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Now, back to the merits of the article: > One of the biggest challenges in making EVs cheaper is the battery, which currently represents about one-quarter of a

Now, back to the merits of the article: > One of the biggest challenges in making EVs cheaper is the battery, which currently represents about one-quarter of a car’s cost because of the expensive metals used, such as lithium, cobalt, nickel and manganese. No, it's such a big, massive misconception the misconception that the echo chamber keeps repeating. The raw material cost of metals used even in the biggest batteries around is at maximum $1k-$1.5k, and usually just few hundred bucks. What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials. Plain graphite, while also being dominated by an oligopoly, still only costs $1 per kg, but the moment it becomes an industrial chemical, its price shoots n-fold. Lithium is by far not the cost factor at all, with the amount used, and no scarcity prospect is in sight, despite speculations of the stock market lemmings, but the moment it is put into some chemical relevant to battery making, it too shoots up in price n-fold. Cobalt was one of few things which really used to be pricey, but not much now. The cost was approaching $200 per kg at the top of the Cobalt bubble, but then it felt to $20, and below. And again, the moment it becomes a cathode material, it costs 10*n-times as much. The cost advantage of LFP batteries which a lot of Chinese companies prefer to cobalt based ones is not much in the material cost, but because the chemical's supply chain is much simpler, stable, and has much, much, more domestic competition. The cobalt based cathode materials are still a domain of LG Chem, and few much smaller Japanese companies.

mixmastamyk 6y ago
> What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials. Could you expand on this?
- baybal2 6y ago
  Processed chemicals used for battery making cost many times the cost of raw materials, and it will be so until competition can weaken the big chem oligopolies currently dominating the market.
  - Retric 6y ago
    That’s completely misunderstanding why the cost increased. 95% pure carbon is worth next to nothing per pound. 99.99+% carbon is really difficult to manufacture. If battery manufacturers thought they could do it for less they would manufacture things in house, but purification is both difficult and expensive.
  - thereisnospork 6y ago
    If it is so easy[0] go start a company and undercut them. Raw materials are commodities, if you can make battery grade materials for less - in bulk - someone will buy them (or buy you out to protect their monopoly). [0]its not. Batteries have exacting purity and qc requirements that meeting and maintaining is neither trivial nor cheap to do well even at small scale.
  - jobu 6y ago
    What sort of processing are they doing? It seems like processing those materials to be pure and consistent could be pricey. Maybe not a perfect comparison, but raw silicon costs $1-2 per kg, but can cost several hundred per kg once processed into wafers.
    - redisman 6y ago
      How come this soup cost $5 per cup when it cost them $0.1 to make?! Of course making soup is fairly easy compared to highly pure chemicals
      - Retric 6y ago
        Because that calculation assumes the existence of a kitchen to make the soup, energy to heat the soup etc. If you ignore what the actual costs of production are it seems like everyone is using an extreme markup.
  - Someone 6y ago
    Are you sure it isn’t, at least partly, due to intrinsic costs of turning raw materials into usable materials? Silicon as a raw material is dirt cheap, too, but removing impurities so that it can be used makes it a lot more expensive.
saulrh 6y ago
Do you have any citations explaining this in more detail, perhaps with some argument supporting intent or collaboration? I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To whit: The chemical engineering department at my university was full of extremely bright people working on incredibly complex machinery and wacky fluid-dynamics tricks to eke out an additional tenth of a percent yield or purity in basic chemical processes. I presume that this could only be even faintly economical if the industry is so competitive that minuscule improvements are a major advantage. Similarly, my understanding is that putting together and running a chemical operation is an astonishingly complex and expensive proposition. Like, I wouldn't be surprised if the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. I know for a fact that it takes decades for new chemical plants to come online, which makes the supply extremely inflexible; I'd be more surprised if new sources of demand didn't cause prices to explode.
- baybal2 6y ago
  > Do you have any citations explaining this in more detail, perhaps with some argument supporting intent or collaboration? I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To whit: I do not, but I mingled a lot with EV engineers from BYD, with some of whom I used to spend Fridays. > the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. The cost of benzene is 50% and more tax in most Western countries. > The chemical engineering department at my university was full of extremely bright people working on incredibly complex machinery Indeed it is, but there are far more harder to synthesize, and work with chemicals sold at single digit margins, largely thanks to Chinese factories steamrolling chem monopolies for the last 2 decades. And battery materials are by far not that tricky to make.
- thaumasiotes 6y ago
  > I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To w[]it: > I wouldn't be surprised if the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. > I know for a fact that it takes decades for new chemical plants to come online, which makes the supply extremely inflexible; I'd be more surprised if new sources of demand didn't cause prices to explode. I don't understand how you think this conflicts with the parent comment. You seem to be in near-total agreement. Compare: >> The raw material cost of metals used even in the biggest batteries around is at maximum $1k-$1.5k, and usually just few hundred bucks. >> What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials. >> Plain graphite, while also being dominated by an oligopoly, still only costs $1 per kg, but the moment it becomes an industrial chemical, its price shoots n-fold. >> Lithium is by far not the cost factor at all, with the amount used, and no scarcity prospect is in sight, despite speculations of the stock market lemmings, but the moment it is put into some chemical relevant to battery making, it too shoots up in price n-fold. >> Cobalt was one of few things which really used to be pricey, but not much now. The cost was approaching $200 per kg at the top of the Cobalt bubble, but then it felt to $20, and below. And again, the moment it becomes a cathode material, it costs 10*n-times as much.
whatever1 6y ago
“What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials.” Sand is so cheap. Why is a cpu processor so expensive?
- anon73044 6y ago
  The expensive part is when we teach sand to think!
nickik 6y ago
Every battery cell itself is a little engineering miracle, that's why its expensive. > The cost advantage of LFP batteries which a lot of Chinese companies prefer to cobalt based This is a kind of nonsense statement. Cathodes can't really be 'cobalt based'. The Cathodes primary part is Nickel. The Cobalt is an additive to stabilize the Nickel.
- vardump 6y ago
  Precisely correct. No idea why this was downvoted.
jacquesm 6y ago
Raw material cost has usually very little to do with what a similar weight or volume of purified material costs. The purification process, energy input and any kind of stabilization trickery required to keep it pure are what drives the cost, the raw material costs are a footnote in that.

mixmastamyk 6y ago

> What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials. Could you expand on this?

baybal2 6y ago
Processed chemicals used for battery making cost many times the cost of raw materials, and it will be so until competition can weaken the big chem oligopolies currently dominating the market.
- Retric 6y ago
  That’s completely misunderstanding why the cost increased. 95% pure carbon is worth next to nothing per pound. 99.99+% carbon is really difficult to manufacture. If battery manufacturers thought they could do it for less they would manufacture things in house, but purification is both difficult and expensive.
- thereisnospork 6y ago
  If it is so easy[0] go start a company and undercut them. Raw materials are commodities, if you can make battery grade materials for less - in bulk - someone will buy them (or buy you out to protect their monopoly). [0]its not. Batteries have exacting purity and qc requirements that meeting and maintaining is neither trivial nor cheap to do well even at small scale.
- jobu 6y ago
  What sort of processing are they doing? It seems like processing those materials to be pure and consistent could be pricey. Maybe not a perfect comparison, but raw silicon costs $1-2 per kg, but can cost several hundred per kg once processed into wafers.
  - redisman 6y ago
    How come this soup cost $5 per cup when it cost them $0.1 to make?! Of course making soup is fairly easy compared to highly pure chemicals
    - Retric 6y ago
      Because that calculation assumes the existence of a kitchen to make the soup, energy to heat the soup etc. If you ignore what the actual costs of production are it seems like everyone is using an extreme markup.
- Someone 6y ago
  Are you sure it isn’t, at least partly, due to intrinsic costs of turning raw materials into usable materials? Silicon as a raw material is dirt cheap, too, but removing impurities so that it can be used makes it a lot more expensive.

saulrh 6y ago

Do you have any citations explaining this in more detail, perhaps with some argument supporting intent or collaboration? I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To whit: The chemical engineering department at my university was full of extremely bright people working on incredibly complex machinery and wacky fluid-dynamics tricks to eke out an additional tenth of a percent yield or purity in basic chemical processes. I presume that this could only be even faintly economical if the industry is so competitive that minuscule improvements are a major advantage. Similarly, my understanding is that putting together and running a chemical operation is an astonishingly complex and expensive proposition. Like, I wouldn't be surprised if the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. I know for a fact that it takes decades for new chemical plants to come online, which makes the supply extremely inflexible; I'd be more surprised if new sources of demand didn't cause prices to explode.

baybal2 6y ago
> Do you have any citations explaining this in more detail, perhaps with some argument supporting intent or collaboration? I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To whit: I do not, but I mingled a lot with EV engineers from BYD, with some of whom I used to spend Fridays. > the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. The cost of benzene is 50% and more tax in most Western countries. > The chemical engineering department at my university was full of extremely bright people working on incredibly complex machinery Indeed it is, but there are far more harder to synthesize, and work with chemicals sold at single digit margins, largely thanks to Chinese factories steamrolling chem monopolies for the last 2 decades. And battery materials are by far not that tricky to make.
thaumasiotes 6y ago
> I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To w[]it: > I wouldn't be surprised if the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. > I know for a fact that it takes decades for new chemical plants to come online, which makes the supply extremely inflexible; I'd be more surprised if new sources of demand didn't cause prices to explode. I don't understand how you think this conflicts with the parent comment. You seem to be in near-total agreement. Compare: >> The raw material cost of metals used even in the biggest batteries around is at maximum $1k-$1.5k, and usually just few hundred bucks. >> What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials. >> Plain graphite, while also being dominated by an oligopoly, still only costs $1 per kg, but the moment it becomes an industrial chemical, its price shoots n-fold. >> Lithium is by far not the cost factor at all, with the amount used, and no scarcity prospect is in sight, despite speculations of the stock market lemmings, but the moment it is put into some chemical relevant to battery making, it too shoots up in price n-fold. >> Cobalt was one of few things which really used to be pricey, but not much now. The cost was approaching $200 per kg at the top of the Cobalt bubble, but then it felt to $20, and below. And again, the moment it becomes a cathode material, it costs 10*n-times as much.

whatever1 6y ago

“What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials.” Sand is so cheap. Why is a cpu processor so expensive?

anon73044 6y ago
The expensive part is when we teach sand to think!

nickik 6y ago

Every battery cell itself is a little engineering miracle, that's why its expensive. > The cost advantage of LFP batteries which a lot of Chinese companies prefer to cobalt based This is a kind of nonsense statement. Cathodes can't really be 'cobalt based'. The Cathodes primary part is Nickel. The Cobalt is an additive to stabilize the Nickel.

vardump 6y ago
Precisely correct. No idea why this was downvoted.

jacquesm 6y ago

Raw material cost has usually very little to do with what a similar weight or volume of purified material costs. The purification process, energy input and any kind of stabilization trickery required to keep it pure are what drives the cost, the raw material costs are a footnote in that.