Combining technology, scale-up capabilities, and capital to power chang
By Rodrigo P. Navarro and Michael Kolk, Arthur D. Little
Shifting from fossil fuels to a more sustainable future relies on battery power, leading to tremendous activity across the battery sector.
With expanding demand comes emerging disruptive and evolutionary players, an increase in corporate investment and partnerships, and institutional investors looking to back the right players.
Realising the strategic importance of batteries, Western governments are aiming to build their own ecosystems, competing (and collaborating) with Asian leaders. So, what will the battery ecosystem of tomorrow look like?
To discuss current and future trends, Arthur D. Little (ADL) brought together representatives of established and emerging players. This Viewpoint provides a high-level summary of the discussion.
The battery ecosystem and the green gambit
Key trends are changing the traditional rules of play as the world shifts to a sustainable, greener future. We are now at the tipping point, where taking risks has become a vital necessity for corporates, start-ups, and investors. We call this the “Green Gambit,” with transformation being driven by:
Increased government action, funding, and sustained commitments. — Greater investor appetite to finance green projects and technologies. — Wider use of novel financing and partnership methods by corporates to realise their green objectives. — Rapid evolution of technology and innovation ecosystems, bringing previously disparate players together.
The three fundamental building blocks for change (sustainable capital, winning technology, and scale-up capabilities) are now in place, all facilitated and orchestrated by active, expanding ecosystems.
When it comes to batteries, the market is seeing a seemingly unstoppable increase in the use of Lithium-ion (Li-ion) batteries led by electric vehicles (EVs), and a correspondingly steep drop in price.
According to Bloomberg, demand is expected to rise from less than 500 GWh to more than 1,800 GWh by 2030, with the costs of battery packs falling from US $1,100/kWh in 2010 to ~$60/kWh by 2030.
This virtuous cycle of demand driving down cost is spreading to other sectors beyond automotive EVs as well, including industrial mobility, energy storage systems, and drones/flying vehicles.
To meet growing needs and deliver on sustainable goals and targets, challenges must be overcome. The clock is ticking — the scale-up of battery technology, manufacturing, and ecosystems takes time, meaning that players must act now to guarantee an effective energy transition.
To understand the challenges and opportunities, ADL brought together key players from across the battery industry. We would like to thank our panellists for sharing their insights:
Bob Galyen, founder, Galyen Energy; former CTO, CATL — Terje Andersen, cofounder and CEO, Morrow Batteries — Qichao Hu, founder and CEO, SES — Thomas Jansseune, Senior VP, Umicore
The discussion focused on four key themes:
The rise of localised ecosystems. — The need to partner across the value chain to achieve scale. — Coping with a fragmented technology future. — Unlocking new sources of funding.
1. The rise of localised ecosystems
Asia currently dominates battery ecosystems, but Europe and the US are both investing heavily and strategically to catch up.
This has been spurred by increased political concerns about over-reliance on Asian/Chinese suppliers and exacerbated by supply chain disruptions resulting from COVID-19, along with a realisation that local battery production creates jobs and is critical to a functioning local industrial base, particularly in the automotive sector.
Europe and the US have different, often complementary, strengths:
Europe, supported heavily by EU and national government funding, can draw on leading players in the automotive, science, energy/chemicals, and industrial sectors.
The US is a hotbed for disruptive start-ups, with a s...