There’s No Such Thing as a Global Battery Price - Benchmark Mineral Intelligence

I'm your host, Ed Porter. Welcome back to Transmission. There's no such thing as a global battery price anymore. A storage cell in China costs around 50 to $60 per kilowatt hour. In Europe, prices are falling. In the US, costs are going up. Same product, different direction. What sets the price now isn't just what a cell costs to make. It's where that cell is allowed to go. Half the world's battery factory capacity is sitting idle. Yet China's storage cell lines are running above 90%. Lithium prices doubled, then cooled. Tariffs, tax credits and sourcing rules are redrawing the map. And sodium-ion, the chemistry tipped to challenge lithium has seen projects cancelled. Iola Hughes, Head of Research at Benchmark Mineral Intelligence, tracks the battery supply chain from the mine to the grid. She's back on Transmission to explain what's actually moving the market and why new chemistries like sodium-ion don't just have to catch up with today's lithium, but where lithium will be in five years. If you want to see what batteries are earning across GB and Europe right now, ask Ko, Modo Energy's AI energy analyst. It's free at modoenergy.com. Let's jump in. Hello, Iola. Welcome back to Transmission. Thanks for having me. Well, our pleasure. A two-time guest. So, as ever, let's get straight into the detail. What is one thing people get wrong about the global battery market? Um, I think probably one of the big things is, is really around. There's no such thing as a global battery price anymore. But ultimately it's really a conversation of where a cell can legally go that's impacting that. And then really, rather than the actual cost, the amount of costs to to make that cell. Yeah. So instead of having a number in your head of like a cell is going to cost you $40 per kilowatt hour. Um, and that being like a global phenomenon, it's how it actually moves around the globe and how it goes through certain tariffs that will set very different prices for different. Exactly, exactly. Yeah. So I think, you know, when we see these, uh, you know, surveys or charts out there of like the average battery price and where it's gone and where it's declined over the years, it maybe doesn't show the full picture of where we really are. Yeah. Um, like, if we looked just in the last month, for example, if we looked at the price within the Chinese market, probably around $50 a kilowatt hour for an LFP cell. Compare that to the European market and the US market. Even the direction of change month on month is different across each market. So in, uh, China and Europe, we've seen prices falling a bit recently because of some of the softening in lithium price. When it comes to, uh, the North American market, we're actually seeing prices tick up a bit. And that comes down to some of the freight costs that we're seeing there at the moment. So you have that at the surface level. And then you start to add in things like tariffs and eligibility for for various regimes, and then you run into all sorts of other complications in terms of when it comes to actual price. And we get into the niche of how this actually works. But maybe taking a step back first, right. And we're going to get into that sort of, um, the specifics of the market. But the bigger picture, it feels like every time there's a new story about batteries, it is batteries have come down in price. Right? And we've seen that over the last 10 or 15 years. And there are some crazy numbers out there, right? If you take a very, very large number and take it all the way down to today, you can always make a 99% reduction. Um, but have we got to the end of batteries becoming cheaper? Are we at the point now where we really have sort of whittled out all of the sort of excess costs, or is that sort of not happening today? And there's still definitely room for improvement. Um, but things are things that ultimately like led a lot more by material prices now than I'd say than innovation. So last year, we saw prices kind of bottomed out at about 45, even 40 in some instances. For a cell? A cell. Yeah. Dollars a kilowatt hour in China. And that sort of price was really below actual manufacturing costs and wasn't that sustainable. Um, this year we had essentially a trifecta of things coming through, starting to impact battery prices. So you had an anti-involution campaign in China, which essentially is a campaign to stop the aggressive oversupply in a market similar to what we've seen in solar. Uh, we started to see a lot of movement in the lithium market. So lithium prices essentially more than doubled over the last year. They've cooled off a bit now, but um, it they continue to be at a pretty elevated, uh, place. And then you also had changes around the export rebates in China. So previously there was a 9% export rebate that dropped to 6% in April. And then the end of the year it's going to zero. So you have all of these different measures kind of going on at the moment. And we have seen prices now come up. They peaked in around May. We saw prices at around $58 a kilowatt hour. Come back down a little bit now, but it's yeah, it's it's certainly not the low cost environment we had last year. And where we go from here. Lithium price is a big factor. Of course we are seeing lithium prices cool off. And you know the lithium market is very sentiment driven I would say. Um, you have things such as conversations around downstream demand and inventories driving one one side of the story. You will have stories such as, you know, exports, restrictions from Zimbabwe restricting supply. You have specific mines in China. CATL's Jianxiawo mine was a big one. That was kind of a constant headline. Like, will it start? Won't it start? And that all feeds into this narrative of kind of speculation and sentiment around lithium prices. But where we are now with the market, it looks like prices are cooling off somewhat. Um, and, you know, that ultimately would would feed into a positive for cell prices. Yeah. Um, and we could see prices come down further, but the sort of decline that we've seen over the last few years isn't necessarily what we're looking at now, I would say. Okay. And maybe there's a kind of couple of bits on that. Um, I suppose let's start with the anti-involution. Like for someone who doesn't look at this space every day, like how would you describe that to them and what sort of impact is it having? Yeah. So China has I mean, huge amount of capacity when it comes to cells, if we think about on a global scale. Um, currently we're tracking like nameplate capacity of six, six and a half terawatt hours of cell production compared to expected output this year of about three and a half. Yeah. So vast majority of that is in China as well, particularly when it comes to storage cells. So already you have a huge amount of capacity in the Chinese market. Crazy crazy amounts. Yeah. And when you start to look into those numbers as well, it becomes even more shocking because if you think about CATL being, you know, largest cell manufacturer in the world. CATL is very public about how their utilisation rates are very high. You know, 90% in some cases once facilities are fully ramped. If CATL, the largest player, is running at 90% capacity, but the average market is running at about 50%. There's a lot of players out there who are running very, very low utilisation rates or even not producing from their facilities. And is that they just can't get the orders. There's an issue of ultimately what they're producing isn't at the the level the market wants anymore. So you have, you know, tier two producers who or even tier three producers who are producing cells that they just can't compete with. What the CATLs and BYDs of the world are able to produce. So cost will be one part of it. Yeah, there's there's a number of reasons. It's just so now ultimately the Chinese government is trying to crack down on that. Um, and it started off with this kind of trying to get the industry to work together to stop prices continuing to collapse, as they had been doing just in the last month. We've now seen actually a restriction on on new capacity build out. Initially it was just looking at the BESS market and then now it's actually been extended to EV cell capacity as well. So that's basically saying, you know, if you're expanding doing a second phase of your facility or if you're building a new factory altogether, you can't do that right now. We have too much capacity already. So has that got people like CATL looking at the tier two providers and saying, well, look, we're just going to buy you. It's going to bring you in. We'll buy your like right to capacity, and then we'll dump the CATL tech on there and just run this up to 90% utilisation. I think it's an interesting one. Like ultimately doing that would, you know, they can build a new state of the art facility, um, where they have, you know, high level of automation and the cell production is very high quality versus buying an old factory maybe isn't necessarily always obvious to them. You know, if you're upgrading a facility, that can be pretty expensive. Yeah. Where we've seen that in the US, for example, where we've seen, uh, retooling of lines from EV to energy storage cells. Typically we've heard the the cost of that comes in slightly lower than building a new line. Um, but that's typically if you're just changing, say, the, the cell chemistry. But if you were to change the cell format as well, then you're looking at costs kind of on par with building a whole new line. So there's this uncertainty of whether you'd actually, uh, want to buy an old factory. Yeah. I think the other point on it as well is, you know, when we look at what's actually going on in terms of the demand side versus the supply, and I think we can talk a lot about this is like, if you take the nameplate capacity that exists today, that number is higher than we ever get to in our demand forecast. So already it looks like there would be ample, uh, cell supply overcommitted. Right. So yeah, exactly. And is it a case that, like, something's got to give that at some point one of these factories will just drop off and will close down because, I mean, like the economics of it would suggest that has to happen. But unless there's sort of, um, subsidy or intervention in the market that keeps everyone afloat. Yeah. I mean, there's definitely a lot of parallels that can be drawn from solar industry. Um, it does feel like it's going that way. And it's very hard to understand how all of these facilities can exist in the current ecosystem. You know, when we look at the numbers like specifically for BESS, for example, like this year, we're talking expectations like around a terawatt hour of cell production. Yeah. Demand this year is probably about 450 gigawatt hours. That's just such a large gap. Yeah. I mean, you know, we can start to explain it by a number of reasons. We can go, okay, time lags is a big thing. Typically from a cell being produced to a project coming online talking like 14, 15 months global average. Um, so really we need to look at next year's demand expectations. And for next year, I think we're looking around 600 gigawatt hours, but it still doesn't add up. The gap, right? So looking at a 400 gigawatt hours of battery cells that are going somewhere. Exactly, exactly. And you know, if you look at any of the supply projections, whether it's ours or anyone else out there, the the expectation is that, you know, this year's a terawatt hour and next year will be bigger and bigger and bigger. And that you can you can think of a number of different ways to explain the gap now. But as we get later in the decade, it becomes very hard to explain that kind of sustained gap between one and the other. And I suppose one sort of final point to put on this is that sometimes when we're talking about cell prices, people hear like sort of whatever, 45 goes to 65 and then swings back down to 50. And I think, oh my God, how are people building battery projects globally with such wild swings and cell prices? And it's kind of important to say that, yes, cell prices are important, but they're not. They're not everything about building a battery project. So by the time a fully fledged battery project comes to market, you've got connection costs, you've got the work of putting concrete plinths in the ground, etc. So it's it feels like, yes, cell prices can move, but they're not everything when it comes to sort of finally deployed systems. Yeah. No, definitely. And I think that's very like market sensitive as well. Um, so for example, in like the European market, you'll have much higher land costs, interconnection costs than say in China where in China the the system price might be a larger share of your project. And it was actually pretty interesting this year when lithium prices got up to about $25,000 a kilo. We started to see a lot of conversations from developers in China around, you know, this is actually going to have a big impact on our project IRRs. Maybe we should pause development. And, you know, China historically has been by far the largest storage market. I think last year we were about 70% of demand was in China. Year to date, we're probably about 40%. So China is having a pretty weak year. Um, for the first seven months, we were down about, uh, 6 or 7%. It's now about 10% up. Yeah. Based on the the full first three quarters data. But there's definitely been a hesitancy in the market because people are kind of reacting to that, that elevated price. And for those projects in China where the margins are a bit tighter and there is that high level of sensitivity. Um, we see more of an impact than in the US or in Europe, where you have a kind of wider array of costs that you're facing anyway. It's kind of good news, right? High prices are a cure for high prices. Um, it's also the classic pitfall of any battery storage conversation anywhere, which is that if you're European-focused or you're US-focused, whatever, and somebody says, what's the biggest market? And you say something like Texas, you're already wrong because the answer is always China. Yeah. There's like so forever. Forever is the correct answer. Okay. Um, we recently had Marek on who you will know because he talks about battery storage a fair amount, and he came on with the view that sodium-ion is going to be a much bigger part of all of this energy storage world compared to sort of the status quo. What do you see? Do you think sodium-ion has earned a place in in grid storage yet, or do you think that there are still some big questions that need to be answered? Yeah, it's, um, it's probably one of the biggest things we've been thinking about this year, like trying to trying to get angles from every part of benchmark to have a view on it, whether it's kind of on the upstream of the supply, um, through to what's actually happening in different end use markets and where we actually kind of settled, we had almost everyone got involved and threw their opinions in. Where we actually ended up settling was that our near-term view was was too bullish. So we actually reduced our forecast in the near term. And in the in the longer term, we did increase our forecast a little bit. And this is about like volumes delivered. Yeah, exactly. Actually what's coming through. And it's it's pretty interesting. So on the on the BESS side now we're probably tracking about ten gigawatt hours of projects in the pipeline. All of those are in China, essentially, yeah. Um, if we look at this year specifically, we've seen over a gigawatt hours of cancelled projects, of sodium-ion projects. So these are batteries that they were going to install sodium-ion, and instead they decided they were going to do so. There's like 10% cancellation rates. Yeah, there's a there's a movement, quite clear movement of people actually kind of moving away from a sodium-ion decision. So things are a lot slower than I think what was anticipated a couple of years ago. And it's ten gigawatt hours versus the 600 gigawatt hours or so, depending on which year you take for the the 450 or the 600. I mean, we we're in our in our pipeline. We're tracking three and a half terawatt hours of batteries total. Yeah. Um, and yeah, ten gigawatt hours of sodium-ion is relatively small. Yeah. It's, uh, it's a it's a tiny amount. Really. So what what, um, maybe just sort of ask a question in a different way. Like what would you have to see to be a believer? I'm not saying you're not a believer. Um, but like, if you were to be a believer and to see sodium get to that point where it's sort of challenging for like 50% market share. Like, what are the stats you would need to see out of a sodium-ion project that would make you say, hey, look. Like, wow, those cycles, uh, 20,000 cycles. Fantastic. Like we can get behind it. So I think sodium-ion definitely has a place. And we are seeing, uh, increased interest in certain use cases. So extreme temperature environment is a classic one. Yeah. The Chinese government in the 15th Five-Year plan, they all like Inner Mongolia, Gobi Desert. Those are places for sodium-ion and also flow batteries to go. Data centres, another one. There's quite a few people who are working on these kind of hybrid solutions, where maybe you'd have some sodium-ion batteries, LFP batteries, and you'd cycle your sodium-ion battery really hard. Some of the cycle life stats are getting to a really good place, but I think ultimately to see it take significant market share. What we need is continued elevated lithium prices. And you know, we've done lots of cost analysis on this, and we kind of saw that price point where it made sense for sodium-ion to continue to to grow was above $25,000 a kilo is where you really get sustained investments. Lithium carbonate. Lithium carbonate price when it got to like 28 ish like six months ago maybe. And it's been sort of falling, as you said earlier. Yeah. So whenever the lithium price gets high, everyone gets very excited about sodium-ion. There's a you know, you could map the Google hits for sodium-ion with the lithium price chart and they'd correlate really well. So the high prices is definitely, uh, one thing that will enable it. And ultimately if lithium price is high, it means that the investment into the sodium-ion supply chain is is more sustained. Yeah. And right now that's the thing that's holding it back. So on the cost side, we are starting to see sodium-ion at the cell level somewhat approach. Um, if you were to model like a scaled 30 gigawatt hour facility in China that doesn't exist at the moment, but hypothetically, it could be done at a similar level. Yeah. Where the barriers come is particularly on the the anode side of the battery. So instead of graphite for lithium-ion batteries, you use hard carbon most typically. Um the feedstock for that is coconut shells from Indonesia. Okay. Um, and it doesn't exist in enough ample supply to, to really fuel the market right now. There's a few people looking at alternative feedstocks, synthetic feedstocks, ones based on petcoke, for example. Um, but right now it is entirely tied to this Indonesian coconut supply chain. No way. I just I can't believe that the the global transition comes down to Indonesian coconuts. Yeah, I would love that to continue to be true just because of the story. But yeah, it seems like people find alternatives quite quickly. Exactly. I mean, being able to say like, oh, my laptop's running on coconut shells would be. It's a, it's a it's a great story. And, and I suppose maybe one thing that you kind of mentioned very briefly in there, but perhaps is a bit of a change. So if I go back 2 or 3 years, people thought about sodium-ion. They thought 2,000 to 4,000 cycles would be the number. But now it seems like that's perhaps not the case. Are you seeing better information around cycling rates? Yeah. So I mean, on the surface, yes. Some of the specs look look great. Oh hold on specs. Is this like is this a brochure that's been received. Exactly, exactly. That's the issue, is that it's the real world. We're still probably lacking quite a lot of that that data. Right. Um, you know, I think sodium-ion is definitely going to take some market share in the next few years. I think by 2030, we probably have at about 10% of the BESS market. Um, but it will really depend on where the lithium price goes, because, you know, if you're a developer looking at your procurement strategy right now and you have the option of a tried and tested cell, you've got your 20 foot container that's offering you six megawatt hours plus. Yeah. Energy density versus taking a bit of a gamble on a sodium-ion cell, which, you know, based on CATL specs. Maybe three megawatt hours for your 20 foot container. Mhm. Even if the cell level costs or even the system level costs reach parity, that has huge implications for your land costs for, you know, foundations, transportation like logistics. So there's a lot that needs to happen before it becomes like this is my obvious choice to make. Yeah. Um, I think the one exception maybe would be if Peak Energy and GM crack sodium-ion and are able to offer this US solution fully, you know, domestic supply chain. But that's still quite some time off, I think. Yeah, yeah. Um, and maybe that's a really nice lead into the next question, because we've talked a little bit about where batteries are from a cost perspective, from a manufacturing perspective. Obviously we talked about China, which, as I've already said, is the correct answer. Uh, so we've covered that. Um, but where are the most exciting places right now to, to be putting batteries? So it feels like, um, we've kind of we saw five years ago, we saw a couple of like big countries or big regions that would deploy a number, but now we're getting, uh, other areas where it's becoming quite exciting. Yeah. So I mean, this there's so many you could choose from, I think like, uh, I think Middle East has been spoken about a lot. Australia. There's been a lot going on. Um, but I think a bit closer to home, probably the, the big one for us would be Eastern Europe. Okay. You know, Europe has historically been a very slow market. Um, outside of the UK. Forget about the UK. But yeah, mainland Europe has been very slow. All sorts of problems around interconnections and tariff regimes and that's been holding it back. But really this year we've seen just Eastern Europe become like this hotspot for storage. Um, I think year to date in Bulgaria, we're probably about, I think over five gigawatt hours installed. Compare that to Germany, for example, which everyone always talks about as the huge amount of potential there is so quickly they have leapfrogged, and it's is really interesting to see what's driving it as these much larger projects than we've typically seen within Europe. And that's, that's a, you know, a global phenomenon. I'd say, like if we look at average project sizes the last few years, probably about 100 megawatt hours in 2023 to this year to date, we're over 200. And, you know, it's being driven by these very large projects which are starting to come through. Um, we like to track giga scale projects like projects over one gigawatt hour. Um, and this year alone, we've had, I think, about 50 come online, uh, and 35 of them or more uh, ex-China, which is, is pretty interesting to see. Yeah. It's like when stuff gets big enough, uh, the blueprint exists, the costs are low enough, like it's going to pop up everywhere. Yeah, there's no kind of stopping it at that point. Yeah, you can have delayed interconnection processes. You can have regulations that exist in your Western European countries, but it is going to turn up somewhere. Um, and so yeah, it's just a matter of when you get on board to, to make it happen. Yeah. Fascinating. You mentioned at the end of the last question a little bit about the US there. So, uh, notably absent from your where are the most exciting places in the world to put batteries right now? What do you think about the US? Is it is it an exciting space? Definitely exciting, but comes with a lot of challenges. Um, you know, when we speak to developers, particularly at the moment, they just feel like they're in this, um, kind of haze of policy noise where from day to day, week to week, things are constantly changing. Um, you know, if you're a developer right now in the US market looking to procure, you're thinking about, you know, what's the tariff rate right now? Yeah, currently would be at 40.9%. There is the upcoming overcapacity 301 tariffs, which could see that increased up towards 50%. You're thinking about FCC inverter bans. You're thinking about the DOE, uh, bulk, bulk load, um, situation. You're thinking about 48E eligibility. I'm thinking about 45X situation. So there's so many things going on at the moment which makes progressing deals quite tricky. And for people outside of the space that those are sort of policy or um, additional charges that are, that are coming on to batteries that sort of move your CapEx number. Yeah, exactly. And some of, you know, some of them are supporting batteries being built. Um, the 48E is a, you know, an amazing, I'd say, incentive where you can get up to 50% of your project CapEx as, uh, as a tax credit. Um, but increasingly there's requirements around sourcing when it comes to, to getting that tax credit. For 45X, that's one which cell manufacturers who are producing cells and even packs in the US can get. And typically that's something which the cell manufacturer may share some of with the developer as well. So you may also be negotiating that. But it's yeah, constantly changing what how you deal with a lot of these policy measures. And I suppose on that topic, like how do you see the kind of US as a growing manufacturing hub, if the role of FEOC is to encourage people to build within the US, is that is that starting to happen? Yeah, yeah. I mean, if we look at just the kind of pipeline. So go back to January 2025, uh, US BESS capacity pipeline by 2030. We'll be talking about 70 gigawatt hours. Um, we're now over 300 gigawatt hours for, for 2030. And, you know, the players that make up that mix, they are, you know, large, significant cell manufacturers who have produced cells before whereas previously it would have been, you know, your start-ups like Freyr and names that never really have progressed anywhere to when it comes to cell manufacturing. And is it? Is it actual cell manufacturing or is it more like an integration? Sort of sort of similar to what Tesla did back in the day with your Panasonic before CATL. Is it is it more sort of integration to make a a battery system, or is there genuine cell manufacturing happening in China? Genuine cell manufacturing? Um, the Koreans are really the big biggest part of it. So, you know, they were really attracted to the US market. If we go back quite a few years based on potential for EV growth. Um, so they all announced a huge amount of investment into the US. Yeah. Building giga factories, a lot of them partnering with OEMs to do so. We had various changes to EV policy over the last 18 months, which essentially, you know, removed subsidies, which also removed some of the sourcing requirements for domestic batteries. At the same time, we had an increased pressure on the sourcing requirements of energy storage batteries. And we saw this this huge pivot from the players. LG is probably leading at the moment. So um, by the end of this year they're looking at about 50 gigawatt hours of cell manufacturing. A lot of that is in ramp up stage. Um, they've done various deals such as like exiting some of the OEM partnerships they were in and bringing those back into their own full ownership structure. Outside of the Koreans, you then have a various other players who are in the mix. Tesla has recently started producing LFP cells uh, for storage, quite low volumes at the moment, and they're just ramping up. Um, you have Ford, which is one of the big ones where there's some contention around. Still, that's an agreement where they're licensing CATL technology, which under current guidelines would make it ineligible for tax credits, but because of the timing of when the deal was signed, there's potentially, you know, they will still qualify. And, um, Yeah. Some push back on that at the moment, but a huge amount of capacity is essentially kind of arrived in the US in the last 18 months. And that's, you know, it's an interesting one when we then think about if we go back a few years for the Chinese cell manufacturers, the US was their second largest market, right. And increasingly they're being closed out of that. So whilst we have all this capacity continuing to grow in the US market, one of its biggest customers is not going to be there anymore. Yeah, it's it's fascinating. Sort of like names like LG Chem that were so early or LG sorry, so early in the the sort of battery manufacturing and you saw being a significant share of batteries in sort of the late 2010s now sort of back as a major name for manufacturing within the US. I suppose the other big story in the US right now is, is obviously data centres. That's something if somebody says, how many batteries does a data centre need? I don't think we have a locked in answer. It seems very variable, but how do you think about that problem? Yeah, it's the question of the time, I think. Um, we we're currently tracking over 130 gigawatt hours of announced batteries alongside data centres. Um, of that, it's about, uh, 80 or so percent, they're not actually on site, but rather you've signed an agreement to procure from a battery being built elsewhere. Often that will come from a lot of the big hyperscalers, large tech companies. They'll have some, you know, greener policies, climate policies in place where they'll be looking to secure from renewables and, and bring down some of the emissions. It really comes to a case by case basis. I think one thing that maybe is overlooked is that this is much more a US story than a global story. Um, so of that pipeline, vast majority of it is in the US. That's where we see a lot of the excitement around it. I think particularly when it comes to, you know, Korean players, the Teslas, the Fluences of the world. That is where their their focus is for for this narrative. And they're all trying to offer various solutions for for what they can do at data centres. We saw just in the last week, Nvidia approve three new products for, uh, for data centres. There was a Tesla one and LG one. And and quite interestingly, one from Hitachi as well. Um, which doesn't necessarily come up much when you think of system manufacturers. So lots of people are trying to do a lot in the battery space alongside data centres. But what's actually been built so far, I'd say, is is it more on the lower end? Um, but projections are pretty ambitious. So by 2030, in the US, we're expecting it to account for about 30% of this demand is is somewhat related to data centres, but elsewhere that's going to be much, much lower. So, you know, I've spoken. Spoken to some data centre developers in, uh, the APAC markets, and they're still very it's still very unclear to them, like where batteries make sense versus in the US. It's, you know, it's almost become intrinsically tied with the policy measures in place and speed to power. And yeah, getting getting access to the to the grid. I think that's the fascinating part. Like we we have been working with a few data centres and large power consumers. And I think it's a really fascinating question around what's the combination of solar gas, battery plus whatever grid connection you can get your hands on that gives you the right mix of cost to power your data centre with, as you say, time to power. Um, if we weren't trying to do this all in such a hurry, uh, there would be other options for these things. But but it is. It's a fascinating space, and it's something that, uh, we're going to be talking much more about over the next 12 months. So that's exciting. I suppose we've kind of gone into the demand side, so let's let's stay there. When you last came on. You described the stationary storage world as the little sibling of the EV world. Is this still true? I'm sure I took great personal offence to that being a bit more of a battery person than an EV person. I think it's now, in terms of attention, it's maybe the big sibling at the moment. Okay. In terms of market share, it is still still a little sibling. Somewhat. But um. What is the what does the split look like between the number of cells going to EVs versus cells going to the stationary storage? So from the production side, um, it's about 2 to 1. Okay. Um, so we're looking at this year. Yeah, over two terawatt hours of EV cells being produced versus one terawatt hours of BESS cells being produced. Um, we have that split staying roughly around around that place. Ultimately the EV market. We we do see being continuing to be the the real driving force there. And is there a direction to it. Does sort of is is that 2 to 1? Is it moving or is it stationary? Like if we have the same conversation in 2030, is it the same split then or. We I think by 2030 we're talking more like 25% BESS versus the EV side. There's challenges, I think, when it comes to demand in terms of how fast things can actually be be built out. Yeah. Um, and I think always the BESS market is just going to be more constrained by the demand side than on the EV side. Whereas an EV provider, you can get a charge like it can go anywhere. Yeah, yeah, yeah. And you know, we've seen we've seen that really well this year where in China the domestic EV market has been has been pretty weak. Um, sales are down about 5% year to date. But if we look at Chinese EV production, it's, you know, continue to grow month on month, year on year. And that ultimately comes down to China exporting those vehicles. So we've seen a huge amount of growth in the European market in the rest of the world markets as well. And Chinese exports is primarily driving that. Yeah. Um, so that's, you know, they can offer these cheap vehicles across the world at a time when there's increased interest because of high oil prices. Yeah. For the BESS side, you know, maybe they can push out batteries to resi applications, C&I applications. But for large scale storage, which is ultimately going to be the driver of demand. You do always run into these issues of like, can the grid keep up with what the cell manufacturers would like to sell to the market? Yeah, yeah. And maybe just to add sort of one more, um, one more name into the mix. Right. So, um, consumers will hold phones, they'll ride a bike, maybe they'll own a three-wheeler. Uh, is there another sort of part of that mix outside of, uh, grid scale batteries and EVs? That's like a growing segment you think's interesting and worth talking about? Yeah, I think one the one that has been getting more attention is the drone space recently. You know, it's a tiny share of demand. So I think in 2025, we tracked defence demand total at about four gigawatt hours. Um, and of that drones make up about 40% of, of defence demand. So it's a tiny sliver when it comes to the entire pie of lithium-ion demand. But it's a really interesting one because we're seeing increasingly a lot of like new tech innovations being pointed towards drones applications. You know, getting qualification for some of these can be a lot faster. Um, you know, maybe you don't care about cycle life if your drone is not going to last for very long. Yeah, it's a one flight drone. Exactly. Um, high energy density. So we're seeing some really, like, innovative silicon anodes and, uh, yeah, novel tech being lithium-sulphur being used in these batteries. And then at the same time you also have this supply chain security element of it as well. So in the US they are, you know, increasingly putting pressure around not relying on Chinese batteries. They have certain kind of timelines they want to meet where they stop sourcing any from China that links in with the rare earth story as well. So a lot of attention is being paid to them at the moment, both from suppliers who are like, oh, this is a great opportunity to get in. I don't need to go through OEM qualification and compete with CATL. Yeah. Um, and then also governments and various bodies are also trying to work out how they can secure their supply in a, in a non... Yeah. Exposure way, people want their own supply within their own nation effectively. And so that's kind of uh, inasmuch as you have sort of the big suppliers you almost, when every nation wants their own, you have to have then 200 individual sort of supply chains start popping up for this. Yeah, exactly. Exactly. Uh, fascinating. As a mother of a mother of invention, uh, story there going on. Um, okay, so maybe one final question for me then. So we've talked a little bit about how many cells are being, uh, produced, in fact. Let's make those two questions. We have, um, have lots more batteries, lots more cells being produced, um, than are finding their way into markets. Why do we see so many sort of additional factories still coming to market? It feels odd to sort of run headlong into a market that's already oversupplied. Yeah, I mean, I think two elements of it. So localisation is the big one. Um, so, you know, people are building in the US, in the European market. A lot of that is being led by by policy. Um, you know, starting to see requirements in the US. It's been a for, for some time now. There's been those restrictions on cells, tariffs on cells from elsewhere and also incentives to to build locally. In Europe we've seen a few kind of hotspots emerge. Places like Hungary where we've got a lot of cell manufacturing coming through or in the pipeline there. Um, and even in Europe starting to see increasing rules on sourcing. We've got the Industrial Accelerator Act coming through, which would start to put some pressure on where you're sourcing your system from or your cell from. So we have this ex-China emergence of of supply. Southeast Asia is another big one that's starting to come through. A lot of those looking to supply into the US market. Is it actually going to be able to compete though like we've we've seen the stories of things like Northvolt where the the success rates or the efficiency of each of the lines just wasn't good enough. Are we do we think they can actually get there? I would, I would say when it's, you know, an established player who's coming into those markets, there's definitely, you know, they can kind of pick up and take what their expertise is elsewhere and do that in a different country. You know, we do. I'd say mainly really just in the European market now, we do still have a couple of Western cell manufacturers who are slowly ramping up players like ACC and Verkor and PowerCo. I think, you know, they all have very strong relationships with European OEMs, which can obviously work in their favour. Um, but for those players, it is hard to compete and to, you know, compete with both the overseas supply of cells. Um, but then, you know, a domestic supply from these established players also grows. It is going to be a challenge for them as well. Maybe, maybe one sort of final question on the on the sort of battery and cell side. I think one thing that's kind of often misunderstood is that the sort of difference between the the cells and the systems. So people do understand the difference, but they don't understand like why a, the, the top manufacturer of cells in the world, which would be CATL, isn't necessarily the top manufacturer of systems in the world. So why do we see that sort of split breaking down? Like why isn't it sort of a 1 to 1 relationship? Yeah, I mean, ultimately it comes down to it's easier to build a system than to build a cell. I think that's probably the the best way to think about it. Um, and then really the components that you're layering on top of the cell. People start to have preferences for certain name brands, certain relationships, certain non-Chinese relationships. For example, in the first half of the year, you know, we had CATL was number one for cell shipments and BYD for number one for, uh, system shipments. So we've got Chinese players at the top, I think for the first time, actually, Tesla fell out of the top three, um, for for system manufacturing. I think it's another thing where it comes down really to like local localisation and what regions you're looking at in the US market, for example, we've you know, we've had quite a big presence of players like Sungrow and CATL. Increasingly, it's going to be challenging for them to be a part of the US market, which works in the favour of players like Tesla and Fluence and and LG and Samsung versus if we look at like the Australian market, which historically Tesla was was a really you know, it was one of their key markets. They're increasingly being challenged by. The Chinese players who are vertically integrating. So be that CATL or the Hithium or Cornexes of the world. So each market is acting in a slightly different way, dependent again on policy, which is kind of driving it. I think we started there, didn't we? I think the conversations start there and it's finished there, which is which is a lovely sort of circular unintended, but let's say we intended it. And that's just, that's we'll we'll start through that circular reference. Um, okay. Let's, let's end up with a final question then. So what is a contrarian view that you hold about energy markets. So I think ultimately the way I see the market evolving in terms of chemistries is just LFP and NCM and everything else is a lot of noise. Okay. So, you know, I've been working in the battery markets for about seven years now. And that entire time there's been, you know, one moment it's about high manganese cells. Next moment. It's about sodium-ion. Next moment it's about yeah, LMFP and NMX and all of these chemistries which have made a lot of noise and then not much has actually happened when it comes to either roll out in vehicles or roll out in storage or other markets. And I think it's increasingly challenging for new technologies to actually compete in this world where we continue to see advancements in existing tech. And that's the challenge of, like any new tech is like, if we talked about solid-state five years ago, we would have been comparing it to an NCM cell of five years ago. But the reality is you need to compare it to a tech which is five years down the road to get a realistic view of it. So yeah, no, not very exciting one. But I think the status quo is, I think, winning out. I think it's underrated, right. People have this perception that they are trying to compete with a static lithium market, and that's the target. And if I can get to that point, then I'm going to be in the door. Um, you mentioned it both here, but also you mentioned it earlier, which is like, okay, you're at cost parity, but are the insurers as happy dealing with your tech as, as they are with the with the thing you're trying to beat? Are the people who are installing it as happy with it? Do they have they got the same experience? Are the owners? Have they got enough track record to be able to bring it in as well? So there is a lot of weight that should be given to the sort of incumbent, uh, nature. And so you really do have to be not only better than it today, but you have to be better than it in five years time, and significantly better such that someone wants to take a risk to do it. So yeah, it's um, I think I think it's time and time again people miss this. So yeah, it's a really good one. Um, thank you so much for coming on. You've been a wonderful guest, as per usual. And, uh, hopefully we can get you back on for a third time, uh, in next couple of years. Yeah. Thanks for having me.