Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
Lithium-ion batteries are everywhere — in your phone, laptop, and by this time next year, maybe your car. The technology is slated for GM’s (s GM) Chevy Volt, Toyota’s (s TMC) plug-in Prius, and electric versions of the Daimler Smart (s DAI) and BMW Mini (s BMW).
Until recently, lithium went primarily into ceramics and glass. Now batteries make up one-fifth of the world’s end-use market for the mineral — a share that will only grow if the auto industry goes where lithium-ion startups like ActaCell, A123 Systems and Imara are betting it will. But shortages could stop an emerging industry in its tracks — or dramatically reshape it — within a decade: Mitsubishi (s MMTOF) estimates that lithium demand will outstrip supply as early as 2015.
The U.S. Geological Survey’s mineral commodity specialist on lithium, Brian Jaskula, offers a more conservative estimate, forecasting that demand will begin to drive lithium prices up in the next 10 to 15 years. But the signs are clear: Lithium, which now costs less than a buck per kilogram, will not stay cheap for long.
This reality has put Bolivia’s lithium-rich salt flats in automakers’ sights. The country has more than half of the planet’s total lithium deposits in the brine beneath those plains. There’s just one hitch: The Bolivian government is none too keen on giving up its resource to foreign miners.
According to Time, Mitsubishi and Toyota (one of the only major automakers that produces its own batteries) have both broached talks about lithium development with Bolivian officials, with no luck. Lacking the infrastructure to manufacture batteries, Jaskula said, it will take Bolivia years to build out the industry it hopes will jump-start the national economy.
But politics and trade negotiations hardly tell the whole story. Enter: Innovation. In the looming lithium squeeze, battery makers whose technologies use less of the mineral could enjoy an advantage — just as thin-film solar became the hot new thing when polysilicon shortages shook the photovoltaic industry last year.
This means the Chevy Volt may be in for a redesign. As is, the Volt battery uses a relatively high load of lithium carbonate for the amount of power in its battery: 1.4 kilograms per kilowatt-hour. At current prices ($8/kg, up from $0.50 to $1.50 a few years ago), that works out to only about $180-worth of the raw material in every car. But if a supply squeeze sends lithium prices through the roof — and causes fully-loaded batteries to add more than the current $10,000 or so to a car’s total cost — lithium-heavy chemistry could be a luxury GM can’t afford.
According to Jaskula, competing designs offer the same amount of power for less than a third of the lithium. For low-margin electric vehicles like the $9,000 model recently announced by India’s Reva, rising lithium prices could be a deal breaker.
Higher lithium prices could also give the nascent U.S. battery industry a steeper climb to the top. The U.S. consumes more lithium than any other country, despite having only 760,000 tons of the world’s 13.8 million tons of identified lithium resources (those of known quantity, quality and grade), according to the U.S. Geological Survey. While most U.S. lithium imports now come from Chile and Argentina (69 and 29 percent, respectively) China has brought new supply online in the last few years. In a peak-lithium world, that could put Asia’s already-leading battery makers one more step ahead.