Global battery markets with Iola Hughes (Head of Research @ Rho Motion)

Right now, the the tariff for batteries being imported into the US is seven and a half percent. Based on statements made by by Trump today, it looks like there will be a additional twenty five percent tariff plus an extra ten percent tariff on imports from China, get you up to around forty percent tariff at this point. That really does change the dynamics quite significantly.

Do do you think it's a fundamental thing? Like, we we will never get cell manufacturing right in Europe?

If you look at Eastern Europe right now, there's there's a lot of Asian players who are producing cells at significant volumes, be that, you know, Korean players or or Chinese. So there is evidence that it definitely can be done within Europe.

How should we be thinking about EVs versus stationary?

I like I think of the ESS market as kind of the the little sibling to the EV space, unfortunately. So, you know, when we think about kind of global battery demand this year, we're looking around one point three terawatt hours. And the storage market represents about fifteen percent market share. So we're expecting about two hundred gigawatt hours this year across the globe.

It is growing faster than anything else.

The global battery energy storage market is undergoing rapid transformation.

Falling lithium prices, manufacturing differences, and potential tariffs all play a role. What's going on in the different markets, and what does the future of battery demand look like? In today's episode, Iola Hughes, head of research at Roamotion, joins Ed to discuss. If you're enjoying the podcast, please hit subscribe so you never miss an episode, and leave us a rating wherever you listen. Let's jump in.

Hello, and welcome to another episode of Transmission. Today, we're joined by Iola. Iola, welcome.

Thanks for having me.

Oh, thank you for being here. And so as ever, we'd really like to kick off with who you are and, Roamotion, who you work for, what do they do, who are their typical customers?

Yeah. Thanks, Ed. So, yeah, my name is Ayla Hughes. I'm head of research at a company called Roamotion.

Roamotion was set up about six years ago to essentially give insights on the battery demand markets. So that started with, really primarily the EV space, tracking EV sales on a monthly basis and building out outlooks for for battery demand. We then really evolved our research into stationary storage as well and into other demand markets, so things like portables, two and three wheelers, even kind of aviation and marine and rail battery demand. We also do a lot on the kind of charging and infrastructure side, battery recycling, and a bit on EV motors and systems.

So providing kind of market data and reports on on those different markets. And we are recently acquired by Benchmark Mineral Intelligence who are more focused on the the upstream. Essentially, now we're kind of providing that full value chain from mine through to to battery application.

Okay. And this is gonna be incredibly hard to stay on topic because the concept of, like, rail battery sounds incredibly exciting, and we should we should talk about that very briefly. What's what, like, what is going on in rail battery?

So there's a few people working on kind of fully electric solutions, but the the main demand right now is more kind of hybrid solutions. So you're looking at basically kind of reducing some of that diesel usage right now by by putting in battery solutions to to kind of accompany that.

I love it. I love it. Okay. This is almost this almost marks like a two parter, this this, podcast episode, because we had Aaron Wade on a few weeks ago around lithium costs and changes in, lithium supply chain. Did you get a chance to to listen to Aaron's Aaron's work?

Yeah. I did. Yeah. It was very interesting.

Very good. And more or less, are you kind of seeing the market in the same way? So if I kind of summarize a little bit of where Aaron was, he was kind of seeing battery cells in that sort of sixty dollar per kilowatt hour type range?

Yeah. Definitely. You know, over the last kind of eighteen months, cell prices have dropped really dramatically, particularly in China, and that's primarily dot drop like, primarily linked to weather lithium prices. So back in kind of the end of twenty twenty two, we saw lithium prices up at kind of eighty thousand, dollars a tonne, and now that's in September, it kind of got down to around ten thousand.

So that can be directly correlated with those those prices that we're seeing. I'd say the kind of range of sale price that we're seeing on the low end for kind of tier three, essentially kind of low quality LFP sales. You could be looking as low as kind of thirty five dollars per kilowatt hour. You know, this is not really a sustainable price, and we're certainly hearing people talking about, you know, even selling at a negative margin.

So I would say, yeah, more typically, those those LFP sales that we see as kind of good quality tier one would be in that that range that Zarin spoke about.

When you say tier three, what does that mean? Like, surely a kilowatt hour is a kilowatt hour.

Yeah. So, I mean, it really comes down to how established the player is, how many off takers it has, and essentially kind of how trusted it is by the market. And that's really based on the the quality of the cell that's being produced. So, ultimately, not all cells are created equal.

You'll have some which are, higher higher quality or better made than others. And, you know, that's not necessarily the fundamental material that's going into it, although that could make an impact. You can have better grades of different battery materials, but also the the actual kind of manufacturing process. And the product that you got at the end might be of of varying quality.

Might come through in, like, the ability to hit warranty, the number of cycles, that kind of Exactly.

Yeah.

Performance detail. Okay. And Remotion did a really interesting piece in the last week or two around the the costs of manufacturing within China. And you were talking about an eighty dollar per kilowatt hour number. What is in that eighty dollars per kilowatt hour?

Yeah. So that that was a that was a really impressive stat. So something that we do at Remotion is we track, essentially, grid scale projects around the world and various metrics around them. You know, we're not necessarily looking about when the projects come online, but everything up until that point.

So almost where where Modo takes over. And in the Chinese market, we can essentially track equipment bidding, and that's the price that people are paid for the equipment. And then from that, we get our kind of average system price. So that I think it was around eighty two dollars per kilowatt hour, in the last quarter it came out at.

And it that's maybe reflected with some lower quality products. I think people like CTL, you may be looking at closer to the hundred dollar per kilowatt hour mark, but that includes, you know, the cells, the pack, the casing, this kind of system. It also includes the the BMS, the PCS, so, battery management system and power conversion system, inverters, and also the installation. So it it really is kind of the full package.

You know? This this system, someone buys it, and it gets delivered to a site. It gets installed.

And, you know, there's gonna have to be a bit more integration that takes place. The developer will usually do. But for pretty much all intents and purposes, that's the the biggest part of the cost.

I mean, that's just like an absolutely crazy number. Right?

Eighty two dollars per kilowatt hour installed, maybe excluding a little bit on, say, EPC or Land cost, that sort of thing.

Yeah. Okay. But in China, that would be very cheap as well.

Anyway. Yeah. It's it's kind of a mind blowing number. And maybe to kinda make it a bit more real, so what would that kinda same system cost in the US?

Yeah. So we we use Tesla as a as a comparison point, and, you know, their product is certainly a a more premium one. But right now, you'd be looking around two fifty dollars per kilowatt hour for the equivalent system to be delivered, installed. And, really, that comes down to Tesla's supply chain right now and also just the the more expensive kind of labor costs associated with with that.

So, you know, right now, whereas in the Chinese market, you may have a player, an integrator who produces their own cells and then also does the the integration themselves. And when you're comparing that to a US player, they're gonna be purchasing cells from China. So Tesla buy their cells from CATL, and then those will go to the US market. And then they'll do their pack assembly there and then their system assembly there.

So just a lot more, costs involved and, yeah, extra steps. And then when you gotta think about tariffs, which maybe we can talk about in a bit more detail, that can also change things quite significantly.

And so when Tesla buys the cells from CATL, is it bringing in the cells from CATL, or is it bringing in a kind of more comprehensive solution?

So they they do cells. So historically, it would have been the the packs as well, and that's what we see other players do. So if you think about some of the other big big integrators, they won't be doing the packs themselves. Fluence traditionally has been, buying in packs from CATL.

However, a lot of these players are now moving over to introduce their own pack manufacturing as well. Part of the reason they're doing that, particularly in the the US market, is to tap into part of the Inflation Reduction Act. So you can get a ten dollars per kilowatt hour tax credit production tax credit for pack manufacturing. So that's kind of an an added bonus, and it also helps with meeting some kind of domestic content adders, which can bring an extra bonus to when you're building in in North America.

Okay. And I think people have got a good idea of what a cell looks like, and I think people know what a twenty foot shipping container looks like. What is what is a pack?

So pack would essentially kind of bring together a number of cells into a into a kind of bigger container in a way.

Like five, ten Yeah.

Exactly. Exactly. Yeah. So it would depend on the the size of the cell.

So, historically, when we were you know, when this market was using maybe one hundred to two hundred amp hour cells Mhmm.

You would have had more cells within the pack. Now the market is at a point where typically you use, kind of three one four amp hour or two eighty moving to three one four amp hour. That's the kind of the single cell capacity. You'll now have, less cells within a single pack and therefore less cells within the overall system as well, which helps drive down costs even further because ultimately you've got less packaging around kind of the the energy dense part of of your system.

Okay. And maybe just going back to the point we covered earlier around the import of sales from China into the US. So we had the the Chinese figure at eighty two dollars per kilowatt hour and the US figure at two forty dollars per kilowatt hour for essentially a similar thing. And then we're adding on top of that, we're gonna be adding tariffs, and we're led to believe a hundred percent of the a a hun a one hundred percent tariff. So what does that do to that two hundred and forty dollar number?

Yeah. So there's there's a number of ways to kind of think about it. So right now, the the tariff for batteries being imported into the US is seven and a half percent. Under the current administration, the plan was for that to increase to twenty five percent in twenty twenty six, essentially giving a bit of breathing room for US manufacturers to to get going. Based on statements made by by Trump today, it looks like there will be a additional twenty five percent tariff plus an extra ten percent tariff on imports from China, and that could be on top and that's gonna be on top of existing, tariffs. So you'd be looking at that seven and a half plus twenty five, plus ten percent, so get you up to around forty percent tariff at this point.

Because it's all based on on top of existing tariffs, you could also see that increase further in twenty twenty five on sorry, in twenty twenty six up to closer to a sixty percent tariff. And, you know, that that really does change the dynamics quite significantly.

However, I would say right now, you know, player like Tesla, when we looked at their their kind of pricings that they're operating with, they are offering quite significant or they are they are basically benefiting from quite a significant margin. So whereas in China, we typically see players operating at, you know, close to zero or even negative margin. Tesla right now, their energy storage business, they're looking at around thirty percent margin. So how those costs are kind of swallowed over time may have to be factored into it as well. But, ultimately, you know, if the price is more expensive, that's gonna be passed on to the developer, to the to the kind of end end consumer at that case.

Okay. So there's a little bit of flexibility in terms of how Tesla can Yeah. Comprise. Yeah. Do we see an element of sort of, like, buy it now and stockpile? Is that a is that like a Yeah. Is that a sensible thing to do?

Absolutely. Like, seeing that from, I'd say, from from all parts of the supply chain. So, you know, we're hearing it from as far as kind of up as lithium carbonate. We're hearing there's been some kind of prebuying, people kind of rushing to get it through.

Similarly, from the kind of sales space, that's definitely been sentiment. And then, yeah, even from the kind of system level as well, people are, you know, rushing to get through because there is this concern that the tariffs will come in very quickly. And, you know, this market right now is so reliant on LFP, and, really, you don't have an alternative when it comes to where you can source LFP from. There are a few players with plans to build in in North America, but all of those plans are, you know, a few years away.

How successful they'll be is is up for debate. So, really, you're you're gonna have to basically absorb that tariff in order to keep building.

Okay. And if you're thinking what's LFP, do check out, the the session with Aaron. That will kinda talk you through NMC versus LFP, but I don't think we don't think we need to revisit that. I think we've got it covered.

So so where am I where where am my kind of stats going wrong? Because I've got this forty two point five percent, import tariff on stationary storage. Mhmm. And I think is there, like, a hundred percent import tariff that's been talked about?

Yeah. Where does that apply?

Yeah. So there's there's currently a hundred percent on EVs.

And, you know, the at the moment, I would say everything you know, all the statements have been made around tariffs, nothing is set in stone. And I think at various points in time, statements have been made. You know, we'll stick a hundred percent. We'll stick a two hundred percent tariff on these things.

So I think there's a few mixed messages, but there was a a statement just today that was, you know, day one on off in office. I'm going to introduce this twenty five percent tariff on basically everyone and then an extra ten percent on on China. I think maybe a almost a bigger concern from that statement was that they're introducing a twenty five percent tariff on Canada and Mexico as well Mhmm. Which kind of goes against all the existing US, Mexico, Canada trade agreements.

And, you know, we've seen a lot of build out or plans to build out within particularly Canada over the the last few years based on, an assumption that, you know, free trade will continue to exist, and you'd be able to kind of benefit from the IRA or inflation reduction act boom. Mhmm. So I think, you know, that's that's something which is causing maybe more more panic in the market than than the China element because that was more expected, I'd say.

Okay. Is this is this good news? If I'm if I'm a US fashion manufacturer, is this good news?

I would say probably not because it's very difficult right now to source components from from elsewhere. Right? So, you know, even if even if you can become more competitive in the market, so you would, you know, ultimately be cheaper than a Chinese cell. If you're looking at your supply chain, you're still gonna be very reliant on China. So a good example would be on the anode side. So the anode of the cell, graphite, synthetic graphite, which is predominantly used in in LFP because it's it's better for for longer cycle life compared to to natural flake graphite.

That's, you know, almost entirely reliant on the Chinese supply chain. So even, you know, if you even if you can build in the US, you are still at a whim of of the Chinese supply chain, at least for now. So I think it's it would be a concern kind of across the board, and, you know, you'd also be concerned about impact it could have on demand and then ultimately kind of consumers as well.

Well, that's that's just it, isn't it? It's kind of your your in competition all of the time with other forms of flexibility. So your gas gas fired generation, if all of a sudden the total battery fleet adds an extra twenty five percent to cost, then maybe fewer batteries and therefore higher cost to consumers.

Yeah. I think that the gas point is a is a really big one. There's I think I was in the US a few weeks ago, and the number of people who were talking about, you know, the EPA rule rulings, the the the Environmental Protection Agency ratings, and, the rules that currently exist basically, encourage kind of the the switching off of of gas peaker plants in favor of renewables and storage and other assets.

Every under every previous administration that's come in over the kind of last twenty, thirty years, kind of day one, week one, they've rewritten those rules. And those rules reach across kind of vehicle emissions, but also those kind of greenhouse greenhouse gas emissions as well. So if those rules change, it will ultimately lead to gas peaker plants staying on for longer and therefore, you know, negating some of the the battery demand.

And maybe just making, the conversation a little bit more around, Trump and kind of how he will work with the Inflation Production Act. I think a lot of things that we've seen have been quite positive about, almost like the momentum is there for a lot of domestic manufacturing, and a lot of this happening in part Republican states.

What do you think that this is something that he will kind of, move away from in principle, or do you think that he will kind of see some or, like, he'll more see, like, an economic sense type argument and think, okay. This is this is useful. We we we need this.

Yeah. So, I mean, on the on the manufacturing side, the the support definitely seems to be strong still. You know, if we think about, states that have benefited from or benefiting from the production tax credit at the moment, before the election, it was, like, fifty seven percent Republican. Post election, it's ninety two percent of the funding has gone into Republican states.

So, you know, the beneficiaries of these are his voters. You know, they are gonna be pushing for this. His fellow Republicans are also not going to to want this removed because, ultimately, it does feed into kind of a bipartisan goal of manufacturing in the US and bringing jobs to the US economy. So the the general sentiment is that ruling will kind of stay in place.

There are some concerns around, the foreign entities of concern ruling within it and whether that would be a way to kind of tighten those rules. On the flip side, there's also been talk that, you know, maybe Trump will welcome Chinese players into the North American market, but but on his terms, essentially kind of take the the Chinese model that they had, you know, twenty or so years ago where they invited US and European EV, sort of other ICE manufacturers into the country, but they had to form joint ventures and and partnerships. So having that kind of technology transfer into the US could certainly be be a really positive thing.

But, you know, in the immediate term, bigger tariffs are gonna make it more difficult for people to build batteries. That's that's the key thing, I think.

Okay. And maybe from the US to to Europe. So in terms of recent news, we have seen that Northvolt is struggling financially, Northvolt being a manufacturer of battery cells within Europe. What's the latest on Northvolt, and why do you think it's kind of got to the position that it's currently in?

Yeah. So quite a sad sad week for for European battery manufacturing. So, yeah, Northvolt filed a bankruptcy in the US this week. And this really comes after, you know, almost twelve months of of bad Northvolt news that that started off with some kind of missing production targets last year. You know, I think they end up producing about sixty megawatt hours last year from an original target of around a gigawatt hour. And then throughout the year, a series of things kind of continued to go wrong, so they lost their their BMW contract, and BMW instead went for for Samsung's SDI.

They also shut down all of their kind of other ambitious plans. So Northvolt were extremely ambitious. They were planning to do cathode manufacturing.

They were planning to do sodium ion. They had a system manufacturing, facility planned, expansion in Germany, expansion in Canada.

So, essentially, you're in a position now where all of that has been put on hold or or canceled, essentially, and they're gonna be focusing just trying to get the Sweden facility up and running. And, you know, that still seems to be the the plan. The bankruptcy will kind of help them do that.

But I think what it demonstrates more than anything is the, how difficult it is to to bring cell manufacturing online when you don't have maybe a technology partner. Yeah. And it's a different model to, you know, what we're seeing some players in in the US do, for example, and that we see OEMs partnering with with Asian, cell manufacturers to to form joint ventures Mhmm. And then build plants that way.

Northwell were very much doing this on their own. You know, they were using, Chinese equipment. There seems to have been major issues around the Chinese equipment, whether that was how the equipment was operated or maybe more personally around how strict regulation is within Europe compared to China, you know, environmental regulation, labor laws, any of these kind of restrictions, health and safety restrictions are gonna be much tighter. And, ultimately, that will mean that, you know, the way that they've maybe worked in previously or elsewhere is maybe not a direct transfer to Europe, and it's fed into the these issues, which is ultimately, it means that Northwell has repeatedly missed their production targets and are now in in this position where they're in where, you know, ultimately, they're they've run out of cash.

Do do you think it's a fundamental thing?

Like, we we will never get cell manufacturing right in Europe, and we will always almost similar to how, say, solar works today that we will kind of rely on China for a lot of that manufacturing.

Yeah.

Is do do you think we'll ever kind of get cell manufacturing working in in Europe?

So, I mean, if you look at Eastern Europe right now, there's there's a lot of Asian players who are producing cells at significant volumes, be that, you know, Korean players or or Chinese. So there is evidence that it definitely can be done within Europe. You know, you gotta hope that this was this was a sad story that and, you know, the the Northvolt will still kinda pull through and still kinda meet those volumes. There's lots of other players with ambitious plans, maybe less ambitious plans, which is in their favor somewhat.

You know, there's a degree of did Northvolt just try to do too much? Should it should they have just been focusing on what they kind of set out to do rather than all of these different different plans and ambitions? Yeah. But, yeah, you know, people like Verkor, Moro, ACC, they're all they're all planning to produce sales and and hopefully, you know, we'll get going in the next few years.

Okay. And you mentioned the sodium ion, so let's let's talk about it very, very briefly.

Do you think sodium ion is the kind of critical storage technology of the future?

Probably not. No.

So, yeah, it's an interesting one.

If we go back to kind of the end of twenty twenty two when lithium prices were were really high, everyone got super excited about bals sodium ion because suddenly it was this low cost low cost alternative. You could drop in this technology and just, you know, get ready to go. This is great. You know, we're not gonna be relying on the lithium supply chain.

The reality has kind of hit over the the last two years when lithium prices reached the levels where it is now. And, you know, if you look at our price point, they are actually reaching price parity now. So up until recently, sodium ion was more expensive at these low prices because, because of the anode. So the hard carbon that you use in sodium ion, that supply chain is not that well established and was ultimately leading to a a higher sell price.

We are seeing that sell price get get close to parity, but the fundamental kind of technology behind it just can't compete with with LFP right now. So, you know, your typical sodium ion cell that we're seeing come through, you're looking at lower lower energy density, cycle life, maybe kind of two to three thousand cycles compared to one of these, you know, fully spec'd LFP cells that we're seeing now that ten thousand, fifteen thousand cycles. And and, ultimately, what that means is, you know, even if you're paying the upfront cost at a similar level, you know, you're gonna have to replace that battery three, four times for the equivalent LFP, and the lifetime cost suddenly goes out the window. So Sodium Mining is kind of chasing down a a moving target in LFP.

On the flip side though, I would say there are certain applications where sodium ion definitely does have a space. So if you're thinking about any kind of cold temperature environments or even hot temperature, it does really well in those places. The ability to fully discharge a sodium ion cell compared to an LFP cell where you can't do that is also a a good benefit for cheaper transportation costs. And then certain applications, things like UPS, we're seeing quite a bit of interest for kind of high power operations. So, you know, the these niches that we are seeing evolve, but, you know, this floods the market, has certainly not happened yet, and, you know, would take significant developments on the technology piece to to kind of become competitive.

Just on the depth of discharge piece. Right? So about LFP not being able to fully discharge. So maybe just to dig into that into a little bit more, what what do you mean by that? But also if from a, like, lifetime cost for LFP versus sodium ion is significantly cheaper, does it actually matter if you can't discharge it fully? Surely you just build a slightly bigger unit and get the same result?

Yeah. So, I mean, on I guess on the first point around what I mean by the fully depth of discharge. So, ultimately, you know, when you're transporting an LFP cell, you still have to leave some some charge in it, which means there's higher kind of safety measures that have to be taken. So you can't get it to to zero percent in in that sense, whereas sodium ion, you can get it all the way to zero percent.

On the kind of capacity front, that would that would definitely answer that question. One thing that has been raised to us around that has been the kind of land cost. I mean, I'd say storage historically has always been like, you know, we can just have low energy density cells. We don't really care about land.

But it's actually quite a sensitive market when it comes to to building those operations. I'd say particularly in Europe more than anywhere else where land is is more expensive.

And people are really liking these new five megawatt hour systems that we see on the market, for example, because it does bring down that land cost or, you know, you can fit fit in more capacity for the equivalent land space. So that that is a concern as well. But I think the the biggest one is around the cycle life. So, you know, if you're looking at a kind of high spec LFP cell, those ten thousand to fifteen thousand cycles, if you're discharging once a day, you could be looking kind of fifteen to twenty year lifetime.

For a sodium mine, sir, with three thousand to five thousand cycles Yep. You're doing the same thing. You know, you could be looking at three to four years. Mhmm.

And you'd have to replace that every three to four years. So Yeah. Yeah. It gets gets expensive quickly.

It gets expensive quite quickly.

Yeah. And maybe maybe let's come back to the, LFP number for warranted cycles. I've seen those same numbers around fifteen thousand cycles. Yeah.

That's a world away from kind of where we were maybe two years ago Yeah. Three years ago. Is that are you seeing it coming through in warranties as well, or is this just kind of PR marketing? Someone says fifteen thousand, so the next person who says sixteen thousand, actually, none of it's true, and it's all ten thousand.

Yeah. I haven't seen any in warranties yet, if I'm honest. I think it's definitely more around the marketing, like, side of things. A lot of these fifteen thousand cycle claims as well have been related to the three one four amp hour or even kind of the five hundred amp hour sales, which should start to hit the market kind of next year. So it is possible that we would see that kind of from next year once once these new cells and systems are are launched. I think that CATL tenor maybe maybe does twelve thousand is that warranty potentially.

Okay.

But you have to factor me on that.

Yeah. Okay. Absolutely. Okay. Good. So then going on from kind of stationary storage to EVs, how do these two markets compete?

What's the relative size of them? Like, how should we be thinking about EVs versus stationary?

Yeah. So, like, we like to think of, the e the ESS market as kind of the the little sibling to the EV space, unfortunately. So, you know, when we think about kind of global battery demand this year, we're looking around one point three terawatt hours.

And the storage market represents about fifteen percent market share, so we're expecting about two hundred two hundred gigawatt hours this year across the globe.

What I would say, however, is this is the fastest growing market. So, you know, even if we go back to kind of twenty twenty, the storage market accounted for about six percent of total battery demand. And now it's at that fifty fifteen percent point. So it it is growing faster than anything else.

Okay. Okay. So the the little sibling is growing up. Yep. But okay. So and just in those numbers, one point three terawatt hours is the total Yeah.

Storage demand of which two hundred terawatt hours Two hundred gigawatt hours.

Sorry. Two hundred gigawatt hours is going into stationary. Yeah. One point one terawatt hours into EVs.

Yeah. And bits of bits of other things as well.

And other bits.

And other bits. Yeah. If if you all of a sudden have an extra fifty gigawatt hours worth of stationary storage demand, is there transferability in terms of being able to move things from the EV side into the storage side?

Yeah. I I'd say we're already kind of seeing it in a way. So probably a a good example within the US market. And in the US market, I would say that the storage market share is even more significant. So this year, we're looking around twenty two percent for storage demand compared to the EV space. LG, they were planning to bring LFP manufacturing to the US. They're planning to build a sixteen gigawatt hour facility in in Arizona.

They put that facility on hold, and everyone kinda panicked like, you know, LFPs or storage is booming. Like, why are they doing this? It then kind of turned out, you know, they had a bit of adjustment in strategy. The EV market's not doing that well, not growing at the rate that maybe was anticipated a few years ago.

So what they're gonna do is instead retool some lines at an existing facility to bring LFP online sooner. So it's definitely you know, it's not necessarily an an easy switch. You can't just turn a manufacturing line from NCM one day to LFP the next day. But, you know, if there's a a well thought out process and the strategy is there, you can you can consider that, and you can get manufacturing up and running for the different technology.

Okay. And in terms of just what you're describing there, so EVs not doing so well, I know we'll kind of, like, we'll have a few people kind of on their keyboards. And so maybe let's just kind of explain that in terms of yes. Maybe what do you mean by EVs not doing so well?

Yeah. I mean, so when you look at it from a a global perspective, I would say EVs are doing very well. So, you know, China this year is expected to grow at close to forty percent growth, which is really impressive. And, you know, we're seeing consistently, over the last few months, EV sales over a million units each month.

You compare that to the US market and the European market and maybe talk about, the US market first. US market, we're looking about ten percent growth this year. They're pretty moderate. Things are kind of ticking along quite quite nicely. You currently have a consumer tax credit, which has had quite positive uptake.

That looks like looks likely to go in the coming months, but nothing too crazy to talk about. You know, number of units we're seeing sold monthly in China is not near enough equivalent to what we see in the kind of full year in the US. So things are moving, but but quite slowly.

European market is a bit of a different story. So this year, we're seeing negative growth in the EV side in Europe. And, you know, that's the first time since EV sales have really begun that we've seen negative growth happen.

What does what does negative growth mean?

So we're seeing, a year on year decline of about four percent, and that ultimately comes down to Germany. So Germany is the largest auto market in Europe. Germany EV sales are down twenty percent compared to the same period last year because they had a shock removal of their BEV subsidy, the the battery electric vehicle subsidy, and that really had a an immediate impact on on that market. The UK is really the only kind of shining light when it comes to European growth this year.

There's a a quite strong zero emission vehicle mandate in place that requires, twenty two percent of vehicles to be zero emission this year. And we're seeing strong growth in in the UK. But, you know, outside of the UK and a few other countries, it's generally not not being good news this year in Europe. And, ultimately, what this kind of feeds into is is a negative sentiment story, which then kind of gets carried away with itself.

People see a headline of, you know, EV sales are down. They think, oh, the technology is not ready. Charging infrastructure can't be there yet. Maybe I won't buy an EV yet, and it kind of just starts this endless cycle.

You know, even with the kind of Northvolt stuff, a lot of that initial rhetoric was almost tied to the EV demand is in decline and battery demand is falling off a cliff. But, you know, this is a, I'd say, a short term road bump. The the long term sentiment is still very much there, and, you know, policy support in the coming years for electrification is is very strong.

Okay. And and maybe let's kind of, get the crystal ball out and go into the future, the twenty thirties, not so far away. Yeah. What do you think that picture for EV, demand but also stationary storage demand looks like?

Yeah. So I I didn't have the the figure off the top of my head. I should've should've got that. But in terms of kind of growth rates, like, you know, we are expecting kind of sustained strong growth over the coming years.

When we think about Europe, for example, as a as a kind of a a good point, Europe has very strong, like, c o two emission policy, so they have kind of a step change nature. So in twenty twenty five, an adjustment has to be made. And then in twenty thirty, you're looking at a kind of fifty five percent decline from twenty twenty one levels. So you can kind of translate that into, you know, pretty ambitious amount of electrification in in order to to get there.

The US also has strong kind of EPA standards that exist currently.

They will likely get rewritten.

The level to which they get rewritten is a big question. And then China, I'd say, you know, is is on this pathway where electrification is very much the status quo now. You know, when we think about kind of the the costing, the or the price of an EV versus an internal combustion engine, in China, that's now it's now cheaper to buy an EV. Yep.

So, you know, why wouldn't you buy an EV in that sense? So, you know, we're seeing consistent months where EV penetration rate exceeds, and that that momentum is gonna carry on in these coming years. And then on the storage side, continued strong growth kind of across the board. When we think about where storage is being deployed right now, it really is a a China story, a California story, and a Texas story with a little sprinkling of the the UK in there as well.

And then when we think about the kind of global context of renewable build out, there is so much opportunity for for kind of growth. I think a really interesting one at the moment we've been looking at is kind of the Middle East. We're seeing a lot of tenders come through there. We're even seeing players like Hythium announce that they're gonna bring system manufacturing to the region.

So, yeah, big opportunities across the board, Africa, India, Australia.

Lots lots to to look out from the storage side.

I think on the on the storage side, and it actually links to your kind of ICE versus EV point, is when a technology gets good enough that it can beat the thing that it's trying to beat Yeah. It's very hard to to to put that away. It's very hard to hide that. You kind of you know, so when your when your ICE is kind of a certain price and your EV is more expensive, there's a subsidy thing that goes on.

And as that subsidy comes in and out, the kind of sales look a bit bumpy up and down, whatever it might be. But as you said, as soon as it gets through that level, you kinda go, ah, it's actually quite difficult to kind of to to to stop this progress Yep. And to move back towards the the other direction. I suppose you could go down the the kind of tariff route if you wanted to if you wanted to kind of explicitly support ICE.

But as you say, within within China, if you have EVs that are cheaper, then, of course, why would you why would you make that move?

Exactly. The momentum is there, and, you know, these technologies will continue to get better. I think that's, that's always a a good point to remember is when when we're thinking about kind of next generation alternative tech, not only are they gonna be competing with the technology of today, they're gonna be competing with technology of three years' time, five years' time, which is gonna continue to to improve. And, ultimately, you know, we've seen that that cost curve decline of solar over the last few years.

Batteries are following a very similar trajectory. And, you know, the the kind of solar and storage solution and and what it offers now is is really interesting and competitive. And it's also opening up, you know, new applications, which maybe, historically, storage wasn't set to be in. So maybe a good one just to talk about is on the kind of duration side.

So, you know, the historical cap for lithium ion batteries was was four hours. People always kind of throw that around as the limit, but we now see batteries being deployed at ten hours, eight hour systems.

And, historically, that was always, you know, we need an alternative tech for this. We need a gas speaker for this.

Mhmm.

But suddenly, batteries are kind of eroding or kind of widening the the application use case. And that's gonna continue to kind of evolve over time.

Oh, it's it's really difficult. Right? Because you have on one hand, the costs are declining, and on the other hand, the performance is getting better.

Yeah.

And so it's almost like you have, like, two or three or four factors all at the same time making this thing a more attractive proposition, it means it's really hard to set policy around it. So when you look at, like, the UK, for example, the kind of the line in the sand that we have isn't four hours. We're we're more progressive than that. We've gone for six.

Yeah. But even that doesn't look very sensible. Right? Because you can easily do lithium systems that go up to eight or ten hours.

It's it's kind of it's very straightforward, and we see it in lots of other markets. So I think maybe where it all comes down to is maybe similar to the ICE versus EV thing, which is like what's best for consumers. Find out what you need. Open it up to the market.

See what they say. See what comes in.

Yeah.

Yeah. They're a really interesting place to to have got to. I think I would like to kind of move on to just a little bit on just on those future texts that we might see. So do you see or if you were to kind of pick out of all of the contenders who are also running alongside, lithium, do you see any of those texts being sort of particularly noteworthy?

So in the Chinese market, I would say flow batteries are the ones which are getting having the most activity. So, you know, I think in our pipeline now, we're tracking about fifteen gigawatt hours of planned flow battery projects, the majority of them being Canadian flow. The big barrier right now is that they are still more expensive.

The majority of those projects are pilot projects. But, you know, the Chinese government and the support for these technologies does appear to be very strong. And, ultimately, you know, the rest of the world will benefit from any advancements made there as it's kind of passed through. So, you know, that that's an interesting one, and I think is is also maybe, you know, pushing up kind of longer duration potential as well.

A lot of the the market mechanisms for long duration don't necessarily exist yet, but but the potential is there. Other interesting ones, I mean, you know, we see the likes of kind of, like, ion air batteries and big ambitions from people like like Form Energy on that front. What that materializes to, I think, is still still a bit of a question mark. But Yeah.

You know, having a one hundred hour duration battery is definitely a a nice idea. But but how that progresses is still a bit of a question.

But it's really interesting. It's like the the the design of it, the concept of a hundred hours is really easy to grasp. Yeah. But how does that then feed into a power market? Exactly.

If it's gonna go into a station market, how valuable is that?

It's really yeah. So when we when we talk about this, we find that kind of human behavior drives almost a daily cycle plus the, like, shape of solar generation also drives a bit of a daily cycle. And so a ten or a twelve hour system has a really kind of logical size to it. Then you go into a hundred hours, it gets really interesting. And I know we had a form on the the podcast, and we can put in the link in the show notes as well to that to kind of talk about, where they see, form systems in the in the markets. And we've also had Vanadium Flow on as well, so we're gonna be kind of stacking up this, these show notes with extra links. But, yeah, if you're interested in those things, then then we kind of have, we have particular episodes on them.

Okay. So maybe onto my final two questions. The first one is, is there anything that you'd like to plug?

Nothing too much, but I guess just plug Remotion. Come check us out. Yeah. Happy to to introduce us and and have a chat about what we do.

Superb. And how would someone find Row Motion?

What's the you can go to our website, row motion dot com, or you can find me on LinkedIn, Twitter, all the all the usual.

Blue Sky.

Blue Sky. Yeah. Potentially. It's actually one post so far.

Yeah. Exactly.

Very good. Okay. And then, final question for me. Is there anything, so what is your contrarian view? Is there anything that you believe that the majority of the market doesn't?

Yeah. So we we have talked about this before. It was rounded like, okay, what could be contrarian? And we don't know how contrarian this one is, but I think there's a lot of challenges to overcome before Second Life can can really become a thing. So we did some some economic analysis recently given the kind of current sale prices compared to second life sell prices and then thinking about it more on the kind of lifetime similar to what I talked about for for the sodium ion, right, sodium ion case earlier. And, ultimately, what it comes down to is it's gonna be very, very difficult to make second life competitive at least in in the current market, and you'll be better off kind of sending that to recycling or even discarding the battery altogether. So I'm not not too optimistic on the the Second Life front.

Okay. Maybe maybe some challenge. So I've talked to some a few people on Second Life recently, and they would say, hold on a moment. Don't do that.

There's life in that that battery yet. Yep. We can take it we can take it from a variety of resources. We can bring that in.

We can set it up so that we're kind of bringing together lots of sales from different places, put that together, run it at a slightly lower level, and, hey, there's value there.

Yeah. So I think maybe in the context I'm thinking about it, it's more for kind of larger scale applications. I think there's definitely an opportunity for taking something which is larger and then turning in something which is smaller. So, for example, you just take an old bus battery and then put that into a a lawnmower, something like that, that I could see as as being a kind of good application.

As soon as you, in a scenario where you're trying to combine multiple EV packs, for example, you start to run into issues of inconsistencies between packs, inconsistencies between cells. You can have voltage issues. And it just requires a lot more work around, you know, getting a new BMS, doing the kind of full reintegration, which I think, yeah, will continue to be a challenge. There's also issues around kind of warranties and who's responsible for the kind of risk offtake.

So, yeah, maybe maybe I was too bold in my statement. I don't I don't hate Second Life or don't diss Second Life for for certain applications, but I think it will struggle in the the grid storage market.

Yeah. Absolutely. Brilliant. Iola, thank you very much for coming on.

Thank you for having me.

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