With Laurent's segele end from London and Gerard read from Berlin. This is redefining.
Energy Today on Redefining erg Jah, we're going to talk about evs and.
Batteries absolutely and an incredible progress we're seeing in terms of technology development and also cost reductions.
But first of all from our partner, A.
B Loco Energy is Europe's premier leaser of ten foot container mobile batteries built in Europe with COTL best LFP cells. A Bloco Energy serves fourteen European countries, including France, Germany and the UK. A Bloco's batteries can be leased for any duration between six weeks and six years and they are monitored by the Dutch award winning platform school a Blocko Energy. Make your life easier, make your business more flexible.
Back to the show and the volumes. This year, the best market is going at forty percent on her and the EV market is going to expand by twenty six percent, which is at the latest number from Benchmark Mineral Intelligence for the first nine months of the year global fourteen point seven million including so China nine million plus twenty four percent, You of three million plus thirty two percent North American only plus eleven percent, and listen to this
rest of the world plus forty eight percent. Insane.
Yeah, And as we are gat to the point now where these cars are now cheaper to actually buy than the internal composition engine equivalence. And that's why in the rest of the world is growing because at the end of the day, the Chinese are now coming out with low course cars that are cheaper to buy and cheaper to run. So those numbers come from Benchmark Mineral Intelligence. We thought it was a good idea to bring in the brilliant yola Us, who's head of research at Benchmark Mineral Intelligence.
Let's bring around the shell. I own it.
It's great to have you on the shell.
Thanks very much for having me.
Well, especially it's great to have somebody something because we have something the expelled to know nothing. And what we really like with you is that you are keeping track of all the data around batteries, eveess and so on. So we brought you in to discuss the state of play at the end of tour twenty five. Maybe we're going to start with the batteries, so I would say, the cells, what do you see there?
Last unpack, It's been a busy year for sure. I guess first place to start is just in terms of headline battery demand growth, we're expecting that to come out at about twenty three percent growth compared to twenty four levels year to date. When we look at the different markets, generally we're at twenty eight percent growth. EV market is up just over thirty percent year to date, and then the energy storage market is up over forty percent year
to date. So that's certainly well with seeing the strongest go throup from from the battery perspective. I think the other thing just to kind of highlight before we get into the kind of detail of the different markets, is in terms of the chemistry spits that we're seeing. We're now seeing LFP chemistry share in the EV market over fifty percent, and that's really on the back of strong sales in China and dominant in LFP in Chinese eds. And then of course in the storage market we're seeing
well over ninety percent LFP share. So when you bring those two markets together, and because the storage market is growing a lot faster than the EV market, we do see this LFP market show really kind of growing its dominance.
Explain a little bit about LFP and the different chemistries just because like a lot of all our listeners are experts in that area and just talk about really the changes that have taken place and in the last few years, so you can give context to people.
Yeah for sure.
Yeah.
So LFP is a lithian iron phosphate battery that is the cathode chemistry, so it makes up half of the ATHMI and battery on the energy have graphiede. That chemistry historically was seen as maybe not as a good option for evs for high power could of applications because it had a lower energy density. However, there've been significant improvements over the last few years that has enabled that chemistry to now be used more widespread. The alternative chemistry is NCM,
which is nickel colbot manganese. That chemistry does have intrinsically
higher energy density behind it. But we've seen this big advancement in how good LFP is and what that means is we're now seeing it really deployed across all vehicles, depending on if your small segment A class cheapest vehicles all the way through to the premium end in the Chinese market, and in China, you know, we see over eighty percent lfp SHA in evs outside of China is a bit of a different story, and maybe we can get into some details on that and a bit later.
Those cells which are like a big book bo and of course now I don't know if it's the state of the art, but you know, we see it pretty much everywhere. It's what we call the three fourteen and power cell from COTL. Is it exactly the same blog who goes into a car and an ESS system? Or you see a divergence, you know, even if the chemistry says the same, how the form factor diverging.
Yes, a big divergent. Historically, the energy storage market was really using the same cells you're using EV. It was almost acting as a bit of a surplus market whatever was leftover with fun of that towards storage. However, over the last few years, the storage market has become very dedicated in its cell design. So those three one, four and power cells you referred to are specific energy storage cells.
In the EV market would see pretty different four factors being used, things like the BYD blade battery, which is the really kind of long thin battery pack which allows you to get high and density in a vehicle. Those three, one four empower cells and storage and now being pushed to the next level. We see five hundred and power plus cells entering production, and actually just a couple of weeks ago we saw byd announcer twenty seven hundred and ten and power cell. It's fun to see some huge,
huge cells come through. How kind of practical that is in the real world is still a bit of a question mark, but that's definitely a big trend of scene is these cells are getting bigger and bigger dedicated to
the storage market. And really the reason behind that is because one of the key ones is driving down cost because when you then put that into a containerized solution, you get much more energensity within your twenty foot container for example, but are less components, less other parts of the cell and starts to have big implications all cost.
That's probably a good segue into talking about costs. So maybe could talk a little bit about what's happened at the cell level and also the pack level, which is over the last whatever eighteen months.
Ultimately, let's if we talk about say the storage market and the eed market slightly individually. For we were to talk about cell prices. Essentially, cell prices have fallen significantly over the last few years. End of three twenty two was when we saw the highs. Really that's timed with when the liftium carbon lilyting hydroxyen price reached its highs. Since then, the raw material prices have declined significantly, reaching their current
kind of floor. However, at the same time, we've also seen innovation happening at the cell at the system level, which is also driving down that cost decline that we've seen. So you have two huge drivers for cost decline coming through when we look at the system level costs. For example, for energy storage in the Chinese market, now we see projects which are going through seventy dollars killer what hour system costs. That price could have easily been three four times that a couple of years ago.
And when you say seventy you're just talking about the battery practice, not.
Including containerized AC solution plus installation in China. In the Middle East walls seen prices similar level to that. If we were to then compare that to say the US market, if you were to use say Tesla Megapak AC solution, you'd be looking over two hundred dollars.
Because even you in your Motion Benchmark and Bloomberg everybody. We were making those predictions even three four years ago that would see those curves going down and going towards one hundred dollars tokilo when I were at eleven and five years earlier, we're at seventy At system level.
Absolutely at that milestone, you've really just blew past it. At the cell level now, for an LFP cell in China, you know we hear prices from thirty to forty dollars kill a hour. So yeah, incredible strides that have been made.
Can I twitch down to evs and talk a little bit about that, because what for me is interesting is just I'm obviously looking at two things. I'm looking at range of the cars. Does the range of the cars are getting better? And what you're also seeing is the costs of them are coming down. But when I listen to the prices you talk about, I cannot imagine that those prices are in the EV that I'm buying right now, or are they.
We see some cheaper batteries going through to vehicles. I'd say the Chinese market more so than elsewhere. Those sort of low, really low prices that we are seeing would be typical of more storage cells. We see maybe some lower quality cells going in storage compared to the EV market in terms of how that translates to actual evs. One thing we do is we track, for say, the top fifteen vehicles for BEV and ICE in each market.
What's the price differential that we're currently seeing. And in China we now see a four percent price of differential, So it's four percent cheaper to buy an EV in China compared to an ICE vehicle. If we then compare that to the US and the European market, in the US is forty four percent more expensive to buy an EV, and then in Europe it's eighty three percent more expensive to buy an EV right now.
Eighty three percent more expensive? And is that still just because the automobile manufacturers have gone at the upper end of the market when they're bringing electric cars?
Is that the reason?
That's definitely a big cause of it. We asked some to see the entry of some smallest segment vehicles in the European market, but they still make up a pretty small market share and they still come in at the high price point.
Can I ask then, what we saw on twenty twenty five towards the end of the year was we saw Volkswagen beginning to sort of shutter its production. I'm talking about EV production, and then I look at it and I sort of say, is this a Volkswagen problem or
is this a problem with EV's In general? My own gut reaction would be, this is a problem with Volkswagen and they just don't have that costs in order, because I see, if I look what Buid is producing and I compare it to Volkswagen, I go, I'm not going to buy the Volkswagen, but I'd love to hear.
Your view on it.
When we look at European sales this year, broadly, they've been good. We're seen so last year penetration rate in Europe was twenty percent and this year we're expecting to finish the year at twenty six percent. And WIST noticing as well that last year we actually saw a decline in penetration rates. So really you're you're kind of comparing it to two years ago, and yeah, twenty six percent. Caution, vehicles being sold in the European market are electric right now,
so progress is good. Compare that to the US, it's about ten percent. A lot more is really kind of happening. The key reason behind that is the EU policy. So this year was a step change year in CEO two emission policy. What that means is OEMs were required to sell a great number of evs in order to avoid fines. When we then put down the context of how different European OEMs are doing, we have certainly seen an uptick
from vehicles coming from elsewhere. In the first half of the year, for example, just over a million evs were sold in Europe and twenty percent that was coming from China. Interestingly, that's actually a decline in market share compared to last year, and we saw about twenty five percent coming from China last year. You know, the volumes have been pretty strong.
One thing to know, and I think that's one of the key things is Europe did introduce tariffs on Chinese vehicles last year, but those tariffs only imply to bebs. So we've seen a big uptick in plug and hybrids coming from Chinese players into the European market, and BYD's plug and hybrid's being one of the key ones there.
That's a lot of information. Let me process it. So twenty five percent penetration in Europe, of which how many of those cars are producing Europe, how many of those cars are produced by European OEM but in China, and how much are pure Chinese? Do you have that split just in terms.
Of once produced within Europe? A seventy percent in first half of.
The year, So that's good. That's good.
Yeah, and that was up from it averaged around sixty five percent over the last five years. That is a clear indicator that things like those tariffs are having an impact on that.
Which brand are the best?
So in terms of the top players in the EU, you've got VW leading the way year to date and they've actually sold basically the same amount in the first eight months of the year as what they've sold in the full year twenty twenty four. Next up you have BMW and there's a big differential. Bw's sold about three times more than BMW has year to date. And then next behind that you have Stilantus with just over two hundred thousand units in the first eight months of the year.
Worth noting as well that Tesla in the first eight months of the year is currently coming in in eighth position, whereas last year for the full year, they were in second place, so big big draph hole there for Tesla sales.
Can I ask you and how about bid on that list?
P ID is coming in on tenth with just under one hundred thousand sales, which you know is quite a big step up because last year for the full year they did about half that. They have doubled in just the first eight months of the year.
I see all the those new ships they have. In fact, they can export much more now because they own their own fleet. Okay, so that's Europe. Can we switch to the rest of the world. You know, before we look back into China, we hear that in the rest of the world is very strong and it's mostly Chinese. Would you see the same way, Yeah.
For sure, definitely seeing the expansion of Chinese OEMs elsewhere in the world. If we look at South American markets, the Australian market, the rest of Asia, really start to see the dominance of Chinese players coming through there at the loss of other key players historically, particularly players at the Japanese and the Koreans, if historically had good market share in the ice market and places like Australia, they're
really losing out to China. The EU manufacturers and you know, it's reflective as well in the chemistry split that we see coming through in the rest of the world, whereas Europe and the US we aren't seeing that much LFP come through yet because the Chinese influence is smaller in those rest of the world regions, we do see strong dominance of Chinese cells in there as well.
I own it earlier in the year. What I did was I just went and had a look at the costs of production of say a bid against a Volkswagen. And what I've said I realized was just the cost advantage that BYD had. Where I'm coming from that is that surely means going forward that BYD is just going to continue in a market share going forward. Would you have a similar view with that or how would you think about this?
It's something that we ran quite a lot of analysis on when the tarists were introduced, really to kind of see how much potential do these Chinese players have to absorb tarak cops essentially and still offer their products at a similar parts to what they may get from a traditional um The production costs come in a lot lower in
terms of current price to the market. They are applying pretty big margins with within Europe, so the price differential that consumer sees isn't as significant as what you would see from the production side. I think the other thing to consider as well is just how things play out with tariff's strategy. Right now, there is this loopholeer of plug in hybrids. Whether that gets shots is a question mark.
At the same time, you potentially there's talk now of Trump suggesting that Europe needs to impose one hundred percent tariff on China, on India or on other countries. If anything like that comes through, that could obviously then change the dynamic quite significantly, and given the tariff world that we live in these days, and nothing is really asked the question when it comes to potential variations.
I read a lot about to go in the press, and the great thing is sources always well motion, so you can go back to the source. When it's come to China, the situation seems absolutely absurd. I read that they sell more IV in China than the old US market, So that's number one. But number two is the factory
capacity that they have put together. Because we always talk about DYD and a few others, but you know, there are hundreds of brands and there's a price war, and of course byd say I'm going to survive, but the others are going to go down, especially the one who can't export. So I hear the capacity of fifty million cars in China or something like this, which is like
three quarters of the world market every engine combined. So what's your take on what's going on in China because they clearly overbuilt.
Yeah, yeah, definitely things in China I think are accelerating. Furse don't really any analyst expectations. One thing I just did I look at for this cool because I was curious to see how it's changed in the last year or so. So currently this year, China penetration sits at about fifty percent twenty thirty. We're forecasting that to reach just under eighty percent. If we compare that to our forecast from Q one of last year, we were only
expecting it to reach sixty five percent. So basically, over the last year and a half, our view of that Chinese market has accelerated so much because of how quickly things are moving and how commitments continue to be made on the policy side from the OEMs themselves, and also the cost advantages too. So there's really no stopping Chinese market growth at this point. There is definitely an element
of oversupply, price wars, a lot of competition. We're going to see a lot of consolidation in the market for sure, But in terms of market growth, it seems to be a key pillar of China's next five year plan and they see it as a key industry for supporting that. So yeah, expecting strong growth to continue.
Can I ask what's your view and the rest of the world then, are you upping your numbers there or downing them or how do you see that?
The US one is the one which is probably the most shocking and understand not surprisingly so given the changing policy landscape that we've seen this year. We're comry sas about ten percent market share for bvs and plug and hybrids. By twenty thirty, we're now expecting eighteen percent market share, whereas comparing to that same T one twenty twenty four
data point, we were expecting forty percent market share. So really in the US you've got two major things which are impacting that forecast, with the removal of the EV tax credit that's seven and a half thousand dollars tax credit and then also the changes for the EPA's standards, so the emission standards, that policy was historically quite strict in terms of what are required for people to sell.
The removal lot can strip back of those is going to be a big one, along with CAFE standards, that CARB standards, various different emission related standards that the exist in the US that are already going to going away under the current administration.
Seconds have decided to ncap the ev industry because their OEMs are struggling to convert and b they've got a lot of cheap oil. But there is clearly a divergence. You see China going on one side, and then some parts of Europe following quite fast, and as you said, some part of the rest of the world following because probably more at the expense of the Japanese than the German because there's a lot of segments that the Chinese are in and used to be taken over by the
Japanese and the coins. Do you see those trends well established and going on like this till the end of the decade.
Yeah, there's a lot of uncertainty in the market and we are increasingly seeing OEMs announced that they're going to where they had committed switching lines or building facilities dedicated to evs, calling back on those plans, pushing out the launch dates of various EV models. So the momentum has definitely been kind of switched off on the TV side. One thing that that's kind of a silver lining for the battery and where we're seeing a lot of activity
is the storage market in the US market. Now, we've seen whole range of the Korean cell manufacturers who had EV capacity that have taken those lines and converted it and making energy storage cells, and they see it as a more stable demand market that will continue over the next five to ten years despite the policy environment, and they want to tap into the tax credits. So if that's what they need to do and they need to produce lfpe venergy storage, that's really where they're looking now.
Allah. Thank you so much for the analysis of demand. Is there anything from the supply a goal that you want to share with us? Yeah?
Yeah, just worth putting some context of Chinese dominance and supply chain is pretty useful. You know, we've spoken today a bit about the cell side, So when we think about cell production right now, but eighty percent of that in the Chinese market. When we think about LFP specifically that chemistry being use for energy storage and increasingly in evs, you're looking at kind of ninety eight ninety nine percent current market share that is going to start to change
with some of those Korean players switching lines. When we then go a step even further kind of into the cathode and anode. For the cathode, you're looking at eighty seven percent Chinese dominance, and for LFP again ninety nine close to one hundred percent, and then for the anode as well, you're looking at ninety five percent Chinese dominant.
So the key thing just from that is there's so much opportunity in this market, particularly in that midstream and kind of cell production area, and a lot of world that needs to be done still to really make that a much more global picture.
Yeah. Look, with kind of wary of all the startups which have emerged the past five years to cut a lot of investment public money. Of course, every really saw loss world. In your opinion, does any of those startup as a chance considering the rate of technological advancement and price decline Not just this, but you know, we can conclude on sodia mayan or whatever you want, but it seemed that this LFP is a total jugger note and only a few people can honest it. Let's conclude with that.
I hope, so I have very hope that there'll be some Western startup that will succeed. The real pathway that we're going to see more of going forwards is more partnerships, so people relying on Chinese or Korean Japanese know how working together and bring that technology across to your the North American market. And sodium mayan to sodiumn This is a chemistry which caught a lot of attention back in
twenty twenty two when liftium price was very high. I would say now we still do see announcements trickling through, but at the current price of LFP cell, it's pretty hard for sodium mind to compete. There will be some use cases where you may see a good benefit, for example hybrid projects in China that are using sodium mine for their cold temperature benefit, but in terms of mass market, we're not really expecting that to come through anytime soon.
Well, a Yerra, thank you so much for coming on the show. It looks like will us Jerad Look, it's always great and I want to tell our listeners Romotion and Benchmark and Chanelle, these are the best that are on this planet when it comes to what's happening in the battery sector and the EV sector. So really rely on those extraordinary research that you are conducting. Thank you so much earlier for coming on the shows. Job. That young lady is brilliant. I mean, she's really great.
Absolutely. What I conclude from all of this is that evs are unstoppable, simplest that it's just a performance improvements. Cost reductions came over for internal combustion engine you know. And don't forget me wrong. Different regions are going to go at different rates. So the Chinese obviously are electrifying quicker than anybody. The Americans are probably doing it slower than everybody. But the reality is the rest of the world is going to follow you, I know.
Oh yeah, Look, I'm very worried about the US because there's been a decision by the current administration to knick up the industry, rolling back incentive tax credits, holding back any regulation, you know, like emission standards, and if you look at what's happening in the US. Okay, yes, There was a pop in the market in September, but it was because the end of the tax credit, and GM last month took a one point six billion charge due
to a strategic pullback from its TV. We have the Nissan stopping living production in the US, going back to hybrids. There is a real divergence between the US and the rest of the world.
Yeah, you are totally right around and by the way, it reminds me of let's imagine we are the turn of the twentieth century and eachurn a round and starts subsidizing the horse and cart. Got locked your app. That's a really great industrial strategy.
It's a short term sugar high. But I don't really know what Europe is doing as usual that kind of in the soft middle. But what we've seen also recently is VW has announced fifty thou job losses and the market share of evs in the UK and Germany now is above thirty five percent. How much do we need to protect our industry versus editing chip Chinese cheap but good product through That's the big question and the answer is not simple.
No, the answer is not simple, But I think the bottom line is the industry does need to restructure. There's no way around it. I mean, you're seeing peak internal combostion engine demand, you know that type of area. What happens is you consolidate, you focus on reducing costs.
Et cetera, et cetera, and that's.
You know, Europe is a huge industry within Europe, so no choice but to go that the next few years. And at the same time, if you want to compete globally in these new electric technologies, then you need to innovate as well. So not easy for your opinion industry.
Well, in a certain way. The good news these batteries are becoming pretty cheap, so in fact, your hope is going to benefit from those cheap batteries. And even a lot of power chronics are becoming very ubiquitous. So whatever advanced China has, I think it's going to be relatively easier and easier between their quotes to catch. And at the same time in China, I mean, the story of over capacity is mind blowing. Of course, they're going to be consolidation and you just start to see cracks in
the system. Last month, there is a Neo which is one of the company which has been really promoted as one of the new leaders, and they have been sued by BIC, which is the single post of Ring Fund for inflating revenues by six uld million dollars. So, I mean China, it's great, but also there are a lot of shenanigans.
Yeah, where you tend to have poems are on, you also tend to have buss That's sort of a little bout what we're saying as well. Right, the Chinese approach is to actually have lots of competitors going out of markets, basically set animal spurts free and then best guys win, right, so you know what your left foot is the bids this world.
Yeah, So look, it was a very interesting conversation. We thank Ayola for coming on the show. We really appreciate everything she does and moderately benchmarking their intelligence. The future is bright, but a lot of work needs to be done exactly. So thanks, it's great having you. Look forward to speaking to you soon. Thanks Ron speak next week. Cheers.
Thank you for listening to Redefining Energy.
Don't forget to rate the show and subscribe on Apple, Podcast, Spotify, or the platform of your choice.