March 6, 2023
Virginia Klausmeier, CEO, Sylvatex
With the passing of the Inflation Reduction Act (IRA) last year, we are poised to witness a fundamental shift in transportation. This crucial legislation creates viability for the net-zero emissions movement by including more than $380 billion in federal funding for measures that counter climate change and boost renewable energy, which could reduce carbon emissions by as much as 40 percent by 2030. This monumental change in emissions in just eight years from now hinges on accelerated EV adoption, which is currently limited by affordability.
To help incentivize EV purchases, the IRA includes a $7,500 consumer tax credit for new vehicles; however, they must comply with the legislation’s US battery manufacturing requirements. For consumers to qualify for the total amount, battery raw materials must be sourced from North America or a U.S. free-trade agreement partner, and vehicle battery components (such as cathode and anode material) must be manufactured or assembled in North America. Unfortunately for consumers, most current EV car models do not meet these requirements as the US relies on international markets for battery raw materials and components manufacturing, with China being the dominant worldwide supplier.
A closer look at EV battery supply chain challenges
The tax credit stipulations for battery manufacturing were put in place to galvanize the development of U.S.-based capabilities and bridge critical domestic battery supply chain gaps. In other words, by including these requirements, the government is able to direct automotive manufacturers to invest in US battery production. That said, demand will outpace the supply for some time as battery manufacturers build facilities in the coming years. Just as critically, a cavernous gap exists in domestically sourced raw material supply and component production. Benchmark Minerals reports that North American cathode production only has the ability to meet 4 percent of demand by 2030.
This supply and demand gap further drives the importance of propping up innovations that meet the needs of today’s requirements and are also resilient to problems down the road. With billions of dollars being deployed, we cannot be short-sighted in our developments. Our objective should be to simultaneously meet the domestic supply chain requirements for battery materials and components while ensuring that the manufacturing we invest in is built for future success.
Sustainable battery manufacturing: Where to start?
The most expensive and carbon-intensive component of the lithium-ion battery is the cathode active material (CAM). Today’s conventional lithium-ion battery CAM manufacturing methods cannot support climate goals due to high emissions, waste, and cost. Upwards of 60 percent of CAM processing materials used are disposed of as waste in the form of sulfuric acid, which has to be transported and disposed of properly, carrying a heavy cost and carbon burden. Moreover, current CAM manufacturing techniques require billions of gallons of water annually, which not only needs to be remediated but will also deplete another critical natural resource as we advance.
Another often-overlooked element is that each manufacturing facility can produce only one type of battery chemistry. The issue here is that these manufacturing plants need more operational flexibility to pivot as technology changes. We have already seen numerous advancements in battery chemistry, both in terms of finding more efficient and longer-lasting chemistries and in terms of efforts to curtail the sourcing of limited critical minerals. Introducing optionality, the ability to produce multiple chemistries from the same asset, to cathode manufacturing ensures that US EV production stays viable and environmentally sound in a landscape of shifting technologies and scarcity of materials.
It is worth noting that today’s battery manufacturing headlines often focus on recycling, which is frequently cited as the answer to reducing costs and creating a more sustainable EV supply chain. EV battery recycling both increases available minerals and helps further decarbonization, making it a vital piece of the bigger net-zero puzzle. However, ample material supply from recyclers will likely not be available for at least a decade, as that is the average lifespan of a battery. We are only now reaching a threshold of EV use that will provide a source from which to recycle. Waiting for recycling to take hold is not an option – we need to introduce sustainability now, and we can start with improvements to battery cathode manufacturing.
Making EV battery production future-proof
The next generation of CAM production should incorporate less processed material inputs—metal oxides and hydroxides instead of metal sulfates. Using these material inputs expands the yield to 99 percent, virtually removing waste and the sulfuric acid problem. A waterless manufacturing process innovated by Sylvatex is also more eco-friendly and drastically reduces the footprint needed. The smaller facility could mean as much as a 40 percent reduction in plant capital, promoting localized production, which in turn reduces transportation costs and further shrinks the carbon footprint of the manufacturing process.
Working with metal oxides and hydroxides also pivotally broadens the range of precursor material inputs, meaning a more expansive catalog of critical minerals can be used. This is one immediate way to ease the pressure on limited mining resources, like cobalt, which is costly and extremely rare domestically.
While EV usage is fundamental to achieving climate goals, achieving net-zero means reducing greenhouse gas (GHG) emissions from vehicles on the road and those in production – including the GHG impacts of manufacturing EVs and batteries. The manufacturing impact is critical, as projections for EV purchases jumped from 43 percent to more than 50 percent of all new car sales by 2030 following the passing of the IRA. The world’s largest automotive markets, including the U.S., are expected to have all new car sales be electric by 2035. These numbers indicate the need to scale up domestic production rapidly. For this reason, we must enact sustainable manufacturing solutions now to meet our decarbonization targets.
Achieving a lower-cost, more sustainably manufactured EV in the near term is achievable by employing future-proofed next-generation cathode manufacturing processes. Further, in doing so, we will help the domestic EV market grow and remain competitive while boosting local economies. The importance of ensuring less environmental impact throughout the EV value chain cannot be overstated. We will only achieve the net-zero by 2050 goal if we expand in a constructive way that is as close to carbon neutrality as possible.
Virginia Klausmeier is the President and CEO of Sylvatex Inc., a venture-backed climate tech company that she founded in 2012.
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