What is the Real Lithium Demand?

A look at the forgotten markets

What is the Real Lithium Demand?

A look at the forgotten markets

The demand forecasts for lithium are typically derived from developments in the automotive industry. Viewed through this lens, the figures are impressive. UBS, a Swiss investment bank, estimates that worldwide demand for batteries (measured in gigawatt hours or “GWh”) to power electric cars and plug-in hybrids will be almost 66% greater next year than in 2020. Further, UBS estimates that demand will continue to grow by 50% in each of the following two years. Expressed in absolute figures, this means that demand for rechargeable batteries is expected to increase from 125 GWh this year to 456 GWh by 2023 - that would mean a tripling.

The figures quoted refer exclusively to the automotive industry. Here, developments can be predicted comparatively well because almost all car manufacturers have issued concrete targets for the production of electric cars. In addition, the visibility is quite high for battery factories that are planned, or even already producing worldwide. Finally, there are plenty of analysts who monitor and evaluate the relevant developments.

For other applications of lithium-ion batteries, future demand is much more difficult to quantify. It is obvious, however, that growth rates similar to those for electric cars can be expected here. For example, batteries are increasingly being used in other modes of transportation.

Quiet ships

The use of electric drives makes sense wherever the lowest possible noise pollution is important; this is especially true for boats and ships. This applies, for example, to lakes used for tourism or in the fjords of Scandinavia. It is no coincidence that three years ago Deutz, a German motor manufacturer, took over Torqeedo, an electrical specialist that mainly equips smaller boats with electric motors. The renowned Hurtigruten shipping company from Norway spoke of a new era on the maiden voyage of the "Roald Amundsen". In addition to diesel engines, the cruise liner also has electrically driven propellers which at times can power the ship alone.

The MS Roald Amundsen - a state of the art vessel featuring new and environmentally sustainable hybrid technology that will reduce fuel consumption and show the world that hybrid propulsion on large ships is possible.

The development in the air is not yet as far advanced as on water. But here, too, there are permanent technological advances. Various large corporations such as Airbus or startups such as the German company Lilium are already testing flight cabs that can carry four passengers from A to B - for example from the city center to the airport and back. The British aircraft manufacturer, British Aerospace (“Bae”), is working on a fighter plane with hybrid or even purely electric propulsion.

Enormous demand in consumer electronics

Lithium-ion batteries are already much more widely used in tools, household appliances and consumer electronics - for example in cordless screwdrivers, cordless vacuum cleaners or mobile game consoles. Headphones with lithium-ion batteries have also been selling like hot cakes since Apple's AirPods. The head of Varta, a German battery specialist, Herbert Schein, said in a newspaper interview, "in five or six years, hardly any headsets with cables will be used anymore. Smartphones will work with many small devices and they will all need lithium-ion batteries. There is enormous potential here." In fact, Varta recently announced that it is now also entering the production of large batteries for powering electric cars.

Growth markets: Powerpacks and 5G

A completely different area of application is giant batteries, so-called powerpacks, for wind and solar parks. These allow excess electricity to be stored until needed and increase the base-load capability of renewable sources of energy. Tesla has had good experience with powerpacks on a large scale in Australia. For some time now, Tesla boss Elon Musk has set himself the goal of making around half of the company's future business with Powerpacks and Powerwalls, i.e. energy storage systems for commercial electricity providers and private households, respectively.

One development that continues to be completely underestimated is the conversion of mobile networks from the fourth (“4G”) to the fifth (“5G”) generation. 5G uses significantly higher frequencies than its predecessor. The shorter waves enable the dramatically higher speed. However, the signals do not reach as far as 4G.The terminals can only receive (or also transmit) them when they are closer to the transmitting stations. A much higher number of stations is therefore needed to ensure nationwide reception with each station requiring much more power. The conventional lead-acid batteries that supply 4G are not up to the task. What is needed are lithium iron phosphate (“LFP”) batteries - and in large quantities.

The bottom line is that in the short term, demand for lithium-ion batteries will probably grow most strongly in the automotive industry in terms of volume. In the medium term, however, there are other areas, such as the examples listed above, which also require large quantities of batteries and will additionally drive the demand for the energy raw materials. This is because electricity has to be stored almost everywhere.

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