Cobalt weighs on Korean battery firms before Tesla Battery Day

Tesla's China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China, Jan. 7, 2020. Reuters-Yonhap

By Nam Hyun-woo

LG Chem, Samsung SDI and SK Innovation are paying attention to Tesla's looming Battery Day event, as the EV maker is anticipated to showcase its increased use of cobalt-free batteries, which could affect the Korean battery makers' current strategy of relying on cobalt in producing their products.

Last month, Tesla announced its annual shareholder meeting and Battery Day presentation will take place Sept. 22, with CEO Elon Musk telling analysts the event would include a "big reveal" of developments in battery technology, and supply chains for the company.

Though Tesla has not disclosed much information, industry officials say more details on new cobalt-free batteries with greater efficiency will be revealed at the event. One said the most important point to watch will be whether the new batteries will be based on lithium iron phosphate (LFP) chemistry, which Korean battery makers claim to be "dated" and which has limits in terms of single-charge distance.

Generally, EV battery makers have been favoring nickel manganese cobalt (NMC) or nickel cobalt aluminum (NCA) batteries over LFP batteries due to their higher energy density and lighter weight. LFP batteries have advantages in cost and environmental friendliness. Many materials used in battery manufacture are raising ethical and political issues.

Korean EV battery makers mostly rely on NMC- or NCA-based chemistry due to the higher energy density, which results in a greater distance an EV can cover on a single charge. But this strategy is facing challenges recently, as a growing number of manufacturers are ruling out cobalt use in their batteries as seen in Tesla's pursuit of cobalt-free batteries.

According to multiple foreign reports, CATL, one of the main battery partners of Tesla, is believed to have begun supplying LFP batteries for Tesla's Model 3 in China, whose largest battery supplier is currently LG Chem. During Tesla's second quarter conference call, Musk said Tesla will boost volume production in China of LFP battery packs for Model 3 cars.

On July 30, Panasonic, another battery supplier to Tesla, told Reuters that it will commercialize a cobalt-free battery in two to three years for Tesla, without elaborating on whether it would employ LFP.


LFP for future battery?

Due to such moves, Korean battery makers are facing growing questions on whether they will turn to LFP batteries, following CATL's supplying of LFP batteries to Tesla. However, industry officials here said they were skeptical on LFP batteries as future tech.

During a conference call for the second quarter, LG Chem said it believes NMC chemistry will remain "mainstream" in the global market due to its advantages in energy density.

"Though we are producing LFP batteries too, these have their shortcomings in energy density and weight," the company said. "We believe NCM will remain the mainstream in the global EV battery market."

Samsung SDI also said it was focusing on NCA technology when asked whether it was considering LFP as an option. SK Innovation is focusing on NCM.

"Many battery firms have tried to upgrade the energy density of LFP chemistry, but they have yet to have meaningful outcomes," an industry official said requesting anonymity. "Tesla is now saying it is increasing its reliance on LFP batteries and is anticipated to come up with information on new cobalt-free batteries during Battery Day."

"This can either mean that Tesla and CATL have come up with technology to improve the efficiency of LFP batteries or unprecedented technology in removing cobalt," he said. "Since either way will likely affect the industrial trend, domestic companies are paying attention to what Tesla will reveal during the event."

Another battery firm official said Tesla's announcement will bear more significance, given the company's influence on the EV market.

"Tesla is now more than just a buyer of batteries due to its influence affecting the trend of the global EV market," another official said. "If Tesla sets LFP as one of its new directions, that will affect the market anyway. In this case, it could result in Korean battery firms losing control and allowing their Chinese rivals to take control of the market again, given their strengths in making LFP batteries."
Nam Hyun-woo

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