Battery manufacturers are strategically diversifying, as sodium-ion and solid-state push the envelope on cost-effectiveness and performance.
Late in 2023, India’s Reliance Industries Limited (RIL) revealed swappable, lithium iron phosphate chemistry based, multipurpose batteries for electric two-wheelers (e2Ws). The batteries support a range of around 70-75 km. This is just one of the several global initiatives that are aiming to tap into new battery chemistries amid rapid electrification across the automotive spectrum.
The e2W market is expanding aggressively, backed by continuous innovations in battery technologies. While lithium-ion and lead acid are currently the most commonly used batteries, the next three to five years could see a marked shift with the emergence of innovative battery chemistries like sodium-ion and solid-state. These new technologies have the potential to disrupt market dynamics, while targeting key challenges related to cost, safety, performance, sustainability, and durability.
To learn more, please see: Strategic Analysis of Battery Chemistries in Electric Two-wheelers and Growth Opportunities, Growth Opportunities for Electric Vehicle Battery Salvaging in Europe and the United States, 2024 to 2030, or contact sathyanarayanak@frost.com for information on a private briefing.
Battling it out
The popularity of lithium-ion batteries in the E2W industry is linked to its superior efficiency and range. These batteries are lighter than their lead acid counterparts, which allows for improved acceleration and handling. Lithium ferrophosphate (LFP) and nickel manganese cobalt (NMC) batteries also support a range that is three to five times higher than that of lead acid batteries.
Cost is a major competitive factor in selecting battery chemistries. In this context, the cost of lithium-ion batteries has steadily fallen to around $139/kWh in 2023 because of technological advances, better used battery recycling practices, enhanced economies of scale, and aggressive competition.
Lithium-ion battery manufacturers in the Asia-Pacific— CATL and BYD in China, LG Energy Solutions, Samsung and SDI in South Korea, and Panasonic in Japan, among others—have a stranglehold over global supply to the e2W market. However, there has been understandable concern about the overreliance on a single region with the attendant threats of supply chain disruptions and price volatility.
Meanwhile, major battery manufacturers have been strategically investing in new battery chemistries to retain a competitive edge. They have been attempting to overcome the dominance of lithium-ion batteries by ramping up the commercialization of new battery technologies with superior performance profiles.
Who Holds the Edge?
At present, key players in the global E2W market primarily use NMC batteries. While NMC and LFP batteries are favored in Asia, NMC batteries are preferred in Europe and North America.
Although promising, sodium-ion and solid-state technology are still in the nascent stages of development. China, with OEMs like Yadea and TAILG, is the hub of sodium-ion battery trials. Progress has been steady: Sunra’s initial offering is aimed at the premium segment, while Gogoro and ProLogium have introduced a swappable, solid-state battery prototype for two-wheelers, which is touted to have higher capacity and faster charging times than liquid electrolyte batteries.
So how do the various batteries chemistries compare with each other? In terms of efficiency, LFP batteries appear to have the edge in terms of thermal runaway, cost, and longer battery life. And while lithium-ion NMC batteries are costly, they compensate with attributes like consistency, power stability, and rapid charging times.
When comparing in terms of energy density and life cycles, lithium-ion batteries also emerge as the most efficient E2W batteries. However, they are likely to be outperformed over the next 3-4 years by sodium-ion and solid-state batteries.
As importantly, how are two-wheeler OEMs engaging with these different battery chemistries? In terms of currently available battery chemistries, most mid-level E2W manufacturers are attempting to balance cost with performance by using LFP and NMC batteries. With performance, rather than cost, as their main focus, premium E2W manufacturers favor NMC batteries.
Currently, lithium-ion is the most widely used battery technology. It is being used by Gogoro, Ola Electric and VinFast in Asia, Roam Motors in Africa, CAKE in Europe, Horwin in Latin America and Damon Motor, BMW and Lightning Motorcycles Corp in North America. At the other end of the spectrum is lead acid which is used in older and cheaper e2W models. Among the new battery technologies, solid-state is being used by Gogoro, Ola Electric, and VinFast. Sodium-ion is currently largely limited to China, where it is being used by the Yadea Technology Group, TailG, and Sunra.
Strategic Diversification
What is impelling the diversification initiatives of lithium-ion battery manufacturers? Why are they developing new EV battery chemistries? There are several reasons for this. At the core is the realization that lithium-ion has its limitations and that to stay relevant, they must strategically explore new technologies. For instance, CATL’s offerings are currently NCM and LFP-based. However, to future proof its position in the e2W market, it is diversifying into sodium-ion battery technology. Similarly, LG Energy Solutions is looking beyond NCM and NCA to solid-state (lithium metal) and sodium-ion.
Among other motivations for such strategic diversification include anxieties over supply chain upheavals, resource scarcities, raw material monopolies, cost reduction imperatives, as well as the need for continuous performance improvements whether in terms of energy density, safety or charging times.
Diversification functions as a pre-emptive strategy for companies keen to safeguard their competitive position in the future. Accordingly, new battery chemistry development and commercialization is intended to address factors like increasingly stringent regulations. They are also aimed at helping companies retain their technological leadership. Here, collaboration is seen as vital to fast-tracking commercialization, and reducing risk exposure by developing multiple technologies.
Future Proofing
As demand for battery technologies soars, battery manufacturers should look to establishing gigafactories. These have the potential to alleviate supply chain upheavals, while realizing cost and resource efficiencies.
Sustainability has become increasingly crucial, highlighting the importance of expanding battery recycling infrastructure. Battery recycling will facilitate material recovery and reuse, thereby resulting in lowering of production costs. It will encourage circular economy practices and optimized resource use.
In line with reduce, recover, recycle, reuse philosophies, expanding the second-life applications of electric two-wheeler batteries will promote a more sustainable ecosystem. However, this will require concerted stakeholder collaboration across the EV ecosystem.
With inputs from Amrita Shetty, Senior Manager, Communications & Content – Mobility
