Chemistry & Life Sciences

Battery Material Producers Remain Optimistic

Full Commercialization Of Advanced Materials Likely To Be Long Haul

06.08.2013 -

Technology - Companies developing and producing chemicals for the large battery market are remaining bullish about its prospects despite its spectacular failure so far to live up to expectations. Full commercialization of technologies such as lithium-ion batteries for key sectors like transportation, particularly for automobiles, is taking longer to be achieved than previously predicted.

Forecasters had been saying 4-5 years ago that there would be strong demand for lithium-ion batteries in vehicles and for stationary use due to the need to cut CO2 emissions and reduce dependence on increasingly costly fossil fuels.
Instead, throughout most of the world large battery sales have been weak. This has resulted in a huge excess in production capacity throughout the battery supply chain from materials through to the manufacture of cells and modules.

Capacity Over Demand

By late last year, global production capacity for automotive lithium-ion batteries was five times higher than demand, according to Menahem Anderman, president of the U.S.-based consultancy Advanced Automotive Battery (AAB).

The most serious flop in sales has been in the U.S. where the federal government had by mid-2012 allocated over $2 billion in subsidies for the production of electric vehicles, the US Congressional Budget Office (CBO) has estimated.

Since automobile manufacturers introduced in 2010 a new generation of electric vehicles powered by lithium-ion batteries, their sales had reached only 40,000 by last year while the government's target was 200,000. "Such vehicles will probably continue to make up only a small share of total vehicle sales for many years to come," concluded the CBO in a recent study on electric vehicle incentives.

Chemical Industry Outlook Positive

BASF's chief financial officer, Hans-Ulrich Engel, said that the company had anticipated difficult financial conditions initially when it set up a global battery materials business in 2011.
"It is a business in which we are willing to take losses at the beginning," he added. "It is driven by R&D expenses and investment in production plants. We have to be patient."

BASF has said it intends to invest a three-digit million euro sum in the research, development and production of advanced battery materials through to 2016.
"We are going in the right direction (with our battery materials business)," Andreas Kreimeyer, BASF's research executive director, told at the company's research press conference in May. "We are being ambitious and we're optimistic we will achieve our targets, although perhaps a bit later rather than earlier."
Among other European companies which are still focusing on expansion in the battery materials market in the longer term are Clariant, Solvay, Arkema, Evonik, Lanxess and Bayer MaterialScience (BMS).

Clariant claims that for its battery materials business the medium to long-term growth prospects remained unchanged.
"Promising future markets such as energy storage... are still in their early days," said Rudolf Wehrli, Clariant's chief executive.

Electric Vehicle Slump

Demand for electric vehicles - comprising plug-in hybrid electric vehicles (PHEVs) with both an electric motor and internal combustion engine (ICE) and all-electric vehicles (BEVs) which rely entirely on battery power-has so far failed to take off because of the cost of batteries, their weight, limited driving distances and lack of filling stations with recharging facilities. There are also safety worries centered on concerns about lithium-ion batteries catching fire
On the other hand, sales of traditional hybrid vehicles, like Toyota's Prius model, have kept up to market expectations. They rely mainly on their ICEs with their electric motors being used at low speeds and sometimes during acceleration. Their batteries are recharged by regenerative braking which releases energy when the brakes are applied.

The cathodes, anodes and electrolytes-the key components of any battery-in HEVs require substantial less materials than those needed for PHEVs or BEVs. Sometimes the amounts can be only a tenth of those necessary for the bigger and much heavier batteries.
Nonetheless analysts are expecting that after a slow start demand for PHEVs and BEVs will begin to speed up significantly. In his latest study of the global EV sector, Mr Anderman predicts that sales of BEVs will rise seven fold to 450,000 units between 2012 and 2020 and those for PHEVs 13 fold to 750,000. But by 2016 their share of new vehicle sales will still only be around 0.6%.

By 2020 the HEV market will expand 2.6 times to 4.1 million. So by the end of the decade the total value of the lithium-ion automotive battery market will have gone up from $1.4 billion in 2012 to $8.5 billion.

Furthermore other outlets for large batteries, such as energy storage for smart electricity distribution, are expected to grow rapidly.

Casualties Of Sluggish Expansion

So far the biggest casualties of the sluggish expansion of the large lithium battery market have tended to be in the businesses of companies which are vertically integrated in the production of materials, cells, modules and battery systems.

Massachusetts-based A123 Systems, a 12-year-old company using nanophosphate technology developed at the Massachusetts Institute of Technology (MIT) to make electrodes, cells and modules for high-performing lithium iron phosphate (LFP) batteries, filed for bankruptcy last year. It was then taken over by Wanxiang Group Corp, a Chinese supplier of auto batteries, which bid the highest price of $257 million in an auction organized by a US Bankruptcy Court judge.

Dow Chemical included a write-down of the value of Dow Kokam, a four-year-old lithium-ion battery joint venture, in total restructuring charges of up to $1.1 billion in the company in the fourth quarter of last year. Dow Kokam has built a production plant in Midland, Michigan, with the help of a US federal grant of $161 million and $180 million in tax incentives from Michigan state.
The battery materials portfolio of Dow has recently been extended with the development of a new phosphate-based battery material-lithium manganese iron phosphate (LMFP). The company already makes coated graphite anode materials.

Evonik recorded losses last year of €14 million at its 100-percent owned subsidiary Evonik Litarion for battery components and of €50 million at Li-Tec Battery, a joint venture with Daimler for producing high-tech battery cells in which it has a 50.1% stake. The total sales of both ventures, based at Kamenz, Germany, were not revealed.

Strategies Focused on Advanced Battery Technologies

The current strategy of leading battery material suppliers is to focus on the development of advanced battery technologies, which will provide a foundation for their businesses in the 2020s when electric vehicles are now expected to become firmly established in the global transportation market.

Clariant, for example, which in a recent restructuring has set up a Catalysis & Energy business to cover battery materials, is concentrating a lot of R&D resources on improvements to LFP technologies. Last year Clariant opened a new LFP plant in Quebec, Canada.

"Based on inexpensive iron phosphate, (LFP) is considerably more thermal resistant and therefore safer," said Klaus Brandt, Clariant's vice-president battery materials. "The material is powerful, fast to charge and also much more resistant to heat and cold."
BASF has made a number of acquisitions and development collaborations to establish itself in the market for existing lithium-ion battery materials, such as nickel-metal hydride (NiMH).

Its long-term plans are centered on materials beyond lithium-ion technologies like lithium- sulphur. Last year it invested $50 million in an equity share in Sion Power, Tucson, Arizona, a leader in the development of lithium-sulphur batteries.

"Lithium-sulphur batteries not only have high performance potential but will be less expensive than other lithium batteries so they will help to resolve the key issue of cost," said Friedrich Seitz, President Process Research & Chemical Engineering at BASF. "But it will take 10 years to fully commercialize them."
UK-based OXIS Energy, another start-up considered to be a technology leader in lithium sulphur batteries, has recently attracted investment of $24 million from Sasol New Energy, the technology development arm of Sasol, the South African chemicals and energy company.

Earlier this year, OXIS reached a joint development agreement with Arkema, which over the last 10 years has been building up a knowledge base in lithium-ion battery technology. In January OXIS also clinched a development deal with Bayer MaterialScience (BMS), which is developing large zinc-air batteries.

While BMS has been investigating zinc-air technology as a possible basis for cheap and efficient energy storage systems, companies like BASF are looking at the long-term potential of lithium-air technology. "It is something which may possible come after the commercialization of lithium-sulphur batteries," Seitz said. "At the moment it is the subject of exploratory research work."

The development of energy efficient but inexpensive large battery technologies is going to be a long haul, which perhaps only the big players in battery materials will be able to afford.