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A NanoMarkets White Paper

Opportunities in Lithium-Ion Battery Materials and Markets

Published February 2012 NanoMarkets, LC

NanoMarkets, LC PO Box 3840 Glen Allen, VA 23058 Tel: 804-270-1718 Web: www.nanomarkets.net

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New Electrode Materials for Lithium-Ion Batteries2012-Nano-503


(click link to visit the NanoMarkets' website) Lithium-ion batteries have increasingly become the workhorse power source for the consumer electronics and power tool market and they are finding new applications all the time. For example, some firms are developing lithium-ion batteries for the electric vehicle (EV) market, while others see them as a better bet than the more traditional chemical storage batteries currently used in smart electricity grids. Within the consumer electronics and power tool sector, the market is looking for longer times between charges and quicker charging from lithium-ion batteries and these performance measures will be key competitive factors going forward among the various kinds of lithium-ion batteries being deployed. Elsewhere other measuressuch as the cost of energy storagewill determine how well lithium-ion batteries will do in sectors such as EV and Smart Grids. Most of these critical factors will ultimately be determined by the materials that are chosen for lithiumion batteries; especially the electrode materials used. This report examines the commercial implications of the newer materials that are being put forward for electrodes. As the table of contents below indicates, the materials that we have covered in this report include nanostructured carbon and silicon, titanates, vanadium oxides, mixed metal oxides and a variety of lithium compounds. This report explains the emerging requirements for battery performance in each of the main application sectors for lithium-ion batteries and then shows how these translate into demand for novel electrode materials. It also analyzes the market strategies of major materials and battery firms active in this space. The report also provides eight-year forecasts by application and material type.

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TABLE OF CONTENTS
Executive Summary E.1 Summary of Opportunities from New Materials for Lithium-Ion Batteries E.1.1 Lithium Cobalt Oxide (LCO) E.1.2 Lithium Manganese Oxide (LMO) E.1.3 Lithium Iron Phosphate (LFP) E.1.4 Nickel Cobalt Alumina (NCA) and Nickel Manganese Cobalt (NMC) E.1.5 Graphite and Its Replacements E.2 Materials Suppliers to Watch in this Space E.3 Roadmap for Lithium-Ion Battery Materials and Eight-Year Market Forecast E.3.1 Features Required for Competitive Benefit E.4 Concluding Remarks on Market Strategies Chapter One: Introduction 1.1 Background to Report 1.1.1 The Importance of Electrodes for Lithium Battery Performance Improvement

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1.2 Objectives and Scope of this Report 1.3 Methodology of this Report 1.4 Plan of this Report Chapter Two: Market Requirements and Opportunities for Novel Lithium-Ion Battery Electrode Materials 2.1 Consumer Electronics, Computing and Communications Applications Trends for Lithium-Ion Batteries 2.1.1 Impact of Market Trends on Electrode Material Requirements 2.2 Power Tools 2.2.1 Impact of Market Trends on Electrode Material Requirements 2.3 Electric Vehicles and Other Automotive Applications 2.3.1 Impact of Market Trends on Electrode Material Requirements 2.4 Smart Grids 2.4.1 Impact of Market Trends on Electrode Material Requirements 2.5 Military and Aerospace Applications 2.5.1 Impact of Market Trends on Electrode Material Requirements 2.6 Other Lithium-Ion Battery Applications and their Impact on Electrode Material Requirements 2.6.1 Medical Markets 2.6.2 Data Communications Markets 2.6.3 Other Applications 2.7 Key Points from this Chapter Chapter Three: New Materials for the Lithium-Ion Battery Industry 3.1 Why the Lithium-Ion Battery Industry Needs Better Materials 3.1.1 EV and Smart Grid Market Requirements: Nascent Markets 3.1.2 Impact on the Battery and Battery Materials Market 3.2 Anode Materials 3.2.1 The Future of Graphite 3.2.2 Nanostructured Carbon and Its Variants 3.2.3 Nanostructured Silicon and Its Variants 3.2.4 Titanates 3.2.5 Vanadium Oxides 3.2.6 Opportunity Analysis 3.2.7 Survey and Assessment of Firms Supplying Novel Anode Materials 3.3 Cathode Materials 3.3.1 Lithium Manganese Spinel 3.3.2 Advanced Lithium Iron Phosphates 3.3.3 Mixed Metal Oxides 3.3.4 Nickel Cobalt Alumina 3.3.5 Opportunity Analysis 3.3.6 Survey and Assessment of Firms Supplying Novel Cathode Materials 3.4 Key Points from this Chapter Chapter Four: Eight-Year Forecasts 4.1 Forecasting Methodology

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4.1.1 Impact of Industry/Application Maturity 4.1.2 Important Industry Sectors 4.1.3 Alternative Scenarios 4.2 Forecast by Application 4.2.1 Consumer Electronics 4.2.2 Power Tools 4.2.3 Electric Vehicles 4.2.4 Smart Grids and Stationary Applications 4.2.5 Military and Aerospace Applications 4.3 Forecast by Material Acronyms and Abbreviations Used In this Report About the Author List of Exhibits
Exhibit E-1: Firms to Watch in the Lithium Battery Industry Exhibit E-2: Total Electrode Materials for the Lithium-ion Industry Exhibit E-3: Total Value of Electrode Materials for Lithium-ion Industry by Application ($ Millions) Exhibit E-4: Total Electrode Material for Lithium-ion Industry by Application (Metric Tonnes) Exhibit 3-1: Firms Producing Anode Materials Exhibit 3-2: Survey of Firms Supplying Novel Cathode Materials Exhibit 4-1: Electrode Materials for the Consumer Electronics Segment Exhibit 4-2: Electrode Materials for the Power Tools Segment Exhibit 4-3: Electrode Materials for the Electric Vehicles Segment Exhibit 4-4: Electrode Materials for the Smart Grids and Stationary Applications Segment Exhibit 4-5: Electrode Materials for the Military and Aerospace Segment Exhibit 4-6: Electrode Materials for the Lithium-ion Industry

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Opportunities in New Electrode Materials for Lithium-Ion Batteries Lithium-ion batteries are a technology poised to see a large growth in revenue in the next five years because of their potential in applications such as electric vehicles (EVs), consumer electronic devices and Smart Grid applications. To successfully enter and maintain its hold in these market segments before strong inroads are made by other battery chemistries, the lithium-ion battery needs materials advancements to propel it out of the performance plateau that the current industry standard has found itself in. The realizable market opportunity exists because of the plateau that the current industry standard electrodes have reached. Technological innovation provides a minimal increase in performance year to year in current lithium-ion batteries. In fact, it is more processing improvements and improvements in cell design that have been providing incremental improvements in battery performance in the recent past. The performance demands of the market are growing at a pace too quick for the tweaks that can be made to the current battery to match. This mismatch between the expectations and needs of the market and the inability of the current industrial state of the art has provided a technological gap that needs to be filled. Since performance of the lithium-ion battery is so heavily performance driven, the largest opportunity here exists for developers of anode and cathode materials. Anode improvements: Next-generation anode technologies are typically identified by their potential to hold lithium ions. In general, replacement anode materials have been less common than those for cathode materials: At this stage silicon, nanostructured carbon and oxides of titanium and vanadium have been identified as viable alternatives to graphite for this enhanced ability. The metal oxide materials are seeing development in the labs of the larger, more established materials suppliers. Hence, their entry time into the market is expected to be quicker due to ease of integration with current battery manufacturing processes. Silicon has the highest theoretical capacity for lithium ions, but until recently has had problems with durability. However, structural modifications to the silicon electrode have made it become a potentially disruptive technology in this market. The silicon anode is a materials technology that is being pioneered by smaller, early-stage

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companies hoping to make a strong impact in the industry. While it has a longer development timeline, its potential to make an impact is sizeable, making it a materials technology worth investigating. Cathode improvements: Cathode materials tend to provide more diversity in terms of the cell characteristics they have an impact on. While anode materials are being investigated mostly to improve the energy density of the cell, various cathode materials can either improve the energy or the power density, provide faster charging times, more safety and/or lower costs. The cathode reaction in the lithium-ion cell is also a safety concern, and while the potential to improve the energy density must be considered, the stability of the materials in the cell environment is a crucial concern. A lithium-manganese based cathode is right now the furthest penetrating competitive technology to the conventional lithium cobalt cathode. Other materials that bear looking at are: Lithium iron phosphates and their derivatives. Composites of nickel, manganese and cobalt are being developed specifically for the automotive market segment. With development being pushed in tandem by established companies in both the battery and automotive spaces, we can expect this technology to be a frontrunner to capture the opportunity in that segment. Key Market Segments Consumer Electronics: The consumer electronics market is the largest revenue source for lithium-ion batteries. This is a mature market with established players, and new entrants to the space will have a tough time gaining traction. Unless a new entrant develops a breakthrough technology that really takes the lithium-ion battery world by storm, we can expect technology advances in this market segment to be made by the big players. Based on a history of battery materials innovation we can expect Sanyo, Samsung, Sony, Hitachi and LG Chem to be the companies that will likely be pioneering materials innovations in this market segment. Power Tools: The lithium-ion chemistry started to gain popularity in the power tools market segment because it offered higher energy densities and a lighter cell than the conventional nickel cadmium and nickel metal hydride batteries that power tools had been using at the

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time. Additional benefits that were attractive were its faster charging times and its functionality over a broader temperature range. It truly started to advance in this market segment once the conventional lithium cobalt oxide cathode was replaced with electrode materials capable of delivering high power. This is a perfect example of a novel materials modification to the lithium-ion battery to capture a realizable opportunity in a new market segment, and is the sort of opportunity this report intends to highlight for future applications. Electric Vehicles (EVs): The lure of capturing the EV market segment has arguably spurred the most activity in the lithium-ion battery market since its inception. A dominant battery chemistry for this application has yet to emerge with nickel metal hydride and lead acid batteries having been the early technologies to make headway in this segment. While the lithium-ion battery makes a strong case for itself on multiple value propositions, it has certain problems that it must overcome if it stands a chance at gaining a strong foothold in the EV market. This is a market segment that is expected to see tremendous growth in the next five to eight years. It is a segment that is driving materials innovations in companies of all sizes. Key things to note on the competitive landscape in this industry are as follows: A large number of advanced materials start-up companies have emerged in the last few years that have chosen this market segment to target. Larger, more established companies are also using their expertise in battery technology towards finding the ideal lithium-ion battery for EVs. The lithium-ion battery is really the battery chemistry of choice for automakers going forward, and materials developers will face a real challenge in meeting the needs of the market. With a scattered landscape of multiple materials available to EV producers, it will be difficult to establish the most likely dominant material in this segment in the future. Cost is proving to be the hardest value proposition for EVs to compete on. While lithium-ion batteries can potentially provide a satisfactory miles per charge number, reducing the size and cost of the battery pack is going to prove to be a huge challenge. A large increase in energy density would reduce the number of cells required, reducing the total weight of the battery pack for the car.

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A technological improvement that provides the paradigm shift in energy density capability will need to come at a reasonable manufacturing cost for the technology to really be considered competitive. The EV market is a very demanding one simply because large-scale adoption of EVs is entirely contingent on them being cost comparable with gas burning cars. Smart Grids: Smart Grids are another market segment that is expected to see high growth in the near future. It is a segment that will see strong initiatives taken by various governments with regards to infrastructure deployment. At present this is still very much a nascent market for the lithium-ion battery, but global revenues are expected to see significant increases in the next decade. Lead acid batteries seem to have dominated the small market so far, but lithiumion batteries are seeing a fair amount of development activity centered on this market segment. While projections suggest that the lithium-ion battery industry could see significant revenues from this market segment over the next decade some sobering factors need to be kept in mind: The dominant battery chemistry for this application will not necessarily be the standout in terms of raw performance, but the one that is the cheapest and performs satisfactorily. This is where the lithium-ion battery chemistry has a significant disadvantage. In the Smart Grid segment, what has conventionally been the strongest value proposition of the lithium-ion battery has been rendered somewhat moot. Competing on cost isnt the strength of the lithium-ion cell, and competing in this segment appears to be out of the comfort zone of the lithium-ion chemistry. NanoMarkets has shown in a previous report that with the development on ultracapacitors, supercapacitors and higher performance lead acid and sodium sulfide batteries that the lithium-ion battery is likely outgunned on this value proposition. The best revenue opportunity with regards to this market could be small-scale applications such as residential, office building or community smart storage options. Safe materials with high energy densities will have the best opportunities in these markets, where having a small footprint could allow for premium pricing.

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Military and Aerospace Applications: In terms of new companies entering the market, another opportunity presents itself. This is the military and aerospace segment. The military segment can be considered the early adopters in the lithium-ion battery industry. They are an underserved segment with tough operating parameters and are typically avoided in favor of the more glamorous EV and Smart Grid segments. This segment is more likely to be willing to test out new products and technologies, and is a good potential starting point to get consumer feedback in order to move into newer market segments. Technologies with incremental improvements can find niche applications in the government and military segments, and materials developers have a chance to charge a premium to this segment which could make up for the lower unit sales that one might expect compared to a commodity market.

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Total Electrode Material Market for Lithium-ion Industry


9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2012 2013 2014 2015 2016 2017 2018 2019

$ Millions

Military & Aerospace Smart Grids & Stationary Electric Vehicles Power Tools Consumer Electronics

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Total Electrode Material for Lithium-ion Industry


350,000 300,000 Metric Tonnes 250,000 200,000 150,000 100,000 50,000 0 Military & Aerospace Smart Grids & Stationary Electric Vehicles Power Tools Consumer Electronics

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