Who will win EV battery race: U.S., China or Europe?

Batteries have risen to the forefront of policy discussions as governments around the world commit to reducing greenhouse gas emissions. With the global market for electric vehicle batteries expected to hit almost $1 trillion by 2030, the U.S., China and Europe are jockeying for position in the race to produce cheaper, more efficient and safer batteries at scale.

As China dominates lithium ion battery production and builds factories at breakneck speed, Europe is on its tail, aiming to become the second-biggest battery cell-producing region by 2025. Although the U.S. has more technological innovation at its disposal, it needs to make significant strides to catch up.

The manufacturing of lithium ion batteries depends on key materials such as graphite, lithium and cobalt. These materials are used in today's active cathode materials and chemistries found in high-performing batteries: lithium ion, solid-state and silicon.

Chinese chemical companies accounted for 80 percent of the world's total output of raw battery materials in 2019. Of the 136 lithium ion battery plants in the pipeline by 2029, 101 are based in China. Cobalt produced in mines in Congo (where the vast majority of the metals are found) is held by a Chinese monopoly. Furthermore, China has been buying stakes in mining operations in Australia and South America where most of the world's lithium reserves are found. In fact, Tianqi Lithium, a Chinese company, now owns 51 percent of the world's largest lithium reserve.

By 2023, Europe is projected to have more lithium ion battery manufacturing capacity than the U.S., with the demand for EV batteries in the country expected to surpass 200 gigawatt-hours per year by 2023 and reach about 400 GWh by 2028. Additionally, the country's share of lithium ion battery capacity will increase to 25 percent in 2025 (jumping from 6 percent in 2020), potentially lowering China's projected share to 65 percent from 77 percent.

Although the U.S. pioneered most of the lithium ion battery technology that dominates the market today, a lack of national strategy has been holding back the country's battery production. To remedy this, the U.S. Department of Energy released a National Blueprint for Lithium Batteries in June to guide investments in developing a domestic value chain. The plan encompasses mandates for materials recycling, accelerating domestic mining efforts to address the growing materials shortage and finding ways to make lithium ion batteries without cobalt and nickel. In addition, the department is planning to distribute $17 billion in loans for EV manufacturing facilities while the Biden administration has pledged $100 million in grants to develop work forces for the new supply chain.

With the world's leading automakers doubling down on electrification commitments, battery demand is forecast to be so powerful that production will barely keep pace by the end of this decade. For the U.S. and Europe, efforts to compete with China over manufacturing scale and materials supply may be more effectively redirected toward battery innovation.

There's no question that achieving mass electrification requires longer-lasting and faster-charging batteries than what's on the market today. Most efforts to improve battery performance over the past few decades have focused on chemistry. This has resulted in incremental improvements, and tweaks to the dominant lithium ion battery have led us to solid-state batteries, which many hail as the next-step change in battery performance. However, mass commercialization of solid-state batteries is still a decade away, with cost still an issue. But there's another approach that hasn't been given much attention until recently — one that can help improve performance of any battery chemistry, existing or emerging: rethinking the physical battery architecture. For example, transitioning away from a traditional 2D electrode structure to a 3D structure yields higher energy and higher power performance in both the anode and cathode, solving two challenges that still plague the battery industry: the power-energy trade-off and cathode-anode mismatch.

Of course, overcoming manufacturing and material supply challenges are still critical factors.

We're seeing more battery industry applications of artificial intelligence and manufacturing automation that show significant promise in this regard. The bottom line is that battery innovation takes a holistic approach, and the countries that develop and adopt technologies with the most significant impact on performance, lowered costs and compatibility with existing manufacturing infrastructure will be the ones that pull ahead in the battery race.