Jump-starting electric car batteries: Will supply problems stall California’s mandate?

After more than 30 years toiling in obscurity in the ultra-complex world of battery technology, Kurt Kelty and the other chemists, electrical engineers and minerals experts racing to design the next generation of electric vehicle batteries are at last having their moment.

Kelty, who ran Tesla’s battery cell team for more than a decade, now heads battery engineering at Sila Nanotechnologies, a Bay Area startup experimenting with new designs for EV power. When he started his career in the 1990s, Kelty avoided telling people at social gatherings he was in the battery industry because “you were relegated to the corner section of the cocktail party.”

“Now you go to parties and you are the center of attention,” he said. “Everyone wants to know what’s going on with batteries.”

Do they ever. For all of the policy hurdles and consumer reluctance bedeviling California’s transition to all-electric transportation, unlocking the battery puzzle is the most critical element to jump-starting the post-fossil fuel revolution.

Failure to deliver safe, affordable and efficient batteries for electric cars could mean that California fails to meet its landmark mandate, enacted last summer, to phase out new gasoline-powered cars by 2035.

As California enforces its first-in-the-world zero-emission requirements for cars, the state is navigating a policy path strewn with unique obstacles: international human rights and environmental issues, global resource constraints and fast-moving technologies.

The industry’s imperatives: Making cheaper, faster-charging and more durable EV batteries. Breaking China’s stranglehold on the industry, where 85% of batteries are produced or assembled. And discovering new sources of rare earth minerals to replace lithium mines in countries with unsafe labor practices and poor environmental oversight, and cobalt mines where human rights groups say children are mining ore with their bare hands.

Standing between the dream and the mandate are potential global supply chain disruptions, rising prices of materials, shifting geopolitical alliances and a profound retooling of a venerable industry.

Materials for electric car batteries come from mines and factories around the world, including

Africa, Australia, South America and Asia. Future exploration is contemplated in the Arctic Circle and the planet’s deep seabeds for mining rare-earth minerals.

Automakers are ramping up EV development and production, and some have already announced their intention to stop selling gasoline and diesel cars and electrify their entire fleets: General Motors set a 2035 goal, while Volvo and Mercedes set even more aggressive targets — full electrification by 2030. Ford so far has made a 2035 pledge to go electric only for models sold in Europe.

But the hill that automakers must climb is treacherous and quite steep. California officials have been planning for an electric future for decades, envisioning clean transportation that is sustainable, carbon free, better for the environment and affordable. That journey begins with batteries, and the road to get there is decidedly tricky.

The favored technology of the moment, lithium-ion batteries, can be dirty and dangerous during their lifecycle — from the mines in Chile and Australia to the cell factories in China and South Korea to the landfills where they can leak toxic substances.

Last month, Ford encountered a battery problem and was forced to temporarily suspend production and shipments of its popular all-electric 2023 F-150 Lightning pickup. A battery caught fire in a single truck during a pre-delivery check, the company said. The fire came after Ford issued a notice to EV pickup truck owners about “performance degradation” problems with the battery module that affected about 100 trucks. General Motors, Tesla, Hyundai and BMW, among other manufacturers, have also dealt with battery problems.

“Growing pains” doesn’t come close to describing the challenges that could thwart ambitions to fully electrify California’s transportation, at least in the short term. The sunny projections about an EV revolution are running into harsh, unavoidable reality.

“We do have a problem,” said Daniel Sperling, a UC Davis Institute of Transportation Studies professor who served on the California Air Resources Board that enacted the zero-emission car mandate last summer.

That problem, he said, is that the air board and other optimistic state officials did not adequately factor in the volatility of global markets, the impact of a worldwide pandemic and the cautiousness of industrial titans.

“The American automobile industry has lagged and has been slow to embrace adoption of EVs, never mind the materials issues. The legacy (car) companies, not just the American ones, have been slow to anticipate all the issues — supply chain, materials,” Sperling said.

“We thought that all of this would be so easy a glide path to 100%,” he said. But supply chain problems are “just one thing that went wrong. There’s going to be other things that will go wrong.

“It will make it harder to get to 100%,”  Sperling said, “but we will get it figured out.”

Mining ‘white gold’ and ‘blue gold’

As the world races to build electric cars, the competition to source battery raw materials has buffeted the world market, primarily lithium, cobalt and nickel. Lithium, known as white gold, is a highly efficient metal for storing energy. Cobalt, called blue gold, provides lithium-ion batteries with their range and durability. Nickel, like lithium, has high energy density.

Demand for these vital metals has yo-yoed their prices along with their supply. Even though the supply picture changes from month to month, experts say, for now, the near-term availability of battery materials is stable.

“I don’t see major issues in terms of getting supply to match demand,” said Kevin Mak, who analyzes automotive electronics markets for the U.K.-based firm TechInsights Inc. “No one is in a panic or hand-wringing. Challenges are there — nickel, Chinese supply vendors, reserves of lithium and moves toward getting supplies elsewhere.”

However, a report from the International Energy Agency found a mixed picture: Lithium and cobalt may be in surplus in the near-term, but supplies from existing mines and those under construction may meet only half of the demand by the end of the decade.

“These risks to the reliability, affordability and sustainability of mineral supply are manageable, but they are real,” the report concluded. “How policy makers and companies respond will determine whether critical minerals are a vital enabler for clean energy transitions, or a bottleneck in the process.”

“Bottleneck” was how Caspar Rawles, chief data officer at the London-based firm Benchmark Mineral Intelligence, described the demand for lithium. Hunger for the metal is a response to California’s mandate to phase out gasoline cars and the global industry’s ramping up of EV production.

“If you look at the various timeframes, there’s going to be a bottleneck as this gets ramped up,” Rawles said. “Pre-COVID, the cost of lithium was about $7 to $8 a kilo. It increased to $65 to $70 a kilo, purely due to massive demand.”

Demand for lithium has been sluggish lately, driven by a variety of market forces, and prices dropped about 12% last month. Chinese suppliers of lithium concentrate halted a planned auction. The volatility makes auto companies nervous.

The price of cobalt more than doubled from mid-2021 to 2022, but has  fallen drastically. At the same time, production is booming. Forecasts project the Democratic Republic of Congo will mine almost 40% more cobalt this year and Indonesia is poised to become a major producer.

Prospecting for and processing these metals can also be problematic. Lithium is commonly derived via open-pit hardrock mining, much of it in Australia, or in northern Chile’s Atacama Desert, by allowing expansive,  lithium-rich brine lakes to slowly evaporate to yield the raw material.

In either case, the mining can leave indelible scars on the landscape and pollute air and water.

The process of evaporation of briny water scatters salt, ruining soils for farming and contaminating streams. One report found that in northern Chile, lithium extraction has consumed 65% of the region’s water supply.

Cobalt carries similar environmental baggage, although its critics more often cite the mines’ impacts on workers. Researchers at Northwestern University studying social and environmental consequences of cobalt mining in the Democratic Republic of Congo found widespread problems.

The mining “was associated with increases in violence, substance abuse, food and water insecurity, and physical and mental health challenges,” the report says. “Community members reported losing communal land, farmland and homes, which miners literally dug up in order to extract cobalt. Without farmland, Congolese people were sometimes forced to cross international borders into Zambia just to purchase food.”

Rawles, who analyzes the global lithium supply chain, said auto companies have been slow to invest in raw materials and are now paying the price, literally.

“There are companies that could have bought the whole industry,” he said. “There’s a massive learning curve while EV manufacturers spend time learning about lithium, cobalt and nickel.”

In attempts to address these global issues and immunize themselves against supply chain volatility, some automakers are directly investing in mines, partnering with battery manufacturers or building their own plants.

Experts single out Tesla — with its close control of materials and battery manufacturing — as being well-positioned to avoid supply chain and battery disruptions.

“Localizing the manufacturing of more electric vehicles in the United States, along with greater localized sourcing of parts and materials, will not just help reduce our emissions footprint. It will make our business stronger and more sustainable,” said Ashwani Gupta, chief operating officer of the Nissan Motor Co. in a February statement.

General Motors announced a $650 million investment in the Thacker Pass mine in Nevada, the largest known source of lithium in the U.S. The company estimates that lithium carbonate produced at the mine will be sufficient to power a million cars.

Another promising U.S. lithium source is at California’s Salton Sea, where companies are beginning to extract lithium, as well as manganese and zinc,  from brine pulled up by geothermal plants near the lake, which is close to the US-Mexico border. State officials established a Lithium Valley Commission, envisioning a future juggernaut where EV batteries are built from side-by-side extraction, processing and assembly facilities.

The commission reported that the Salton Sea region has the world’s highest concentration of lithium contained in geothermal brines. Generally, the process piggybacks on existing power plants that pull up superheated water and convert it to steam. The additional step would extract lithium from the brine then reinject the remaining water back into the ground.

One difficulty is the federal Inflation Reduction Act, which includes rebates for car buyers but requires that at least half of the battery components must be sourced in the U.S. or from a trading partner country by next year, ramping up to 80% in 2026. Federal officials have not released final guidance to the car companies.

China understands that these policies are directed at its supremacy in electric battery and vehicle production, an advantage that Mak of TechInsights said is at least a decade in the making.

“China has scale,” Mak said. “At the moment, no one can compete.”

In response to the Inflation Reduction Act requirement, automakers are constructing their own domestic battery supply chains or partnering with existing producers. For instance, Ford is licensing technology from a leading Chinese battery maker and joining with it to operate a battery plant in Michigan. It’s unclear if that business relationship will meet the federal guidelines for domestic production.

Battery durability: Extending their life

While carmakers paint a generally sunny picture in public pronouncements regarding the coming stampede of new EV models, they present a more sober outlook when pushing back against what they say are California’s accelerated battery performance standards.

The Air Resources Board got an earful from automakers before its regulation was enacted last summer. The companies said current battery technology would not easily or cheaply meet the proposed standards for durability, which require batteries to maintain a certain range over time.

How far cars will go on a single charge is a critical element that allows consumers to feel comfortable about electric vehicles as a comparable replacement for gas-fueled cars.

Joshua Cunningham, who oversees the Air Resources Board’s Clean Cars program, said carmakers asked for more time to source batteries that could maintain their power longer, while not making them too large and heavy and driving up the cost of EV ownership.

The air board modified its proposal to reduce battery durability requirements to 70% for model years 2026 through 2029, increasing to 80% in 2030 — which means that as batteries age, they must retain 80% of their originally-designed range.

Complying with  California’s durability standards will add between $400 and $1,200 to the cost of an electric car, according to the air board. However, the board predicts that electric cars will become cheaper than gasoline-powered cars by 2030.

Automakers told regulators that they were less about the future supply of lithium and cobalt than retooling EV batteries to meet California and international requirements. Companies told the air board they had already locked in battery types for the coming models and needed more time to adjust.

“The primary area where the industry pressured us on was the cost side of batteries.” Cunningham said. “They would bring up issues about scaling up capacity and supply. We felt our proposal was reasonable.”

Making a better battery through chemistry

Batteries in electric vehicles are a bit like chemistry sets. The minerals are mined, processed,  turned into cathodes and anodes — the positive and negative sides of the battery — and packed into individual cells. They are then laced with all manner of sophisticated electronic controls and sensors to monitor the performance of each cell in the battery pack.

Manufacturers are tinkering with the chemical makeup of new EV batteries to solve a few problems: lessen the reliance on rare and costly minerals, produce a battery that more specifically suits the needs of different drivers and, especially,  find a way to make them more cheaply. Batteries account for as much as 40% of the cost of an electric vehicle.

Innovation must conform to the market. The American appetite for large SUVs and trucks, for instance, necessitates more powerful, heavier batteries that allow a vehicle to tow or carry loads. The nickel, cobalt and manganese batteries are higher density and provide for longer-range driving. Ford claims its F-150 Lightning electric truck will run 320 miles on a fully charged nickel, cobalt and manganese battery, for example.

Tesla’s high-end, long-range cars carry bespoke nickel-cobalt-aluminum batteries made for the company, exchanging aluminum for manganese. Like the  nickel, cobalt and manganese types, the Tesla battery is expensive but powerful and, with the addition of aluminum, longer-lived.

On the other end of the EV food chain, smaller commuter cars may carry batteries made with lithium, iron and phosphate. These less expensive batteries have a longer life span and are expected to be charged more frequently and faster. Their lack of nickel and cobalt make them less expensive to manufacture.

The race to create the next generation battery is propelled by an overheated market eager for new batteries and, in the U.S., by federal  grants that nudge innovation. The Biden administration has allocated nearly $3 billion to expand domestic EV battery manufacturing.

One recipient of a U.S. Energy Department grant was South 8, a San Diego-based tech company, which received $3.152 million to develop powerful, rapidly chargeable battery cells that, rather than utilizing solid materials, liquify gas under pressure. The result, the company says, is a less-volatile battery that will work well at low temperatures, is easier to ship and faster to charge, and is projected to cost 20-30% less than standard lithium-ion batteries.

“Everyone is looking for a made-in-the-USA product, and (to) have a secure supply chain,” said Cyrus Rustomji, South 8’s chief executive officer. The gases he is working with “are available on an industrial scale in the U.S.”

Rustomj, who expects the technology to work well in future electric cars, said the first customer is the U.S. military, which will test the batteries in extreme climates.

Giving batteries a second life

Electric car batteries are uniquely valuable for recycling, and their critical metals are not difficult to recover and reuse. That’s the good news. The not-so good news is there simply isn’t a critical mass of these batteries to make such businesses viable yet.

Experts say it will take another decade of robust EV sales — and EV retirements — for battery recycling to reach a scale that would support a viable industry. But, they quickly add, it will happen.

Since 2019, a group of California experts has quietly chipped away at the task of how to create a more useful and clean afterlife for lithium-ion batteries.

Their report was published a year ago and submitted to the Legislature. Among their recommendations reuse, repurpose and recycle. An estimated 95% of EV batteries can be recycled.

Alissa Kendall, a professor of civil and environmental engineering at UC Davis and one of the report’s authors, said the approach was to recast end-of-life batteries as a solution rather than a problem.

Batteries disposed of improperly can leak toxic chemicals and in some cases spontaneously combust when overheated. Still, experts say that tossing out old EV batteries is like throwing away money.

Kendall’s group looked at the batteries’ so-called second life once they are taken out of cars — data shows there’s plenty of life left. While there’s not a large pool of retired electric cars yet, those sent to the scrap heap have on average 65-80% of battery capacity left.

That’s because, as Kendall says, the hardest job you can give a battery is to run an electric car. “The power demand is great and the performance requirements are hard to meet,” she said.

“As your battery degrades, you may not have the performance you want. But if you take that battery out, it can be useful for storage,” she said.

Retired EV batteries can help power small-scale operations by providing storage for excess energy. One such pilot project is underway in San Diego County, where discarded Nissan Leaf and Tesla batteries are storing energy derived from a rooftop solar system.

Kendall, a former auto engineer who worked on Ford’s first-generation hybrid-electric vehicles, said there is no need to get rid of batteries when they provide shorter range. She said she still happily drives her aging plug-in hybrid with one-quarter battery capacity.

The most promising use of old lithium-ion car batteries is to recycle them using a process that recovers the remaining lithium, cobalt and nickel, then puts the still-usable material back into new batteries. It’s an approach that some engineers refer to as “urban mining”; the already-processed minerals are more highly concentrated than the ore pulled from the earth.

“The quality of the material is very good,” said Anand Sankaran, who heads Ford’s new battery technology center. “A large percentage of what you need can be gained from the field. But we need to build an ecosystem. The last thing we want is to get the material then send it back out of the country.”

If widely scaled, reuse of the critical materials could lessen the reliance on foreign sources and bring those minerals closer to yet-to-be built battery assembly plants in the U.S.

At the moment, it’s a future vision. The EV battery recycling industry is still in its infancy. One such plant exists in Nevada, although more are promised.

“Right now battery recycling does not recover lithium. The capability exists but the economics aren’t there on its own,” Kendall said. Government grants and incentives could jump-start a nascent industry, she said.  “This is where policy intervention can make a difference. “

The U.S. Department of Energy recently distributed $74 million from the Infrastructure Investment and Jobs Act to advance projects to reuse batteries.

According to Kendall and others, it’s worth it.

In what researchers say is an admittedly best-case scenario, if all new cars are electrified by 2035 — with more EV batteries available to be reused — 24% of the annual national lithium demand could come from recycled materials. In 2050, it could increase to 57%.

Automakers are retooling their companies, too

As transportation transitions from oil to electricity,  an equally profound transformation is taking place within the auto industry. Batteries have replaced gasoline engines as the focal point of vehicle design, meaning cars and trucks will no longer be greasy, loud machines but quiet and clean computers.

Innovators are no longer industrial designers or mechanical geniuses but chemists and electrical engineers. Corporate organizational charts are reflecting that shift.

In an article about how the shift has transformed the auto industry, The Economist tracked the migration of managers from tech companies to car companies, reflecting the technological challenges that electric cars present.

The vulnerabilities of the industry’s reliance on outsourcing were exposed by the supply chain breakdowns during COVID-19, which prevented computer chips from reaching car manufacturing plants. Worldwide the industry is protecting itself from being caught again when it comes to batteries: Companies are now developing partnerships and investing in each step of the process.

It’s an old-school business model that harkens back to Henry Ford’s vertically integrated company: purchasing rail lines, glassworks, producing its own steel and even operating coal mines to supply the power to run the Dearborn, Michigan factory.

The modern-day incarnation of that “is a wholesale transformation,” said Mike Maten, director for electric vehicle policy at General Motors.  “We are changing the fundamental structure of our business. We are transforming our products, but internally we are transforming our company from a structural standpoint to recognize the new realities of the supply chain.”

As an example, he said, GM used to employ two people in its purchasing department tasked with buying raw materials for EV batteries. Now the company has a center staffed with 100 people whose job is to find lithium, cobalt, nickel and other minerals.

Even with the head-snapping pace of change to electrify automobiles, industry insiders call for patience, saying what’s required to propel an industry from its infancy to its maturity goes well beyond solving battery problems.

Compare what needs to happen to the infrastructure that supports internal combustion cars, said Celina Mikolajczak, chief battery technology officer for Lyten, a San Jose-based advanced materials company developing a lithium-sulfur battery for electric cars.

“We are just starting out, in the scale of these things,” she said. “If you look at the scale of our petrochemical industry, if you look at how many rigs there are out there drilling, how many refineries are out there, if you look at how many gas stations there are out there, and how many pipelines to transport all this material — that is the scale of infrastructure you need to electrify all our vehicles.”