Recently on Linkedin we read an article was talking about the new gigafactory plants in USA and Europe. As everybody know, the lithium ion battery business is one of the hottest topics on the web: everybody talk about the lithium batteries, electric vehicles and huge speculation is ongoing about how fast this transition is.
On the web you can find many of maps where you can see the Lithium battery manufacturing projects and the location of the new Gigafactories.
Do all these project timelines still sustainable?
We’ve decided to go in details and check if all these announcements of new lithium battery manufacturing plants are sustanable for the current supply chain.
All projects starts with a Lab scale production where the new lithium battery cell design is validated. Then the lithium battery cell maker moves to pilot plant and then to mass production. The most common lithium battery manufacturing plant dimension in term of production capacity [GWH] is between 4 and 10GWh per year.
This seems, based on latest information and project where we are involved as the best compromise in term of production capacity, production cost $/kWh and effort in ramp up and logistic.
If we take a look at the timeline, most of the projects will take place between 2024 and 2027 with a peak on 2026. Indeed 2026 seems to be the year where many pilot plants moves into the mass production.
So, based on the recent news and information we should have the maximum peak of effort in term of production start up in 2026 or close to that year.
But, is the supply chain ready for that?
When we talk about supply chain we mention all automated machine makers, lithium battery raw materials suppliers, building constructor, clean room and dry room equipment makers, so all the players involved in delivering a turnkey solution for lithium battery manufacturing plants.
Based on our experience and recent partnership with important machine makers, the average annual capacity of lithium battery equipment manufacturer is about 20GWh per year. Looking at the capability of the main players in the lithium battery equipment business, the numbers could be higher but we need to consider the entire project timeline which usually is longer than 12 month due to the still present supply chain problems for electronic components and uncertain installation and commissioning time which for New comers (as most of the company which are joining in the lithium battery business) could take even 2 years per plant.
Let start from the beginning.
In order to start a project, the lithium battery makers need to have a clear commitment. The production capacity target must be clear as the manufacturing process flow, even the overall cell design should be almost defined for sure keeping some flexibility.
Usually, most of the cell maker place the purchase order to the equipment manufacturing company without a clear idea about the manufacturing process flow and the process technology to use.
The cell design usually the most unclear topic due to lack of experience and very tight timeline which push the lithium battery maker to place the purchase order in order to meet the timeline without having finished the R&D phase.
These kind of situations are ok if we consider most of companies are start up and is impossible freeze design and manufacturing process without some years of experience in pilot production scale.
What some analysts and people are missing is this kind of scenario make the project schedule longer: uncertaints are increasing the design phase of equipment and without clear information, sometimes the design phase stop waiting clear feedback from the costumer.
Once the machine is ready, sometimes the project got delay due to production plant and dry room readiness level.
But the real key phase is machine installation and commissioning: in order to perform the installation and commissionig smoothly all utilies should be available and all material as well. Many start up don’t know the mixing, coating and calendering process (electrode manufacturing area) are the most critical in the beginning. Poor quality and too small quantity of material coming out from electrode manufacturing are make really difficult (in some case impossible) to make progress with the commissioning cell assembly lines.
Is very common spend 16-24 months for installation and commissioning of the first lithium ion battery manufacturing plants. Usually in these 24 months both parties (cell maker and suppliers) are deeply involved to reach the target; in many cases 2 or maximum 3 projects like these are enough for equipment makers to start new projects.
Looking at the data, in the hottest years we are going to have installations and production start ups for 300-400GWh per years which means in average 15-20 equipment maker companies providing entire turnkey solution: right now this is not sustainable.
We’ve identified 2 pathways. As engineering consulting company in lithium battery manufacturing we are promoting both:
- Support big companies which are not in the lithium battery business yet, to invest and join in the business with disruptive technology able to increase the overall production capability in term of technology, equipment and raw material. Keeping constant the technology level, this for sure allows the business to keep same pace spreading the effort through a bigger number of supplier.
- Invest in disruptive technology able to reduce drammatically the effort and nr of plants to achieve the same production capacity. One example is to double the lithium battery production line in order to cut an half the number of machines to deliver to achieve the same annual production capacity. This will double even the capacity of lithium battery equipment maker and allows to obtain the overall production capacity with less or smaller dry rooms which results in less effort and less energy and conditioning equipment. But doesn’t solve the problem of raw material and parts suppliers.
How the current scenario affect the Gagafactory schedule?
First of all, we need to say most of these Gigafactory projects are very ambitious and probably get some delays due to introduction of new technologies, longer R&D phase and all common issue the companies are facing moving from pilot to mass production. Then, considering all start ups and new comers in lithium battery business just half of them are working in the right direction establishing strategic partnership thorugh the entire supply chain and introduction innovation step by step once the production is started. The lack of skills is another big issue, especially in Europe most of the team members don’t have huge experience in lithium battery cell design, cell manufacturing and very confused idea about challenges and time required to start up this kind of production plants.
Many projects will have delays but cooperating and establishing a strong technoligical network is possible to minimize the risk. Another target, is trying to improve the technology related to equipment and process as soon as possible to guarantee higher production rate and higher production capacity with a limited number of plants and machines.