The electric vehicle (EV) industry faces a long term lithium ion battery bottleneck for the highest quality of cells.
New data from Benchmark Mineral Intelligence shows that while forecast demand for lithium ion batteries only begins to exceed capacity in 2029, Tier One cells are going to be in the shortest supply throughout this period, especially as we enter 2021.
The chart below maps forecasted lithium ion battery cell capacity tracked by Benchmark’s Lithium Ion Battery Megafactory Assessment against Benchmark’s forecast battery demand.
On the surface, it appears there will not be any oversupply of battery cells at any point until 2030.
However, not all lithium ion batteries can be used in all EVs which is why Benchmark introduced its EV tiering system to assess each producer on the three Qs: quality, quantity and qualification for automotive uses.
It is an issue that has already been faced by European auto OEMs especially in the last 6 months.
The industry will be looking to Tier Two cell manufacturers to step up and meet the burgeoning demands of the EV industry, but this is not as straight forward as it may seem.
Not only do these Tier Two manufacturers need to qualify with the major automakers — a lengthy and high specification process — but they will also need to ensure they can grow their capacity at an increasingly rapid rate without compromising quality.
This speed of expansion is something that Tier One battery makers in Europe have struggled with so far this year.
With the increasing capacity commitments seen since 2014, Benchmark is now tracking 123 battery plants (megafactories) totalling 2,272.5 GWh total capacity by 2029 (as of February 2020 assessment).
Tier One Battery Bottleneck: Quality and Quantity remain an issue for electric vehicle makers (Units: GWh)