Is Lithium the 21st Century's Oil? Part III

 |  Includes: BYDDF, F, HMC, TM
by: Erik Bethel

Why is the lithium ion battery better?

There are three main types of rechargeable batteries: Nickel Metal Hydride (Ni-MH), Nickel Cadmium (Ni-Cd), and Lithium Ion (Li-Ion). The main advantage of using lithium batteries over the others is higher charge density. Lithium batteries are smaller than equivalents such as nickel metal hydride (Ni-MH), and much lighter. In layman’s terms they “punch above their weight.” And unlike nickel cadmium batteries, lithium ion batteries do not suffer from “memory effect.” They also have a low self-discharge rate of approximately 5% per month, compared with over 30% per month in common Ni-MH batteries, 10% per month in nickel cadmium batteries.

Lithium batteries are used in great quantities in consumer electronics. Most mobile phones, laptops, cameras and PDAs use lithium batteries. But the industry’s “holy grail” is the electric vehicle market. An average laptop has around 5 grams of lithium while an electric vehicle, depending on the technology, could have more than 150 grams per battery.

Lithium ion batteries are rapidly becoming the technology of choice for the next generation of electric vehicles, and “green technology” is being heavily encouraged by the U.S. government and auto industry. To reduce dependency on non-renewable oil, a considerable percentage of the world fleet of 1 billion vehicles will likely convert to partial or full electric mode in the next ten years. And potentially, all future production (currently ~ 70 million vehicles per year), will be replaced with electrified vehicles. Ironically, reducing dependency on oil from the Middle East will mean increasing dependency on imported lithium from South America.

Today, hybrid vehicles such as the Prius still use nickel metal hydride (Ni-MH) batteries, not lithium. That said, Toyota (NYSE:TM) confirmed that the next generation Prius will use lithium. The premise behind the shift is the simple fact that Ni-MH batteries are heavy and their energy output/per unit of mass is approximately 50% that of a lithium-ion battery. In an industry as focused on performance (and weight), the only reason auto companies are still using Ni-MH is that they have not yet developed an effective means to mass produce the amount of lithium necessary to gain economies of scale.

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According to lithium producer Chemetall, there could be 6 million lithium-powered vehicles by 2018. Each of these vehicles would likely have a 10kWh (kilowatt hour) Li-Ion battery. And each of these batteries requires roughly 0.3kg of lithium metal equivalent per kWh of capacity.

So 6,000,000 vehicles x 0.3kg x 10 amounts to 18,000 tons of lithium (metal) or 84,000 tons of (Li2CO3). This figure equates to almost the entire 2008 world production of lithium and assumes that all of the lithium would be used to make electric vehicles (i.e. none in laptops or cell phones).

As of 2009, the following auto companies had introduced hybrid or plug in cars. Note: these are just some of the brand name companies and don’t include any Chinese firms such as BYD (OTCPK:BYDDF), specialty car companies like Tesla, or the thousands of electric government vehicles.

  • Toyota (Prius)
  • Honda (NYSE:HMC) (Civic Hybrid)
  • Ford (NYSE:F)/Mercury (Escape, Fusion, Mariner, Milano)
  • Chevrolet (Malibu hybrid, Volt)
  • Mercedes (S-Class hybrid)
  • Lexus (HS 250h)

If annual vehicle production is around 70 million per year, then Chemetall’s 6 million electric cars seems conservative (less than 10%). What if the figure were 15% or 20%? The math is pretty straightforward. We need more lithium.

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