IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v286y2021ics030626192100060x.html
   My bibliography  Save this article

Economies of scale in battery cell manufacturing: The impact of material and process innovations

Author

Listed:
  • Mauler, Lukas
  • Duffner, Fabian
  • Leker, Jens

Abstract

One key lever to reduce high battery cost, a main hurdle to comply with CO2 emission targets by overcoming generation variability from renewable energy sources and widespread electric vehicle adoption, is to exploit economies of scale in battery production. In an industry growth currently supported by subsidies, cost-efficient battery plant sizes are vital for the establishment of a self-sustaining industry and a transition into a long-term climate-neutral society. For optimal plant sizing, no consensus has yet been achieved in the battery literature and a detailed analysis of economies of scale is unavailable. To close this gap, a process-based cost modeling approach is taken that reflects the determinants of economies of scale. In state-of-the-art, minimum viable plant sizes are demonstrated to be below 2 GWh year−1 but may exceed 15 GWh year−1 in the future. This study finds that economies of scale are related to the capacity of the roll-to-roll processes in electrode manufacturing and can be maximized if the respective equipment operates at its capacity limit. This capacity depends on materials, cell design and roll-to-roll process parameters. Since these parameters improve over time, increased plant sizes will become necessary to achieve cost-efficient production levels. Required plant investments are found to decrease on a per GWh basis, whereas significantly increased funds will become necessary to reach efficient plant sizes in the future. Finally, implications are presented that support future battery cost reductions and a self-sustaining market breakthrough of battery-powered products.

Suggested Citation

  • Mauler, Lukas & Duffner, Fabian & Leker, Jens, 2021. "Economies of scale in battery cell manufacturing: The impact of material and process innovations," Applied Energy, Elsevier, vol. 286(C).
    • Handle: RePEc:eee:appene:v:286:y:2021:i:c:s030626192100060x
    DOI: 10.1016/j.apenergy.2021.116499
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030626192100060X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2021.116499?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Frederick T. Moore, 1959. "Economies of Scale: Some Statistical Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 73(2), pages 232-245.
    2. Zubi, Ghassan & Dufo-López, Rodolfo & Carvalho, Monica & Pasaoglu, Guzay, 2018. "The lithium-ion battery: State of the art and future perspectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 89(C), pages 292-308.
    3. Marc Wentker & Matthew Greenwood & Jens Leker, 2019. "A Bottom-Up Approach to Lithium-Ion Battery Cost Modeling with a Focus on Cathode Active Materials," Energies, MDPI, vol. 12(3), pages 1-18, February.
    4. Zhang, Jian & Cho, Heejin & Luck, Rogelio & Mago, Pedro J., 2018. "Integrated photovoltaic and battery energy storage (PV-BES) systems: An analysis of existing financial incentive policies in the US," Applied Energy, Elsevier, vol. 212(C), pages 895-908.
    5. Duffner, F. & Wentker, M. & Greenwood, M. & Leker, J., 2020. "Battery cost modeling: A review and directions for future research," Renewable and Sustainable Energy Reviews, Elsevier, vol. 127(C).
    6. Feng, Sida & Magee, Christopher L., 2020. "Technological development of key domains in electric vehicles: Improvement rates, technology trajectories and key assignees," Applied Energy, Elsevier, vol. 260(C).
    7. Björn Nykvist & Måns Nilsson, 2015. "Rapidly falling costs of battery packs for electric vehicles," Nature Climate Change, Nature, vol. 5(4), pages 329-332, April.
    8. Silberston, Aubrey, 1972. "Economies of Scale in Theory and Practice," Economic Journal, Royal Economic Society, vol. 82(325), pages 369-391, Supplemen.
    9. Duffner, Fabian & Mauler, Lukas & Wentker, Marc & Leker, Jens & Winter, Martin, 2021. "Large-scale automotive battery cell manufacturing: Analyzing strategic and operational effects on manufacturing costs," International Journal of Production Economics, Elsevier, vol. 232(C).
    10. Pillai, Unni, 2015. "Drivers of cost reduction in solar photovoltaics," Energy Economics, Elsevier, vol. 50(C), pages 286-293.
    11. Hache, Emmanuel & Seck, Gondia Sokhna & Simoen, Marine & Bonnet, Clément & Carcanague, Samuel, 2019. "Critical raw materials and transportation sector electrification: A detailed bottom-up analysis in world transport," Applied Energy, Elsevier, vol. 240(C), pages 6-25.
    12. Ballinger, Benjamin & Stringer, Martin & Schmeda-Lopez, Diego R. & Kefford, Benjamin & Parkinson, Brett & Greig, Chris & Smart, Simon, 2019. "The vulnerability of electric vehicle deployment to critical mineral supply," Applied Energy, Elsevier, vol. 255(C).
    13. Ørjan Mydland & Erik Haugom & Gudbrand Lien, 2018. "Economies of scale in Norwegian electricity distribution: a quantile regression approach," Applied Economics, Taylor & Francis Journals, vol. 50(40), pages 4360-4372, August.
    14. John Haldi & David Whitcomb, 1967. "Economies of Scale in Industrial Plants," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 373-373.
    15. Coester, Andreas & Hofkes, Marjan W. & Papyrakis, Elissaios, 2020. "Economic analysis of batteries: Impact on security of electricity supply and renewable energy expansion in Germany," Applied Energy, Elsevier, vol. 275(C).
    16. de Jong, Sierk & Hoefnagels, Ric & Wetterlund, Elisabeth & Pettersson, Karin & Faaij, André & Junginger, Martin, 2017. "Cost optimization of biofuel production – The impact of scale, integration, transport and supply chain configurations," Applied Energy, Elsevier, vol. 195(C), pages 1055-1070.
    17. Luo, Xing & Wang, Jihong & Dooner, Mark & Clarke, Jonathan, 2015. "Overview of current development in electrical energy storage technologies and the application potential in power system operation," Applied Energy, Elsevier, vol. 137(C), pages 511-536.
    18. Mathiesen, B.V. & Lund, H. & Connolly, D. & Wenzel, H. & Østergaard, P.A. & Möller, B. & Nielsen, S. & Ridjan, I. & Karnøe, P. & Sperling, K. & Hvelplund, F.K., 2015. "Smart Energy Systems for coherent 100% renewable energy and transport solutions," Applied Energy, Elsevier, vol. 145(C), pages 139-154.
    19. Morroni,Mario, 1992. "Production Process and Technical Change," Cambridge Books, Cambridge University Press, number 9780521410014, November.
    20. Richard Schmuch & Ralf Wagner & Gerhard Hörpel & Tobias Placke & Martin Winter, 2018. "Performance and cost of materials for lithium-based rechargeable automotive batteries," Nature Energy, Nature, vol. 3(4), pages 267-278, April.
    21. Morroni,Mario, 2006. "Knowledge, Scale and Transactions in the Theory of the Firm," Cambridge Books, Cambridge University Press, number 9780521862431, November.
    22. Sanchez, Daniel L. & Callaway, Duncan S., 2016. "Optimal scale of carbon-negative energy facilities," Applied Energy, Elsevier, vol. 170(C), pages 437-444.
    23. Nicholas Georgescu-Roegen, 1969. "Process in Farming Versus Process in Manufacturing: A Problem of Balanced Development," International Economic Association Series, in: Ugo Papi & Charles Nunn (ed.), Economic Problems of Agriculture in Industrial Societies, chapter 0, pages 497-533, Palgrave Macmillan.
    24. Tovar, Beatriz & Javier Ramos-Real, Francisco & de Almeida, Edmar Fagundes, 2011. "Firm size and productivity. Evidence from the electricity distribution industry in Brazil," Energy Policy, Elsevier, vol. 39(2), pages 826-833, February.
    25. Parra, David & Patel, Martin K., 2019. "The nature of combining energy storage applications for residential battery technology," Applied Energy, Elsevier, vol. 239(C), pages 1343-1355.
    26. Gert Berckmans & Maarten Messagie & Jelle Smekens & Noshin Omar & Lieselot Vanhaverbeke & Joeri Van Mierlo, 2017. "Cost Projection of State of the Art Lithium-Ion Batteries for Electric Vehicles Up to 2030," Energies, MDPI, vol. 10(9), pages 1-20, September.
    27. Skovsgaard, Lise & Jacobsen, Henrik Klinge, 2017. "Economies of scale in biogas production and the significance of flexible regulation," Energy Policy, Elsevier, vol. 101(C), pages 77-89.
    28. Mydland, Ørjan & Kumbhakar, Subal C. & Lien, Gudbrand & Amundsveen, Roar & Kvile, Hilde Marit, 2020. "Economies of scope and scale in the Norwegian electricity industry," Economic Modelling, Elsevier, vol. 88(C), pages 39-46.
    29. Zhao, Rui & Liu, Jie & Gu, Junjie, 2015. "The effects of electrode thickness on the electrochemical and thermal characteristics of lithium ion battery," Applied Energy, Elsevier, vol. 139(C), pages 220-229.
    30. Dismukes, David E. & Upton, Gregory B., 2015. "Economies of scale, learning effects and offshore wind development costs," Renewable Energy, Elsevier, vol. 83(C), pages 61-66.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Beck & Philipp Dechent & Mark Junker & Dirk Uwe Sauer & Matthieu Dubarry, 2021. "Inhomogeneities and Cell-to-Cell Variations in Lithium-Ion Batteries, a Review," Energies, MDPI, vol. 14(11), pages 1-25, June.
    2. Wijayasekera, Sachindra Chamode & Hewage, Kasun & Hettiaratchi, Patrick & Razi, Faran & Sadiq, Rehan, 2023. "Planning and development of waste-to-hydrogen conversion facilities: A parametric analysis," Energy, Elsevier, vol. 278(PA).
    3. Burke, Andrew F. & Zhao, Jingyuan & Fulton, Lewis M., 2024. "Projections of the costs of light-duty battery-electric and fuel cell vehicles (2020–2040) and related economic issues," Research in Transportation Economics, Elsevier, vol. 105(C).
    4. Ruben Leithoff & Arian Fröhlich & Steffen Masuch & Gabriela Ventura Silva & Klaus Dröder, 2022. "Process-Product Interdependencies in Lamination of Electrodes and Separators for Lithium-Ion Batteries," Energies, MDPI, vol. 15(7), pages 1-17, April.
    5. Rezaei, Mostafa & Akimov, Alexandr & Gray, Evan Mac A., 2024. "Levelised cost of dynamic green hydrogen production: A case study for Australia's hydrogen hubs," Applied Energy, Elsevier, vol. 370(C).
    6. Rezaei, Mostafa & Akimov, Alexandr & Gray, Evan Mac A., 2024. "Techno-economics of offshore wind-based dynamic hydrogen production," Applied Energy, Elsevier, vol. 374(C).
    7. Cotterman, Turner & Fuchs, Erica R.H. & Whitefoot, Kate S. & Combemale, Christophe, 2024. "The transition to electrified vehicles: Evaluating the labor demand of manufacturing conventional versus battery electric vehicle powertrains," Energy Policy, Elsevier, vol. 188(C).
    8. Rezaei, Mostafa & Akimov, Alexandr & Gray, Evan MacA., 2024. "Techno-economics of renewable hydrogen export: A case study for Australia-Japan," Applied Energy, Elsevier, vol. 374(C).
    9. Florian Degen, 2023. "Lithium‐ion battery cell production in Europe: Scenarios for reducing energy consumption and greenhouse gas emissions until 2030," Journal of Industrial Ecology, Yale University, vol. 27(3), pages 964-976, June.
    10. Bustamante, Juana & Oughton, Christine & Pesque-Cela, Vanesa & Tobin, Damian, 2023. "Resolving the patents paradox in the era of COVID-19 and climate change: Towards a patents taxonomy," Research Policy, Elsevier, vol. 52(9).
    11. F. Degen & M. Winter & D. Bendig & J. Tübke, 2023. "Energy consumption of current and future production of lithium-ion and post lithium-ion battery cells," Nature Energy, Nature, vol. 8(11), pages 1284-1295, November.
    12. Wesselkämper, Jannis & Dahrendorf, Laureen & Mauler, Lukas & Lux, Simon & von Delft, Stephan, 2024. "Towards circular battery supply chains: Strategies to reduce material demand and the impact on mining and recycling," Resources Policy, Elsevier, vol. 95(C).
    13. Gutsch, Moritz & Leker, Jens, 2024. "Costs, carbon footprint, and environmental impacts of lithium-ion batteries – From cathode active material synthesis to cell manufacturing and recycling," Applied Energy, Elsevier, vol. 353(PB).
    14. Vykhodtsev, Anton V. & Jang, Darren & Wang, Qianpu & Rosehart, William & Zareipour, Hamidreza, 2022. "A review of modelling approaches to characterize lithium-ion battery energy storage systems in techno-economic analyses of power systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 166(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Duffner, F. & Wentker, M. & Greenwood, M. & Leker, J., 2020. "Battery cost modeling: A review and directions for future research," Renewable and Sustainable Energy Reviews, Elsevier, vol. 127(C).
    2. Yang, Chen, 2022. "Running battery electric vehicles with extended range: Coupling cost and energy analysis," Applied Energy, Elsevier, vol. 306(PB).
    3. Duffner, Fabian & Mauler, Lukas & Wentker, Marc & Leker, Jens & Winter, Martin, 2021. "Large-scale automotive battery cell manufacturing: Analyzing strategic and operational effects on manufacturing costs," International Journal of Production Economics, Elsevier, vol. 232(C).
    4. Michalis Nikiforos, 2013. "The (Normal) Rate of Capacity Utilization at the Firm Level," Metroeconomica, Wiley Blackwell, vol. 64(3), pages 513-538, July.
    5. Thomassen, Gwenny & Van Passel, Steven & Dewulf, Jo, 2020. "A review on learning effects in prospective technology assessment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 130(C).
    6. Daniele Stampatori & Pier Paolo Raimondi & Michel Noussan, 2020. "Li-Ion Batteries: A Review of a Key Technology for Transport Decarbonization," Energies, MDPI, vol. 13(10), pages 1-23, May.
    7. Perčić, Maja & Frković, Lovro & Pukšec, Tomislav & Ćosić, Boris & Li, Oi Lun & Vladimir, Nikola, 2022. "Life-cycle assessment and life-cycle cost assessment of power batteries for all-electric vessels for short-sea navigation," Energy, Elsevier, vol. 251(C).
    8. Gutsch, Moritz & Leker, Jens, 2024. "Costs, carbon footprint, and environmental impacts of lithium-ion batteries – From cathode active material synthesis to cell manufacturing and recycling," Applied Energy, Elsevier, vol. 353(PB).
    9. Wesselkämper, Jannis & Dahrendorf, Laureen & Mauler, Lukas & Lux, Simon & von Delft, Stephan, 2024. "Towards circular battery supply chains: Strategies to reduce material demand and the impact on mining and recycling," Resources Policy, Elsevier, vol. 95(C).
    10. Steffen Link & Annegret Stephan & Daniel Speth & Patrick Plötz, 2024. "Rapidly declining costs of truck batteries and fuel cells enable large-scale road freight electrification," Nature Energy, Nature, vol. 9(8), pages 1032-1039, August.
    11. Xaviery N. Penisa & Michael T. Castro & Jethro Daniel A. Pascasio & Eugene A. Esparcia & Oliver Schmidt & Joey D. Ocon, 2020. "Projecting the Price of Lithium-Ion NMC Battery Packs Using a Multifactor Learning Curve Model," Energies, MDPI, vol. 13(20), pages 1-18, October.
    12. Morroni, Mario, 2014. "Production of commodities by means of processes," Structural Change and Economic Dynamics, Elsevier, vol. 29(C), pages 5-18.
    13. Lombardi, P. & Schwabe, F., 2017. "Sharing economy as a new business model for energy storage systems," Applied Energy, Elsevier, vol. 188(C), pages 485-496.
    14. Xie, Yunkun & Li, Yangyang & Zhao, Zhichao & Dong, Hao & Wang, Shuqian & Liu, Jingping & Guan, Jinhuan & Duan, Xiongbo, 2020. "Microsimulation of electric vehicle energy consumption and driving range," Applied Energy, Elsevier, vol. 267(C).
    15. Ziad Ragab & Ehsan Pashajavid & Sumedha Rajakaruna, 2024. "Optimal Sizing and Economic Analysis of Community Battery Systems Considering Sensitivity and Uncertainty Factors," Energies, MDPI, vol. 17(18), pages 1-20, September.
    16. Guelpa, Elisa & Bischi, Aldo & Verda, Vittorio & Chertkov, Michael & Lund, Henrik, 2019. "Towards future infrastructures for sustainable multi-energy systems: A review," Energy, Elsevier, vol. 184(C), pages 2-21.
    17. Cagli, Efe Caglar, 2023. "The volatility spillover between battery metals and future mobility stocks: Evidence from the time-varying frequency connectedness approach," Resources Policy, Elsevier, vol. 86(PA).
    18. Sturm, J. & Ennifar, H. & Erhard, S.V. & Rheinfeld, A. & Kosch, S. & Jossen, A., 2018. "State estimation of lithium-ion cells using a physicochemical model based extended Kalman filter," Applied Energy, Elsevier, vol. 223(C), pages 103-123.
    19. Hsieh, I-Yun Lisa & Pan, Menghsuan Sam & Chiang, Yet-Ming & Green, William H., 2019. "Learning only buys you so much: Practical limits on battery price reduction," Applied Energy, Elsevier, vol. 239(C), pages 218-224.
    20. Hsieh, I-Yun Lisa & Pan, Menghsuan Sam & Green, William H., 2020. "Transition to electric vehicles in China: Implications for private motorization rate and battery market," Energy Policy, Elsevier, vol. 144(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:286:y:2021:i:c:s030626192100060x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.