Automotive supply chains at a crossroads – new evidence in the battery technology debate
Battery technology is at a crossroads with significant impact on the steepness of the EV adoption curve and the competitiveness of new model launches. We again partnered with industry experts P3 Automotive and UBS Evidence Lab to tear down two new iron (LFP) batteries. We now have eight nickel, cobalt, manganese, aluminum (NCM/A) and two LFP cells in our unique teardown portfolio. In addition, OEMs are investing significantly in differentiating battery systems as evidenced by the shift to dedicated EV platforms. We worked with the UBS New Analytic Approaches team to analyse US / China regulatory filings on 655 recent EV models to predict the impact of battery technology advances on vehicle range / cost. Here are some key findings from our report:
- iron batteries will go global,
- relative cost competitiveness is nickel sensitive, but lithium agnostic,
- OEMs can differentiate with battery system innovation that unlocks vehicle range,
Iron batteries going global
We underestimated the LFP use case and now believe medium sized EVs equipped with iron batteries can attain > 500 km range. Our UBS Evidence Lab surveys indicate this can meet consumer expectations around range in most markets. In a surprise finding our teardown analysis shows next generation nickel batteries (NCMx) could offer the lowest cost solution in delivering a kilometer of range. However we believe OEMs will likely take a portfolio approach to hedge against different technology and metals price scenarios; it will also help to alleviate a battery cell supply traffic jam that could derail OEM electrification targets of 50~60% by 2030.
OEMs can differentiate on systems; analysis shows 100km of range benefit
Our regulatory filing analysis suggests OEMs can extend range +100km through battery system innovation and without cell level changes. The aviation industry carried jet-fuel like cargo prior to integrating fuel tanks into the wings. Today’s battery system is cargo and the next gen systems will integrate cells into the vehicle structure / chassis. OEMs on dedicated EV platforms are already a step ahead in the structural battery system race as compared to OEMs on vestigial gas vehicle platforms. We estimate that each percentage point of packaging improvement from a weight / volume perspective can increase range 3.7 km / 1.7 km. Average weight packaging efficiency in the US is only 61% and we expect this rise to 85% in next generation systems.
