Panasonic and Tesla work together to develop zero-cobalt batteries

Panasonic, the exclusive supplier of batteries for Tesla, has now pledged to develop zero-cobalt batteries. According to Reuters, a senior Panasonic executive announced on July 12 that the company plans to reduce the cobalt content of its mass-produced electric vehicle batteries by half within 2-3 years. The global cobalt supply problem may soon become the main bottleneck for the mass production of electric vehicles. Panasonic has reduced the cobalt content in their NCA batteries by about 10%.

"We have already completed such a battery in the research and development phase," Kazuo Ito, head of Panasonic's automotive business unit, said at a roundtable meeting. "But we still need to conduct more evaluations before mass production."

Tesla and Panasonic have been working together to produce the world's highest energy density electric vehicle batteries since 2009, when the Japanese company signed an agreement with Tesla to supply 18650 battery cells. In June 2010, Panasonic invested $30 million in Tesla. In 2014, Tesla began building its Gigafactory in Nevada, also in cooperation with Panasonic. Panasonic has since become Tesla's exclusive battery supplier, providing batteries for Tesla's Model S, Model X and Model 3. The strategic partnership between Tesla and Panasonic was once seen as Panasonic becoming the ultimate winner in the competition with China's CATL and South Korea's LG.

Now, the most important thing for Tesla to produce the lower-priced Model 3 is cost control, so as to ensure that it can generate profits normally after large-scale production. This is why the Gigafactory is so important to Tesla. The Gigafactory reduces the cost of the Model 3 battery pack through the scale effect of batteries, and the strategic partnership with Panasonic has also become the key to Tesla's success in leading electric vehicles.

Panasonic revealed some details of its cooperation with Tesla at the 2018 Consumer Electronics Show, describing how the Gigafactory began producing 21700 batteries for Tesla's energy storage products and Model 3 electric vehicles last July. The 21700 battery has better performance and is jointly designed and manufactured by Tesla and Panasonic. It achieves the best performance at the lowest cost and is the best choice for electric vehicles and energy storage products.

Tesla and Panasonic's cooperation goes far beyond lithium batteries. They both care deeply about sustainable development. Panasonic's corporate philosophy includes the responsibility of humans to maintain the delicate balance of nature. They both pledge to use the earth's resources carefully and sustainably and to protect the natural environment during the production, use and disposal of their products.

Panasonic contributed $1.6 billion to the $5 billion investment in the Gigafactory, and just a few days ago, Tesla announced that it would build a factory in Shanghai, China. Kazuo Ito of Panasonic also said that if Tesla asked Panasonic to participate, they would consider additional investment. However, there is no more clear news yet.

Why is Panasonic desperately trying to reduce cobalt content in electric vehicle battery production?

Most lithium batteries contain elements such as cobalt, lithium and graphite to participate in the charging and discharging process. The supply of lithium and graphite has never been a concern, but the supply of cobalt has always been a concern for Panasonic and other suppliers. The global production of lithium batteries has been increasing, resulting in an increasing demand for cobalt. It is estimated that demand will double to 225,000 tons per year in the next eight years, and the expansion of existing mines and further processing are relatively lagging, which may directly lead to a serious shortage of supply.

The amount of cobalt in lithium batteries has become one of the most controversial topics, especially in terms of cost. Battery manufacturers have been working to reduce the amount of cobalt in lithium-ion batteries in recent years due to a sharp increase in the price of rare minerals. Sales of electric vehicles are expected to grow rapidly, and if not managed carefully, a shortage of cobalt could lead to a slowdown in the production and sales of electric vehicles.

The largest supplier of cobalt is the Democratic Republic of Congo, a country known for corruption and the use of child labor in its mining. International companies such as Apple and Samsung have joined the Chinese-led cobalt development project, pledging to address the most serious environmental and social issues in the cobalt supply chain, as well as the impacts of child labor.

Panasonic is trying to sign contracts with customers that can hedge the risk of soaring valuations, Ito said. And professional battery research firm Benchmark estimates that in the past six years, Tesla has reduced the average use of cobalt in its cars by 60%, from 11 kilograms per car to 4.5 kilograms.

Tesla China - the next Panasonic cooperation project?

Tesla is planning to build an electric car assembly plant in China, which is scheduled to start production within two years, with an annual production capacity of 500,000 vehicles. Panasonic has not yet received Tesla's request to cooperate in building a factory in China. Panasonic currently has a factory in Dalian, China that produces batteries, but the batteries are square, unlike the cylindrical batteries used in Tesla cars, so this factory may not be suitable.

As the exclusive battery supplier of Tesla, Panasonic should have priority in supplying batteries to the Chinese factory. This is not difficult to understand. Kazuo Ito said on July 12: "Batteries are heavy and flammable, so air transportation is out of the question. The best way is to build a factory opposite the vehicle assembly plant."

However, Panasonic may face competition from China's Contemporary Amperex Technology Co., which says it shipped 11.8gWh of batteries last year, ahead of Panasonic's 10gWh. Panasonic also supplies batteries for Toyota and Volkswagen's plug-in hybrids.

As Japan gradually loses its position as a major battery manufacturing country, some new entrants from China such as CATL and BYD are rising. Competition in battery technology is inevitable in the next decade, and there will also be great development. Panasonic, Toyota, and some other companies are trying to find a solution other than lithium batteries, and their eyes are also on solid-state batteries. 23 related companies in Japan have joined together to form the New Energy and Industrial Technology Development Organization, referred to as NEDO. NEDO has been investing a lot of research on solid-state batteries with material suppliers.

NEDO has set a phased goal to complete the market preparation of core technologies by 2022. In the long run, their goal is to reduce the cost of solid-state batteries to $90 per kWh, which is one-third of the current lithium battery cost by 2030. According to Nikkei News, Japanese companies currently have an advantage in solid-state batteries. "Currently, the main application patents in solid-state batteries are basically from Japanese companies," said the project manager of NEDO.