What is cobalt? And how are OEMs using less of it?

 In EV Industry

It’s no longer in doubt, electric vehicles (EVs) are the future of transportation. Growth has been significant, by the end of 2017 Norway had 39.2 percent market share, and analysts tell us that global EV market share is set to increase significantly in the coming years. Electrification offers many advantages such as fewer toxic emissions, and cheaper transport. However, there is room for improvement. Most of the EVs on the road today have large lithium-ion batteries, which first prompt worries about the worlds lithium supply. But, another element cobalt, is of greater concern.

What is Cobalt? And, why is it used in EV batteries?

A lithium-ion battery uses a cathode, consisting of nickel, cobalt, lithium, and aluminum, an anode made of graphite, and an electrolyte containing lithium salts. The diagram below breakdowns both the elements and the materials typically used in an EV battery.

Materials used in a typical EV battery

Source: BNEF

Lithium-ion batteries use cobalt to do the job of retaining and discharging electricity. Without getting too technical, cobalt has unique properties that allow a large quantity of energy to be stored in a relatively small space, and provide the battery with excellent cycle ability, thus making it attractive to battery manufacturers.

It is important to point out that the demand for cobalt is not purely explained by EVs, the global demand for consumer electronics, such as smartphones, laptops, and other electronic devices that use lithium-ion batteries all play a role. There has been plenty of talk about the potential supply constraint of lithium; however, arguably a more significant concern is the supply of cobalt as the market for EVs grow.

Cobalt is controversial

The International Energy Agency indicates that there is a good chance that global EV stock will reach upwards of 20 million by 2020 and 70 million by 2025. As EV stock increases, the demand for lithium-ion will also increase, therefore, in turn, increasing the need for cobalt. Expanding the supply of cobalt is controversial, but why? The following pie chart lists the countries with the highest volumes of cobalt mining.

Mined cobalt output

Source: Macquarie Research Report, data retrieved for 2016

As shown above, the majority of cobalt mining takes place in the Democratic Republic of the Congo (DRC), and this is where the controversy lies. The DRC is well-known for its lack of political stability, legal transparency, and controls on the exploitation of child labor. In 2017, The University of California analyzed the working conditions of 2,500 households on the DRC’s copper belt. They found that 90 percent of cobalt work was in small-scale artisanal mining sites.

Glencore predict with an extremely conservative scenario of 30 million electric cars by 2030, would require cobalt output to more than treble. Therefore, this concentration of supply risk of the physical extraction and ethical sourcing isn’t likely to be eradicated anytime soon, and could ultimately heighten. With that said, the arrival of OEM manufacturers to this unstable market could, in theory, have a positive influence to encourage market reform and more responsible sourcing. Tech giants such as HP, Samsung, and Sony have already set the blueprint by joining an initiative called the Responsible Cobalt Initiative to increase transparency and hold firms accountable all the way along the cobalt mining supply chain.

What are OEMs doing to reduce cobalt use?

According to Bloomberg, as EV production gathers pace, cobalt supplies are expected to fall short of demand, and therefore OEMs must be pro-active to close the supply gap.

First, OEMs must be held accountable for the sourcing of its cobalt stock. For example, Tesla is committed to source cobalt from North America only. Furthermore, one of the world’s largest battery suppliers, LG Chem, claims they will no longer source cobalt from conflict zones. Another way to alleviate the strain is by providing a second life through recycling. Cobalt is 100 percent recyclable, and therefore reduces the need for additional sourcing. Commodity Research Group (CRU) expects recycling to account for up to 18 percent of total market supply by 2026. But, perhaps the most effective way is to change the way EV batteries are made by reducing or completely removing the use of cobalt in the production process.

Alternatives, and new emerging battery technologies

Since the Roadster and the first-generation Model S, Tesla has managed to reduce the use of cobalt in their EV batteries by an average of 59% over a nine-year period from 2009 to 2018. In the 2018 Q1 update, Tesla claims this has been achieved by significantly reducing the amount of cobalt per battery pack, and replacing the content with nickel, without having to compromise on battery performance.

Tesla cobalt evolution

Source: Benchmark Mineral Intelligence

Further to this, manufacturers have begun to explore new battery chemistries, thus protecting themselves from the foreseeable shortages of cobalt. For example, solid-state batteries use less cobalt and have the potential to perform better than the batteries currently on the market. Lithium Titanate is gaining traction as they don’t require cobalt. Other chemistries that rely on magnesium or lithium-sulfur are also being brought into the conversation as they have the potential to beat the current lithium-ion batteries on energy density and cost. For a closer look at the battery chemistries on the market today, see this recent article.

Concluding remarks

In an ideal world, EV battery manufacturers would source cobalt from an alternative country to the DRC, but this is difficult to avoid when 60 percent of the worlds cobalt reserves reside in the DRC. Nonetheless, Canada and the United States are creating their cobalt supply chains, which some OEMs are looking to exploit. There is also the potential for OEMs to join forces to encourage a clean-up of the cobalt supply chain globally. However, when cobalt is one of the most expensive components of the EV battery, coupled with the possible shortages as EV adoption rises, it creates an incentive to remove cobalt in the development of EV batteries all-together. Tesla has shown that decreasing the use of cobalt is possible. Furthermore, new alternative battery chemistries such as Lithium Titanate are beginning to emerge. If history is anything to go by, technological innovations will make supply constraints of cobalt a thing of the past.

Recommended Posts