In a presentation at the inaugural Lithium Supply & Markets Conference held in Santiago in January 2009, I suggested three factors to determine whether lithium-ion (Li-ion) batteries will be adopted by the global automobile industry in its transition to electric propulsion, namely: the oil market, technological development and resistance to change.
In the first part of this contribution I review and extend this argument in light of some important recent events that have occurred in the world economy. First, I re-analyze the oil market not only in terms of yearly oil prices and their volatility but also in relation to average oil prices and volatility for the last 12 years. Second, I now discuss technological development in reference to different types of Li-ion batteries as well as other classes of rechargeable lithium batteries that are beginning to appear in the market. And third, I complement the notion of resistance to change with acceptance to change.
The Oil Market
Once the economic recession has been declared to be over, oil prices have averaged around $76 a barrel during the last quarter of 2009. As anticipated in a previous article, they could not in fact drop forever and a long run perspective of the world economy did indeed call for not-so-low oil prices to avoid a supply crisis.
The argument that “Peak oil” and climate change may prevent an ever-lasting decrease of oil prices also appears to be quite relevant today.
In addition, although 2009 closed with a yearly average oil price about 38% lower than the value obtained in 2008, this did not diminish the intensity of the electric car race. Of course, prices are not alone in the oil market as determinants of adoption of Li batteries; price volatility (i.e. uncertainty) counts as well. But this variable showed also a much lower figure in 2009 than in 2008. Yet, again, the lithium rush was seen to be on the rise.
At first sight, the findings above would demolish the original contention that both oil price and its volatility may have an important effect on adoption of Li batteries. However, the argument remains intact if yearly oil prices and their volatility (as measured by yearly standard deviations) are examined in relation to average values for a given period of years.
As shown in Table 1 and Figures 1 and 2, both yearly average oil prices and volatility clearly reflect figures well above their corresponding total averages (for the period 1998-2009) during the last 5 and 3 years, respectively. The numbers attained in 2009 do not seem to be as near to the ground. Albeit low, they are still well above the average for the last 12 years.
Hence because yearly oil prices (beginning 2005) and their volatility (starting in 2007) remained above the average figures over the period 1998-2009, the trend towards electrification in the car industry as well as adoption of advanced lithium batteries to come to grips with this development intensified.
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This resolves the puzzle as to why, despite the recent fall of oil prices and their volatility, both car and battery manufacturers are still investing billions of dollars in research and development of different electric cars and advanced lithium batteries. It also suggests that both car and battery makers may be placing more emphasis on both yearly oil prices and volatility in relation to total average numbers over a given period of years rather than simply yearly figures for their decision to invest in the development of electric cars and advanced lithium batteries.
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In just a year since the inaugural LS&M09 conference, technological development in the advanced lithium battery industry appears to have progressed significantly, both in terms of its focus and the number of new lithium batteries that are reportedly part of different research projects.
In terms of its focus, it is now amply acknowledged that breakthrough innovations are likely to take place in different kinds of Li-ion batteries, not just lithium iron phoshate (LFP) batteries. After the hype generated by the launching of the first mass-produced range extended electric vehicle (REEV) by Chinese firm Buying your Dreams using LFP batteries in December 2008, the concentration now appears to have shifted towards Manganese Spinel Cathodes manufactured by Lucky Goldstar Chemical from Korea which is working with its US subsidiary Compact to provide Li-ion batteries to General Motors for its Volt car, and NEC from Japan, Nissan´s (OTCPK:NSANY) official Li-ion battery supplier for its Leaf automobile.
But there is also an important effort underway with lithium-nickel cathodes by Panasonic (PC), which has recently established a partnership with Tesla to help it lower the cost of its Li-ion batteries and extend the range of its cars including the planned model S, a cheaper and more efficient electric car than its Roadster, which still uses a lithium cobalt battery.
According to a recent article, “Panasonic’s partnership with Tesla is part of a larger strategy to dominate the market for advanced automotive batteries”. Panasonic already leads the production of nickel-metal hydride (NiMH) batteries for hybrid vehicles. With Sanyo (OTC:SANYY), the largest Li-ion battery maker in the world, a subsidiary it bought in December 2009, it is likely to continue providing NiMH batteries to Toyota (NYSE:TM), Honda (NYSE:HMC) and Ford (NYSE:F), and start “manufacturing lithium-ion batteries for the plug-in hybrid version of the Toyota Prius”.
Likewise, the nanowire battery invented in 2007 has constituted another interesting Li-ion research project in 2009. It essentially consists of replacing the standard graphite anode with silicon, which is meant to store ten times more lithium than graphite). Lastly, Hyundai (OTC:HYMLF) is reportedly expected to use Lithium-ion Polymer (LiPo) batteries, which have technologically evolved from Li-ion batteries, for its hybrid electric vehicles (HEVs).
With respect to new research projects, last year Lithium-Sulfur batteries have also received some attention. Following a Technology Review article, these batteries have potentially a higher energy density than lithium-ion batteries, but have typically been too expensive, unsafe, and unreliable to make them commercially available. Of these problems, perhaps the most difficult one remains cost mainly because they use lithium metal, the most expensive form of lithium.
In addition, in November 2009 the University of Dayton Research Institute has announced the development of the world´s first solid-state, rechargeable lithium air battery, designed to address the fire and explosion risk of other lithium rechargeable batteries and pave the way for development of large-sized lithium rechargeables for a number of industry applications, including hybrid and electric cars. These batteries are purported to have higher energy density than ion batteries due to the lighter cathode (oxygen) they use and the fact that this material is freely available in the environment and does not need to be stored in the battery.
It should then come as no surprise that Li-air batteries are considered to be one of the "five technologies that could change everything over the next few decades".
Under normal conditions, it seems reasonable to expect that technological development in the next ten years or so will follow a similar diversified path as the one observed in 2009 with Li-ion batteries aimed at facilitating the launching of the first mass-produced electric cars in the US and other developed countries, while starting to gradually focus more on Li-air batteries, which are likely to take over the market towards the beginning of the next decade.
However, whether or not Li-ion batteries become some sort of “transitional technology” will definitely depend on how soon Li-air batteries are commercially available. This may also have some implications as to which specific types of electric cars (HEV, PHEV, REEV, BEV) prevail during this decade and the next.
Acceptance of / Resistance to Change
As originally defined, resistance to change is referred to actions by “governments, companies and individuals with vested interests to prevent the emergence of lithium battery technologies mainly because this will put at serious risk their current or future privileges or advantages”.
Here this concept is extended so as to begin discussing also about the positive side of the coin, namely the activities performed by the same players to promote the adoption of such advanced energy storage systems in their plausible search for national energy independence or security, sustainable development or just more efficient forms of transportation. For reasons of space, in what follows, the topic will be examined once again with reference to governments and companies only.
In terms of governments, last year it was argued that some oil producing countries may be indeed “seeking a lead in clean energy”. But of course this is probably not the case for all of them, particularly those that have not been able to sufficiently diversify their economies.
So there is always a possibility that some oil producing countries would be interested in the failure of lithium. On the other hand, 2009 has been emblematic in terms of the billionaire financial support provided by the government to the emerging electric car and lithium battery industries in the US. Nevertheless, the behaviour of the US government has not been exempt from some contradictions and confusion. In addition, tax incentives aimed at the introduction of “green cars” are beginning to proliferate all over the world.
Regarding companies, last year this topic was taken up exclusively in terms of the role of state-owned petroleum enterprises in the adoption of Li-ion batteries by the car industry. But of course other companies may have to do a great deal with the lithium business as well, even within the car industry itself. One case in point is Toyota.
Somewhat surprisingly, there are some signs that Toyota’s strategy has started to change significantly by the end of 2009. Two reasons appear to explain this behaviour. First, following the tremendous hype produced by other major car makers such as GM and Nissan that by the end of this year will be launching the first mass-produced lithium-powered REEVs and BEVs in the US, it seems that Toyota has begun to realize that its previous arguments against use of lithium in different kinds of electric vehicles (Li-ion is not a proven technology and there is no sufficient lithium on earth) can no longer stand on their own.
In this connection, as limited as it might be, its new plan aimed at putting 500 lithium-ion-powered PHEVs on fleet-trial in Japan, Europe and the US, must be seen as an important step forward. Second, as is well known, Panasonic has been Toyota’s partner in the production of nickel metal hydride (NMH) batteries for its “star” HEV “Prius”. But Panasonic’s recent acquisition of Sanyo may unfold a new set of circumstances for Toyota. It could in fact enable the motor giant to become a key player in the new electric car market to be formed following the launching of GM’s Volt and Nissan’s Leaf later this year.
 Some time was devoted to define an appropriate period of time for this analysis. To begin with, this effort was constrained by data availability: Whereas WTI at Cushing provides daily oil prices for the period 01/02/1986 – 12/30/2009, Brent offers such information for the period 05/20/1987 – 12/30/2009 only. Secondly, from 1986 or 1987 up to 1999 oil prices averaged each year no more than 24,53 dollars a barrel or 23,76 dollars a barrel (depending on the data utilized), but from 2000 on they started to climb and would never come back to previous figures. However, 1998 was an atypical year since it reflected the lowest values for both complete series. So it appeared reasonable to establish 1998-2009 as the period of analysis for this study.
 Using a longer period of time (1986-2009), both yearly average oil prices and volatility show numbers above their corresponding total averages during the last 6 years.
 See Hella Engerer and Manfred Horn, “Natural Gas Vehicles: An Option for Europe”, Energy Policy, Vol. 38, pp. 1017-1029, 2010.
 As of now, there is no information on lithium requirement per kWh in Li-air batteries. However, since they use lithium for both their anode and cathode, chances are they will require more lithium per kWh overall than Li-ion batteries. This is also endorsed by the fact that the lithium utilized in the anode is metallic lithium. Under these circumstances, one can wonder whether this will place additional pressure on the supply of lithium in the world in about a decade or so.
 See Juan Carlos Zuleta, “The Obama Audit Task Force and the Volt”, EV World.Com, April 18, 2009; Juan Carlos Zuleta, “The Illusion of Lithium Batteries?”, EV World.Com, April 22, 2009; Juan Carlos Zuleta, “Critiquing John Petersen´s ´The Plug-in-vehicle-scam”, Seeking Alpha.Com, May 04 2009.