The lithium-ion battery industry for electric vehicles

Abstract

Electric vehicles have reemerged as a viable alternative means of transportation, driven by energy security concerns, pressures to mitigate climate change, and soaring energy demand. The battery component will play a key role in the adoption of these vehicles as it defines their cost, range and safety. Advances in lithium-ion battery technology are creating possibilities for electric vehicles to compete with their gasoline counterparts for the first time. However, many challenges remain, the most important of which is cost. This thesis has three main objectives. The first is to describe the evolution of the lithium-ion battery industry up to its current state. Lithium-ion battery technology was first developed in the United States and Europe. Japanese companies were the first to adopt it and commercialize it in the early 1990s, principally for electronics products. Manufacturing capabilities spread to China and Korea in the early 2000s. By the end of the first decade of this century, Southeast Asia was dominating manufacturing of lithium-ion batteries, with 98% of global production. The United States is today investing heavily to create a domestic lithium-ion battery manufacturing capability while Asian battery manufacturers are repositioning themselves to capture the market for electric vehicle batteries. The second objective of the thesis is to describe the current status of supply chain relations between automakers and battery manufacturers, and to understand how these relations might affect automakers' competitiveness. Three types of relationships are coexisting today: vertical integration, partnerships and outsourcing. Some automakers are developing battery packs in-house in vertically integrated organizations, others have forged partnerships with battery suppliers, while others have completely outsourced the development and manufacturing of the battery pack to an external supplier. Each model has its own advantages and drawbacks, and none would appear to be optimal for the entire industry as different automakers have different constraints and objectives. In the near future, knowledge of cell characteristics will be key to developing battery packs. While battery standardization is unlikely, as the technology matures firms will focus more on software and battery integration to establish their competitive edge. Finally, the thesis examines the role of government policy in the industry. Many mechanisms can be used to promote the industrial development of battery technology, both on the supply-side through research funding and the support of manufacturing, and on the demand side though regulatory standards and consumer incentives.