Time To Invest In Rechargeable Battery Manufacturers?

With the rapid growth in sales of electric vehicles (EVs), is it time to invest in rechargeable battery manufacturers? Global sales have been remarkable: 6.75 million EVs were sold in 2021, 108 per cent more than in 2020. Industry figures show that in 2021 nearly 10 per cent of all cars sold globally were electric, 4X the number recorded in 2019. 

The most recent sales figures seem to cement the trend. The first quarter of 2022 saw 2 million EVs sold, up 75 per cent from the same period in 2021. There is no stopping the EV wave. Astute investors are finding new opportunities in this trend. They are putting their money down on manufacturers whose batteries are at the heart of these vehicles. 

China-based Build Your Dreams (better known simply as BYD) is among the most sought-after rechargeable battery manufacturers. Warren Buffet’s Berkshire Hathaway invested in BYD way back in 2008. In August 2022, BYD made it to the Fortune Global 500 list (rank: 436). 

It is impossible to miss the significance of battery technology in the future of EVs and the fight against climate change. You could double-click on rechargeable batteries and invest in companies that produce the raw material for them. 

The Global EV Outlook 2022 report of the International Energy Agency (IEA) points out that the prices of raw materials such as cobalt, lithium and nickel in May 2022 were 7X their price at the start of 2021. 

Much of the increase in prices can be attributed to growing demand from EV manufacturers and some of which is due to the shortage created by the Russian invasion of Ukraine. Russia supplies 20 per cent of global high purity nickel, a key component of rechargeable batteries. Lithium is another critical mineral essential to manufacturing rechargeable batteries.

Current estimates suggest there will not be enough lithium to manufacture the required batteries for the 2 billion EVs necessary by 2050 to reach our net-zero targets. 

As per the IEA, there will be a lithium shortage as early as 2025 unless investments are made to expand production. China knows this and is aggressively on the job. 

It has been investing in lithium mining operations through acquisitions, strategic partnerships and extraction and exploration rights in Latin America and Africa. It is now positioning itself to exploit the untapped mineral reserves of Afghanistan, believed to be worth USD 1-3 trillion. Afghanistan’s rare earth minerals include lithium.

There are two worrying aspects of the developments around EVs:

Will we have enough power to recharge EV batteries? EV batteries will be power-hungry. The forecasted demand for energy by EV batteries is expected to be nine terawatt-hours (TWh) annually by 2030, 15 times the levels seen in 2021. We have discussed this problem in depth earlier.

Are we ready for end-of-life battery management? 

Anyone using a mobile phone is already familiar with this problem. A top-quality new phone may take 45 minutes to an hour to recharge. 

The charge could last two days. As the number of recharge cycles grows, the batteries run out of power faster. They not only need more frequent recharging, but they also take longer to recharge. While this is acceptable for a mobile phone — because you can even continue to use the phone while it is recharging — it is not for an EV. 

Most EV batteries will work well for about 3,000 charge cycles. After this, the battery will lose 20 per cent of its efficiency, leading to range anxiety. In most instances, the EV user will consider replacing the battery before its range affects the practical usage of the car. 

This is good news for manufacturers. It will increase demand and help reduce the stress on lithium supplies. The World Economic Forum (WEF), in its report, A Vision for a Sustainable Battery Value Chain in 2030, stated that 54 per cent of end-of-life batteries will be recycled by 2030, covering approximately 7 per cent of the annual demand for raw materials.

The WEF report argues for a circular value chain for rechargeable batteries. As the race to preserve and extend battery life, safely recycle components and materials and extract residual value from it intensifies, this space will become ripe for technological interventions. 

Already, researchers at Stanford and MIT are able to use data, machine learning and artificial intelligence to predict the useful life of lithium-ion batteries. Monitoring battery performance, diagnostics, usage optimisation and helping to intelligently manage charge cycles will be important areas for technology companies to explore.

More importantly, the practical challenges and the urgent need for sustainable solutions are accelerating research in battery technology. 

NanoBolt lithium tungsten and zinc-manganese oxide batteries could reduce recharge times and increase the energy density in batteries. Earlier this May, researchers at the Indian Institute of Technology (IIT) Madras announced a mechanically-rechargeable zinc-air battery developed to replace lithium-ion batteries. 

The zinc-air batteries are safer and have a longer shelf life. Gold nanowire gel electrolyte batteries could help increase the number of charge cycles a battery can withstand before it must be replaced.

My favourite solution is to do away with batteries completely. In traditional cars, fuel is mixed with oxygen in an internal combustion engine. The heat from the combustion expands the air inside a cylinder that pushes a piston. 

The piston rotates a crankshaft, which uses a powertrain to propel the car. Why not just use compressed air to power a car? Why use combustion? 

Compressed air will end the hunt for rare minerals. There will be no toxic waste to recycle. And we will have zero-emission. This is not a new solution. Chances are that air-powered vehicles go back to 1870, or about the same time that the first “modern” internal combustion engine was invented.

In 2007, Tata Motors signed an agreement with the French Motor Development International (MDI) company for a compressed-air car. The AIRPod, designed and manufactured by MDI, is environment-friendly. However, the Tata compressed air car did not hit the road, perhaps due to safety concerns in an accident or because of the car’s limited range. 

There are several initiatives around the world to develop a compressed-air car. A university in Egypt was working on developing one. Engine Air in Australia uses clean compressed air and its engine’s footprint is no larger than a flip phone.

Where will the race for environment-friendly mobility take us? What is the role IT will play in the future of mobility? How will IT enable new ideas that help us progress toward a net-zero world? These questions will come up more frequently in the next few years — and the world will not stop until it finds the answers.