More motion, less e-motion: Is 2014 the year lithium regains its traction? David Merriman Senior Analyst 6 th Lithium Supply & Markets Conference 2014, Montreal
Disclaimer The statements in this presentation represent the considered views of Roskill Information Services Ltd. It includes certain statements that may be deemed "forward-looking statements". All statements in this presentation, other than statements of historical facts, that address future market developments, government actions and events, are forward-looking statements. Although Roskill Information Services Ltd. believes the outcomes expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include changes in general economic, market or business conditions. While Roskill Information Services Ltd. has made every reasonable effort to ensure the veracity of the information presented it cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions contained herein. Accordingly, the statements in the presentation should be used for general guidance only.
Overview Setting the picture State of the market in 2013/14 Plug-in (EV & PHEV) Full hybrid (HEV) Tesla s gigafactory Deviation to 48V/micro/mild hybrid & 2-wheelers Inflection point and market forecast Conclusions
Setting the picture
Transport applications consumed 3% of lithium demand in 2013, approximately 5,000t LCE World: Consumption of lithium by end-use, 2013p 3C 79% Power & motive 10% Primary battery 2% Air treatment 5% Polymer 5% Metallurgical powders 6% Aluminium 1% Other 9% Rechargeable battery 29% Transport 10% Heavy duty 1% Glass 9% Greases 8% Glass-ceramics 12% Ceramics 14%
State of the EV market
E-car sales (000 units) % E-car in global sales E-car sales have increased since 2011, especially HEVs, and reached 2% of global auto sales in 2013 1,800 Electrified vehicle sales by type, 2007-2013 5.0% 1,600 1,400 4.0% 1,200 1,000 3.0% 800 600 2.0% 400 200 1.0% 0 2007 2008 2009 2010 2011 2012 2013e HEV (NiMH) HEV (Li-ion) PHEV EV % E-car 0.0% Source: Roskill estimates based on a number of individual sources
It should be remembered that car sales are not indicative of battery requirements Electrified vehicle sales, by type, 2013 Electrified vehicle sales, by battery capacity, 2013 EV = 94,000 (5.5%) PHEV = 112,000 (6.5%) HEV (Liion) = 220,000 (13%) HEV (NiMH), 1,664MWh (27%) EV (Li-ion) = 2,680MWh (43%) HEV (Li-ion) = 308MWh (5%) HEV (NiMH), 1,280,000 (75%) PHEV (Liion) = 1,500MWh (24%) Source: Roskill estimates based on a number of individual sources
EV & PHEV ( Plug-in vehicles )
The Nissan Leaf was the best selling plug-in of 2013, with sales almost double that of its competitors Plug-in car sales by model, 2013 (no. units) Source: Zachary Shahan, ABB Insights
Sales of plug-in e-cars to date appear to be more successful than HEVs at corresponding times in their life cycle Comparison of Prius sales versus plug-ins since launch to end-2012 (no. units) Source: IEA (data to end 2012)
Lux Research estimates output of EV/PHEV batteries reached 0.92GWh in Q1 2014 Plug-in battery sales, by manufacturer, 2011-2014 (MWh) Panasonic s market share has accelerated with Tesla s success, accounting for 39% of sales in 2013 NEC, supplying the Nissan-Renault alliance was previously the market leader and had a 27% share in 2013 LG Chem, supplying Chevrolet, was third at 9% Source: Lux Research
The automotive lithium-ion battery value chain is relatively concentrated, which is typical of the auto industry in general Lithium Cathode Battery OEM? Source: Roskill, Avicenne
Plug-in market: What to watch in 2014 1) Success of newly launched BMW i3 & Mercedes B-class EV, and forthcoming BMW i8 PHEV: BMW has already increased output by 43% and committed to increase carbon-fiber production for its I models by 200% New EV models (Leaf, Volt, Model S) seem to have fared better than retro-fit (Tesla Roadster, VW E-range, Ford Focus EV) Not so true for PHEV, with adapted cars selling well (Ford C-max, Volvo V60) 2) China s policy on transport and reducing air pollution Incentives of US$9,800 subsidy for EV purchases Lagging behind 5 million target by 2020 (27,800 sold by end-2013) Sales of BYD s Qin (6,000 orders in the first few weeks of 2014) 3) Other government support/subsidies for electric vehicles 4) Tesla gigafactory plans and launch of Model X (already delayed to 2015) Source: Trade press, Tesla announcements
HEVs
Toyota s loyalty to NiMH means HEVs continue to lag plug-ins in lithium-ion battery use US hybrid sales by manufacturer, 2013 Hyundai 4% Honda (incl. Acura) 4% Kia 3% VW (incl. Audi/Porsche) 1% Other 1% GMC (incl. Cadillac, Buick, Chevrolet) 5% Ford (incl. Lincoln) 15% Toyota (incl. Lexus) 67% Source: Company websites
Tesla gigafactory
Tesla s gigafactory announcement jolted the lithium sector into life, but the lift was temporary Tesla Announcement Source: Yahoo Finance
Tesla s announced plans to construct a lithium-ion gigafactory in Q1 2014 What we know The US$5Bn facility will be located in either Arizona, Nevada, New Mexico or Texas, or California Output will be used for Tesla s vehicle line-up, including the proposed Model C (a targeted US$35,000 sticker-price) The factory will also supply Musk s other company, SolarCity, and similar companies, with off-grid storage batteries. By 2020, the facility would produce more lithium-ion batteries than total global output in 2013 Aim is to reduce lithium-ion unit costs by 30% Panasonic (Tesla s existing battery supplier) has signed a LOI to become a partner in the project Source: Trade press, Tesla announcements
The gigafactory idea is still short on specifics, however, leaving questions over its viability What we don t know Who will finance the US$5Bn in CAPEX (Tesla committing US$2Bn) Will it be based on Tesla s current Panasonic lithium-ion technology, next-generation technology, or be flexible enough to change/switch Where will other partners come from (Tesla has previously courted Samsung, but would they work in a JV with Panasonic) Could the US Government support the venture through a new American Recovery and Reinvestment Act loan program given limited success (Tesla) and notable failures (Solyndra) Many other government-supported EV programs, including loans for battery plants, have yet to realize their potential Source: Trade press, Tesla announcements
The impact of the Tesla gigafactory would be very pronounced on the global battery industry and its raw material requirements 120,000 100,000 80,000 60,000 40,000 20,000 0 Battery (MWh) Lithium Cobalt Nickel Graphite 2013e 2018f Tesla Source: Navigant Research
Micro, mild and start-stop HEV and 2-wheelers
48V lithium-ion systems for start-stop, micro and mild systems could increase strongly, but lithium use per unit is small (0.2-0.4kg LCE) Forecast 48V sales by region (no. units), 2013-2023 Source: Navigant Research
E-scooters account for around 30% of total scooter and motorcycle sales, the highest e-drive penetration of any transportation sector ~4.1M e-scooters sold in 2013; <1% outside Asia-Pacific and ~80% in China Two main categories: 50cc equivalent = 3kW motor and 2kWh battery (50m range, 30mph top speed) 125cc equivalent = 7kW motor and 3-4kWh battery (50m range, 50mph top speed) Market forecast to grow slowly as Asia-Pacific market is mature Lead-acid dominates, because price competitive with gas-based models in Asia-Pacific; Li-ion penetration estimated at 5-7%, Clamp-down on lead-acid producers in China in 2011 only succeeded in concentrating production, rather than prompting a switch to Li-ion Source: Navigant Research; Cleanrider.com
Predicting the inflection point
Trends suggest the transport market has entered a period of steady growth, but inflection won t come until costs fall 90,000 Forecast E-car sales by type, by battery capacity (MWh) 80,000 70,000 60,000 50,000 40,000 30,000 Interest grows, benefits acknowledged = Increased growth Infrastructure improves, Technology improves Costs fall = Mass market adoption 20,000 10,000 Early adopters = Steady growth 0 HEV (NiMH) HEV (Li-ion) PHEV (Li-ion) EV (Li-ion) Other (Li-ion) High case Low case Source: Roskill estimates Note: PHEV includes extended range EV (e.g. BMW i3 with back-up motor); other = buses, delivery vehicles bigger than LCV size
Lithium demand growth sees wide variances because of uncertainty over electric vehicle output going forward 600,000 Forecast lithium demand, 2007-2020 (t LCE) 500,000 400,000 300,000 200,000 100,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Non-transport uses Transport uses High case Low case Source: Roskill estimates
Conclusions Is 2014 the year lithium regains its traction In terms of PR yes, Tesla s gigafactory has seen to that In terms of demand growth sort of, electrified vehicle sales growth is expected to continue but the impact will be minimal to the overall market The lithium industry must continue to wait patiently for the inflection point. But, the inflection point is not going to magically appear, it is going to have to be created A number of factors will influence it, but most importantly electric-only range must increase and costs must decrease To this end, Tesla s gigafactory plan may actually create the inflection point and should be closely watched
And don t forget about technology though Possible alternative battery technology for electric vehicles
Roskill Research & Consulting Consulting: Market assessments Feasibility studies Industry analyses Acquisition studies Strategic planning Competitive evaluation studies Commercial intelligence Due diligence Contact: David Merriman +44 20 8417 0087 merriman@roskill.co.uk Relevant reports: Steel alloys: Nickel Manganese Minor metals: Lithium Cobalt Industrial Minerals: Graphite Fluorspar
Thank you for your attention!
Appendix A: Plug-in sales data for 2013