In a 2021 remake of “The Graduate” (God forbid), the one word of advice that a family friend would offer Benjamin Braddock will be “batteries,” not “plastic.” While most of us only think about batteries when a mobile phone goes dead or a child’s toy stops, new battery technology will transform our lives and reshape geopolitics in the process.
Batteries were invented over 200 years ago. While essential to most forms of technology, improvements have been incremental although their performance assumed new urgency after the 1970’s Oil Shock when energy prices skyrocketed and safe and effective storage became critical. That moment spurred researchers to find alternatives to fossil fuels, an effort that culminated in the development of the lithium-ion battery, the workhorse that powers virtually all current portable electronics. The 2019 Nobel Prize in Chemistry was awarded to Stanley Whittingham, John Goodenough and Akira Yoshino for their work in this field, with the Nobel Committee noting that “future breakthroughs will undoubtedly lead to further improvements in our lives, not only for our convenience, but also with respect to global and local environments and, ultimately, the sustainability of our entire planet.”
The race to improve battery technology is proceeding on several fronts, the most visible of which is that for electric vehicles (EVs). Only about 17,000 electric cars were on the road in 2010. The International Energy Agency (IEA) estimates that more than 2.1 million electric cars were sold globally last year — a 40 percent increase over the previous year. That’s an impressive jump even though the total number of electric cars worldwide is just 7.2 million, or about 1 percent of the global car stock. In 2016, EVs made up about 2 percent of global vehicles, a percentage that is expected to grow to 22 percent by 2030. (More optimistic forecasts predict that 57 percent of new passenger car sales in 2040 will be electric, and the electric fleet will constitute 30 percent of the total.)
Critical to a bright future are better batteries, which will allow consumers to travel longer distances at higher speeds without recharging. Most first-generation electric cars could go around 160 kilometers on a single charge; newer cars go two or three times that distance. A full home recharge takes 8-10 hours while public chargers can do it in about 10 minutes.
The leading — and certainly loudest — evangelist for electric cars is Elon Musk, whose Tesla Roadster was the first commercially viable battery-powered electric vehicle. His success prodded almost all other automakers to follow suit. Musk’s goal now is to make his cars more affordable and more competitive with gas-powered cars.
Success depends on reducing the cost of the lithium-ion battery, which accounts for nearly one-third of the cost of the car. To pull that off, Musk announced last week that he will move battery production in-house. He plans to produce 100 gigawatt-hours’ worth of battery cells by 2022 — three times the amount he purchases from Panasonic, his current supplier, and enough for 1.4 million vehicles. He aims to cut production costs by 56 percent per kilowatt hour, which would allow him to market a $25,000 car, a price about one-third less than his current cheapest model.
While chemistry and physics set absolute limits on how much juice can be squeezed out of a battery, Musk is well positioned to find that bound. By internalizing the entire battery production cycle, he can find efficiencies and then benefit from economies of scale. That process has already pushed battery prices down about 85 percent since 2010, and the price is expected to drop another 50 percent by 2024. At that point, electric vehicles will cost about the same as internal combustion engines. (Other automakers are collaborating with their battery suppliers to match that cost curve.)
Musk has another advantage in this race: He also manufactures batteries for home energy storage, the second, far less recognized, but equally important, use. Home batteries allow homeowners to store energy that they generate themselves — from, say, solar panels — or that they purchase from the grid (which can be used as a backup if local energy grids are unreliable).
Batteries are central to any transition to a world dominated by renewable energy. The chief obstacle to its spread is the reliability of wind or solar power sources: The wind stops blowing and the sun goes down or is often obscured. If the energy they generate could be stored at a reasonable cost, the cost advantage of fossil fuels would diminish. A recent study from researchers at the University of California Berkeley concluded that under the most optimal case — which depends heavily on new grid-size batteries — the U.S. could, by 2035, rely on renewables for 90 percent of its energy. That process is underway. In 2017, more than 1 gigawatt of power storage capacity (batteries) was added worldwide. That is a sliver of the demand but the curve is ascending: That figure is forecast to exceed 50 GW this year and reach almost 1,000 GW by 2040, impressive growth but still only about 7 percent of world energy capacity.
Falling costs are already having an impact. They have undercut the need for the natural gas-powered plants that were planned to meet variable energy demand — if storage is an option, then those so-called “peaker” plants aren’t needed.
Better batteries can help clean up the environment. The IEA estimates that the electric vehicles in operation globally in 2019 eliminate the consumption of almost 0.6 million barrels of oil products per day. The electricity generated to supply that fleet emitted 51 metric tons of carbon dioxide equivalent (Mt CO2-eq), or about half what would have been emitted from the same number of internal combustion engine vehicles. In all, then, EVs reduced emissions by 53 Mt CO2- eq — a little more than the amount saved globally by the use of nuclear power in advanced economies.
There are two more pieces to this story, however. The first concerns destruction done to the environment and the society of the Democratic Republic of Congo, which produces more than 60 percent of the world’s cobalt. There are voluminous reports of human rights abuses in the mining of cobalt, and the theft of the country’s resources. Companies are trying to be more transparent about battery supply chains, but much more can and must be done.
A second environmental problem for batteries is disposal. The 1 million EVs sold last year will result in 250,000 tons of discarded battery packs; as electric vehicles become more popular, so too will the volume of such refuse. And they are dangerous; they leak heat and can explode. Recycling, either for electric vehicles or other uses such as home storage, is preferred, but systematic programs have not been developed — and they will have to grow as fast as the EV market.
Researchers are hot in search of the next big thing in battery development — perhaps where a 21st century Benjamin Braddock would work. While Japan has fallen behind China and South Korea in battery production, it still leads on the frontier. Japanese companies applied for more than one-third of international patents in the field, and in 2018 published almost twice as many international patent applications as second-ranked South Korea. The EU was third, China fourth and the U.S. fifth. While Samsung had the most filings for battery inventions from 2000-2018, there were seven Japanese companies among the top 10 applicants.
With the battery market forecast to grow to $426 billion worldwide, Ben can always profit from the battery boom, even without becoming a scientist, by investing in those companies.
Brad Glosserman is deputy director of and visiting professor at the Center for Rule Making Strategies at Tama University as well as senior adviser (nonresident) at Pacific Forum. He is the author of “Peak Japan: The End of Great Ambitions” (Georgetown University Press, 2019).
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