Battery Cell Suppliers Might Not Be Able To Keep Up With Growing Demand

NOV 30 2017 BY MARK KANE 41

Samsung SDI Battery Factory In Hungary

Plug-in electric vehicle sales are growing fast, and with the arrival of new 2nd generation offerings (finally) and EV mandates around the world, the increased demand for better (and cheaper) EVs looks to take sales even higher.

However, the pace of that growth could be determined by the ability (or lack thereof) of battery makers to adjust their production capacities higher.

LG Chem’s Holland, MI Plant

The main concern is that lithium-ion battery cells are now supplied to most manufacturers by companies like Panasonic, LG Chem and Samsung SDI.

All those suppliers are today expanding their production capacities, and even launching new facilities (Panasonic with Tesla in U.S., LG Chem in Poland and Samsung SDI in Hungary), but these are just the first steps.

The anticipated future sales of plug-ins – up to 15% market share in 2025 according to IHS Markit, means shooting battery demand over 300 GWh annually (setting aside the surging energy storage business). That’s eight times more than today in just eight years!  While at the same time, some other forecasts (Exane BNP Paribas) say that demand will be even higher, up to 600 GWh.

Whatever the result, the general consensus is that suppliers have many years of rapid growth ahead, and they need to get to building more factories.

source: Automotive News

Categories: Battery Tech, General

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41 Comments on "Battery Cell Suppliers Might Not Be Able To Keep Up With Growing Demand"

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That is definitely true.

Wonder what’s happening with the LG Chem plant in Michigan? Are they on three shifts now?

I know they just finished an expansion of a pack assembly facility, and are also planning to add on another 50k sq ft for cell manufacturing.

Not sure how many shifts they’re running though or how other production related stats are at that location.

The president of LG Chem Michigan spoke at a local Holland chamber of commerce breakfast several months ago and said they were at three shifts, but I don’t believe all three are at full capacity. Nor do I believe the built plant is at full capacity yet since they’re still doing pack assembly in the main plant which will shift to the new addition they just built once all equipment is installed. The pack assembly expansion is finished by the outward appearance (within the last month), but I drive by daily and when it’s dark out you can clearly see through the windows that there’s not much in the way of equipment installed in the new addition yet, and it doesn’t even look like they’ve taken occupancy of the addition yet.

By the way, the plant rendering in the article above shows future expansions too; the only part actually built is the front 1/3 of the large building, plus the pack assembly building which lies to the bottom left (not visible in the rendering). So they have lots of future expansion possible at this location.

Ten years from now, The Big Story in the EV world be one of these two:

1. Wow, did the battery suppliers ever build out fast! Look at all the gigafactories online now cranking out batteries! Man oh man, did we ever dodge a bullet!

2. Where the heck are the batteries??? EVs are being strangled by a lack of supply. Every company that makes them has a long waiting list and dealers are jacking up prices like crazy.

Given the demonstrated reluctance of battery cell manufacturers to increase production to meet demand, is there any doubt it will be #2?

Tesla didn’t spend billions of dollars to build Gigafactory One just to lower the price per kWh of batteries by a few percent. It build that huge factory to ensure a steadily increasing supply, which it wasn’t getting from Panasonic.

Note also the reluctance of LG Chem to build out to meet future demand. Looks like LG is demanding a signed contract in advance before it’s willing to spend the money to build more capacity.

EV industry watchers seem to have rather short memories on this subject. Apparently they have forgotten the glut on the li-ion battery market circa 2011-2; a glut which saw Envia go bankrupt, and A123 nearly so. Panasonic had to shutter some of its factories, and likely other battery makers too.

Perhaps EV enthusiasts have forgotten what happened so recently, when battery cell makers build out production in anticipation of demand which did not appear. But we can be sure the battery makers have not forgotten!

Battery capacity seems to be increasing rapidly; I think supply will be just fine. From:

“Global battery-making capacity is forecast to more than double by 2021 to 273 gigawatt-hours, up from about 103 gigawatt-hours today.”

I have every expectation it will double again by 2025.

A poorly researched article.


Just because it takes Tesla years to build and get a battery factory runnning, doesn’t mean that established battery suppliers will take that long to ramp up.

There may be a short period where demand outstrips supply, but the market will quickly adapt.

When Boeing announced the all carbon fiber 787, it was reported that its production would double the worldwide production use of carbon fiber. Boeing quickly bought out all the future supply they could get and retail market price of CF went through the roof. And a lot of small CF retailers went of business because they couldn’t buy any product. But companies like Hexcel and Toray built new capacity pretty quickly and the market has stabilized.

Well, Tesla is responsible only for the building. The actual battery cells are manufactured by an “established battery supplier”.

Another Euro point of view

Neither can cobalt suppliers follow up with ever increasing demand as I understood it.

There are a few timid projects of additional cobalt mining but not nearly sufficient for production of say, one million BEV per year.
Even using the new 811 chemistry (which uses less cobalt).

As I understood it, it may take a few years for the massive mining ramp up to take place so if not initiated now or in 2018 it might delay the all car electrification process.

As I understand it a lot of cobalt production is a byproduct of nickel mining. I don’t think it’s a huge issue to increase the cobalt output.

Another Euro point of view

Well that seems to be part of the problem as it being a byproduct of copper and nickel mining you need to find buyers for nickel and copper to make the mining worthwhile. Apparently even doubling the price of cobalt would not still not make it worth the capex investment in mining if demand for copper and nickel does not follow. Now as always it is hard for me to say whether this information I found is 100% accurate or if it is part of a wider effort by some traders to make cobalt prices rise.

Nickel is used (a lot) in batteries and copper is used in everything electric.

Another Euro point of view

I agree, so logically all those cobalt shortage stories are BS unless better explained. For example one needs to mine 100 tons of nickel to obtain 1 ton of cobalt. Problem would be that ratio Nickel/cobalt from mining is not the same ratio that markets are awaiting, possibly creating a surplus of nickel for example (thus a price drop).

“There are a few timid projects of additional cobalt mining but not nearly sufficient for production of say, one million BEV per year.”

Dude, we are already at one million BEV per year!

Capitalism 101 … you show them money and they will come. In another words, invest and fast. Capitalists always like to get bigger and richer, so I have no doubt, the ramp up will be significant by everyone involved in such marketplace.

It might look unclear this moment, but it will resolve, like it always does when there’s money to be made …. money, money.

Another Euro point of view

Sure but grass does not grow faster if you pull on it. So there might be a couple of years when demand and offer will not be on par. Agreed a couple of years is not that much.

You cannot throw more money at grass to grow it faster …. true, but you can certainly do it on any sort of manufacturing, even research. Money talks … research takes time, but again, you throw more money at it and everything speeds up.

Depending on where YOU are at, but the folks around here know how to “add watering” to speed growth and/or “add fertilizer” to speed growth. All it takes is…..more money.

Yup. Or even install sod.

A bottleneck in cobalt production will yield to money being thrown at it, and will yield faster if more money is spent to alleviate the problem faster.


If throwing money solve all problems, breast cancer would be cured by now (they are way over funded). There are some things you can’t hurry even if you throw infinite amount of money at it.

As for resource extraction, infinite money would speed it up; however, that will be very unprofitable venture that no one will take.

No but you can plant more grass

That’s pretty much how this week’s WSJ article concluded. At “tripple the price”, more cobalt mines get built. Regardless, cobalt becomes less than the cost of “plastic”, in any given car. No matter how many “EV Killer” stories get trotted out, it seems none of the necessary resources really hit a wall.

Right. Altho a possible bottleneck in cobalt production is a real concern, still I think when “Another Euro” says:

“Neither can cobalt suppliers follow up with ever increasing demand as I understood it.”

…what he really means is “Seeking Alpha and other Tesla stock shorting sites I frequent have a lot of articles claiming that a cobalt bottleneck is going to strangle EV production growth.”

When someone claims that one mineral or another is going to be in short supply in the very near future, he’s almost certainly trying to sell you something. Usually that something is investments in speculative mineral exploration companies… which is the industry with the highest occurrence of fraud!

It’s a great time to be in the battery manufacturing business.

Another Euro point of view

Am also to be a 6 year old in the RDC’s mining industry (producing 60% of world’s cobalt production). You might see your salary hiking from $0.50/day to the ludicrous amount of $1/day.

One always needs to look at the half full glas.

Those damn 6 year olds are cutting into our profits with their constant demands!

The commodities sector, sourcing from banana republics. Say it isn’t so!

If Musk weren’t so busy in Puerto Rico, he’d probably start a “fair trade” cobalt program. You know how crunchy those EV people can be.

Another Euro point of view

Don’t worry, Elon will invent an electric peanut throwing machine so to keep them there deep 24/7. I will feed and pay them at the same time. Tsla stock goes $800.

Darn those 6 year olds! They’re willing to work for wages that undercut what the 8 year olds should be able to earn. The 8 year olds should unionize to keep them out!

* * * * *

Although cobalt is used in electroplating to give objects an attractive surface that resists oxidation, it is more widely used to form alloys. Alnico, an alloy consisting of aluminum, nickel and cobalt is used to make powerful permanent magnets. Stellite alloys, which contain cobalt, chromium and tungsten, are used to make high-speed and high temperature cutting tools and dyes. Cobalt is also used to make alloys for jet engines and gas turbines, magnetic steels and some types of stainless steels. (source below)

Oddly enough, we never see EV haters like “Another Euro…” complain about how cobalt is used in those other industries. It’s almost like they have some sort of obsessive bias against EVs. Or like they’re shorting Tesla stock…

DRC colbalt mostly went to Samsung and LG, which supplies batteries for Apple, Byd, VW. But it’s not in Tesla’s supply chain.

Another Euro point of view

Indeed, Tesla batteries (Panasonic) cobalt comes from Sumitomo Metal Mining Co which does not sources its cobalt from DRC. Now this may limit their batteries production for 2018/2019 as I understood that Sumitomo mining had now cobalt production capacity for the equivalent of 250K cars (+/-75Kwh batteries) per year. More would need mining investment and it takes time. A cobalt mine seems a big operation that takes time to develop.

Don’t forget BMW 🙂

In fact I am looking at investing in Cobalt, Ontario since I expect the cobalt mining there to increase over the next couple of years.

Um, link to Samsung Hungary plants takes us to yet another Tesla Gigafactory flyover….

A now obvious advantage of sticking with smaller packs during the introductory stage… allowing more plug-ins to join the population while working costs lower at the same time.

This is where PHEV’s help with the ramp. Enough battery range for most daily trips while getting more ICE only cars off the road. Get people hooked on electric while the technology and supply’s ramp up.

“Battery Cell Suppliers Might Not Be Able To Keep Up With Growing Demand”

That headline needs correcting: “Battery Cell Suppliers Definitely Won’t Be Able To Keep Up With Growing Demand”

In fact, Panasonic and Tesla, this has already happened, repeatedly. It also happened with the Nissan Leaf in its first couple of years of production.

When the EV revolution enters the fast growth phase of its “S-curve” of increasing sales, it will become a game of musical chairs with auto makers trying to find a supplier. The auto makers who are truly looking ahead are the ones moving to build out battery production that they control.

But in this game of musical chairs, it won’t be just one player left without a chair when the music stops. Several auto makers are going to find themselves unable to build as many EVs as they need to, to stay in the competition.

After 7 years of “The EV wave is just around the corner, guys!”, I have tired of the boy crying wolf.

Instead of wasting a lot of money trying to build out factories for a Massive Surge that may never arrive, why not just wait for demand to actually catch up to the supply that currently exists? EVs might increase from <2% of the market to 10% in one year… or they might increase to 3%.

Sustainability is the name of the game. I don't want to see battery companies (or companies in associated support industries) going out of business because they bet too heavily on demand that isn't there.

Another Euro point of view

You are right but don’t worry, the industry most probably thinks the same.

In 2025 the main demand will be for solid state batteries, so there is no point in building the factories now.