By Simon Moores, Managing Director, Benchmark Mineral Intelligence
It was on the first Benchmark World Tour in Toronto, 2015, that I first mentioned the phrase “battery arms race”.
It was picked up by top industry journalist, Simon Rees, who cemented those words when writing for Mining Weekly with the article: Megafactory trend sparks ‘arms race’ in battery sector.
At the time, Benchmark was tracking seven lithium ion battery megafactories (or gigafactories), five of which came to fruition and are producing cells for electric vehicles (EVs) today.
It was a phrase I believed was apt at the time.
It was in the wake of Tesla’s Gigafactory announcement which had rapidly entered construction, which saw an immediate reaction from battery incumbents of LG Chem and Samsung SDI to expand existing facilities and establish new plants in China – the heartland of the first wave of EV demand.
To say many mining industry participants were sceptical about Tesla, the Gigafactory, and EVs in general, would be generous. After all, any one plant that would require the equivalent of a new lithium and graphite mine was unheard of.
Little over two years later, I was invited to give a testimony to the US Senate Committee on Energy & Natural Resources led by Senator Lisa Murkowski of Alaska.
I explained to the committee that “huge battery plants are now being constructed that are an order of magnitude larger than their predecessors”.
At this point in time, Benchmark’s megafactory tracker had now risen to 17 super sized battery plants worldwide.
While excitement in the industry was growing, the message at US government level beyond the committee was not really landing during what was the first year of President Trump’s Administration.
This is despite Team Benchmark being consistent with our message: the world is undergoing a mass expansion of lithium ion battery cell production to fuel an energy storage revolution.
One year and four months later, Senator Murkowski invited me back to present for a second time to the US Senate Committee on Energy & Natural Resources.
The megafactory trend had not changed; in fact it had intensified in the short time since my last testimony. We were now at 70 lithium ion battery megafactories worldwide, 53 additional plants than a little over a year before.
My speech was already written in earnest from the first testimony, it just needed a retune.
Knowing what to expect this time round in Room 366 of the Dirksen Senate Office Building in Washington, DC, helped me focus on not just what to say but how to say it.
Addressing senators that are juggling numerous hearings on even more expansive subjects every day, and for some that walk in and out of the room mid-hearing, is a challenge.
So as I took my seat, it was simple… stick to the Benchmark ethos of ‘say what you see’: “We are in the midst of a global battery arms race in which the US is presently a bystander.”
The message landed, and did so “clearly and directly,” said Senator Murkowski.
What follows would be the true battery arms race.
From this testimony to being invited to address the US Senate once again in June 2020, the build out of lithium ion battery cell capacity had entered a new gear. Benchmark was now tracking 142 battery megafactories.
The comparative inactivity in the US versus what was happening in Europe and China was becoming more and more stark. My headline message for this speech was as follows:
“China is building the equivalent of one battery megafactory a week, the United States one every four months.”
Back in 2015, I saw the unfolding story as a race for dominance in what will be a mainstream industrial cog of the 21st century – the automotive industry.
It was clear to me back then that with lithium ion batteries getting better, lower cost and at same time as supply availability increasing, EVs would represent a large proportion of the future auto industry – more than most people expected.
The probabilities of success were strongly on lithium ion’s side. And coming from a base of almost zero, the opportunities for the early movers both in EV production all the way up the supply chain to mining companies was clear and present.
So I envisioned it as a race for dominance in the auto space and, for similar reasons, the energy and utility industry.
Since 2019, with this trend taking hold and the world becoming more bullish on EVs as a mainstream technology, it was also clear this was a race to shift technology from ICE to EV. This has been bolstered in 2021 with Volkswagen Group’s Herbert Diess and President Joe Biden both playing major roles to push this global battery arms race to yet a new level.
VW revealed in March that it is going all in on building its own EV ecosystem and with it announcing 6 battery megafactories in Europe in a bid to produce the 240GWh* it will need by the mid-2020s.
*A reminder that back in 2015 the world’s entire lithium ion battery market was 70GWh.
President Biden ensured US political sentiment and will was fully behind domestic EV and battery production with two major actions. The first occurred in February through the signing of Executive Order 14017: a 100 day review focusing on a number of strategic technologies, including lithium ion batteries.
The second was by stepping into a multi-billion dollar dispute on US soil between South Korea’s two biggest battery makers, LG Chem and SK Innovation, to spark a resolution ensuring a competitive US lithium ion battery industry going forward – something Benchmark advised on.
Both events marked the first time that lithium ion batteries were at the top of the geopolitical agenda in the USA. Both Diess and President Biden are only the second and third people to appear on the cover of the Benchmark Quarterly magazine after Elon Musk.
Our first ever cover featured Musk in 2015 – “The megafactories are coming” – followed again in 2018 with “The megafactories are here”.
All three can both take some credit for making these battery megafactories or gigafactories mainstream and building the platform technology to the energy storage revolution.
Be under no illusions that this is a moment.
The battery arms race trend was set in motion in 2015, but we can now comfortably say: “the megafactories are mainstream”. The journey has taken Benchmark to the top of world governance including The White House, The Pentagon and The G7.
The world’s governments are listening. And with this political will adding to industry commitment, Benchmark’s Lithium ion Battery Megafactory Assessment now reads 225 plants and rising.
And the USA is no longer a bystander.
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