 Good morning from California. My name is Will Chu. I'm the co-director of StorageX Initiative here at Stanford, also a professor in the Department of Material Science Engineering. Welcome, everyone, to today's StorageX symposium. A couple months ago, we had the pleasure of hosting J.B. Straubel, Selena Mike Wajak, and Heiko Erzel to talk about the technical aspect of creating the supply chain for energy storage, specifically lithium-ion batteries. We learned quite a bit on what it would take to develop the manufacturing expertise and to scale up to meet the terawatt hour requirement in the coming decades. Today, we continue that theme from a slightly different perspective. It's my great pleasure to have Simon Morris from Benchmark Mineral Intelligence and Adam Panayi from Roe Motion to give the perspective from an analysis of the entire supply chain. Simon and Adam are truly industry insiders who have been monitoring and participating in the industry and providing input to policymakers, companies, and other institutions on how to navigate this rapidly changing industry. Today, we're so pleased to hear from them, and they will cover everything from mining to sell to markets. I encourage everyone to participate vigorously and ask them questions. I'm sure we'll have a very spirited discussion. So with that, I can't wait to get started. Simon, if I can have you start, we look forward to your talk. That's one. Thank you very much, Will, and the Storage X team and the Stanford University team for inviting us at Benchmark and our friends at Roe Motion with Adam along to this seminar. Really interesting. The only downside about this seminar is I can't visit again the amazing Stanford campus in Palo Alto. I come away from that place inspired with ideas and energy to take back here to London where I'm based. So that's the only downside, but I hope we can have just as energetic discussion on what we call the global battery arms race, the state of play for the lithium-ion battery supply chain today. At Benchmark, this is what we do. We are an independent publishing company that collects data and conducts analysis and other various forms of advisory and intelligence just on the battery supply chain from the mine all the way to the battery cell. So we specialize, as I mentioned, we have many subscriptions and database products. That's the core of the business, the subscription business. It's how we make our money. We're independent, as I said, and we collect lots of information on lithium, cobalt, graphite, nickel, manganese. We're starting as well. And there are five, what we call five holy grail raw materials for lithium-ion batteries. Then you could add copper in there, but the reason we select these five is because you have to turn those into speciality chemicals and that's something I'll dig into later on while it's important. Then we go all the way through the supply chain. We have products on cathodes and anodes and what's happening there, battery cells. Of course, we track every single lithium-ion battery plan active and under construction in the world. So much data there. That's actually my favorite product, to be honest. And then the automotive space, of course, we don't, Adam's team, Roe Motion, do so much detail on the automotive space that we work with them for the detail on the individual cars, but we're focused on the battery cell supply. And it's really important. If you haven't got the batteries, you haven't got the cars. I know it sounds simple, but it's a fundamental point that people tend to forget. So we also, as a result, no one cared about lithium-ion batteries in 2014 when I set benchmark up. I've personally been tracking the lithium-ion battery industry from a publishing perspective or my career since I joined a publishing company in my last job in 2006. The iPhone was coming out, then Nissan Leaf was coming out, then, and that was about it. But that was enough for me to get me interested in this. And of course now, the last four years is a completely different world. And as a result, we are advising governments on this. I've, on behalf of Benchmark, have testified to your Senate three times. And many different countries are coming to us. And the key thing about when countries come to us, it's not just government departments, it's the highest level. It goes right to the top. And that's how important this supply chain and lithium-ion batteries have become. And hopefully my presentation and Adam's afterwards outlines a bit more detail on that. So this is another personal element to the story. So the first time I have got quoted in a in a press, a mainstream press article was the 9th of October 2009. I remember it well. And I showed my mum and she loved it as well. So it was the best thing that ever happened in the household at that time. But 9th of October 2009, lithium-ion batteries may shift the balance of industrial power. The Times, that's the Times is one of our biggest newspapers here in the UK. Fast forward last week or 10 days ago. You're not sure of battery stories now, by the way, but this is a good one. The 5th of February, 2021, the Wall Street Journal, over to the US, over to you guys. The battery is ready to power the world. What we always thought would happen, while personally what I've always thought would happen is happening now. And I just wanted to start with that. I thought those headlines really just tell the story. And it's taken 12 years to get there. In fairness, let's call it a decade to get there, to get serious about it, to scale the supply chain to a certain extent. But now people believe, they don't just believe in the electric car story, they believe in the lithium-ion battery and the lithium-ion battery successes as well. So the next slide is what we call, is this outlining this global battery arm? So what do I mean by that? I mean, it's a term I created in 2015. It was the first time I used it. And back then, there was actually only four of these mega-fatteries that were built. There's three logos on there, but there are actually four. One added at the end of 2015, 57 gigawatt hours. Back then, that was massive. 57 gigawatt hours was the size, more than the size, but probably the size of the battery industry at the time, doubling it, but from two or three plants. Now, the point there is now, it's not just four, we have 186 battery mega-fatteries or gigafatteries in the pipeline out to 2030. And now, all that capacity added up is just over three terawatt hours. All lithium-ion, pretty much all NCM unless you're Panasonic. And yeah, 186 of that. The interesting point of this is not all of those plants are going to make it, but already 115 of those plants are active. Making lithium-ion batteries now, consuming cathodes and add-oads, consuming all the raw materials, and there are obviously at various levels of capacity utilization. There's lots of things we can talk about that in the Q&A, but the global battery arms race, which started in 2015, continues. It's rapid, it's relentless, and it's real. I wanted to just put some numbers or some context, post-pandemic context, or let's say since the pandemic started, because I know it's still going on. So back this time last year, we were trying to work out what would the impact be? Everybody was. It felt like the world was ending. It felt like you were living day by day, waiting for the next headline, the next news headline to come on to tell you more about how bad the world was and how quickly this virus was spreading. But for us, it went into overdrive. As soon as we hit May, June, our own business at Benchmark, the inquiries went through the roof. They haven't stopped. They've just continued. And the interesting thing about inquiries into our business is everybody in the supply chain uses it, but so many companies from outside of the supply chain in different industries, whether it's equipment makers or whether it's companies that make chemicals in completely different industries, there's oil and gas guys, they were coming to us saying, we want to buy your stuff. Teach us more about this industry. We need to get into it. And this showed in the number of battery mega factories that we added to our tracker. We track these battery mega factories every month. We do analysis and properly qualify the data before we publish. And what happened since May was the US added three more. So the US has 10 now in the pipeline. The EU added two in that, in that, let's say, from March to December 2020. But China added, I'd say, 38. So 38 battery mega factories. So China, the Gigafactory actually started this. Elon Musk and LG Chem, Elon Musk and LG at the same time, LG building in China. But Elon and JB Strable, I spoke to JB about this. It was a fantastic story. It should be a book or a movie really, because not only did they build a massive battery plan and make it work and make it work ahead of time, they shifted the whole industry to make lithium ion batteries at scale. And then China, within China domestically, of course, that's where the EV market was and still is and the fastest growing. That's where the batteries are needed with government support, a surge. So that was probably 2015 to 2017. After China, it's allowed to slow down a bit, and Europe started to pick up. Certainly, we're backing from the European Union, a government strategy there, which has really helped the European Union build capacity. But 2020, last year, China made its comeback. The US, it's been sporadic. It's been very test eccentric. It's been sporadic. But that might be starting to change. It's not just about individual battery plants. It's about the capacity. It's about the amount of production capacity you can make. You need to make electric vehicles or even energy storage systems, same batteries. So as you can see, by the end of actually the end of this year, we expect to have massive capacity ramp up. Production won't be there. So actually, what we'll probably see as a capacity construction slowdown maybe for this year, maybe for next year, because the industry is going from, let's say, around 200 gigawatt hours to the 350 mark in a two-year period, 400 mark in a two-year period. So the question is, how much battery capacity do you need? This is something we can discuss, linking that upstream to the raw materials is absolutely critical. But the sentiment is there. By 2030, over three gigawatt hours of capacity at the moment, it's always changing. But that's where we are right now around the world. The key things to outline here are China's portion of the pie is stable. Okay, it's gone from 75 to 60. But China's always, we've been tracking this since day one. And these numbers are always up and down, well, not up and down, up, up, up, but at different rates. But China's always been holding at least that 65% of the pie, which means there's always investment in China in this base load of lithium-ion batteries. Europe, 17.6%. Really important. You can see that Europe are effectively coming from a base of zero lithium-ion battery production, certainly for EVs, to having a significant portion of the pie. The U.S. is, well, Tesla-dependent LG now, and of course, SK Innovation. Big story yesterday between LG and SK. You might want to, if anyone's got any questions on that, we'll see. We can pick that one apart. But things are happening in the U.S. now, which the wheels are turning, which is interesting. So European breakdown, what's happening in Europe? There's a few clicks here. So bear with me as I click through all of it. I promise it's the only one that has, maybe it isn't. Maybe we've got two more slides that have got like five clicks in it. See, what happens when I do these presentations? I like to click and do these big dramatic name drops. It also allows me to think, it allows me to kind of get my thoughts as I click through. But I think this is it. So I think we've made it on this one. Anyway, the point you're looking at here is lots of big names in Europe, but new names. This is interesting. So you've got the big three or four lithium-ion battery makers, LG, Chem or LG Energy Solutions now, since they spun it out. Tesla, of course, Tesla building in Berlin, CATL. I mean, these are the common names, but new ones. SK, of course, in Samsung as well. New ones, Norfolk, the European champion. Also building a plant with VW. S-Folts actually should be in the tier two and should be mentioned there. Verkor, Magna, Saft and PSA is really interesting. Saft is owned by Totale Oil Company. French encouraged the merger about four years ago. Oil merging with batteries. Now they're putting that company together with PSA, the Peugeot Group. So really interesting seeing how these different industries, like, let's say, manufacturing champions are being brought together, all zeroed in on battery making. North America, this is the breakdown of the moment. You can see it's capacity by 2030, always changing. But the key thing is of those 10 battery plants in the US, the only ones that are active at the moment are the Gigafactory in Nevada, LG, Chem and Holland, Michigan, AESC, and Vision AESC now. Should I say it used to be Japanese, now it's Chinese-owned. And SK Innovation, which are getting up and running this year. So three active SK will be active by the end of this year. And yeah, that's kind of it. And then what the one to watch for me is LG's partnership with General Motors in Ohio. That'd be really interesting seeing how that comes along, because that will be crucial for GM's push on electric vehicles. And of course, you might have seen the adverts, General Motors is now making a big noise on electric vehicles. Also interesting, the new logo there, if you turn the new logo, saw us on Twitter, if you turn that new logo, it spells Elon. People might have seen that. But if you tilt your head on the side, the GM logo spells Elon. So I thought that was quite funny. Anyway, on we go. Yeah, so this is a really important trend. Big auto and big battery are moving ever closer. There's a picture of my colleague Casper with his backpack. The point about the car industry and the battery industry is the existing car makers have to learn how to be, have to learn the lithium ion battery. Traditionally, they want to outsource it. Traditionally, they want to go, well, automakers, we buy components. We're good at scaling. We're good at contracting. We're good at buying and bulk and pushing the price down. And effectively, we're, oh, yeah, right, we are original equipment manufacturers. We can, we put things together. The problem of that is this is an industry that's been created from scratch. So the one thing I've asked all IEMs, the one thing I ask the Senate and other people is when was the last time the US built a heavy industry from scratch? And it's probably before most of our, if not all of our lifetimes. And that's what the US has to do here is build these supply chains as you can and scale them economically and environmentally consciously. Those things don't usually go hand in hand, but that's the challenge. And so as you can see here, this is the supply chain a bit more, a bit more detail on it. But what this shows is China's percentage of world production of these links in the chain. There's a misnomer that China has all the raw materials in the world. Not the case. So this, the 23%, I put together a basket of these key battery raw materials and to simplify it and ask myself how much of these raw materials were actually dug out of sort of domestic China produced in China domestically. So only 23%. But what China and Chinese companies have done really well, and it's been a really forward thinking strategy over the last decade is build massive capacity in the midstream. So you're taking, say, lithium out of the ground in a rock or in a brine, but you have to chemically engineer this into a battery grade material, high spec and high purity, more importantly, low impurities. That's actually just as if not more important than the high, high purity thing. And then you've got to do that consistently over time to then sell it to your Catherine Anno guys. And so building massive capacity and know how in the chemical stage and the Catherine Anno stage gives supply chain dominance. And as you can see, China has 80% only 23% of those raw materials are dug from the ground about 80% of the chemicals for batteries are producer 66% of the cathodes and anodes on the anode side is near 100%. That's how crazy it is. As a result, batteries are there and the end market is there in China. So the world has to really the US especially and the EU have to do what China has done, copy the strategy of the Chinese nation and do the same thing, controlling the midstream. It's so important. It's not just about controlling the resources because you've got to the raw materials will always go where the next stage in the link in the supply chain is based. So as a result, you can see what's happening with Tesla in Texas. They're creating this battery hub and this actually is a blueprint for the US is the creation of these hubs. So what you've got here is the that's my Gigafactory 4 is it in Texas or the Terra Factory, let's call it. Well, it was interesting because Tesla was seen as a car company now they're seen as like an energy company or maybe even a battery company starting to see that but actually the business keeps a grow the strategy keeps on moving upstream. So what the Terra Factory campus if you like or hub will have is cathode making a step before batteries, lithium hydroxide production. That went so sorry that went under the radar on battery day but Tesla will make its own lithium hydroxide. That's the first ever car company to ever get into making lithium and that will actually come from hard rock spodium, not the clay, the clay is a misnomer here. So focus on lithium hydroxide if you want more details on that Google benchmark Tesla lithium hydroxide free story breaks it all down and nickel as well. The point about this is that in many ways Elon has been asking the upstream of the industry to scale with him much like when Elon went to Panasonic back in 2015 and says you know like please Mr Panasonic can you increase your capacity by four times for me? I mean I'm a effectively I started I was probably 2013 you know I'm a small car producer for electric cars so you can see what the Japanese reaction to that was naturally conservative they said no. So what did Elon and JB do? They built the Gigafactory they forced they were going to do ourselves and force the industry to move well what are they doing now? They're building cathode hydroxide and precursor they're clearly the areas that they're worried about nickel and lithium and the resulting cathode. The cathode is an interesting one because the cathode now now Tesla have mastered battery production and going into that making their own cells the cathode is so important of course the anode is just as important but controlling that quality understanding how a cathode is made and therefore controlling your inputs into that are crucial to the quality of your electric vehicle and this is why Tesla's so far ahead of all other automakers isn't just about huge battery supply it's quality throughout it's quality at scale and so if you think about where Tesla and I use Tesla's example just because it is the game changer here and their approach is completely different to how any other company would have done it they're like build the supply well build cars we have to go and make everything ourselves and scale the supply chain now they used to have to go around the world to collect all these components now 80% of that battery supply chain is on a single site and that will be post 2022-3 onwards so this is actually a template that the US should go for actually is is by hook or by quip developing is actually we've identified three future EV battery hubs so this one I've called um what do I call it Tesla West I think so you've got the big tera factory here you've got the giga factory here and actually that Fremont plant with that those new cells will um will be will be production um at the end or will be scaled at the end of this year will actually be making its own batteries quite a lot of batteries as well like in the order of eight to ten gigawatt hours so so that's something to watch because that can actually make batteries that are used in EVs or um maybe sort of smaller models that Tesla want to push out but that's kind of gone on the radar but that's a battery mega factory and that's going to be scouting so I want to watch hub number two general motors are calling this new Detroit for us a quite nice futuristic blade runner type type of thing so that's my vibe there and um you've got GM's plant in um Michigan in Holland Michigan uh which actually was from 10 years ago so when it started um with the last round of incentives that was up that was built with but the EV the EV space is coming of age and you've got here um the the Lordstown Ohio JV with um LG Chem really important one to watch the third hub to watch is in the south and actually calling it EV south and there we go um that's kind of a quite a few different automotive OEMs operating there AESC and Vision are based there because that was the original plant for the Nissan Leaf in um Tennessee but of course you've got uh SK innovation down there now SK innovation are have been banned for 10 years for importing lithium ion batteries because the ITC in the US um said yesterday google it if you haven't seen it that um SK stole information from LG Chem uh across the board to build their battery plant there in Georgia highly controversial I don't think the ruling the ruling I can't really comment on but you can read the details but it's that the story has the potential to blow apart the US plan to make EVs and batteries domestically and you can't be shipping these batteries long distances so look into the LG SK story it's going to go on for a bit it's going to be an almighty legal wrangling and it's going to go to the top this will go to the president and I think he might have to get involved in one way shape or form but it's one to watch so um on the last few slides he'll go about how long have we got left for about three or four minutes I wanted to link it to the raw materials and just give you some some basics to think on but these aren't commodities they are specialty chemical supply chains aka the user dictates the flow here iron ore coal those kind of things dig it out the ground obviously you have to be a quality spec but you can dig it in massive volume and it will get sold and it will get used you don't have to worry about that side of things with um specialty chemicals you actually have to create them for your customer your customer will have a certain flavor or spec it wants and you have to work with them in long-term contracts to get the quality right and that is why it's kind of a specialty chemical but it's coming mainstream and this is the problem with new entrants into the market don't grasp this if you grasp that it's nuanced it's not just digging stuff out the ground it's chemical engineering then uh you're on to a good thing you're on the right path this is what it looks like though when it starts graphite that's actually micronized um uncoded spherical graphite in china that ends up in you know anode uh cobalt mining happens in areas like this cold um this is uh this is feedstock lithium hard rock feedstock in china and the final picture this is cobalt in the drc and and and big tanks of like march is probably washing but you have tanks of acid purification and things like this so it's you know it's mining classic mining but these mines have to work with the chemical companies to create a proper high-spec product so interesting to watch and then the problem we've seen is as a as a massive disconnect between the battery the guys planning battery plants and the guys doing raw materials i call it the great raw material disconnect because it sounded dramatic it works it's true so you can see on every single one of these is a cliff edge what's happened the last three years is the rise of these battery mega factories or this global battery arms race has gone ahead the ev um the the oems have planned loads of evs they haven't looked at the supply chain they haven't looked upstream sounds crazy it's true they're very active build the evs plan the plants battery plants uh let's you know the market will sort the rest out but it won't because um the market's never been there before lithium is a 300 000 ton market when i started benchmark as 150 000 ton market it's come a long way but it's going to the millions of tons so that needs complete overhaul of the way the industry thinks it needs money that hasn't happened so as a result you've got a problem raw material supply will be the limiting factor on ev growth it's as simple as that it takes seven years to build a lithium mine it takes 18 months to build a battery plant that's your problem uh want to discuss and then what we're telling um advising governments your government in the us uh in europe in many countries around the world is that mining isn't a bad thing there will be where economically viable domestic mining of critical minerals for strategic industries like evs has to happen but it has to happen if the ecosystem is there in the country i.e you can't just mine for the sake of mining you have to mine and chemically refine in the same area um to build a base load of mining and speciality chemical supply for these industries and you don't have to be a big mining country for this but if you can do 25 percent of your needs domestically and then go to the big mines around the world for 75 percent that's a sensible approach and a sensible strategy that's what we say um when we get asked by politicians now you can see on this chart there's four stages stage one is digging the stuff out the ground it's extraction or mining stage two is that chemical processing stage or or refining you can call it if you want to use oil terminology stage three is cathode and anode making you're making specific products different stands alone and stage four is battery cell manufacturing we've talked about battery manufacturing but the only thing i want to point out here the us is zeros across the board on this this is for 2019 by the way sorry it's not on there it's zeros across the board everywhere the us is importing every single one of these components and that's a problem but when there's a problem there are big opportunities for for business right and for jobs and all of the above so the last three things i want to leave you with before the soft and soothing voice of adam takes over is the three trends to remember the three things that i just love about this industry it's exciting the three things why lithium ion batteries aren't going away really number one lithium ion batteries are getting cheaper so we click prices on lithium ion battery cells and as you can see from this chart our price last year actually carried on dropping so this is the low end of large contracts for automotive buyers of lithium ion battery cells 125 dollars sorry not it's 110 dollars per kilowatt hour selling price not production price so this is a i would say this is a real number if you're an oem buying cells not producing them yourselves 110 dollars a kilowatt hour the year before is 125 and so on and so forth the lithium ion battery is getting cheaper but as you drop to 100 around 100 dollars or below the percentage of raw material costs that increases we've gone from 40 to 50 percent of the battery cost being raw materials to now 70 to 80 percent so you can see if you don't have the a steady stable low-ish cost supply of raw materials well then your battery prices are going to go up or they or the price drop is going to it's going to plateau and that's what those red lines on there mean between 2014 and 2017 battery price cell price dropped at 20 percent a year but 17 to 20 it dropped 7 percent a year what happened to make the drop bigger before the rise of the battery mega factories scaling but of course this as raw materials become a bigger proportion of the pie it slowed so the challenge now isn't scaling batteries you can still make manufacturing techniques that's a really important area what Tessa have done with the new cell is really cool but the big challenge and the big opportunities is on the upstream side the raw material side making cathodes cheaper that's the next battleground to pushing that price down but lithium ion batteries are getting cheaper also lithium ion batteries are getting better point number two and this chart was actually from 2018 but it just depicts how we have constantly underestimated since day one the the performance the energy density of the lithium ion battery and as you can see in 20 in 1992 when it wasn't commercialized in the Sony Walkman we expected we could push it to 350 watt hours per liter but in 2002 that broke through then we thought in 2002 we brought it to 550 that broke through in 2012 we're now pushing we're now around that 800 limit but that red line is moving up because the the chemistry the chemistry makeup more nickel less cobalt is changing so my point is you you can never put a proper ceiling on the lithium ion battery when you've got so much clever so much money and intelligence going into this market the third one lithium ion batteries are getting cheaper they're getting better and the point I will leave you with is they are becoming abundant so this is the global lithium ion battery cell capacity build out from 2010 to 2030 I've put the numbers of EVs worth their order of magnitudes very clear where we're going here but lithium ion batteries are becoming abundant they are three things they are three fundamentals to this what I believe is the platform technology for the most important mega trend which is the energy storage revolution and I'll pass over to you guys now it's the end of my presentation all right Simon thank you very much and actually we're going to take some questions with apologies we are receiving a lot of questions today so I'll only be able to ask a fraction of them so let me try to group the question in a in a logical manner so I thought maybe we can start from the the business and the the operation aspects of the supply chain so the first question is actually something I'm very interested you mentioned the litigation between LG and SK just now one interesting aspect about patents especially those say involving with the cathodes that dictates the chemistry of the battery many of them are expiring soon can you comment how that has oh how that will impact the supply chain and R&D space going forward I think about cathode chemistry and let's say let's say research that's being commercialized so the the interface between you know research which has been proven and and money's been invested and it's about to go into production and the thing about that kind of interface that zone is actually the cathode chemistries are very well known now it's the tweaks it's the little secret source little additives you put more manganese in do how much you increase the nickel in do you add another and speciality chemical just to just to tweak this and push the and push the energy density up a little bit further but the fundamental sort of basics of the cathodes are known and so I don't think the expiration of patents will have like a fundamental kind of there won't be a like a mad rush from companies to put certain patents into production and because when you're when you're dealing with new chemistries you have to the one thing cathode companies get is is you've got to ensure you've got a steady stable supply of those raw materials at the right price as well and it's a balance between best fit for the chemistry and the application and also at what price you can produce it and if you've got those minerals and metals available and that's kind of the it's a really big challenge for for the cathode guys and the battery guys but that's where these these people earn their money terrific Simon maybe expanding a little bit more onto the topic of logistics so you mentioned this I think you described as as mad of you know materials moving around the globe to make your battery pack for EVs and ultimately cars can you give us some insights to the extent of logistics when it comes to materials mine all the way to the car how how massive is it and what is the environmental footprint and the economical footprint when it comes to moving you know kill tons of this stuff around hmm well five years ago it was it was nuts so so the you had lithium that could be mined in south america or australia it would then get flown um let's say into north america or into china not flown sorry shipped um into north america or into china it then sends a chemical there um actually look at the spodumene of australia you've got a spodumene mined in australia as a rock that rock gets shipped into east coast of china that gets turned into a chemical that gets shipped out to japan or career to make into cathodes then that cathode material might get shipped back into china might might go elsewhere or might be made into batteries in japan or career and those batteries are shipped all the way to the usa that was five years ago now you're about 30 percent better than that but you've got to be 80 percent better than that right and um otherwise you're you know the carbon footprints for the roof the cost is through the roof and it's just not scalable on a on a fundamental level but the industry is getting that and that will actually form um you know these local hubs that i talked about and uh and it will actually make local domestic mining of critical raw materials more economic and they haven't been in the past great actually a related question that is um in the north american market um you talked about the u.s quite a bit but not canada um where do you see canada um its role is in terms of the supply of raw materials crucial you know crucial canada understands mining that's where everything starts um canada has a canada could be the bread basket for the u.s for e-v rush and the u.s battery rush and it's going to be a crucial partner and i know that i know that the canadian government are focused on this and and now i think with the president biden you know going big on e-v's and um and on the supply chain for e-v so somebody so watch out for that uh the the canada and the us on this supply chain will be in harmony and i think it's a great opportunity for anyone that's developing these key raw materials in canada to be a big part of the us e-v story which will be along with china the biggest market in the world great well maybe one more question on the business side um recycling this is something that um has received tremendous attention and jay b spoke here on our symposium a couple months ago on this very topic maybe one specific question is what is the timeline you see of recycled materials becoming an important stream of fee stock um can you comment on is this coming soon is this maybe you know five years out what are we looking at here yeah i think you're looking at between 2025 and 2030 i think what the what jb's doing is brilliant right i've been there to redwood i've seen what they're doing um it's not just it's not just uh excellent it's solving uh what's part of the solution for you're going to have a mountain of spent batteries around the mid 2020 in about three three four five years from now as you know these these pure e-v's these uh e-v's that have a battery the size of a chassis of a car come to end their life um so that's problem number one then uh so there's value in that the second thing is can you take those raw materials out and what can you take out and how can you use them the challenge at the moment for the battery recycling guys is can you can you take lift them out and use it back in a battery that hasn't been successful today because it's a specialty chemical high spec it's a problem um but doesn't mean it's it's not there to be solved but for everyone listening that's that's where the money is if you can create a technology be the interface between uh like the the the massive task that JB's um uh company are taking on to to recycle volume gigafactory and recycling part the size of a gigafactory if you can create this speciality chemical to to tag on to their plants speciality chemical process to turn that lithium into battery ready lithium it just bolts on then you'll make loads of money and you probably want to speak to JB Strable about that but it's the challenge I think it will be solved in some way but but the point about recycling is what I can only ever see and get long term being about 10 or 15 percent of the market um you know we're scaling so much but it's needed right it's a crucial part well a challenge is an opportunity that's great thank you Simon so maybe let's take a couple more questions on the chemistry side of things um so one interesting aspect uh in your talk as it was a focus on uh nickel mechanics and cobalt based catheter chemistry can you maybe expand upon a little bit of the other aspects of the product mix and where you see the product mix going into the future for example we've been seeing the reemergence of lithium iron phosphate and how will this modify the supply demand dynamics especially for raw materials going forward yeah so the first thing I'd say about uh the let's say the the market for this a lot of people looking at cathode chemistries and the reemergence of LFP which is interesting I'll discuss that in a sec they kind of see it as one or the other you know if LFP is emerging that means that's winning or NCM is going that way and 811 it means that's winning it's not the pie is just growing it's massive it's massive and what we're talking about are what slices of the pie or the or the cake which is probably better um you know are um how much how big are those slices of the cake going forward but the pie is growing significantly and the biggest trends at the moment that we see on the commercial side I spend my time on the OEM side and battery side of the business of course the push to 811 is actually been slower than people anticipated we expected that anyway it's happening but it requires bigger investment but still that's still the main trend NCM 5262 of the bulk of the market LFP has emerged because LFP called it LFP 2.0 in fact you google benchmark LFP China Tesla there's a great free story on our website for that um the thing about LFP is especially in the Chinese market where they're more cost sensitive it's not replacing the NCA or the NCM that Tesla are using it's it's giving a great option for for a car that needs to go 258 miles or whatever it is at that low price point it's perfect for that market so I think LFP is a great opportunity to sit in this lower cost end of the market but perform well you know we don't need an EV that goes not everyone needs an EV that goes 300 plus miles and I think that's really where LFP plays as well but that's kind of the the three main trends would be the ones I mentioned and so I mean in terms of raw materials and obviously this the iron versus NMC but also the the precursor use for lithium is also different between the two do you think that's going to have an interesting effect on the market I'm saying again so the do you mean the in terms of lithium carbonate versus lithium hydroxide for example when it comes to the preference for the two chemistries okay yeah so without not really I mean the thing is hydroxide is the the favored one at the moment for high nickel chemistries and the reality is our forecasts have hydroxide anywhere from the the 55 to 60 or 70 percent or 65 portion of the market it's all growing at the same time you're going to need carbonate and you're going to need hydroxide of course you can make hydroxide from lithium carbonate but if you're building a new plant it makes sense to go for the bigger part of the market and the and also the price you you know the the product you can get more a higher price for but you know I think you're you're going to need both and yeah that makes sense great Sam and we only have time for one more questions so let me just put this one out there so again you talk quite a bit about the cathodes and there's a question now on graphite you know specifically synthetic versus natural you know obviously graphite in terms of cost as a small fraction of the battery computed the cathode but from a performance perspective it's extremely important for example in your slide showing the co-location of material processing and cell making the end it wasn't shown there and of course there's a lot of discussion and beyond graphite chemistry now so Simon can you tell us a little bit about how the story mirrors on the anode side compared to the cathode? Yeah good question graphite or anodes which is graphite goes under the radar so important what we've seen I guess from 2010 to 2017 was everyone was talking about anodes the the raw material side and the the R&D side was all sorry everyone's talking about cathodes that was where the focus was that was where the money was going and you know rightly so you're seeing the benefits the fruits of that investment now with what I just said in my last question but the next focus now are anodes and it's the next sort of battle grounding to nudge up the the energy density of the battery you can improve energy density of batteries today by a good five seven percent if you tweak and improve your anode and the quality and and a key thing is graphite is going nowhere it's going to be the volume anode its graphite is a brilliant anode from a fundamental sort of chemistry perspective it's stable and it does drop brilliantly whether it's natural or synthetic the reality is they're blended for stability of product of course the big interesting one is silicon at the moment the industry only blends silicon if it blends silicon it's four to six percent take that as an average of five obviously or a midpoint but silicon is one to watch as an additive not as a whole replacement the one company to watch on that which I think very interesting despite me saying that in the past is um is uh I've got no big name now so a sila nano that's a sila nano um kirk kelty works there from tesla but they definitely want to watch but again it's a bit it's further out they've got a lot of big three years ahead of them graphite's going nowhere you're going to have additives and and for me it's a it's one of the cutting edge it's the cutting edge research areas that is under looked uh yeah overlooked not under looked overlooked it's been a long hour there's a message for all the materials that develop are out there so thank you Simon for that so don't go anywhere we'll we'll have a spirited discussion uh after adam finishes so adam if I can have you come to the stage uh so first of all thank you will for inviting me to speak uh his day and for everyone at stanford as well so we all wanted to be able to address you so my name is adam panay I'm the managing director of row motion uh row motion is effectively the downstream benchmark as Simon has often described it we we actually uh started out in the back of benchmark a few years ago uh I used to be an amnesty benchmark as well and the purpose of the company was to develop the visibility and the granularity of the analysis in the downstream component of this fly chain so what we do is we track every EV that's sold in the market uh for each EV we have he's growing all the time it's around 25 metrics pertinent ones for today's discussion are around battery pack size battery chemistry we look at that in both the anode and the cathode we look at range vehicle price charging into base charging speeds vehicle weight an enormous amount of information we collect on every vehicle the passenger car sector are databases now something like 1200 vehicles and growing all the time it may even be slightly harder may it might be near 1500 um and from that we're able to produce a number of aggregated reports um around uh what chemistries have been deployed in the market in a given month we also look out into the future into uh what chemistries are coming down the pipe in terms of development today I will be speaking primarily about what's happened in 2020 in terms of the development of pack sizes overall globally the split of chemistries and what that tells you about the future because what you're starting to see is very different regional dynamics in terms of firstly sales but also the deployment of different chemistries um and so we'll start by looking at sales and then work through the chain to see how all of that is impacting along the line and this ties in quite nicely with what Simon was talking about because the chemistries I've been talking about are the drivers for the uh more materials that that Simon are living to in his presentation but just a quick plug here on these slides we show our two monthly assessments we have currently and our database uh that we update every every month with all the vehicle sales and from that you can generate an anordinate amount of data around battery chemistry and so on that battery cell manufacturer and everything on there we have our long-term outlooks which are EV and battery quality outlook our global EV charging outlook and our battery energy stationary storage outlook as well and we do some um uh one-off reports or focus reports as we call them fuel cells micro mobility and two and three wheelers as well the key thing that's really driving this though is the EV and battery space and actually primarily the passenger car and light duty vehicle piece as well just to say as well we have our membership platform uh this is our entry-level product it's online it's actually where our reports are delivered through as well um and here you have up-to-date uh sales numbers um stories around the EV sector our latest videos and presentations as well so let's start at the beginning uh we'll look at these sales numbers for 2020 this is for the passenger car uh and light duty vehicle sector of the battery electric and plug-in hybrid electric market the key thing to bear in mind for this this year just past is that China is no longer the dominant power in terms of EV sales now let's not to say it's no longer the dominant power in the EV market that's quite a different thing because uh from a battery demand point of view it still remains the biggest market I'll come to that uh why that is shortly um and it's also clearly the most important part of the market in terms of some of the pieces of the supply chain particularly sale manufacturing and chemical processing but Europe overtook China in terms of sales in 2020 marginally and we don't expect necessarily that Europe is now going to go off in a complete ascendancy we do expect that China and Europe will now be a relatively similar sized market into 2021 and beyond now there's several key reasons why Europe took off in the way it did in 2020 and actually to a large extent the Covid pandemic was a large piece of that it was a very uh same strange to put it in these terms but it was a very positive thing for the EV market in Europe and that's because it legitimized government intervention in the market in short-termist uh um ways that really boosted sales and I'll again I'll come to that in a bit more detail the third bar up is the US and Canada and what you can see there is really there's been very little growth in that market for battery electric and plug-in hybrid electric vehicles for the last couple of years in fact and again that's a function of a lack of government intervention in that market uh from a subsidy point of view but also from some of the legislative points of view as well and again we will get into more detail in that the key thing one thing I will point out on this is that the key thing around that change in the regional dynamics in terms of the sales is that has a massive impact on battery pack size and chemistry again I will come to that later what this chart shows you here is the rate of penetration uh for battery electric and plug-in hybrid electric vehicles versus the total vehicle market uh in 2020 versus 2019 so the the uh the black and white bars there are 2019 and 2020 is the increase in the case of Japan the slight decrease uh versus the previous year now what you can see is that for virtually all of the european markets there's a significant uptick uh in in penetration rates this is a function of two things one is obviously the increased level of sales but also the dramatic fall in the total vehicle market as a result of covid so again this is really 2020 was a step change year for the EV market in terms of its public awareness potentially but also its share of the market overall we do expect that as 2021 develops and the total vehicle market starts to recover we'll start to see some changes in terms of the penetration rates it's going to be interesting to see whether they can be maintained at these levels most of that will be determined by the rate of which the total vehicle market comes back versus 2020 in 2019 but EV sales are forecast to continue to grow strongly this year we're expecting similar levels of growth in 2021 as we saw in 2020 and the reason for that is that the same conditions for that growth remain in place and again i'll get to that in my next slide okay so what this chart shows you is the timelines for short-term interventions in the market from governments around the world in terms of effectively what are subsidies and incentives for EV sales either on the OEM side or on the consumer side now working through the list it really does tell you the story of EV sales in 2020 if you just work through each of these subsidies so start with China in China if you follow this market you would know that in the second half of 2019 the government had a dramatic cut in the overall subsidy that you could achieve for battery electric vehicle in China and as a consequence of that you saw a significant drop off in EV sales in in the second half of 2019 both in China and globally because of the relative impact of China in the market in that year so this year the Chinese government has just given really clarity about what it will be doing in the next couple of years in terms of the availability of subsidies so this year it's really just rolling rolling on the subsidy this year i mean 2020 for 2021 it's cutting the subsidy slightly and that would be cut again in 2022 and that's why you didn't really see this dramatic increase in Chinese sales in 2020 this is 2019 because ultimately the market there now is operating almost on the basis of economics really it's not so much a government policy driven market in the short term in the long term it clearly is and that's around air quality issues and also CO2 and I will come to address that in a moment in the big European markets France Italy Germany you saw increases in subsidies last year and some of those will run into this year most have been phased down this year as well but they can almost be seen in some respects as government intervention in the local automotive industry to some degree as well because there is this enormous transition that's now happening in the European car markets towards electric vehicles and the the pandemic offered an opportunity in some respects for local governments to apply apply significant stimulus in those markets despite the fact that you have rules around European Union membership that stop you directly subsidizing state industries domestic industries but for last year it allowed governments to really intervene in those markets in the big way and ease that transition that some of these European OEMs are going through towards electrification the reason why it matters now in Europe is because all the long-term policy levers if you leave aside subsidies and incentives all the long-term policy levers are starting to kick in now for for Europe so this year we have the full introduction of the 95 grams per kilometer fleet average zero to emission standard it was phased in from last year but this is the real the year we really starts to bite and that standard continues to get tighter in the next decade after 2030 so because of that these there are these significant and industry changing investments going on in the European market that have been backed by these long-term effectively sticks of legislation to push the market forward in the US right down the bottom there really there hasn't been because of the administration that has just left there hasn't been an enormous amount of intervention in the market either at the short-term policy level so there isn't a federal level subsidy or a significant level of incentive beyond the tax credit which is really now expired for Tesla and GM who are the two main players in this in the North American market and at the at the legislative level for air quality and for fuel economy there hasn't really been an enormous amount of change in the markets in the last couple of years and in fact the Trump administration rolled back some of the Obama administration's targets for fuel economy does now look like that the incoming administration will start to speed through the gears on this in terms of the legislation piece so introducing tougher fuel economy standards when you talk about fuel economy standards you're really talking about co2 in effect and that that will increase the speed at which domestic areas will look to electrify we've been speaking to most of them in the last month in fact and they're fairly bullish on this market in the coming years and also at the subsidy and incentive levels of the short term policy level it does look to be more enthusiasm now from this current administration to to move things forward in this market who's got a reason that they would even that Tesla who is the world leader in this market is a is a US company and has demonstrated really to the Europeans to a lesser extent the Chinese how you make this successful at scale and it would stand to reason that the local will be the domestic government would look to support an industry where the US potentially has a world leading stance so but really just the point of this slide is to show to you that the the government intervention in the market really has an impact on how quickly in the short term the market will develop and we will see that the long-term scenario is is pushing towards electrification of all of the global major global vehicle markets over time what this chart shows you is the timeline long-term timeline for outright bans of diesel gasoline engines over time and like I said every major automotive market now has a timeline for the phase out of these vehicles what I will say here is that the the targets on this slide are targets they're not legislation in most cases yet and in many cases there's a limited visibility in terms of the pathway for either local or import imported vehicle OEMs to move forward towards heat in these timelines so one of the key ones actually in the last year the change was actually in the UK where the government talks about bringing in a bringing forward the ban to 2030 without really any clarification about how that would be achieved either with domestic OEMs or through the imported vehicles that the UK market brings in so one of the key things we look at when we're thinking about the timeline for the development of this market in terms of really ramping up the the scale of it is around legislative targets for nitrous oxide and for CO2 so the nitrous oxide standards in Europe are around what's called the euro standards in the in the US they're the EPA standards and also from California resource board as well but they effectively are driving force away from internal combustion engines notably diesel engines in Europe European market making those vehicles more expensive to produce and less polluting from a much softer standpoint so that's localized air pollution and then there's the CO2 standards which are around global warming and those those standards have really been rolled in like I said previously in the European Union now to tighten up on that so that's why you're starting to see a really big move from OEMs to make these investments but the direction of travel that this this chart lays out is clear there is a clear purpose if not a clear roadmap to moving towards fully electrified or zero carbon markets by generally speaking the 2040 model our view is that that's not going to be fully possible in all cases and all of these targets are going to have caveats built into them when they become legislation but it is a clear direction of travel there the next slide shows you the other end of the market which is around you've got really got that legislative push I described this is on the demand side of the market really rather than the supply side and what it shows you is the availability of unique models for battery electric vehicles and plug-in hybrid electric vehicles in a range of markets let's just concentrate on China European Union and EFTA which excludes the UK now but those EFTA does that with the UK and the US and Canada start with China you can see that it's well ahead in terms of the availability particularly on battery electric vehicles of different types of models this really is crucial to thinking about how battery chemistry will develop over time China could be seen as a leading indicator for particularly Europe but and then later the US but the driving dynamics in the US is quite different than in Europe and China but it particularly for Europe China is a is a leading indicator so there you have nearly 200 different battery electric models available they range from a five thousand dollar 14 kilowatt hour pure electric LFP bearing vehicle which sells in bucket loads now it outsells the Tesla Model 3 after it was released in China last year all the way through to the very the very large portion of the market Tesla's and BYD Han and so on up 60 70 80 kilowatt hour battery packs there we're convinced that an approximation of that trend will occur in Europe over the next five to 10 years as the market matures what you have to think about it in terms of now is that the market is still very young and in order to be able to develop this market in a commercially sensitive way where you can build up economies of scale you have to focus on certain key models as we move forward as them as the scale absolutely grows the availability of scale at more niche parts of the market will increase which allows you to commercially to give you commercial viability on developing multiple different products to hit different consumer standards in consumer desires in terms of where the market will go so the point is really here that in China it's already started to happen that you're getting a diversification of the types of models on the road that means a diversification of the types of battery chemistries that are being deployed and I'll go into that in detail in the moment in Europe that hasn't started yet but we know it's going to happen because we've been told and the European market is also ripe for it in terms of how the market is split currently for the internal combustion engine vehicle market between the smaller end of the market and the larger ends of the market both pieces are important in the internal combustion engine vehicle market stands to reason there would be important in the electric vehicle market as it develops in the US really that's an encounter as well for that matter it's a bit of a different picture and the miles driven are much higher than you get in Europe and in China also consumer tastes and preferences are completely skewed towards the larger end of the market compared to the European and Chinese cousins so that is less likely to get as diverse in terms of either chemistry or in terms of the types of vehicles on the road so that's just one way to think about how the the battery chemistry piece will develop over time the key thing for us is that the market will develop in terms of applications driven chemistry that's the way we see it happening and that's already starting to happen now so one thing before we move into the chemistry piece is really what the impact of those different sales dynamics those regional sales dynamics has had on battery pack sizes over time so let's start at the left and move over to the right and because what the chart shows you here is on the blocks on the bars is the split of battery electric to plug in hybrid electric vehicles sold in a given regional market last year and the red bar corresponds with the right axis and shows the average pack size in the passenger car unlike due to vehicle market last year in that regional market so start with the US and Canada you see that it's roughly 80-20 split in terms of battery electric to plug in hybrid electric vehicles sold in that market as a result of that the average pack size is relatively high so around 55 kilowatt hours in that given market now the european market like i said has had that significant increase in in sales in 2020 and we expect that to continue to 2021 but the thing to remember the key thing to remember is half of that market is plug in hybrid electric vehicles so what does that do it drags down the average pack size overall because your average battery electric battery is about five times the size of a plug in hybrid electric vehicle battery and also the chemistry is deployed and those batteries are quite different as well and i'll come to that in a bit of detail shortly and then china on the right hand side again it's a similar sort of split in terms of the profile of vehicles being sold in terms of battery electric versus plug in hybrid electric versus the US and Canada but what you see there is the battery pack size is a bit lower than in well significant amount lower than in the US market the US and Canada market and that's because of that diversity of vehicles on the on the road now really weighing down some of the larger pack sizes or smaller pack sizes as we move forward so these are all sales weighted averages and again that diversity has a significant effect on the on the chemistry has been deployed now and into the future as well okay so what this slide does is sort of draw a lot of that discussion together so what we have here is the percentage share of the total vehicle excuse me the battery electric and plug in hybrid electric vehicle market by battery chemistry here we're actually lumping in all the vehicle classes so really that means just including buses and coaches and the small number of medium and heavy duty commercial vehicles that are sold currently for battery electric and plug in hybrid electric let's just start with 2020 this is the most important piece and it's also illustrative of the lot of the points that I've been making so at the bottom of that bar you have NCM 811 that deployment there is virtually all in China the Chinese OEMs have been much more ready to move forward with that high nickel cathode technology in their current model releases than the Europeans or or the North Americans have been so there's a number of reasons for that some is around the the importance of warranty time periods the attitude towards risk well some of it is just about access to cathode materials and the connections that Chinese OEMs have because of the domestic battery manufacturing space that you have there but it's very important to remember that that piece is almost entirely concentrated on China with a few exceptions the next block up is NCM 622 slash 712 we've actually now in our monthly report broken out 712 because it's become a significant portion of the market in the last couple of months but you can think about this as mid-nicle or six or seven series nickel if you want to think about it that way the reason why that piece has expanded so much in in 2020 is basically because of the increase in in vehicle sales in Europe as well so if you're releasing a battery electric vehicle in in Europe with well they're all fairly fairly significant pack sizes new model lines being released 2019 into 2020 were virtually all 622 712 if you know so the id3 that the Volkswagen you know the leading Volkswagen vv sale is a 712 cathode and again that's really driven forward that that piece of the market we'll talk about what the future holds for that in the next slide but I will come to that the next piece is 523 523 is very very readily deployed in plug-in hybrid electric vehicles because that extra piece of cobalt in there supports a quite an aggressive charging discharge cycle as the as plug-in hybrids tend to be discharged 100% and charged 100% that affects the life cycle the battery if you don't include a relatively high proportion of both cobalt and manganese there and so that the reason why the 523 is hanging on there is because of plug-in hybrid electric vehicle sales in Europe in 2020 111 piece is really far phasing out a lot of those legacy vehicles so when a vehicle comes onto the market it will tend to maintain the same chemistry it has all the way through its life cycle until it leaves the market as it comes back as a new iteration or disappears altogether so those mcm 111 portions there are vehicles that really came into the market 2017 2018 and the nca piece is virtual tesla and virtual north america as well and then the lfp piece at the top there is the lion's share of that is buses in china now people talk about lfp coming back and it is it will be coming back for passenger car and light duty vehicles that process really just begun and what we're in now is a transitionary period between the phase out of older legacy lfp vehicles in mainly in china really but also to some extent in european america but uh old lfp legacy vehicles phasing out of the market they tend to have larger pack sizes than some of the new lfp vehicles coming into the market and so we're in this transitionary period where people expect that lfp share to be larger in 2020 but it's really coming next year in the year after that but that that share will start to increase significantly as the level of firstly the number of vehicles bearing that technology primarily in china increase and then also the sales of those vehicles start to pick up as we move forward there's an important point here and it's often missed and it's so that we're always paying to point out which is that the transition of these chemistries as it's deployed in the market has a natural lag because of the way the vehicles are released so as i said a vehicle tends to maintain its same chemistry throughout its life until it's reissued as effectively a new iteration of the model and also in a in a given year if a model was released in 2019 or 2020 it will be released say let's say halfway through the year and then the sales take a while to pick up as they move forward so the market share takes a while to develop so it's a nuance that's often ignored or missed and it's something that we pay a lot of attention to as the as the market develops so effectively my final slide in terms of this and i'm looking forward to receiving your questions and and having the discussion at the end with simon and will uh it's really around this timeline and what it means so again a conversation that you tend to have fairly often is around the the development of new technologies or the perceived development of new technologies and how quickly they come into the market so you have a lot of discussion around you know second and third generation technologies which can on paper offer significantly higher energy density or significantly better charging speeds or significantly better life cycle and so on but the reality is that all of those chemistries have to be tested the way through by OEM so that's a couple of year cycle of itself they have to be proven at scale which again is a is a is a is a task that is in some respects hard or or maybe as hard as developing the technology itself and they also have to hit the market the right price point as well and finally the important thing is they have to have an application so we do and this is sort of echoing the point that simon made we do believe that that there are interesting and new technologies coming through solid state obviously being one the timeline for that is actually probably slightly quicker than maybe had been previously imagined but i'll come to that in a bit more detail in a moment silica dominant nanodes again sila nano technologies that simon mentioned is one of the major companies developing that technology lmno is similar type technologies so these are nickel manganese technologies s-folder developing one as well they call it nmx these are quite interesting so they hit a point in terms of energy densities above lfp but below some of the high nickel ncm cathodes quite an interesting technology choice there the point is with all of these technologies as they move through is that they have to have a market and the market will be driven by again this diversification of applications that consumers are going to want with different evs because they come through one point on ncm811 and high nickel before i finish is around the fact that as i showed you in the previous chart ncm811 has come into the market but it's all been virtually china the european orems and and to some extent the north american orems are reluctant to move that quickly forward with it and so we've opted for these mid-nickel chemistries 71262 by the time they're ready to move forward with high-nickel chemistries ncm811 might have already been surpassed and i was like me because anything can happen but there's coming on the back of it now the road maps are all towards high nickel low cobalt chemistries at that high nickel in the market ncm9.5.5 for example and other iterations around that and it's going to be interesting to see how that happens from a forecasting company like ours even getting the definitions right is quite difficult as we move forward but with that i'm happy to expand on anything in the in the question and answer piece and i'm sure there'll be plenty of questions to come forward and so for now i'll hand back to Will all right adam thank you very much for that so let's take a couple of questions before we have a discussion with simon as well so maybe that's followed the order you presented um you spend a couple of slides talking about subsidies so where does the money come from how is this being done sustainably by the government that's a good question but with regards to the covid related subsidies which is what saw that big increase last year is that that became cover for some of that a lot of that is through borrowing frankly that's around rescue packages for various industries at which the automotive business is one and the point is that it's not sustainable at scale it is a supporting mechanism for a market that is in its infancy even though we're talking about three million vehicles last year which is a big step up from where we have five years ago it's still a it's still a relatively mature market especially in terms of where it's going so when the market is hitting 10 million vehicles it's not going to be possible to support the market in the same way and thinking back to that timeline you see that most of them run out 20-25ish and get graded down more than anyway so really by that time you're hoping that OEMs would have built the scale of production and the supply chain in order to be able to build these vehicles at a competitive cost sell them at a competitive price without government intervention to some extent that's starting to happen in China already at the lower end of the market so it can be done and there's really no option but that for that to happen Speaking of China Adam one listener commented that the Shanghai metropolitan government has changed as changing the subsidy policies for EVs do you see any signs on the declining of subsidies in China and also in the US having an impact on the growth rate of adoption Yes I mean China's a good example because last year well it's so last year 2019 the Chinese government effectively halved the available subsidy at national level as a result that people knew that was going to happen so what happened was that you had a big pre-buy effect in the first half of 2019 and then the market just dropped off significantly in the second half of 2019 so when you but that was quite a profound change they had I think what perhaps that was was a misreading of how mature the market was at that stage and yes I mean it does have a significant effect and I would say as well if you looked at the month by month sales data in Europe last year and for individual nations within Europe you'll see that COVID hit Europe sort of March April time in terms of the sales numbers last year and then it had a significant rebound second half of the year because the government's piled in with these extended or increased subsidies and incentives so yeah at this point in the market's maturity has a huge impact but like I said as the market increases and grows and goes to scale it will become less and less important and viable. On a personal note I really took cues from the subsidies declining the US I bought both of my electric vehicles and took advantage of the $7,500 federal rebate and the $2,500 California rebates made a huge difference so certainly yeah exactly I mean I could have showed you a chart actually which I've been showing recently because it's around what's what could potentially happen with the Biden administration but the the correlation between sales and especially a pre-buy and the change in the tax credit with volume as it was linked to volume was huge I mean you know you can almost you closed your eyes and just said okay where was the tax credit changed you would be able to pick it out on a chart from the sales it was that obvious so we were thinking that one of the easy policy leaders in the Biden administration could pull this year is to just get rid of the volume cap on tax credits. From speaking to the US and actually some government officials it's not probably not going to be as simple as that but it's certainly something to think about because you know you're not really spending anything and you're just deferring fairly minimal tax revenue streams anyway but it's potential at least. Adam I really like the point you made earlier that you know the the pandemic has been terrible but the one little catalyst it really helped with is the transition to EV so I think that's one of the very very small positive effect we're seeing so this is thank you for sharing with that insight now moving more into the demand side share mobility fleet autonomy is really catching a lot of popular media attention you know right here in our backyard Zooks announced their robot taxi vehicle do you see that substantially impacting the trends in terms of EV use in the market demands going forward and if so one is going to start taking shape. Yeah it's an issue we had Zooks speak at one of our seminar series in the middle of last year in fact and it's fascinating and we're building into our modelling assumptions in the in the western world effectively that vehicle ownership will decline per capita over time but it couldn't frankly it couldn't get much higher especially in North America so and autonomy obviously plays a part of that shared economy plays a part of that there are clearly limitations to that in some respects in rural areas even to some extent in suburban areas it becomes less viable but what it will mean actually is that for certain types of vehicles particularly taxis delivery vehicles those sorts of things sales will go down over time for those vehicles because you'll be able to work those vehicles harder than they have been worked so far because the main limitation on the on the hours those vehicles and work is even being driving them most part so that will have an impact it will also change batch of chemistry for those vehicles because the lifecycle of those vehicles is going to be a lot shorter because they're going to be used a lot a lot more frankly in the short period also they're going to have to be charged differently because there'll be in a lot of cases for those probably one is charging a depose also robotic charging ABB if develops a system for that and the W have recently been mounting their system for that as well so it's going to mean a change in the in the chemical makeup of the batteries that go into those vehicles as well so it's a very interesting piece. Adam I really resonate with that point you know some 10 15 years ago when I started working on batteries on the chemistry side there was a mantra from the car maker which is 3000 cycles because at that time plug-in hybrid was on the road map and now that has changed completely this lifecycle requirement has gone down significantly because you're going to be these so I really agree with that point that the specifications are evolving very rapidly maybe on that point let me ask one last question before we go to the panel discussion you discussed within the the NMC space the nickel-mechanics cobalt space the diversification the the change in the chemistry and we just talked about this PHEV to BEV how that has put pressure on the chemistry to evolve how about within the olivines do you also see diversification within the lithium iron phosphate space there's being you know new chemistry coming out for example with megane substitution what is the what is the the market and the supply demand look at there yes interesting I mean well LFP has captured a lot of people's attention and imagination in the last 18 months probably maybe slightly longer than that in in what was seen as uh almost an aging technology it's been completely uh had new life completely reared back into it because of the the development of cell-to-pack uh technologies and I think a lot of that will be around pack design and module design and so on which will enable transitions to LFP being deployed in in different types of vehicles on the NCM side as well given that you mentioned manganese and so on there's you know there are physical limits to what you can do with certain uh chemistries but the the point that you know I've been making is that uh that's fine because different vehicles are going to need to do different things and you're going to be hitting different price points and it really doesn't matter that one one one chemistry you can take you 300 miles and one can take you 150 if the marketplace is there for both of those so that's um yeah but you know certainly LFP is already having a resurgence like I said it hasn't really filtered through in the deployment numbers yet because there is a delay in that um but yeah it's almost a different technology from the one that was available maybe 2013 2014. Adam that was wonderful thank you so much I'm sorry that we can't get to all the question but I'm eager to have um the discussion with both Simon and Adam so if I can have Simon come back as well there you are Simon thank you so much so maybe let me begin with kind of a provocative question but I think I know the answer looking back a couple years how good are your how good were your predictions well a benchmark there are about 99.5 accurate Adam I don't know what it was yeah equal order and magnitude I'd say well what I would say is that um you get exogenous shocks in the market which are difficult to predict but I think what what I met stuck sort of year to year month a month and you know you put your hands up when you did things wrong but what is clear is that there is a there is a fairly open roadmap for the longer-term trade right and I would stand by in five years time what we're saying about five years now so I mean I know it's a bit of a fun one to say but because if you look at what's happening at a little legislative level leave aside all those targets those co2 target co2 legislation in Europe is what's driving the market there in the long term and that's what's driving areas to make investments now um actually we did some analysis they don't really need battery electric to meet the near-term targets but they're going to need it eventually so they're they're making as it was now so you can say with a degree of confidence what is going to be happening in the future because you're talking about such huge level investments uh to make this to make it possible for areas to meet those standards um yeah so looking backwards it's difficult on a year basis but long term I think the trends are fairly and I think I think one common trend across all publishing companies in this was underestimating sorry overestimating the short term and underestimating the long term I think the key thing with forecasting from our perspective at least I actually changed our forecasting methods to quarterly instead of annually this is about three years ago because so much was happening and so much was changing we had to revise these every quarter as we collected data but the one the one kind of key thing with forecasting is trying to predict when those inflection points are when is the real change the step-ups in demand and I think if you can manage that accurately then the rest of the rest of it falls into place and and yeah it's kind of that that's why the the benefit of from what we do um and what Adam does with the row motion is you know understanding the whole supply chain because then you know where the bottlenecks lie to the whole thing if you just look at batteries on its own or ebbs on its own you won't get the full picture and um I think that's why that's why we have the businesses we do Simon Adam giving your track record um you know if you guys have an investment fun I will be investing in that 99 um let me poke you both on solar so in my career I have I saw the the rise in the maturity of the solar industry in many ways it's similar but in many other ways it's entirely different relative to batteries and and ebbs what can you tell us in terms of the lessons learned but also the new things we have to invent because batteries and solar shows are very different Simon would like to go first okay yeah okay well I mean with it it's a common comparison and I always try and think of a fresh answer well I kind of crystallize it in my head but look the bar when you're making solar panels the barriers for entry are lower you're dealing with more simple supply chains um you're dealing with you know your biggest problem will probably be polysilicon supply whereas in with batteries you've got to manage five fundamental supply chains that are going into one five or more probably copper but let's say five critical elements and minerals going into one um and therefore you're making a more complex product and so if that product I mean you know people are going to try and build battery plants there is this rise of the battery mega factories but if they stick and if they sell they're in it in the game for a long time especially if it's tier one production and for me I guess the the fact is it's difficult to stay in the game for a long time and once you're there I think that's one thing and but also you're coming from a lower base so I mean with batteries you're going to have oversupply you're going to have many companies that go bust and that misjudge it so in many ways it's going to have a similar story to solar but I don't think it will be as volatile as dramatic um so my thoughts yeah I'd agree with most of that I mean as Simon says the the product is so much more complex so people quite often when they make the comparison talk about the scaling economies and the learning you know the cost savings from learning and all that sort of thing as we move forward and while that's obviously true because any industries it ramps up becomes more efficient and the cost basis per unit drops is you're just talking about so many more moving parts with the EV space and also you're talking about a piece of technology that if it goes wrong it can go wrong fatally in terms of the vehicle so that is less the case with solar and so there are obviously parallels to be drawn but you know there are there are steps there I think one final point on follow up to Adam is this is high battery lithium-ion batteries for EVs are high risk especially western EVs if one goes wrong you've got a big problem and so that's another reason why kind of I'll talk about this kind of sticking and being less volatile um with solar it's not consumer facing it's you know it's in the energy and utility industry space it's not down to the individual if so if a solar installation goes wrong in any way shape or form it's not going to be all over social media is it so I think that's that's something to think about as well so I mean Adam if I were to summarize what you said I think the chemical complexity of batteries relative to solar so so the solar cell is basically silicon and maybe a little bit of silver for the contacts and then batteries you know all of a sudden we're talking five six seven elements um so I as a material scientist I fully agree with that assessment as the complexity that makes it much more difficult to control as well and both of you also highlighted the safety issue am I correct to understand that the what does that stake in terms of lives then is what dictates the commercial development timeline that's why it takes so long to qualify and to roll out market data understand that correctly yeah I mean certainly from from from my side I'd agree with that entirely because it's also I mean you've got the safety issue purely paramount but the safety issue precedes another consideration which is tens of billions of dollars of investment going into these technologies that if you don't get it right especially for a western area it's maybe slightly less in case for some of the Chinese areas but certainly for a western area if this goes wrong now then I don't know what the strategy would be frankly so um they they have got so much right on this the caution is probably uh very sensible approach frankly and another very interesting thing I'm also observing between the solar versus battery industry is the logistical aspect so solar cells are very heavy right if you look at the weight per dollar it's quite high but yet you now have the dominance of Chinese manufacturers in supplying those solar cells and and as we saw in both your representation this is not the case for batteries what are the key drivers here that is making the two cases so distinct in terms of how the supply chain has been built out it's a good question Adam do you want to take it or I mean yeah I I really don't have much more time on that other than the fact that uh someone stroke me in it here a little bit but you know the the dynamics of what the the technology actually has to do and I said the complexity feeding into it is just it's really clearly there are power parallels because it's uh industry being built pretty much yeah it operates in the same sector but yeah I mean it's just it's just so different in terms of the end I think also another thing to look at is where the raw materials are coming from right we highlighted this five or six you know critical supply chains to master for batteries but for for for solar you know or any of these what are the feedstock are they easily and readily available materials and feedstocks therefore if they are or if they're byproducts and the barrier for entry is much lower so therefore you're not going to have the raw material shortages that slow down the technology or the production side of the technology i.e. in batteries the slowing factor will absolutely be and you'll see it this year supply of lithium supply of cobalt supplied nickel that will slow the whole thing down and make it far more real and and I think it was certainly you never had those slowing factors so I think that's something to consider as well well if I can share my own hypothesis I think it's really that solar is a standalone product you have solar cells you have inverters you have installers right the various part of the entire business chain but the installers are very separate from the the makers of the solar cell and so are the inverters and it's not a truly integrated ecosystem they can't be done separately but for cars it's completely integrated you have you know Detroit, Wolfsburg, Stuttgart you know built around cars so I think the political driving forces is very significant here yeah so I think that was not the case with solar so I think that was okay to you know from the US perspective to to have China take it over and still you know a majority of the cost is actually not insulation so it's still there there's still plenty of jobs around solar in the US that's a really good point well because that actually then brings to the the slides I was showing with most of this back these tier one lithium-ion batteries are all being tied up in long-term contracts or JVs with the automakers so there aren't that it's not like there's a outside of China maybe but even inside with tier ones it's not like there's a huge amount of free market lithium-ion batteries and actually if SK Innovation do get banned then the US is going to have that's about 50% of the US's free market lithium-ion batteries considering Tesla is internal considering LG Chem's plant with GM so then there's an issue for the US on the battery supply side so I think it's a really good point in batteries these things are locked up for the majority of time and that's the same on the raw material side as well yeah I mean just to finish off that point from my side on solar is that the it's the various barious-drenchery thing is you know it's technical and it's also in terms of capital intensity as well so if the solar I can't remember what year it was but there's almost a doubling of AST for the build out of solar that you know that would be very very difficult to do in the battery industry because just the level of capital involved and also the technical complexity of the finance. Absolutely I think it's it's a good comparison I think it's a lot less than learned but batteries are very unique I think let's talk charging so Adam you briefly touch upon the importance of charging there are a number of questions from the audience as well I'm really curious on your thoughts on how vital the charging infrastructure is for EV adoption we hear quite a bit from the popular press but largely you know there's a lot of money at stake there as well one specific question I have is you know the overnight charging or sort of your eight-hour type level two chargers versus your fast charger level three and beyond you know there's been a lot of noise around having fast charging network deployed for example in the United States and in Europe and you know companies are discussing that as being their unique advantage when it comes to charging infrastructure and Adam I I wonder if you see an opportunity for the government to come in here and incentivize charging infrastructure deployment in the same way they have done so for EV adoption and specifically I'm thinking and just this is a scenario in my head in suburban America where we are here just right in Palo Alto you know if every home has a charger level two charger which is about you know a thousand dollar or so to to to purchase and install and you have adequate charger in the workplaces in suburban America that will take care of I think a significant amount of the charging need but this is not true for urban areas so maybe Adam can you tell us a little bit about the complexity of charging deployment as geospecivity and also how government could be driving some of these policies to help with the EV adoption yeah so to start this conversation or start my answer I'm going to give you a tale of two different markets so one is Norway which you would have seen in my EV penetration slide it's got the highest EV penetration anywhere in the world and the other one is China which is you know the biggest market by volume in terms of the fleet. Norway has a ratio of EVs to public charger about 26 memory is 25 26 to 1 very much the European target is 21 so it gives you some idea of how far that is in China it's 6 to 1 roughly speaking so you know you've got two markets there where EVs have been successful and will continue to be very very different dynamics in terms of charging now part of that is because of well a large part of that is because of demographics in China you have much higher population densities in key urban areas the number of people living in single family units or households is much lower so you don't have that private infrastructure you described that's a suburban market has so you have to have the coverage there and the Chinese government as it always does will figure out and got that done in Norway like I said the fact that you've got you know the worst ratio of any developed market in the world has not affected its ability to sell EV or to buy EVs because the demographics are so different if you look at the types of vehicles being sold to all high ends that tells you something about the buyer most of them are living in single family households because of the population density of Norway is much much lower as a whole that most countries frankly it means that you know the the level of private charging is much higher and therefore the public infrastructure doesn't need to be as large so all other countries fit somewhere between those two poles in terms of what is necessary for coverage there's going to be no alternative but the government's to get involved on some level the rollout of this because if it's well a couple of reasons one because it's going to have an impact on the grid longer term but that's not so important right now but because you're going to have to be digging up public areas to put these points in so on street level charging it's going to have to at least government consent it's going to probably need government incentives because the business case we're doing that now is is is fairly limited frankly what you have with the charging market is that you have what you've seen is that the EV markets instead of sales have raced off the head of the charging market instead of keeping up and that's because the charging market needs demand before you can give supply like most markets frankly but then you have this added complexity which is the fact that infrastructure projects take a long time so governments are going to have to make it very easy in terms of permitting those those infrastructures but the right tax credits in place so that you can claim back the losses you're going to make in the near term because long-term revenues and in some cases are going to have to to pay for it as well so it's been a long answer but the charging piece is fascinating because you have this it almost acts a completely different tangent to the OEM piece right and I know that now they started to talk to each other and they are investors but it's really it's a market all of its own and yeah the two pieces aren't really talking to each other what one way that you can relate it back to battery chemistry and battery dynamics is around charging speed and that has an has an impact on the level of infrastructure you need as well because people talk about in these sort of fairly loose terms around ratios of EVs to charges as I had been doing but really what matters is the ratio of EVs to fast charges publicly that's what really matters because the slow charging will just take a place at home or at the workplace or or at commercial facilities shops for example and that that's the ratio that really matters and it's it tends to be a lot higher than people think it is like as you need less than you think at least in the short term. Yeah I just quickly have a charging story I don't do charging but I am a consumer a user of the charging network in London I had a model I bought model three two years ago when it first started coming to the UK and I live in London and you know I'm a young go getter that kind of demographic and I drive I've never used in London or even around London ever a fast charger the the 125s or 250s because I just do that on road trips and when I longer I my car has been constantly topped up between 50 and 350 and probably 280 miles anywhere in that zone because when I go into London I go to the gym or if I go shopping or if I drive my car into central ish London there's seven or 12 kilowatt hour charges on the street for parking so it's free to park you plug it in the the 10 pounds you you're going to pay on parking is free goes into the juice in your car and that's how I've charged and and in London it's it works perfectly it means you can park anywhere so I never thought that would happen I always thought I'd be using the superchargers but Simon I have exactly the same story so I have a model three for about two and a half years I've used a super charger once when I drove to to Los Angeles and I have the same story for parking too one of the you know the thing I don't like about the the university is that it charges parking of quite high premium and one of the benefit of charging is that the charging rate which includes parking is less expensive than the regular parking rate so you're getting essentially negative parking rate so I have a lot of incentive to drive the EV of course it's better to bike even if you can but I think that you'll hear a lot of these stories people sharing them so thank you for that was really fun to hear that story um we're coming to the last couple of minutes I thought we can talk a little bit about the integration of supply chain so Simon you made this point very clear that you know there's this increased driving force to co-locate different aspects of the processing for batteries and making it an incorporation to cars um is there a benefit in terms of sustainability that could be realized here and I'm also thinking for example the EU's recent directive on increased requirements for sustainability is this a good thing for sustainability you think in terms of co-locating everything is there an argument to be made to to promote sustainability when it comes to making batteries and things I think it's one of the most important aspects of sustainability if you're co-locating production you know you're reducing the miles all of these components of the supply chain of traveling that's number one that's massive right number two is you're controlling more of your processes in-house which allows you to then change those processes tweak them make them more sustainable like for example you're not just a single cathode maker trying to make some sustainability improvements you're you're a battery maker cathode maker lithium hydroxide maker you can do it all in one go and so there's benefits there um I would say there are two extra medium ones and then things like I mean the biggest thing for cathode for example is the energy input it's very energy intensive to make cathode so you've got to have a if possible way a low carbon or renewable source for that so once if you can co-locate these battery hubs right next to you know wind solar or nuclear energy um then it's game on for the co2 footprint but that's just my my rambling so then Adam yeah don't have an enormous amount to add to that other than that the energy piece is is vital because you know if you're talking about you know I'm funny I must think about it but if you're talking about green technology then it does it the sense is that from a public perception point of view it would be better have the feedstocks all for that accountable and and as great as possible that also goes for the SG piece as well so you know what it's coming from so yeah I mean that that is something that's slightly overlooked but increasingly particularly in Europe you start to see that hydro power and actually say manufacturing yeah and I think the fundamental principle is if they're instead of having seven or eight companies in the supply chain which you used to have 10 years ago if you've got three that's a much better gig for everything costs, sustainability, so on and so forth and I think that's the way we're going over the next 10 years we're probably at about five at the moment I think that'll go to about three and I think you'll have a really I think that's key to scaling and key to efficiency and key to ESG as well so I'm going to add a little bit more it's I think having many participants in the supply chain it becomes very leaky in terms of environmental footprint CO2 and others I fully agree Adam sorry I interrupted you yeah I was just going to say there's almost like a legacy issue here with the lithium-ion battery industry which is that previously it was okay to operate at a relatively small scale and you see that with lithium hydroxide converters maybe in China or carbonic converters in China but you know then you barely know any of those names if you read them they're not household names so yes there is that legacy issue it makes sense that as the industry grows scale improves and faceability has to improve and all that sort of thing there will be consolidation in that case Adam and Simon we only have three minutes left I thought I would end with another provocative question is you highlight it today the synergy of all the players in making batteries happen and EVs happen can you talk critically maybe for a minute or two each the disconnections that have to be addressed what are not well connected yet I can tell you one thing you know academia and industry isn't very well connected in terms of R&D what are the big opportunities for connections to be made I mean I'd come back to the charging piece actually because one thing that I neglected to add was that people talking about the rollout of very very fast charging with 300 kW chargers none of the batteries on the market now can really take it there's a few exceptions but most of them can't take it the whole way through so there's become this disconnect between the charging piece to the less expensive airing piece but certainly the battery piece and speaking to those two different parties it's like different languages so that's clearly one that needs to come together we're actually trying to do some work on that Adam would say charging he loves it and also that's what his business does in a world-class way so and for me R&D sort of R&D academia to industry completely agree well I think that problem will be solved as these hubs grow and on the R&D side it's really important that the chemistry the stuff in the labs the chemists work hand in hand with the manufacturing R&D cathode and anodes alongside the manufacturing because usually I mean most of these might fit but if you can if you can get both your engineers and your chemical engineers together in one room and brainstorm the thing together at full scale with the supply chains in mind learn where these raw materials are coming from don't go down the route of picking a really niche specialty metal you will never get into commercial production but the biggest disconnect by far is the capital markets the funding the money funds are risk they don't either don't understand it or they don't have the risk with this so there's nowhere near enough money coming into this space from the public markets from private equity so on and so forth that's the biggest disconnect for me and that's slowing up everything on and it's on the raw material side it's from the mine to the chemical plant that's that's really where well you'd probably need a specialist fund for that and a long-term thinking fund as well well Simon I sense a challenge from you to us you know we always view one of Stanford's superpowers is to convene a very broad audience so perhaps that will be our post-pandemic exercise is to bring every stakeholder academia to industry to government to one place and really sit down and brainstorm so I think on that very positive note Simon and Adam I'd like to thank you for spending two hours with us today it was very much a learning experience and I'm sorry to the audience that I can't get to all of your hundred questions that were asked but it's truly being a delight to have both of you thank you very much and Justin if I can have the slide please so one of the downside of our timing here which is 7 a.m. Pacific it's very difficult to feature colleagues from Asia so we're now going to periodically have a slightly different time so rather than Friday 7 a.m. Pacific it's going to be Thursday 3 p.m. Pacific and that will allow us to include our colleagues from Japan Korea China and so forth so for our next symposium which will be two weeks from yesterday we will feature two of my colleagues from academia Professor Kisub Khan who was leading many of the battery development efforts in Korea and then Professor Hong Lee who was doing the same in China and they will talk about novel chemistries that's coming online in China and Korea and with that I'd like to thank everybody for listening Simon and Adam thank you so much for your time we look forward to see everyone in two weeks have a great day