Battery cathode investments accelerate outside China

Drivers in the US are switching to electric vehicles in droves, and companies are racing to build facilities that will produce cathode materials for the country’s growing battery industry. Firms hope US tax incentives will help them compete with manufacturers in China.

The cathode is the positively charged end of a battery and the most valuable component. About 70% of cathode materials for lithium-ion batteries are made in China, according to the International Energy Agency. Only two small cathode facilities operate in the US, but the country is trying to attract more.

The Inflation Reduction Act, passed in 2022, offers financial incentives for companies that make cathode materials in the US or a country that has a free trade agreement with the US. A number of companies have recently announced plans for facilities that will take advantage of those incentives.

In early December, Wildcat Discovery Technologies announced plans to build a US-based plant to produce lithium iron phosphate (LFP) and lithium manganese iron phosphate (LMFP), which are low-cost cathode materials. The company, which has historically focused on discovering new battery materials, expects to start producing 15,000 metric tons of the compounds in 2026.

Also in December, Lithium Australia and First Phosphate announced that they’re considering a joint plan to produce LFP and LMFP in North America or Australia, and the Indian Farmers Fertiliser Cooperative revealed that it’s talking to the Taiwanese cathode manufacturer Aleees about licensing technology to make LFP in either India or Jordan. All those locations have free trade agreements with the US, allowing the materials to qualify for US financial incentives.

Charlie Parker, founder of the battery advisory firm Ratel Consulting, says the US tax incentives have spurred interest in building cathode projects outside of China, but he cautions that the long and complex battery supply chain won’t change overnight. “You can’t turn on a dime,” he says. “None of this stuff moves fast.”

Parker says building plants in China is usually much cheaper than building in the US; moreover, manufacturers in China have had years to improve their processes. To make cathode powders in the US that can compete with material from China, Parker says, companies will need to scale up technologies that are better or cheaper. “Take all this novel technology. Bring it to full commercialization,” he says.

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