithium-ion battery development. That's enabled this amazing transformation for this relatively young company to grow its own IP, and ultimately ready itself to produce batteries at scale, 33-gigawatt scale.
Ade Thomas:
Graham, thanks very much indeed for that introduction. Really exciting to hear about that rapidity of growth of Britishvolt. What do you think are the dynamics of the market for batteries on the fast charge to e-mobility, what its underpinning the likes of Britishvolt's huge growth trajectory?
Graham Hoare:
We've seen a real change, even within the last nine or so months, with a pivot...
PART 3 OF 4 ENDS [00:39:04]
Graham Hoare:
Even within the last nine or so months, with a pivot into Europe for the growth engine for the next industrial revolution, previously China, with about 106 gigafactories live today, was really the powerhouse for the future, and actually a lot of activity in North America. But actually, in the last nine months, we've seen that pivot into Europe, particularly with new government policy in the UK and across Europe, which is favouring electrification over internal combustion engines. So, that really has created a very difficult and complex dynamic for the OEMs, all of which that need to change their supply chains over very quickly over the next 5, 6, 7 years. And so, effectively, what we're seeing is a rush now into electric vehicles, and particularly into the battery world.
Ade Thomas:
Yeah. It certainly is super, super exciting times in the innovative space, isn't it? And so, I mean, no company with a growth trajectory like Britishvolt can do that without the support of the investors. Could you tell us a little bit more about some of the investors that you've had helping you in your journey?
Graham Hoare:
At this point, the company is going through three waves of investment. So, we just completed our series B, investment wave, which generated about 50 million pounds. And that really has enabled the company to strengthen and grow, primarily around our R&D platform, so that we can create differentiated and tailored cells that are appropriate for future electric vehicles. But its also meant that we can start to invest in the land and the building development, that's just about to start in Blyth, in the Northeast.
Graham Hoare:
The next wave of investment, which is probably in the 300 to 400 million range, is really then anchoring the first wave of machine tool equipments to the ground, making those early orders, and making sure that the shell and core of the building can be built. And we're seeing a different type of investor being interested in that type of growth. Those investors, more the established investment community, rather than the retail investment that we've had experienced with to date. We're also looking to see where those investors can fit strategically with our work. All of them are committed to the ESG agenda, which the company is built upon, but also that there are many adjacencies that those companies interested in investing in the company usually have an adjacent activity, that would benefit from the battery supply chain being developed with them.
Ade Thomas:
Tell us about the Blyth facility. What's so different about the Blyth facility?
Graham Hoare:
So, the Blyth site is a piece of real estate just north of Newcastle. Its on the coast. It has its own deep water port. It has its own rail link too. And its right on the site of the interconnector between ourselves and Norway. So, it uses 100% green energy from the interconnector, which is quite a remarkable opportunity. It means the cells that we will produce will be green cells. So, out of the box clean, this is the new industrial revolution, and this is one of the first sites that will use that sustainability from its inception.
Ade Thomas:
So, its an enormously dynamic marketplace at the moment, Graham. How are you managing to get product development to market so fast?
Graham Hoare:
We're using the opportunity that the ecosystem in the UK affords us. Some wise investment from the government around the Faraday Institute has effectively brought the best researchers in the world together, about 450 of them, to create a lithium-ion capability to be proud of. What Britishvolt has done is, its come in and its created the key to the front door, if you like. We've been able to leverage all of that science superpower and bring our own intellectual property together to give us about an 18-month acceleration. That also includes using things like the UK battery innovation and industrialization centre that's in the UK Midlands.
Graham Hoare:
Its only just opened, but that facility would have cost Britishvolt about 113 million pounds to invest in, but more importantly, would have taken us 18 months to build. We can leverage that asset straight away. So, we've got a very accelerated project, with an accelerated timeline, with unique IP that's being developed by Britishvolt, but using this backdrop of UK infrastructure. Its a really winning combination that's making a big difference for us. And its allowing us to tailor our chemistry to the unique requirements of the future customers. All of these brands are very passionate, passionate and beautiful brands, particularly those based in the UK, but they all have power train at their heart. Effectively, the batteries are the power trains of the future, and we need to be able to tailor them for these unique customers, and that's very much what the Britishvolt team are doing.
Ade Thomas:
You also mentioned ESG investors. I'd like to just turn our attention now to environmental considerations. Are those environmental considerations a key driver for Britishvolt?
Graham Hoare:
Environmental considerations are really important in the whole products and development. When we talk about embedded carbon in batteries today, if those batteries are coming out of, let's say, China, generally they'll have about 92 kilogrammes of embedded carbon in their development, to that point. In Europe, particularly Eastern Europe, we're at about 62 kilogrammes of embedded carbon. Our aspirations are to significantly improve on that, and the Blyth site we think can be below 30 kilogrammes of CO2. So, that's a tremendous step forward, and really does spark the start of the green industrial revolution, as far as batteries are concerned.
Ade Thomas:
I know from a lot of questions that I get asked, that sustainability and batteries, it is going to be a really key question, and indeed, a question mark around the transition to electric vehicles. On that point, what are you doing at Britishvolt about batteries at the end of their life? Do you have battery recycling plans built into your ideas?
Graham Hoare:
So, firstly, its probably worth recognising that batteries and their battery life expectancy is significantly longer than we originally forecast in the industry. So, we're seeing battery lives well beyond the 10 year mark, at this point. But very much, we need to keep front and centre the redevelopment of those batteries at their end of life. And there are two strands. One is repurposing the batteries, primarily that's into battery energy storage systems for static applications, whether that's in the home, or whether its for other industrial use. In addition to that, there's the recycling, the full recycling, so effectively creating black mass from the batteries through grinding the batteries up, and then recycling through either pyro or hydro processes.
Graham Hoare:
In both cases, we're clear on our strategy, and working with partners to ensure that both routes are available. We clearly don't need to have a massive commitment in this space in the very short term, although the processes of producing batteries does generate a small amount of scrap that must be recycled, we must have that plan in place, and we will do for 2023, when we start to operate in the plants. The bigger scale recycling effort doesn't really need to be in effect until 27, 28. So, our plans are good up to piloting, at this stage, and then having full-scale recycling available to us with our partners in 2027 and eight.
Ade Thomas:
With the rapid advance of EVs, how is Britishvolt well-positioned to deliver to that growing market?
Graham Hoare:
Britishvolt is well-placed to take advantage of this pivot into Europe for electrification. We're very much seeing a huge growth in the electrification world. The sales of electric vehicles doubled in 12 months, so 4%, up to 8%. but actually if you look month on month, about 20% of the vehicle sales in the UK, for example, are now electric vehicles. So, the customers are starting to really coalesce around this new technology, and the passion is really building for these products. So, Britishvolt's I think the right company, with the right technology, and the right location, both here, in the UK, but also in Canada, and at the right time.
Ade Thomas:
Graham, thank you very, very much, indeed. Super exciting to hear about Britishvolt's journey, and a journey that's happening here in the UK. So, very many thanks to you, and very good luck to you at Britishvolt. Thank you very much.
Ade Thomas:
So, that's it for episode four of EV Y. Thank you for joining us today. We've got two more episodes coming up in this series, so please do subscribe to stay up to date with those, and keep sending in your questions and comments to evsummit@green.tv. We'll see you back here for episode five.
PART 4 OF 4 ENDS [00:48:14]
Ade Thomas:
Yeah. Interesting point on the serendipity of geographies. We can all look forward to seeing the new lithium mines on our holidays in Cornwell here in the UK, can't we?
Pam Thomas:
Yes, that's right.
Ade Thomas:
Perhaps, James, one of the EY offices in London is sitting on a rich seam of lithium. Who knows? But to continue the theme of sustainability and looking at recycling, do we need to look at recycling to regain those precious elements from the batteries that we make? Pam, would you like to have a first take on that question, please?
Pam Thomas:
Yeah. Well, I think that's absolutely key. We know that we have a finite supply, wherever it comes from in the world, and therefore we should be doing our utmost to recover these precious elements from the batteries at their end of life. That...
PART 2 OF 4 ENDS [00:26:04]
Pam Thomas:
The batteries at their end of life. And I mean, that might sound like it should be trivial, but in fact, its a very complicated project, because batteries do not end life in the same state as they started life. I mean, if all we had to do, as it were, dismantle a pristine battery, that might be something that would be a very surmountable problem. But these batteries would actually have been abused, in terms of the fact that they have been driven probably beyond their recommended life and treated in ways by the average motorist that are not exactly the optimum ways of treating the battery according to the technical book as it were. So they may have been in accidents, they may have been in all sorts of situations, run at higher temperatures than they should have been and so on.
Pam Thomas:
And therefore you have, actually every battery itself, a new case in terms of recycling. And so the way, as I said earlier, this has been treated in the past as well, so the best thing we can do with them then is to throw them all into an enormous shredder and reduces them to black powder, which we then get rid of in various rather unsustainable ways. So the project, for the researchers, is really around how the whole life cycle of the battery can be monitored so that the recycling can be designed in a bespoke way for every battery that comes through the whole process. And all the monitoring and the data that that is collected will tell the end-of life-recycler what this battery has gone through on its journey to the recycling plant, and will then inform how that particular unit is then safely taken apart and the elements recovered.
Pam Thomas:
And there are projects around the world looking at the best way of recycling and recovering elements. And then of course, the other way of looking at this is, well, don't bother to take it apart, but use it in a second-life application, like in a stationary grid storage application until really there are no electrons left coming out of it. Which again, gives it greener credentials, but then you will still have the battery left that you have to get rid of in the very end. So we have projects in the Friday Institution that are looking at ways of safely taking batteries apart and recovering the elements inside, rather than just shredding them. But very much these are future technologies, and they need to be adopted. And probably they need to be adopted also in production so that we're recovering elements from scrap, in manufacturing and so on, and that sustainable manufacturing is very much key to particular companies. I think I could mention Britishvolt here, who are coming in to look at creating gigafactories in the UK.
Ade Thomas:
I like your notion there of surmountable problems, Pam, it sounds like it could perhaps be a research paper from EY, surmountable problems in the mobility sector. One to work on James. Are you doing any work on the business of recycling at EY?
James Nicholson:
Yes, we are. I mean, should we recycle? Obviously there's benefits abounding on that, on being able to recapture and reuse these rare materials. I think on the plus side, we've got a little bit of time on our side. The reality is that we don't have the installed volume, there's not enough batteries that have been into a car, been through its useful first life and come out again, to support recycling plants at scale on an economically-positive basis. So we need that installed base to build up. So we've got a little bit of time until we have the number of batteries that need recycling. And that's useful, because we need the technology to mature a little bit. There are some great technologies and some very nascent technologies that look promising, but we're trying to get things like the nickel and the manganese and the cobalt back out of these batteries at the end of the first life.
James Nicholson:
And this is where it gets really interesting, and Pam touched on this. You can see a divergence between the families of batteries and the types that we use; its nuanced, they're not all one types. So you've got these high-nickel, high-power, high-energy density batteries. And these are the ones that contain all of those precious metals. Now they're perhaps at the moment, they look like they're going to be less good in a static storage second-life application, they're just not as well suited to it at the moment. And that's good because in that instance, you go, "Well, I'll recycle those at the end of first life or soon they're after, and I'll get the metals back." But some of these other batteries, what we call L FP and those types of families, they're probably better suited to a second life. And that's okay too, because they don't contain quite the value of metals in lithium and what's essentially fertiliser, and so they can find their way to a second life.
James Nicholson:
And in that instance, recycling probably has less economic sense, but we still have that end-of-life issue, which you've got to scrap it down, turn it into a black mass and do something with it, I don't know, turn it into a road surface or something. So, there are reasons to be positive, there's a little bit of time, but its not one problem for all batteries, I think its quite a divergent picture.
Ade Thomas:
At the moment, battery prices are hovering around just sub 40% of the overall cost of a vehicle. Projections are that that's going to drop quite substantially to around 20% in 10 or so years time. What are your thoughts on that? And do you think that reduced cost base is going to happen? And if so, will that be a flip to the sector?
James Nicholson:
I think there are... There's been lot of positive advance on battery price, and quite a steep decline in what we call the cost per kilowatt hour, so how much you pay for the power that comes out of the battery. And that's brought it closer to parity with the internal combustion engine. Its not there yet, but its getting there. Its also worth saying that as we transition away from all the volume of the internal combustion engine, there's a strong chance that components that go into those are going to get more expensive as the volumes go down. So the internal combustion engine cars are going to get more expensive. The price curve, the cost curve, is driven primarily by things like energy density and manufacturing excellence. And we've made great progress and there's lots of reasons to be positive around that. We're getting better at making these batteries.
James Nicholson:
We're getting better at assembling the supply chains and the processes in the factories that make them. And there's good reason to believe there's continued benefit there. We're also improving the technology, Pam will speak to this, no doubt, where we're increasing this energy density with better materials in the cathode and the high-nickel materials, and things to come like solid state and silicon anodes. These are all reasons to be positive. There is one cloud on the horizon, and that's it. We've got an ever increasing reliance upon compounds such as nickel, cobalt, lithium, manganese, and copper, indeed that go in the plates in these batteries. And for a while now, a lot of those commodities, those metals have had suppressed prices. And they've had to climb to a level where people are willing to put the mines and the refineries in place to generate the materials that go into the batteries.
James Nicholson:
And there's a strong chance that this demand goes up, and those things become quite rare, quite scarce; we could see some of those raw material and refined material prices continue to lift. And that's going to put a pinch point on the cost of the bill of materials that go into these cells. And with it, that could lift the price to the car maker and eventually the consumer.
Ade Thomas:
Pam, what are your thoughts on the materials, science perspective, and wider technology around battery costs?
Pam Thomas:
Yeah, so there's still a lot of work to be done in the material science and the chemistry and the engineering of battery packs. So its not solely the chemistry that's inside, the elements that are inside, there's also all the engineering that goes around that, and there can be huge improvements in battery performance. I heard about an example from a manufacturer that I can't name, a couple of weeks ago, where they've actually had a 40% improvement in the efficiency of their battery from the way they've packed the elements, the components of the battery together inside the space that they have and the way they've mounted those and the thermal management around them. So its not all the chemistry, there's engineering improvements that can be made all the time as well. We should notice that the cost of a lithium battery pack has fallen by over a factor of 10 in the last decade.
Pam Thomas:
So it was over $1,000 on average in 2010, and by 2018, even it was down to under $200, and its gone down further since. So there has been a massive decrease in cost in that decade. To get that kind of further reduction again, is going to take some real breakthrough technologies. And James mentioned a couple, like going to solid-state batteries, for example. And to answer his pinch point about the supply of these important elements like nickel and manganese and so on, the way to address that of course, is to change the chemistry, is to go away from the high-nickel cathodes and so on. James mentioned lithium iron phosphate, LFP, that goes away from the high-nickel cathodes, but then you're going into a lower power density. So we've got to break through on the twin-track of getting rid of those elements such as manganese and nickel, and getting the power.
Pam Thomas:
So that's the real breakthrough-research question, to do both those things at once, which will keep the cost down and keep the resilience of the supply chain up at the same time. So its quite a conundrum, and you may find that you have batteries that are horses for courses, you'll have different batteries in the McLarens and the Lamborghinis from the batteries that you have toddling around in the city cars. And that's a whole landscape that we've got to keep an eye on and play inside, and get the right battery to the right application.
Ade Thomas:
Very good, thanks both. I think in summary, this podcast feels like a school report for materials, investment, manufacturing, sustainability, doing well, but still lots of rooms for improvement across the sector, which I suppose is the opportunity and the space that we're all in. So thank you very much indeed. Both hugely interesting and very insightful. Pam Thomas, James Nicholson, thanks very much indeed. To end every episode, we highlight an exciting and innovative hyper-fast growth company in the sector. Today, our guest is Graham Hoare, President of Global Operations at Britishvolt. Graham, Britishvolt have taken off at an incredibly rapid rate. Could you tell us a little bit more about that trajectory please?
Graham Hoare:
Hello, Ade, and hello everyone. Britishvolt is a company that's only 18 months old, but now valued at over a billion pounds. And its been one hell of a journey. Employees starting at employee one and two, now growing to over 125, but with a trajectory up to 3,000 by 2023, as we start to work on our first gigafactory that will be based in the Northeast of the UK. Its been an amazing story, actually, a story that's leveraged the backdrop of the UK ecosystem for lithium-ion battery development. That's enabled this amazing transformation for this relatively young company to grow its own IP, and ultimately ready itself to produce batteries at scale, 33-gigawatt scale.
Ade Thomas:
Graham, thanks very much indeed for that introduction. Really exciting to hear about that rapidity of growth of Britishvolt. What do you think are the dynamics of the market for batteries on the fast charge to e-mobility, what its underpinning the likes of Britishvolt's huge growth trajectory?
Graham Hoare:
We've seen a real change, even within the last nine or so months, with a pivot...
PART 3 OF 4 ENDS [00:39:04]
Graham Hoare:
Even within the last nine or so months, with a pivot into Europe for the growth engine for the next industrial revolution, previously China, with about 106 gigafactories live today, was really the powerhouse for the future, and actually a lot of activity in North America. But actually, in the last nine months, we've seen that pivot into Europe, particularly with new government policy in the UK and across Europe, which is favouring electrification over internal combustion engines. So, that really has created a very difficult and complex dynamic for the OEMs, all of which that need to change their supply chains over very quickly over the next 5, 6, 7 years. And so, effectively, what we're seeing is a rush now into electric vehicles, and particularly into the battery world.
Ade Thomas:
Yeah. It certainly is super, super exciting times in the innovative space, isn't it? And so, I mean, no company with a growth trajectory like Britishvolt can do that without the support of the investors. Could you tell us a little bit more about some of the investors that you've had helping you in your journey?
Graham Hoare:
At this point, the company is going through three waves of investment. So, we just completed our series B, investment wave, which generated about 50 million pounds. And that really has enabled the company to strengthen and grow, primarily around our R&D platform, so that we can create differentiated and tailored cells that are appropriate for future electric vehicles. But its also meant that we can start to invest in the land and the building development, that's just about to start in Blyth, in the Northeast.
Graham Hoare:
The next wave of investment, which is probably in the 300 to 400 million range, is really then anchoring the first wave of machine tool equipments to the ground, making those early orders, and making sure that the shell and core of the building can be built. And we're seeing a different type of investor being interested in that type of growth. Those investors, more the established investment community, rather than the retail investment that we've had experienced with to date. We're also looking to see where those investors can fit strategically with our work. All of them are committed to the ESG agenda, which the company is built upon, but also that there are many adjacencies that those companies interested in investing in the company usually have an adjacent activity, that would benefit from the battery supply chain being developed with them.
Ade Thomas:
Tell us about the Blyth facility. What's so different about the Blyth facility?
Graham Hoare:
So, the Blyth site is a piece of real estate just north of Newcastle. Its on the coast. It has its own deep water port. It has its own rail link too. And its right on the site of the interconnector between ourselves and Norway. So, it uses 100% green energy from the interconnector, which is quite a remarkable opportunity. It means the cells that we will produce will be green cells. So, out of the box clean, this is the new industrial revolution, and this is one of the first sites that will use that sustainability from its inception.
Ade Thomas:
So, its an enormously dynamic marketplace at the moment, Graham. How are you managing to get product development to market so fast?
Graham Hoare:
We're using the opportunity that the ecosystem in the UK affords us. Some wise investment from the government around the Faraday Institute has effectively brought the best researchers in the world together, about 450 of them, to create a lithium-ion capability to be proud of. What Britishvolt has done is, its come in and its created the key to the front door, if you like. We've been able to leverage all of that science superpower and bring our own intellectual property together to give us about an 18-month acceleration. That also includes using things like the UK battery innovation and industrialization centre that's in the UK Midlands.
Graham Hoare:
Its only just opened, but that facility would have cost Britishvolt about 113 million pounds to invest in, but more importantly, would have taken us 18 months to build. We can leverage that asset straight away. So, we've got a very accelerated project, with an accelerated timeline, with unique IP that's being developed by Britishvolt, but using this backdrop of UK infrastructure. Its a really winning combination that's making a big difference for us. And its allowing us to tailor our chemistry to the unique requirements of the future customers. All of these brands are very passionate, passionate and beautiful brands, particularly those based in the UK, but they all have power train at their heart. Effectively, the batteries are the power trains of the future, and we need to be able to tailor them for these unique customers, and that's very much what the Britishvolt team are doing.
Ade Thomas:
You also mentioned ESG investors. I'd like to just turn our attention now to environmental considerations. Are those environmental considerations a key driver for Britishvolt?
Graham Hoare:
Environmental considerations are really important in the whole products and development. When we talk about embedded carbon in batteries today, if those batteries are coming out of, let's say, China, generally they'll have about 92 kilogrammes of embedded carbon in their development, to that point. In Europe, particularly Eastern Europe, we're at about 62 kilogrammes of embedded carbon. Our aspirations are to significantly improve on that, and the Blyth site we think can be below 30 kilogrammes of CO2. So, that's a tremendous step forward, and really does spark the start of the green industrial revolution, as far as batteries are concerned.
Ade Thomas:
I know from a lot of questions that I get asked, that sustainability and batteries, it is going to be a really key question, and indeed, a question mark around the transition to electric vehicles. On that point, what are you doing at Britishvolt about batteries at the end of their life? Do you have battery recycling plans built into your ideas?
Graham Hoare:
So, firstly, its probably worth recognising that batteries and their battery life expectancy is significantly longer than we originally forecast in the industry. So, we're seeing battery lives well beyond the 10 year mark, at this point. But very much, we need to keep front and centre the redevelopment of those batteries at their end of life. And there are two strands. One is repurposing the batteries, primarily that's into battery energy storage systems for static applications, whether that's in the home, or whether its for other industrial use. In addition to that, there's the recycling, the full recycling, so effectively creating black mass from the batteries through grinding the batteries up, and then recycling through either pyro or hydro processes.
Graham Hoare:
In both cases, we're clear on our strategy, and working with partners to ensure that both routes are available. We clearly don't need to have a massive commitment in this space in the very short term, although the processes of producing batteries does generate a small amount of scrap that must be recycled, we must have that plan in place, and we will do for 2023, when we start to operate in the plants. The bigger scale recycling effort doesn't really need to be in effect until 27, 28. So, our plans are good up to piloting, at this stage, and then having full-scale recycling available to us with our partners in 2027 and eight.
Ade Thomas:
With the rapid advance of EVs, how is Britishvolt well-positioned to deliver to that growing market?
Graham Hoare:
Britishvolt is well-placed to take advantage of this pivot into Europe for electrification. We're very much seeing a huge growth in the electrification world. The sales of electric vehicles doubled in 12 months, so 4%, up to 8%. but actually if you look month on month, about 20% of the vehicle sales in the UK, for example, are now electric vehicles. So, the customers are starting to really coalesce around this new technology, and the passion is really building for these products. So, Britishvolt's I think the right company, with the right technology, and the right location, both here, in the UK, but also in Canada, and at the right time.
Ade Thomas:
Graham, thank you very, very much, indeed. Super exciting to hear about Britishvolt's journey, and a journey that's happening here in the UK. So, very many thanks to you, and very good luck to you at Britishvolt. Thank you very much.
Ade Thomas:
So, that's it for episode four of EV Y. Thank you for joining us today. We've got two more episodes coming up in this series, so please do subscribe to stay up to date with those, and keep sending in your questions and comments to evsummit@green.tv. We'll see you back here for episode five.
PART 4 OF 4 ENDS [00:48:14]
