Battery Revolution Clubhouse Recording - Developing Regional Battery Supply Chains

0:00Transcript

0:00So welcome everyone back to the 31st week of Battery Evolution. We had an exciting discussion earlier and officially kick-starting the topic on developing regional supply chains with James Frith. As everyone here may know, he's been requested by the audience, so really excited and honored to have him here with us today. So just a quick reminder of how this room works. This room lasts for one half hours. We will end at about 10.30. My time, which is here in Taiwan at about 4.30 CET. And for everyone here in the audience, these podcasts are available on Spotify and they're recorded. So please reach out to Simon and myself if you have any concerns about that. And as always, we always have a lot of people joining us towards the end of the session. So we really do encourage everyone to join us here early on stage. And once you're on stage, if you're not speaking, please keep your mic on mute. And, you know, if you wish to speak, just tap your mic twice.

1:06So if you wish to applaud to anything, just filter your mic twice. Right. So without further ado, maybe I'll pass on to Simon to introduce James. I'm going to kick start. Thank you so much, Catherine. Yeah. And I will keep it brief because I know we're already all ready for hearing from James. And yeah, so just really quick for recap. We've been doing this for the last 31 weeks or so. I've covered all kinds of topics. We already had some discussions on supply chains in the past, which also gets me very excited for today's session because I know James has a bit of a different view on this, like you was kind of mentioning. And so, yeah, I think I don't want to take much more time. I will pass it on from James from Bloomberg Energy Finance. And maybe if you want to say a few words about yourself, you're welcome to do so as well. And then I will give the word to you to introduce the topic for today.

1:56Thanks so much for being here. Perfect. And yeah, thanks for having me on, Catherine and Simon, and to the audience for kind of asking for me to be here. I suppose there's a little bit of background on myself. So I work for BloombergNEF now, heading up the energy storage team there. So the team kind of covers everything to do with the lithium-ion battery value chain, new technologies that are being developed, looking at the kind of competitive and low-level landscape as well. So trying to understand how companies are positioning themselves. And I mean, I think kind of just at the moment, it's generally an incredibly exciting time to be part of the industry with all of the activity that we've seen, particularly over the last kind of 18 months or so. Before joining BloombergNEF about four and a half years ago, I was a battery researcher. I did a PhD in working on lithium-oxygen batteries and then spent a couple of years working on other types of lithium-based batteries, so lithium-sulfur, lithium-ion, solid-state, and spent a little bit of time working on supercapacitors and sodium-oxygen batteries as well.

3:17So I've kind of done my fair share of electrochemistry and loved that. And I'm just really happy now to be able to kind of look at the wider battery industry. So the topic I selected today, as Simon said, is looking at or discussing regional battery supply chains. And I actually, I'm cheating slightly. The reason I chose this is because I think it gives us the opportunity to go into a couple of different angles from there, whether that be technology, whether that be looking at kind of startups, or, you know, indeed, what a lot of this is on is policy and how different regions are positioning themselves. Now, this week's actually ended up being a fairly, I mean, difficult week from kind of international policy standpoint. Obviously, the pullout of American and British troops from Afghanistan has led to all kinds of problems. But it's also been quite interesting, I guess, from a kind of, from a, you know, a battery industry point of view, to hear this kind of these comments from pundits on, you know, Afghanistan being the largest untapped reserve of lithium.

4:46And just the fact that that's entered into the narrative, because I think previously, when we've seen kind of similar, or say similar, you know, when we've seen US or European activity in the Middle East, it tends to be around oil. And now we've got this question around kind of lithium. And, you know, I'm sure most people on this call will appreciate that, you know, having lithium in the ground doesn't necessarily mean that it's ever going to come out of the ground. You've got to look at the kind of cost of extraction compared to other lithium resources, et cetera. You've got to look at the geopolitics as well. But just the fact that that's been mentioned, I think, really kind of highlights how important the battery industry and the supply chain is going forward. And really, that's, you know, unsurprising. If we think about the, you know, the oil industry, the reason that it's been so kind of, or has defined international policy and politics so much is because oil keeps things going, particularly transport.

5:49Now we're moving to a period where lithium is going to keep things going, you know, and again, particularly transport, but it's also going to impact on the power sector as well. So it's unsurprising that lithium is kind of entering that narrative. And in fact, you know, I think, as I say, kind of for most of us in the industry, you know, the fact that lithium in Afghanistan doesn't actually matter because, you know, there are plenty of other resources out there, ones that are being exploited already. But it does, you know, I had a conversation earlier this week with some US agencies. And this question that actually, you know, then arose from that was, well, is China in a better position to kind of work with the Afghans to access that resource? And we kind of, you know, had a talk about how, you know, actually there are, as I say, kind of plenty of other resources out there. And, you know, it's kind of slightly inconsequential in the battery industry today.

6:53But it just highlights how, particularly from the kind of US standpoint, the idea of kind of raw materials in the battery supply chain, it's about resource security. Similarly, in China, actually, the kind of conversation is about resource security. And this is possibly one of the ways that we can pivot into the technology conversation. But one of the reasons that sodium-ion batteries are being developed by Chinese companies, yes, cost is a factor there. But actually, the other kind of key factor is that if the Chinese can develop a sodium-ion supply chain, they can reduce some of their reliance on imported raw materials that go into the lithium-ion battery industry. So I'm sure most kind of are aware that, yes, China has a lot of chemical refining capacity. But actually, they have very little natural resources within the kind of boundary of China. And to kind of compensate for that, they've invested overseas, they've invested in Africa, they've been obviously kind of investing in Australia as well to access lithium resources there and some of the other resources.

8:03But they contain kind of very little of those critical materials within the kind of boundaries of China. For sodium-ion, on the other hand, they do have more of those resources. So it's quite interesting to kind of see that development there being one, or sorry, that reason being one of the kind of reasons that Chinese companies are investing in sodium-ion and trying to build that out so that they can reduce that reliance on imported lithium and other materials. And we juxtaposition that we have the position of Europe where, you know, I think it's fair to say that there's certainly kind of resource security that is part of, you know, Europe's strategic battery initiative. But I think Europe's handling it in a slightly different way, you know, rather than kind of positioning its policy as we want to make sure that we're not relying on other countries and regions for the materials that we're going to need in our power and EV industry. Actually, we're positioning it as a kind of sustainability push.

9:21You know, that doesn't then necessarily mean that you're saying, OK, we're not going to work with this country or that country because, you know, for whatever reason. Instead, you're saying that we just want to get the cleanest materials we can to go into our batteries, into our supply chain. And, you know, while that then means that companies in China, for example, can sign renewable PPAs to reduce the kind of greenhouse footprint of their material processing, et cetera. You still have those embedded emissions of transport, which are kind of harder to reduce unless you're kind of using carbon offsets. So, you know, that by itself saying we're focusing on sustainability, that actually pushes much of the supply chain to Europe. And, you know, again, we are beginning to see that, you know, the result of that is there's potentially going to be some raw material investment kind of projects going, you know, being developed in the future. I guess kind of Vulcan Resources with its zero carbon geothermal lithium would be one of the kind of obvious ones to point out there.

10:34So it's interesting to see the kind of, you know, the different ways that countries are positioning themselves and what the, you know, the impact of that is going to be. And I think within Europe and actually it's going to be the same for the US as well, but we just don't have any of these kind of resources developed today. So, you know, we need to understand that for the next five to 10 years, really, for mined material, we're going to be relying on, you know, other regions. And even in 10 years time, if we have kind of lithium projects that have been developed here or some of the other materials, let's say kind of nickel or cobalt, and there will still be some cobalt and batches at that point. You know, for nickel and cobalt, we're going to be relying on other countries. So the only way to, I guess, kind of wrest some of that supply chain from China would be to invest in overseas mines, which is what kind of Europe is looking at.

11:33The European Investment Bank is beginning to kind of consider investing in overseas raw material projects. So, yeah, so I think it's an interesting standpoint that Europe has slightly different to the kind of resource security point of view taken by the US and taken by China. So I think, you know, I'll touch on some of the technology side of things in a second and how that can kind of change supply chains. But I think the other thing to kind of point out with regards to the United States is that quite often in the conversations that we have, you know, we hear about this concern over a lack of kind of supplies within the borders of the US. But actually, what a lot of people overlook is the new kind of US MCA treaty. So the United States, Canada and Mexico kind of free trade treaty that also has kind of rules of origins kind of put into that for the automotive supply chain. And actually, if you look at that region together, you have most of the key materials that are needed for lithium-ion batteries.

12:54So although people in the US are kind of concerned that they're going to have to rely on overseas kind of resources, actually, a lot of that kind of nickel and even some cobalt can come from north of their borders from Canada. And well, some lithium potentially as well. There are lithium projects being developed within the kind of US. And we have projects like the Bacchanada lithium project in Mexico. So it sometimes feels like there's a lot of concern about perhaps kind of China having too much control of the supply chain and other countries not being able to kind of catch up. But I think that's, you know, something that is changing and it is not going to be, there won't be the same kind of concerns in, say, 10 years' time once nations have had a chance to develop their own supply chains. I'll quickly jump onto some, you know, just one or two points on the technology side. So I think I've mentioned, you know, sodium-ion, which obviously isn't kind of, you know, lithium-based technology, but the workings of the sodium-ion system are very similar to the lithium-ion system as is the manufacturing.

14:05But if we look at lithium-based technologies, the other consideration, you know, around the kind of raw materials is actually it's only really lithium that you need to kind of care about because the makeup of batteries are changing so rapidly that in 15 years' time, actually, our reliance on raw materials could be completely different. And we could find that, you know, we have breakthroughs in the development of kind of inter- sorry, conversion cathode materials. There's research being done on iron sulfide materials, for example, you know, where obviously you're then not going to need any of that nickel. You're also going to have kind of higher kind of capacity on the cathode side. So what that means is that actually you need fewer kilograms of material per kilowatt hour. So there's lots of changes that are occurring. It's, you know, I think probably actually a slightly different dynamic to what we've seen in the energy kind of resource industry before, as I say, kind of with oil, because the materials that make up batteries are just changing.

15:15Yeah. So, so, so quickly, as I say, and so what holds true today may be very different in kind of 10 or 15 years time. So I think that's worth, you know, that's also always worth highlighting. But to counter that, you know, I think the, the, the, the other concern is, you know, this is something that we've seen that kind of the work that we've done at Bloomberg in the past, when we model the power system, when we model kind of EV adoption, we look at it from an economic standpoint. So we, we tend to do kind of economic transition modeling. We look at kind of when will the cost of PV plus storage outcompete gas peak a plant in different markets, for example, you know, and that's quite easy to do. But with the modeling that we do in both the power sector and the transport sector, if you extend that out to kind of 2050, what you find is the changes that we're making are not happening quick enough, and you're not going to get to net zero.

16:18So if governments are serious about reaching their net zero targets, you actually have to have much faster kind of electrification transport, both passenger electric vehicles, commercial EVs, e-buses, and the rest, you know, and similarly, you need to have faster or kind of higher deployments of renewables and support those renewable deployments, you need to have more battery deployments. So when we start to look at the battery industry from the net zero scenario, actually to get to kind of net zero by 2050, we find that the battery deployments that are needed from kind of 2030 onwards to around 2040 when they would peak are about double what we expect in our base case scenario in those economic transition. ...is on, or, you know, batteries being deployed, whether it's on the road or in social storage projects, suddenly your raw material concerns are, you know, are getting serious. There's not enough kind of known reserves at the moment of nickel, for example, to meet a net zero scenario with the kind of current chemistries that we have there and the way that the industry is moving today.

17:38Now, you can counter that. You know, clearly, recycling is going to be important. That can, you know, offset some of that increased demand. If you have a built-out charging infrastructure for the battery electric vehicles, actually, you can deploy smaller pack sizes. So if you have built-out fast charging infrastructure, smaller pack sizes, that reduces some of that raw material demand. And again, if you have kind of next generation chemistries, whether that's on the cathode side, anode side, et cetera, being introduced, you can switch demand from, you know, let's say nickel to more kind of iron-based systems while maintaining that performance. So I think it's actually, you know, so many kind of moving dynamics in the battery industry, which is why I find it really interesting to kind of follow. But it does make the supply chain side of things more complicated to understand. And, you know, is why we shouldn't perhaps always compare, you know, the previous energy resource sector to the resource sector that we're moving into.

18:48So, you know, although we've heard about kind of lithium being brought up in respect to Afghanistan and the Middle East, you know, similar to how we had kind of oil brought up in the past and back to the Middle East, actually, it's very different, you know, and it's continuously changing. And, you know, we're also kind of continually finding new resources that can be extracted. And we'll see a host of new technologies on the mining side that will perhaps, you know, make more lithium resources. So I've talked for a while and I've touched on a couple of topics, but why don't I stop there and pass it back to Simon and we can kind of open up the debate. Thank you so much, James. And yeah, what really stuck with me is this, you know, this thought of, you know, lithium truly being the new oil on the way. But then as you also said, right, I think new technologies coming in and all these different feedback loops and effects.

19:54And yeah, I think it's super exciting. As you mentioned, yeah, thanks so much for doing this nice overview. And I think now, as you said, let's open the floor and get some other people's thoughts, some perspectives and also questions in. So, Milo, you are first. You want to have any questions? Yes. Yes. James, like you said, it's very clear that we need to build a supply value chain. Not that we need to build. We are building massive supply value chain. Like you pointed out, it's very, but it is not easy to build because what kind of supply value chain? This puzzle is getting very complicated, complex. A very complex puzzle, what kind of supply value chain? For now, lithium-ion battery for this decade, most probably we will build a lithium-ion battery existing chemistry supply value chain. Is that right? Yeah, exactly. So, I think kind of there is some respite for the industry and that it's fairly clear how technologies will develop over the next decade and what will be required for that.

21:13And actually, as you say, we are building these supply chains. There are certain parts of that supply chain that are easier to develop. So, if you're doing binaries or particularly from precursor production through to cathode-active material production, those plants are much quicker to deploy and don't have the same complexities as building those raw material projects, which is, I guess, where a lot of the concern is. But yeah, I think, as you say, we do at least kind of have a pretty good idea of what chemistries will be deployed over the next decade and what materials that are needed to go into them. And actually, similarly to the last point I raised, the demand out until 2030, although there are kind of several, you know, there are variations in the forecasts out there, they're kind of, you know, they're within the same order of magnitude. So, we kind of know exactly what we will need for the next decade. And I think it's beyond that that it starts to become, you know, slightly harder to kind of gaze into the crystal ball and say what direction the industry will take.

22:21I just respectfully disagree that we know. I think that we don't know how massive it is. I think that it will be much more massive than this decade that people imagine or the companies like professional companies like they are predicting. Like, I think we are in the stage when McKinsey predicted that we are going to have 9 to 80, that we are going to have 900,000 cellular phones in 2000. And we had 200 million. So, we are in this kind of the stage that it's very difficult to predict how much batteries we will produce in 2030. Yeah, actually, actually, kind of, as you say that, I, yeah, I reconsider my point. I think you're right that there is still, I think there's a lot of upside that can come through. You know, if we look at the US, we recently had the, you know, Biden administration released its target of 50% zero emissions vehicles by 2030. For passenger EVs and commercial vehicles, like commercial vehicles.

23:51Obviously, that's not legally binding yet. But if we do get to that point, that's about a kind of roughly a 50% increase on the current deployments that the NEF expects in the US by 2030. So, you're right, there are some upsides. Similarly, in Europe, the latest kind of proposals on CO2 emissions, tailpipe emissions by 2030 would be kind of somewhere from a roughly about a 20% to 30% increase in, or actually kind of 10% to 20% increase in EV deployments compared to what we currently expect. So, I think, yeah, I actually take my point back. I think you're right. There is a lot more upside that could come. And I think there are also, you know, as batteries come down in price and performance increases, you know, we're seeing more and more sectors electrifying that will add on demand to that. I think nothing's going to be quite as big as the passenger EV sector. But, you know, you will still get that additional demand.

24:56Yes, thank you. And there is another myth in the industry, I think. We didn't talk about it. Right now, it seems like it's government-driven and environmentally-driven, and this energy transition or energy disruption. And I think it's a wrong consideration because it's not environmentally-driven or it will be actually not environmentally-driven. It's technology-driven. Technologies are converging in this time and enabling to produce better products and services, and it's basically technology-driven. So, more we will go to this decade, more it will be clear that it is technology-driven, and it will be the businesses-driven. It will be free-market-driven. So, who will deploy those technologies are the companies. The government cannot order, because it's also global. It's not national supply-value chain and the global issue. So, it's technology-driven, energy disruption, or in the case of the transportation, energy disruption, the triggered transportation disruption. So, it's not government-driven, not national policy-driven, and not environmental, global climate change-driven. I mean, so I agree with some of that. But I think there's also the kind of consideration, you know, that if it wasn't for government policy, we wouldn't be in a position now where actually the technology is at the point where technology can kind of take over.

26:52If we hadn't had, you know, increasing tailpipe emissions regulations, automakers in Europe wouldn't be forced to sell EVs. They wouldn't have invested in it, you know, to the extent they have, and we wouldn't see as many electric vehicles on the road. So, I think policy has been kind of key to get us to where we are today. And you can look to the US to see where you haven't had that same kind of policy there. So, with the exception of Tesla, you know, there's not really an EV market in the US today, but that is changing kind of with the Biden administration. But I think you're right. Now that we are at a point where technology is taking over, and particularly when you get to that point where batteries are, kind of battery pack prices are low enough to enable parity between internal combustion engine vehicles and electric vehicles, at that point as well, you know, battery pack prices will continue to fall. That gives manufacturers a lot more flexibility to start thinking about the metrics that they can play with.

27:59And I think sustainability will be one of those. But you'll also have, you know, as we see kind of companies optimizing for fast charging. Some will be optimizing for kind of longer ranges. And I think, yeah, technology at that point does take over. And once, yeah, EVs are kind of, well, once automakers can make, you know, a healthier margin on electric vehicles than internal combustion engine vehicles, it really will be kind of technology defining everything. Thanks so much for the great discussion, James, in my list. In the interest of time, let's move on to Bareth. Bareth? Bareth, I'm not sure if it's me, but you're breaking up quite a bit. Bareth, is it audible now? Bareth, is it audible now? Yes, this is. Okay, great. So my question basically is that many startup companies in India have a problem. Right now, a very big, giant, you know, private company in India named Reliance, which is 75,000 crores in establishing Jika companies, Jika factories in India for many people argue that finding a task.

29:23So how this country, the new countries like India, Indonesia, Philippines, can find raw material source from other parts of the world? So how we can reduce the cost, even though India is doing very good in human capital because we can reduce the production cost by reducing the human capital investment, but how we can find a reliable raw material provider for us? Do you have any comment on it? So I think you cut out halfway there, but I think I've got the gist of the question. So it's essentially kind of, you know, India doesn't have that kind of, those human materials within its borders. So who can it work with to kind of develop that supply chain? And I think that's a, it's a difficult question at the moment because the kind of natural, or the kind of countries around India where there are some of those raw materials are kind of similarly trying to position themselves to capture as much value of that supply chain as possible.

30:22Indonesia being the most important part of years ago where you had to add more value within the country. And they've been quite aggressive in trying to then bring the rest of the battery manufacturing value chain to within the borders of Indonesia, which has kind of culminated in LG Energy Solution, and Hyundai announcing several, a couple of weeks ago that they would build a battery manufacturing facility in the country. So there's a lot of, yeah, fighting for those resources at the moment. And I think, you know, really from an Indian standpoint, to get that industry up and running, you're probably going to have to turn to Chinese suppliers initially because, you know, for most of the supply chain, that's what the rest of the world is having to do at the moment. Going forward and when it comes to, you know, developing, you know, the long-term plan, five, 10 years time, it's a tough question. It's really, I guess, kind of working, probably taking a, you know, similar approach to what China has done in investing in mines overseas, whether that's in kind of Africa or perhaps even kind of Australia or South America.

31:47But that's the, you know, that's the blueprint that we have today. The other possibility, you know, and I know actually this is something that I've talked to a number of Indian companies about, is setting up recycling capacity within India so that you can, you know, capture some of that secondary materials market. The problem there being that actually, you know, that's again what most kind of countries or regions are also trying to do. They want to set up recycling industries so that once raw materials enter their borders, they don't leave again. So it's, yeah, it's going to be tricky for, I think, most kind of countries out there that don't have their own natural resources. But again, you know, one of the other options, and this is something we're also seeing in India, is to start investing in technologies that use materials that you do have within the border. So again, we saw, you know, sodium-ion in China. And I imagine we'll start to see some sodium-ion production in India or development in India.

32:59So I think recently we saw the investment, I believe it's from Reliance, in fact, into Ambri. So Ambri works on liquid metal batteries. Off the top of my head, I can't remember what the metals they use are. But again, it's kind of materials that are potentially maybe easier to source in India than in other regions. So I don't have a direct answer at the moment, but hopefully that's a... Yeah, sure, sure. Can I help you a little bit, James? Right now, what we have built supply value chain, what we are building, it's like 10% of the supply value chain which we need to build. So at about 90% of the supply value chain will build. So China realizes it, and China can control it when it is small. When we will build 90% more supply value chain, there is still a chance for the other countries to compete or overcome China in the leadership of those materials. So it will be much more spread all over the world, supply value chain.

34:13But it's still a geopolitical game open. Basically, China didn't win this game yet. That's why they are branching out, pivoting to the other technologies and so on. Yeah, that's a great point. Thank you for it. Actually, this happens in India because we invested a lot in Afghanistan also, but the conditions are not that much favorable. But China is supporting the recent thing in Afghanistan because a lot of lithium reserves there. I have seen a very interesting article also in that. Let's make a sense, Melos. Thank you for it. That's what my question is. Yeah, thank you. Thanks for the awesome answer. Perfect. Thanks, everyone. Let's move on to Iwilina. Oh, I think Iwilina has dropped off. If she joins back later, let her up on stage again. Kaushik, are you there? Yes, Catherine. I'm here. Great. Perfect. Do you have any questions for James or any thoughts? Right. Am I audible? Okay. Thank you. Right. So, you know, taking off from where Melos has started the discussion and where James added in, two parts to the equation for me, the way we are looking at it.

35:37We are a renewable energy storage device manufacturer based in India. My link and my bio is present. You can look it up. And we are working only in the sodium and the silicate space. So we have made several advances in the sodium space. We have got a few patents lined up. And we have come up with a product that trumps most of the rechargeable units that we have seen both in terms of performance, but more importantly, in terms of recyclability, because we leave zero residue at the end of it. Now, what Melos explained, that the geopolitical challenges of dealing with availability of lithium and the other reserves which are needed to make the batteries, the other resources, are much more challenging given the fact that China has spread itself all across and they control most of the global supply and the rest of the world is still catching up. But, you know, we're looking at a China versus the rest of the world sort of an equation here.

36:28So do we need to break that down into a geopolitical issue or actually a supply chain issue where we, you know, reduce the time of turnaround, therefore reducing cost and performance of units, and see how we can deliver with better productivity? That is one equation. Two, I don't agree with Melos' statement that business alone will drive this, you know, the demand supply here. I think the environment damage caused by lithium is something which is becoming a strong factor. And once end product recycling comes into play, there will be a cost per unit of battery that will be paid by either the user or the government is going to charge the tax to the manufacturer for doing that. We're seeing those moves already happening here. And unless recycling of lithium-ion batteries is well understood, they could turn out to be a disaster. However, if well understood, like what is happening in India and other parts of Asia at the moment, we're trying to come to grips with it, we could become a secondary source of lithium.

37:24And I think James mentioned that once the, you know, the unit comes in, very rarely do those chemicals leave your shore, which is so critical because that is going to add to the supply and therefore reduce the gap over there. These are two observations. But I think alternative materials for lithium and cadmium are the way ahead. And I see that catching up very fast. We have published performance data on our batteries. You can look it up. It's on the site. And we see if we can do it with basic understanding. We have worked with majors like Tesla and Panasonic in the past. But I'm sure everybody can do that. And once that gains momentum, I believe that that is the way ahead to break the supply chain disparity rather than trying to make a global supply chain, which again would be dependent on one particular country's interest and how this is going to be turned around. My two bits. Thank you. Yeah. So I think some kind of, yeah, really interesting comments there.

38:18And actually, some of those tie back to what Milos mentioned, around the supply chain that we'll need in 10 years' time is almost 10 times larger than what we need today. And I think I agree with Milos here that it's not really necessarily a kind of rest of the world versus China debate perhaps so much. That's certainly the way that it looks today. But actually, kind of China is mainly concerned with securing kind of supplies for itself. Yes, it would like to kind of export batteries as well. But its main concern is around kind of supporting its own kind of EV industry and storage industry. So there will be a lot more investment. Countries will kind of be looking out for themselves and kind of investing in their interests. So I think we will see that changing. And we see that in the cell manufacturing space already, right? So in 2020, I think around 70% to 80% of cell manufacturing globally was within China. By 2025, that's going to be reduced down to about 50% with kind of, you know, almost 20% or so of cell manufacturing in Europe.

39:46And actually, a lot of that kind of capacity being invested in by European companies. So I think we'll see, you know, similar changes to the supply chain. It just takes slightly longer as you go further upstream to see those kind of changes coming through. As to recycling, you know, yeah, I think you're completely right there that recycling will become important. But I think there'll be kind of, you know, a fight for all those recycling resources. And based on the analysis that we've done at BloombergNEF kind of recently on recycling, depending on the material that you're looking at, by kind of 2035, recycling can account for kind of anywhere from around 10% to 30% of demand going into new batteries. So for nickel and lithium, you know, based on our current expectations, it's closer to that 10% mark. For cobalt, it's closer to 30%. And that's just because, you know, we're seeing cobalt being substituted out of batteries much faster. And so the kind of growth in cobalt demand isn't as fast.

40:55You know, it is increasing because we're seeing more batteries generally, but it's not as fast as, you know, what we see for lithium and nickel. But yeah, I think then to the point around kind of other technologies and resources that countries can develop where they have those materials within their borders, you know, I think that's definitely really interesting. I think it's difficult. I mean, I've looked at the stationary storage market, you know, over my time at BloombergNEF, and we've been tracking alternative technologies within the stationary storage market. And for the last kind of five years that I've been there, and I know since before then as well, there's been lots of focuses, lots of focus on non-lithium based technologies for the stationary storage market with many different kind of, you know, reasons cited as to why these technologies are better. Perhaps they're safer. Perhaps they use kind of fewer critical materials. But what we see is that year on year, it becomes harder and harder for these alternatives to kind of increase their market share.

42:04So over the last three years, lithium-ion batteries have accounted for over 90% of deployments into the stationary storage market on a gigawatt hour basis. Yes, the storage market is growing. So that kind of 10%, you know, is actually more gigawatt hours each year going to non-lithium based technologies. But these other technologies kind of don't get the same momentum as lithium-ion batteries. And that's because they tend to cost more, have less well-developed supply chains. And it's difficult to convince backers to use them because they're just, you know, whether it's an insurer or the kind of financer, they just don't understand these alternative technologies. And they want to go with what they know, which is lithium-ion. I think actually this is somewhere where sodium-ion has an advantage because much of the manufacturing process is the same as lithium-ion batteries. And, in fact, you can kind of simplify some of the steps because you can use aqueous solvents for the cathode coating, et cetera. So it's, you know, from a production standpoint, you can kind of continue building the same facilities roughly and use lithium-ion or sodium-ion.

43:18From a performance, you know, in a technology standpoint, they're not that different. And so when it comes to kind of educating insurers, et cetera, on this kind of sodium-ion technology, you know, compared to lithium-ion technology, I imagine that's something that's going to be easier to do. That's just my expectation, you know, today. And then, you know, finally, of course, sodium-ion promises to be lower cost than lithium-ion battery system. So I think, you know, that obviously gives it an advantage in the sectors that it can play in, you know, primarily replacing lead-acid batteries or in kind of some of the stationary storage market. So, yeah, hopefully that kind of helps to, you know, give my view on that. I don't know if you've got any more comments or thoughts. One addition I would like to make, that those new technologies, they need to commercialize first, and then we need to build supply-value chain for them. So not this decade, but maybe I'm saying while in lithium-ion battery, we are already building supply-value chain.

44:33So I expect those technologies next decade and decade after. And also in the volume, I'm trying to say, competing against lithium-ion batteries. And another point which I would like to make also, this recycling, like James said, not this decade, but next decade, like the complementary to the mining resources. Yeah, I would like to add some, yeah, the comment on the... Please allow me to finish. I'll just respond to what both James and Willows have said. Thank you, James. That was very informative. A couple of quick points. Yes, in terms of cost perspective, sodium-ion is definitely more competitive. As I mentioned, we have published results in terms of both usage as well as delivery of performance. I would be happy to share that directly as well. However, we have built the risk coverage using Marsh, which is a global insurance broker, to understand how these batteries can impact performance and what are they covering in terms of both the risks and the safety associated with this.

45:43So we have delivered a project. As I mentioned this earlier in one of my talks, that we work mainly with the islands in the southern hemisphere, and Marsh works very closely with us. So we have delivered commercial projects at Madagascar and Mauritius, and we're working on one now in New Zealand. So hopefully, Willows, not the next decade, but this one, it is going to be a lot of hard work getting this across. But essentially, looking at disrupting the hegemony and probably the monopoly that one country has. Maybe it's not really China versus the rest of the world, but it's a supply chain versus what is commonly available. And that's where disruption is really going to come in. So I hope we can beat that trend. Thanks, everyone. I'm so sorry to, you know, rush this, but in the interest of time, we've got five more people who've joined us on stage, and, you know, we'd love to give everyone a chance to speak. So if that's okay, we really appreciate you to, you know, keep your comments, short and sweet, that would be great.

46:43Let's move on to Ivelina, who skipped earlier. Ivelina, are you there? Yes, yes, yes, I'm here. Sorry. Some connection issues. I was wondering, because here in Europe, we are talking a lot right now about carbon footprint, and very soon, European community will ask all OEMs for all EV, PHEV, all batteries, also the calculation for the footprint. So having probably in the next 10 years, the same chemistry, the same quality of the production, the same supply chain, which are the possibilities of carbon footprint reduction? Yeah, so I think it's an interesting point. And yes, certainly kind of in Europe, it is the, yeah, it seems to me the kind of subject on everyone's lips at the moment. I think there's a lot of areas where we'll see kind of, you know, reductions coming. If we look to, you know, one of the easiest ways to do it, I suppose, is to move your production to somewhere like the Nordics. So I think Freya is targeting carbon footprint of something like 10 or 15 kilograms of CO2 per kilowatt hour.

48:21So, you know, some of the lowest in the world. And I believe that that is, and actually that's something worth pointing out, you know, often when companies talk about their carbon footprint and, you know, of their batteries, there's not yet, there's some ambiguity over, you know, what they're including in their supply chain and within that calculation. You know, I think really if we're talking about carbon footprint, we need to be going from kind of mine through to finished product. So I think, you know, somebody like Freya is targeting 10 to 15 kilograms of CO2 per kilowatt hour. They can do that because they, you know, have very low, very low carbon grid in Norway. And it's really done about kind of reducing the carbon footprint of the supply chain. So I think from a cell manufacturing standpoint, you know, most of the processes can use electricity. There's still some kind of, you know, heat and steam used for some processes, but that can be switched fairly easily.

49:26We'll see more of that happening. We'll see companies, you know, signing PPAs to reduce their kind of, you know, annual carbon footprint for electricity. I then think in the supply chain, you know, particularly in mining, that's the difficulty at the moment, you know, and you can get around that in some respects with new technologies. So the kind of direct lithium extraction technologies that are being developed, particularly for kind of brine and geothermal clays in the US, I think Schlumberger is one of the companies investing in that, you know, those technologies will mean that you get essentially kind of more kilograms of lithium out for every kilowatt hour of energy you're using. So that kind of helps to reduce your carbon footprint. I think we'll see changes to the active material or the precursor and active material production as well. There are companies out there like Nano One in Canada who are kind of developing one-pot synthesis methods. You know, again, if you can electrify that, you can kind of, and then working on a greener grid, that goes a long way.

50:45So I think it's kind of a combination of things across the supply chain. But the biggest concern is in the mining industry. Miners are beginning to catch on to this. You know, now that ESG ratings are becoming kind of a big feature in the financial markets, they are starting to look at their processes and see how they can green it. And actually, you know, the other advantage is that for miners, you know, in a lot of instances, mines tend to be fairly remote. Grid connections can be, you know, tricky. And so miners are looking to, you know, turn to solar and storage or wind and storage to try and electrify their facilities so that they have a more stable, you know, grid connection. And it comes with steam power. So I think we're moving in the right direction, but it will be slow in the mining industry. So I suspect that companies will be looking to kind of turn to carbon offsets in the near term.

51:52Thank you very much, James. And yeah, looking at the time, we have 14 more minutes and we've got four people. So let's keep it brief. Michel, would you like to go next? Yeah, thank you. Very informative conversation. Thank you for this. My question is, for companies to adopt and venture into this area, what capabilities and skills do we need to develop as a company or as a country to regionalize and localize the supply chain and through the value chain? Yeah, a great question that's coming up a lot at the moment. You know, I think the most immediate kind of skills that need to be developed are on the, and it's difficult to do, but knowledge on kind of scaling up manufacturing facilities and then kind of operating manufacturing facilities. That's something that is, you know, that's one of the kind of key resources that are missing today. And we see, you know, European companies that are trying to build battery production turning to, you know, Chinese or former kind of workers from Chinese and Korean cell manufacturers to actually bring them in and help them develop their capacity.

53:06I think as we go further, you know, along, you then need to start thinking about, you know, investing in R&D so that you can start bringing new technologies on in, you know, within a country. And, you know, I think luckily from the rest of the supply chain, actually, you know, most countries have some, you know, expertise in that, you know, India, for example, you know, has a well-developed chemicals industry, which you can kind of turn to producing, let's say, electrolytes or some of the materials going into lithium-ion batteries. But I think, yeah, the focus at the moment and the new bit for everyone is cell manufacturing at scale. So that's where the focus should be today. Thank you. And at an individual level, for those who are venturing as a career options, I'm sure there are people listening, what would you advise such individuals to explore these areas? No, that's a harder question. So I think it really depends on where your interests lie and what you're hoping to achieve.

54:21You know, personally, from my standpoint, I find research and development the most, you know, interesting, one of the most interesting parts. You know, I think developing new technologies that can do things like reduce your reliance on critical materials or perhaps a kind of greener to manufacture. I think that's really interesting and is something that we will have increasingly need, you know, over the next 10, 15 years or so. But again, you know, there's lots of other interesting areas out there. So for engineers, for example, the manufacturing process, you know, really hasn't changed significantly over the last 30 years. It's still using this tape casting technique, essentially, that was originally developed for creating magnetic tapes, you know, cassettes, VHS, etc. But that is beginning to change. So I think, you know, having engineers getting in and looking at how we're actually building these batteries and optimizing those processes is, you know, is incredibly interesting. Similarly, from, you know, there's going to be lots to do on a politics side of things, a policy side of things.

55:36And, you know, I think to go back to the, you know, what Evelina brought up, understanding environmental footprints, you know, making sustainability the forefront of the industry. So working on recycling or indeed going into a battery manufacturer, auditing supply chains, making sure that your suppliers are doing what they say, you know, what they say they want to do. So lots of areas to kind of go in and look at. And, you know, depending where you are, it depends how you want to kind of go through education. If you want to go into R&D, you know, a master's or a PhD is kind of preferable. If you just want to go in and, you know, improve processes in existing facilities, you know, getting an engineering degree is suitable. And then, you know, yeah, huge, huge wide range of different options out there. And if you're interested in the battery industry, I think almost any degree that you do now can be turned towards kind of, yeah, making the world a better place through batteries and through electric vehicles.

56:40Thank you. Thanks very much, James and Vishal. Maybe also one quick one, of course, also self-interest here. But you might also like to have a quick look on the BatteryMBA, because literally that's what we're doing there, right? Looking from the raw material, you know, supply chain with speakers from Circulor, for example, which work on the supply chain topics all the way through production scale up from S-Volt and Porsche and all their kind of examples, as well as recycling in there. So, yeah, maybe that's also of interest. But now looking at time, Bill, would you like to connect? Yes. Can you hear me? Hello? Yes, we can hear you. Can you hear me? Okay. Very good. Well, thanks for bringing me on the stage here, Kathleen. James. I'm Bill. I'm with a startup battery company out of upstate New York called Ethereum3. We're going to be entering the market this year. Cool free, cobalt free chemistry, kind of a twist on the cell. And we've already talked a little bit about market segmentation.

57:52But, you know, everyone talks about the next win in chemistry and supply chain issues. I take a look at the market, effectively, growing so large, so fast, that there's going to be a variety of win in the industry. I'd like to hear from you. See the market segmenting as it grows. There's going to be space for a lot of winners. I understand. Well, you talked about sodium batteries. Lithium battery segment. I understand. Yeah, Bill. So I think you're, you know, you're completely correct there, that there is going to be a lot of segmentation. There's not going to be kind of one chemistry that wins out, I think, for many reasons, because... Consumers want... Consumers want... Different consumers want different things. Some want longer range. Some want lower cost. Some want perhaps, yeah, more environmentally friendly. But also, automakers, you know, increasingly want to differentiate their product. They don't want to be selling the same thing as their competitor. And so they want to give... They want to have something that will give them an edge over their...

59:10Yeah, over other automakers. But I think if we stick to the battery electric vehicle market or the passenger electric vehicle market initially, you know, roughly, I think we will see kind of three segments emerging. So we're going to see the kind of low cost entry level segment where, yeah, performance isn't the focus here. So it's really just about having kind of a low cost system that is functional and, you know, can get you from A to B. Then you'll have that medium segment where, you know, consumers want, you know, the best performance they can get, but at a reasonable... You know, for a reasonable budget. And then you'll have the top end, which will, you know, be about performance, whether that's kind of fast charging, whether it's range, whether it's acceleration, whether it's kind of lightweighting so that you can get better handling, et cetera. And, you know, those are the broad kind of three spectrums that we see out there. And you can have different chemistries in each of those segments.

1:00:13You know, already, if we look to the kind of performance segment today, if you like, we see kind of, you know, ranges, the focus with fast charging in there as well. And you can have, you know, NMC811 in some models or perhaps NCA and others. And, you know, in fact, you look at Tesla Model 3 in the US, they use NCA. In China, they use NMC811 for the kind of high performance one. And then they're using LFP for the low range. So we're already seeing that segmentation coming. And, you know, I think there will be kind of plenty of opportunities out there. I realize we're tight on time. So I guess I'll just kind of turn to then other segments and specifically storage where, you know, I think storage is different from transportation where kind of low cost becomes increasingly important. Energy density is less so. So, but, you know, what is now very much a focus is safety after the kind of fires in Arizona two years ago.

1:01:13So that resulted in some firefighters being injured. So it does vary. But, yeah, within the EV space, I think that's where we'll see the kind of most diversity. Thank you very much, James. And then let's go to Divik and Sreem. Thanks, Simon. Hi, James. Good to be on the stage with you. James, my question was regarding a tweet that you had posted on the 12th of May 2021 where you said, so this basically given a manufacturing cost of NMC power cell by region, basically where you put, where you begged India to be producing it at about $92.8 per kilowatt hour. And you also did tweet that it's going to fall all the way down with the subsidies to about $65 per kilowatt hour. I just want to understand from you as to, you know, what got you to this analysis of saying either $92.8 or $65 per kilowatt hour, James. Yeah, perfect. Thanks, Divik. And thanks for reminding me what the tweet was. I was suddenly racking my brain thinking, God, what have I put out on the top of May?

1:02:27But, yeah, so that analysis came from a model that we have at BloombergNEF called our Batman model. So that looks at the kind of cost of manufacturing cells in different parts of the world. So the, you know, there's a couple of things to point out there. One is the model, you know, assumes the same supply chain for each of the regions that we're modeling. So it assumes that you're buying, you're separating your electrolyte, your cathode material, your anode material, your cell housing, you know, at the same cost wherever you are. Now, while that is kind of, you know, that can be achieved, it's always worth remembering that, you know, if you're a new manufacturer, you are, let's say, kind of five or 10 gigawatt hours of capacity. Your economies of scale and your supply chain are going to be different to a CATL with, you know, kind of 100 plus gigawatt hours of capacity. So that will, you know, change those. But if everything is equal because of, you know, electricity costs in India, because of labor costs in India, because of, you know, utilities, et cetera, India could be one of the lowest cost manufacturers we see out there.

1:03:36Then when we take into account the subsidies, that's then looking at kind of the potential subsidies that you could achieve and the discount that would give you on your manufacturing facilities. So in that case, you know, then it's, if you could achieve the highest, the highest subsidy, which is, I should point out, difficult because you need both high cycle life and high energy density, which is, you know, very difficult. But if that was done, you know, actually the subsidy could pay for the capex of the facility. And then you're really, you know, your manufactured cost is actually really looking at the kind of OPEX and the materials cost, which is what would reduce it down to that kind of $65 per kilowatt hour or so. So that's, I would say, you know, that's more of a guide than a hard and fast rule. You've got to think about the rest of the supply chain where you're sourcing the materials from, et cetera. But, you know, in general, if India can scale its manufacturing industry and its supply chain, then it can be, you know, a very low cost producer.

1:04:44Right. Thanks. Thanks, James. I think there are a lot of outliers. So even if you do consider that about $75, even $80 a kilowatt hour, you're still at a great price. Yeah. No, I agree. You know, I agree. And, you know, we've seen now LFP in China coming in at kind of six or reportedly coming in at $66 per kilowatt hour or even lower. So, you know, if you go to those very low cost chemistries as well, you know, perhaps gets even lower. Thanks, James. Thanks. Thanks. Hello. I know we're not on time, so I'll try to keep it short. Thank you, James, for all of the insights that you provided today. I wanted to talk a little bit about stationary energy. And one of the reasons that we've really seen companies go the lithium-ion route is because of how proven the technology is or how developed the technology is for implementation. But we do have startups that are waiting on the sidelines with chemistries outside of lithium-ion.

1:05:55We've got platform energy. We've got Amprix. Another lithium-ion metal startup from MIT waiting to get into the market in the coming years. So one of the main propositions is that value proposition. I change. United States. Or locally. But second strategy that is being used by some of the automakers. In mind from. Vehicles. Use them. Second life. Applications. Now, where do you see this? From a cost perspective, where do you see auto manufacturers going either the second life route or going the recycling route, putting those batteries back into the air? So, yes. So this is a great question and actually a really difficult one to answer. We looked at this, in fact, in BloombergNEF over the last few months. And from a, you know, there's a couple of considerations. From an upfront cost perspective, you know, we estimate that second life systems can be lower cost than first life batteries. But it depends on the, kind of, depends on your, your, kind of disassembly and testing costs.

1:07:33And how, you know, are you just taking packs and repurposing them? Are you disassembling down to the module level and testing? Or are you going to take it to the cell level? And actually, the cell level is just not practical. But at the module level, you know, second life systems could make sense. The next consideration, though, is, okay, you have the upfront cost. So if you're, you know, if you can get your battery, your used battery packs, you know, cheap enough, and then you have a high enough usable or reusable rate at the module level, you can build a second life storage system that is, kind of, cost competitive on an upfront basis. But if the cycle life of that system isn't sufficient, then you're actually limited on the, kind of, areas that you can deploy it. And then the, kind of, cost competitiveness on an LCOE basis may not be better than that of a new lithium-ion battery system. So particularly if you're putting it into a safety storage, kind of, project where it's, it's quite a taxing, you know, has quite a taxing use, then you could run into, or you might have found that actually it makes more sense to use a, kind of, first life system.

1:08:51That being said, you know, it's, you know, it's still early days. And I think if we have automakers that start to design their systems with second life use in mind, whether that's the cells itself or the packs to, kind of, reduce the repurposing cost or to, you know, improve the second life cycle life, then it becomes, you know, a different question. And we're seeing that happening now. So CATL, for example, has said that it's developed a LFP system that after the first 1,500 cycles, which is essentially, you know, its use in a vehicle, it would still have, kind of, almost no degradation. So it can then go into a second life system and, you know, act like a new battery. So I think probably back to Milos's point earlier, you know, technology is changing and it is leading the market. I think for safety storage, it's very early. The pilot projects that are being developed by, you know, automakers are still, you know, the results are still coming back in.

1:09:53So it's hard to say how that will actually kind of, you know, go out in real life. The final consideration there is, of course, that if you have battery swapping or battery rental, you know, rather than buying the batteries, the upfront part of it, or if you have fleets of vehicles, perhaps second life starts to become, you know, more useful because you have better access to the performance of those systems before you then start testing it and repurposing. I would make it very short. Secondary usage of the battery long-term is that on arrival. I would also like to agree Milos. I mean, I think, James, second life is nothing but a clickbait opportunity. I mean, even if you look at it, I can just beat you on numbers with this. 85 kilowatt hour, today you're at about $100. Probably in the next eight years, it's at about $60. With even, let's say, 50% of battery that you can reuse, it's definitely not going to make it viable at all.

1:10:53Use better your time. Yeah, I mean, the thing I would just add to that is you've also then got to consider recycling, the recycling industry. If commodity prices are low and actually it's going to cost you to recycle, you might be incentivized to put it into second life use until you can then economically recycle it. You know, vice versa. If commodity prices are high, you'll be incentivized to kind of recycle over second life. I wouldn't completely write second life off yet because we have seen some commercial deployments in the commercial deployments. We've seen some large scale deployments in China with China Tower deploying about two gigawatt hours of second life batteries to support its telecoms infrastructure. But, you know, I think you're right that with new battery system prices coming down so quickly, it becomes increasingly difficult for second life systems to kind of be viable. And until the batteries will come to the recycling one decade, 10 years, there will be different technologies, different costs, and everything different in that time.

1:12:04So basically, you will rather recycle it and buy the new one than use 10 years old technology. Yeah, no, I think that's definitely, you know, a good point that performance is going to just continue improving. And therefore, yeah, you're comparing kind of what was good today with what is kind of going to be historic in 10 years. Yeah, thank you so much for that. One of the concerns that I had regarding second life usage was more from a technical perspective. On the safety side of things, we have seen some catastrophic failures in some of these second life applications in China. So I was wondering what the cost. Thank you for your insights. Fantastic. Yeah, I think with this, we're kind of going towards the end. We already went a bit over, but thanks so much, everyone, for sticking around. And, yeah, really, really big thank you to James Fifth to be with us today. I think it was a super interesting session. I think, yeah, we all learned a lot.

1:13:16And I think we really had a really engaging conversation. And also a big thank you for everyone who joined us on the panel to ask the questions and contribute their thoughts as well. And, yeah, just a big applause again for James. Thanks so much for spending your time with us, especially as you just came back from your holiday. I'm sure there's lots to catch up on. So even more grateful that you came on with us today. Before I will also pass it on to Catherine to kind of close today's session, just a bit quick, you know, maybe you want to give James a follow. As mentioned earlier, he's new on this platform. Maybe you can convince him to stick around more. I think we would love to have him in future sessions. I think everyone will benefit from that. So, yeah, if you'd like, if you'd like to give him a follow here on the platform as well or connect with him maybe on LinkedIn.

1:14:00I think also he's quite active there as well. And you can also follow, you know, the room, Bash Revolution or the club because then you get notified. We do this every week or 31 times by now this, you know, the last week. So that's always really nice to come back to that. And before I give it to Catherine, maybe also quick plug to say, I think we'll be looking for some more conversation starters for the coming weeks. So if you would like to be involved in people like Sriram and Milo's and others already have done it also in the past. It's always fantastic to have you as conversation starters. So please reach out to us, to Catherine and myself. We'd be happy to schedule you in. Fantastic. With this, I will give it to you, Catherine. Thanks so much, Simon. And really big thank you to James. I've learned a lot from this session. And, you know, I personally have a lot of questions to ask on this topic as well.

1:14:53But as hosts, we usually give our members a chance to speak. So really thank you for, you know, staying around and contributing to the topic. And yes, as mentioned by Simon, if you have any suggestions as to, you know, what kind of topics you want to hear from us next or the first speaker or if you would like to be a first speaker yourself, please reach out to me and Simon on LinkedIn or, you know, via the message option here. So with that and without further ado, thank you so much, James. Once again, a big round of applause to James. And stay tuned for our next week session at 3 p.m. CET. Thanks, everyone.