Currently, the world's proven cobalt reserves are extremely scarce, amounting to only 7.1 million tons. In the long term, cobalt faces the risk of resource depletion. Industry estimates suggest that producing one Tesla Model S consumes 13.68 kilograms of cobalt. If 30% of global cobalt reserves were used in electric vehicles, it could support the production of approximately 170 million vehicles. Based on annual sales of 5 million vehicles, without new sources of cobalt, it would be exhausted in about 30 years.
As of June this year, the price of cobalt was approximately 350,000 yuan per ton. Although it has declined somewhat in the short term, the future price increase of cobalt may still be fierce. Some industry insiders even predict that the price of cobalt will surge to 500,000 yuan per ton in 2021, and the price of cobalt powder will surge to 600,000 yuan per ton. Historically, the highest price of cobalt has reached a staggering 860,000 yuan per ton.
Analysts at the Southwest Steel Index believe that from a capital perspective, factors such as tight supply, a fragile supply chain, a significant increase in cobalt demand, and the importance of strategic reserves could all stimulate a new round of price increases for cobalt. The institution even suggests that cobalt prices could rise indefinitely over the next 40 years.
It is obvious that ternary lithium batteries are too reliant on cobalt, which is ultimately not a long-term solution for battery manufacturers. How to break free from the torment of cobalt is a fundamental question for battery companies.
The only way to break this deadlock is through technological advancement. After the ternary cycle, the quadrilateral cycle emerged.
01. The cost is "significantly" less than that of a ternary lithium battery.
The NCMA quaternary battery is not exactly revolutionary, but it is an innovation combining NCM and NCA technologies, representing the culmination of both approaches. Although the quaternary battery uses only one more element than the ternary battery, the amount of expensive cobalt is further reduced compared to the high-nickel ternary battery, while the amount of cheaper aluminum is increased accordingly. At the same time, in terms of cost, the quaternary battery is "many yuan" cheaper than the ternary battery.
According to industry research, high-nickel NCMA quaternary batteries can reduce cobalt content to below 10%, lowering battery costs to below $100/kWh (approximately RMB 650/kWh). A report by Zhongtai Securities estimates that the current cost of ternary batteries on the market is between RMB 800-850/kWh. Based on a 60kWh battery capacity per vehicle, using NCMA batteries could save RMB 6,000-9,000 per vehicle.
More importantly, the cost advantage of quaternary batteries is not limited to ternary batteries. The internationally renowned Roland Berger consulting firm has stated that high-nickel batteries are likely to become a new trend in the future. Due to their inherent technological advantages, quaternary batteries, in addition to their cost advantage over ternary batteries, are also expected to replace lithium iron phosphate batteries in more vehicle models.
Furthermore, besides its cost advantage, quaternary lithium batteries also boast high energy density. The combination of a positive electrode material and a highly efficient silicon oxide negative electrode allows the battery system's energy density to reach over 300Wh/kg, enabling electric vehicles equipped with these batteries to travel 650 kilometers on a single charge. Additionally, advanced thermal management technology can significantly improve charging speed, allowing for nearly 300 kilometers of driving range with just 5 minutes of charging.
"Quadrial batteries incorporate dopants into ultra-high nickel content batteries while reducing the content of the valuable rare metal cobalt, thereby increasing battery capacity and reducing costs—a win-win situation," an industry insider summarized.
02. Will it share the market with ternary lithium batteries and lithium iron phosphate batteries?
In terms of commercialization, Tesla may become the world's first automaker to use quaternary lithium batteries. Starting in July this year, Tesla will use LG New Energy's NCMA batteries in its (Shanghai-made) Model Y vehicles, which contain up to 90% nickel and less than 5% cobalt. The battery is a 21700 cylindrical shape; currently, LG supplies Tesla (Shanghai-made) models with NCM 811 21700 cylindrical batteries.
In addition to supplying Tesla, LG Chem will also provide NCMA cathode materials for GM's Hummer electric vehicles. Besides LG, POSCO Chemicals announced last year that its NCMA cathode materials would increase the nickel content to over 80%, significantly improving battery capacity. Simultaneously, it would uniformly arrange aluminum within the material's physical structure and employ surface coating technology to further enhance output power and stability.
Domestically, Svolt Energy has taken the lead in the industry by successfully developing NCMA quaternary cathode materials, with mass production expected in 2021. At its "Svolt Battery Day" event last December, Svolt Energy revealed that its quaternary NCMA cathode material achieves energy density comparable to 811 batteries while improving safety. The cost is further reduced due to the decreased proportion of nickel used in the quaternary material.
Furthermore, reports indicate that Zhongwei Co., Ltd.'s NCMA precursor materials have entered large-scale mass production. Huayou Cobalt's subsidiary, Huayou New Energy, launched its 12,500-ton-per-year NCMA quaternary precursor material project at the end of last year, with a construction period of two years. According to GEM Co., Ltd., its NCMA quaternary precursor products are undergoing customer ton-level certification and have already begun mass production based on customer demand.
Last December, GEM Co., Ltd. announced that LG Chem had placed a bulk order with the company for high-nickel battery precursors for new energy power batteries, and that GEM had begun supplying high-nickel battery precursors to LG Chem. Combined with reports that Tesla will be using LG's quaternary batteries, this raises the question of whether GEM is a major supplier of NCMA battery precursors for Tesla, a question worth considering.
It's worth noting that CATL, the world's leading power battery manufacturer, has not yet publicly announced any progress in NCMA battery research and development. However, some industry insiders believe that considering GEM is one of CATL's cathode material suppliers, CATL may also be quietly conducting NCMA battery research and development, "waiting for the right opportunity to make a big move."
Against the backdrop of cost reduction and cobalt reduction trends, and with more and more companies in the industry chain entering the quaternary lithium battery market, industry insiders predict that NCMA quaternary batteries will see rapid volume growth in the next few years. Will quaternary batteries eventually share the market with ternary and lithium iron phosphate batteries? We shall wait and see!
