Since the mass market adoption of lithium ion batteries in the early 1990s, cell prices have fallen year on year, resulting in a reduction of 73% since 2014 alone.
This dramatic decline is attributed to the combined effects of increased scale of manufacturing and maturity of global supply chains. However, in 2022, lithium ion cell prices rose notably for the first time as a result of surging critical raw materials prices, especially lithium chemicals (carbonate and hydroxide). Between April 2021 and January 2023, lithium prices increased six-fold causing market participants to seek alternative energy storage technologies that were less dependent on bottlenecks in the lithium ion battery supply chain and corresponding price fluctuations.
©Benchmark Mineral Intelligence 2024
As battery production scales, the cost is coming down.
Sodium ion batteries offer an energy storage solution built from cheap and Earth abundant raw materials. A step change in the announcements of additional sodium ion battery capacity was observed in the early 2020s, demonstrating the market’s appetite for technologies that are independent from the lithium supply chain. An additional 50 GWh of sodium ion battery pipeline capacity is expected to come online in 2024 marking a 230% year-on-year growth, signalling a strong drive for mass adoption of sodium ion batteries.
Lithium ion and sodium ion batteries are conceptually similar, since both are rechargeable batteries operating via the movement of alkali metal ions between the cathode and anode. Where the technologies differ is the type of alkali metal ion being used: Li+ and Na+, respectively. This distinction leads to unique performance characteristics and necessitates the use of different materials for the cathode, anode, and electrolyte of each technology.
Sodium ions are four times the volume and three times the mass of lithium ions. Consequently, the volumetric and gravimetric energy density of sodium ion batteries is limited relative to that of lithium ion batteries. Despite this, ongoing research and development has seen sodium ion batteries evolve to the point where state-of-the-art gravimetric energy density (~160 Wh/kg) now approaches that of lithium iron phosphate (LFP) battery cells (120-200 Wh/kg).
Furthermore, sodium ion batteries can offer excellent performance at both high and low temperatures (down to −40 °C), high power performance (up to 10 C), and improved safety characteristics compared with lithium ion batteries. These properties mean sodium ion batteries could find application in energy storage systems (ESS), two- and three-wheelers, and short-range electric vehicles (EVs). Sodium ion batteries may also pick up market share in niche applications such as cold-temperature automotive start-up and datacentres.
One of the key advantages of the sodium ion battery is its reduced reliance on not only lithium, but nickel, cobalt, and copper too. Sodium ion battery cathodes are generally synthesised from materials such as sodium, iron, and manganese, which are abundant and globally distributed.
Other transition metals such as vanadium and magnesium, may also be incorporated into some sodium ion battery cathode formulations. Sodium is one thousand times more abundant in the Earth’s upper continental crust than lithium, and accordingly, the price of sodium carbonate is two orders of magnitude cheaper than lithium carbonate.
The most common anode material for sodium ion batteries is hard carbon, which can be synthesised from biomass or petrochemical sources, which are available globally. While lithium ion batteries rely on copper as the anode current collector, the distinct chemical stability of sodium ion batteries, allows the replacement of copper with aluminium, which is both cheaper and lighter.
©Benchmark Mineral Intelligence 2024
Sodium ion batteries necessitate alternative raw materials to lithium ion batteries.
The abundance of sodium ion battery raw materials not only enhances the sustainability credentials of the technology, but also reduces reliance on supply chains which are geo-politically constrained and increasingly prone to price volatility.
However, while sodium ion batteries have the potential to be cheaper than the incumbent lithium ion battery, this has not yet been realised. Sodium ion batteries need greater manufacturing scale and more mature supply chains to realise cost-competition with the incumbent lithium ion battery.
Today, the price of lithium raw materials has returned to pre-2021 levels and the price of lithium ion batteries, especially LFP battery cells, are at an all-time low. Commercial interest in sodium ion batteries for ESS and short-range EVs continues, but under the shadow of unprecedented low LFP prices.
Growth in the demand for batteries across the EV, ESS and portable sectors is expected to continue, surpassing 3.5 terawatt-hour (TWh) by 2030. While the EV market accounts for most of the demand, growth is especially strong from the ESS sector, with demand forecast to triple between 2024 and 2030. Demand is expected to increase such that a supply deficit of lithium ion batteries is forecast from 2034, growing to a 2.6 TWh deficit by 2040, based on Benchmark Mineral Intelligence’s base-case supply and demand scenarios.
With significant investment in new lithium, nickel, and cobalt supply required to meet this growing demand for lithium ion batteries, further price volatility is anticipated for lithium and other critical raw materials in the mid-term.
©Benchmark Mineral Intelligence 2024
Demand for sodium ion batteries (SiBs) is growing faster than lithium ion batteries (LiB), but their role is complementary.
Benchmark forecasts demand for sodium ion batteries to increase steadily over the coming years, and for the technology to account for an increasing share of both the ESS market in the near- to mid-term and the EV market in the mid- to long-term. While sodium ion batteries are expected to play an increasingly important role in the industry, demand for battery technologies is sufficiently large that significant lithium ion battery demand destruction is not anticipated. Continued growth is expected in the demand for lithium, nickel, and cobalt to meet the demands of the lithium ion battery market. Benchmark expects sodium ion batteries to play a complementary role within the growing battery market.
By Catherine Peake
Analyst, Benchmark Mineral Intelligence
