Tesla to eliminate cobalt from electric vehicles

At Tesla’s live-streamed Battery Technology Day this week, chief executive Elon Musk outlined the company’s plans to build a US$25,000 electric vehicle (EV) with a cheaper, more powerful battery that doesn’t contain cobalt, and the construction of a new cathode plant.

The new battery technology, which the company plans to manufacture in-house, will lower the cost of its EVs and extend their range by 16% thanks to a six-fold increase in power.

Musk didn’t provide details on the exact cost per kilowatt-hour (kWh), a key metric used to measure the performance of an EV’s battery pack. However, changes to battery chemistry and how the battery pack is made, he said, will reduce the costs per kWh by 56%, suggesting a cost below the US$100 per kWh threshold that is generally accepted for EVs to be price competitive with gasoline-powered cars.

New battery chemistry 

Production of the new battery cell, called “4680-cell” because of its 46 millimetres diameter and 80 millimetres height, has already commenced with ten gigawatt-hours (GWh) of annual capacity expected before the end of 2021.

According to Energy Research & Consultancy firm Wood Mackenzie, the new design can cause thermal and rapid charging issues. However, Tesla claims to have overcome these issues by removing the tabs that act as the positive and negative connection points between the anode and cathode and the battery casing.

The tab-less design will reduce the cell’s winding and increase production rates and could result in around 20% less copper and aluminum content in the cell, said analysts at BMO Capital Markets.

The tab-less design, Wood Mackenzie noted, is yet to appear in any other commercialized EV battery cell.

Tesla also intends to eliminate cobalt in battery cathodes by switching to batteries that use less costly metals such as nickel and manganese.

In recent years, battery manufacturers have been focussed on cathode design, particularly the ratio of nickel, cobalt, and manganese used in cathodes. Manufacturers, including Tesla, are moving towards high-nickel cathodes with lower cobalt content.

But this has proved challenging because cobalt stabilizes the battery during recharging, extending the battery’s life.

To get around this, Musk referred to the use of “novel coating and dopants,” but did not provide any further details. This lack of clarification, said Woods Mackenzie, would appear to suggest that the problem has not yet been solved.

Tesla also noted that the nickel-rich cathodes would be reserved for their high-performance and commercial EVs, while lithium-iron-phosphate batteries will be used in cheaper models.

The company aims to reach 100 GWh of in-house lithium-ion battery cell production capacity by 2022 and 3,000 GWh by 2030, which, Woods Mackenzie noted, is far greater than any other major battery manufacturer has announced.

Although the outlook for cobalt and nickel remains favourable, according to BMO, the switch to cathodes with higher nickel and lower cobalt content could lead to a minor short-term reduction in forecast cobalt demand, which becomes more noticeable further out as the technology is more widely adopted.

However, BMO believes that the cobalt market will tighten going into 2021 and forecasts a 2,000 tonne per day increase to 56,000 tonnes per day in nickel consumption for 2020, with a forecast consumption by 2025 of 351,000 tonnes nickel, up from 322,000 tonnes in its previous forecast.

Reducing costs and ethical sourcing

Tesla’s determination to transition to a cobalt-free cathode appears primarily to be driven by reducing costs and ensuring that their EVs’ raw materials are ethically sourced.

The company’s current battery technology uses nickel-cobalt-aluminium cathode chemistry, which contains less than 3% cobalt (other battery manufacturers use nickel-cobalt-manganese blends that have around 10% cobalt).

Warnings about long-term shortages caused cobalt prices to spike in 2017 and 2018, prompting Tesla to try to reduce its reliance on the metal.

Tesla sources most of its cobalt from the Democratic Republic of Congo (DRC), which has been beset by claims of illegal mining, human rights abuses and corruption.

However, the company’s stance on cobalt appears to be at odds with its plans (as reported by the Bloomberg news agency on June 16, 2020) to source 6,000 tonnes of cobalt over five years from a cobalt-copper mine in the DRC operated by Katanga Mining, a subsidiary of Glencore [LSE: GLEN], for its Gigafactories in Berlin and Shanghai.

The Environmental Justice Atlas, which documents and catalogues social conflict around environmental issues, has alleged that Katanga has polluted local water sources, is linked to child labour, has engaged in tax evasion, and threatened human rights defenders.

“Around two years ago, Elon Musk put a statement out via Twitter that he was going to take cobalt out of their batteries,” Trent Mell, First Cobalt’s (TSXV: FCC; US-OTC: FTSSF) president and chief executive, said in an interview. “While it’s important to note that it’s been an ambition of theirs for some time, it didn’t get much airtime and don’t think we heard anything on Tuesday by way of a commitment.”

He added that the shift away from cobalt appears to be achievable but will take many years and will only apply to a small segment of a large battery market.

“Tesla’s peers and competitors are not going that way because cobalt is such a minute cost element (at around US$200 to US$300 per battery) and that its benefits are perceived to outweigh its costs,” Mell noted.

Manufacturers instead have opted to reduce the amount of cobalt in the cathode to decrease the cost while preserving the battery’s integrity.

“Cobalt is a metal that many people want to hate,” Mell said. “The last time cobalt made headlines it was around the use of child labour and human rights violations in artisanal mines in the Congo, the reverberations of which would be extremely damaging for a company like Tesla.”

The mining executive noted that on Sept. 8, Tesla announced that it had joined the Fair Cobalt Alliance. The initiative aims to improve artisanal and small-scale mining operations in the DRC.

“As cobalt is the most expensive raw material input to batteries, lowering its levels will facilitate higher EV penetration rates, which, in turn, will drive EV adoption rates,” Mell said.

Although he believes that cobalt will continue to be an essential component in nickel-rich battery technologies, the cobalt amount will likely be reduced, making them cheaper.

Mell’s position appears to be supported by Benchmark Mineral Intelligence analysis, a leading authority on cobalt.

Benchmark has forecast demand from nickel-cobalt-manganese batteries to increase from approximately 20,000 tonnes in 2019 to over 730,000 tonnes in 2040, even after factoring in reductions in the use of cobalt.

First Cobalt is producing battery-grade cobalt sulphate at the company’s hydrometallurgical refinery in Ontario, 600 km from Canada’s border with the United States. It is the only fully permitted primary cobalt refinery in North America.

In a boost to the North American EV market, Californian governor, Gavin Newsom, on Wednesday signed an order that will ban the sale of new gasoline and diesel-powered passenger cars in the state by 2035.