Welcome back everyone! I’m Jordan Giesige and this is The Limiting Factor. This is part twelve of the Lithium Mine to Battery Line Series to break down and understand what was unveiled at Tesla Battery Day. Today we’re going to take a closer look at Tesla’s cathode manufacturing process. We’ll start by covering how Tesla is setting an aggressive new standard for driving down battery cost and then walk through the technical details of how Tesla’s process differs from a conventional process. Before we begin, a special thanks to my Patreon
supporters and YouTube members. This is the support that gives me the freedom to avoid chasing the algorithm and sponsors, and I hope will eventually allow me to do this full time. As always, the links for support are in the description. Back to cathode manufacturing. At the end of the polycrystal cathode video, I explained that my view is that up to 4.5% of the 12% cost savings that Tesla claimed for the cathode was due material cost improvements rather than manufacturing improvements. This left a minimum of 7.5% of the 12% cost reduction attributable to Tesla’s cathode manufacturing process. It’s now time to refine that number from a minimum of 7.5% up to a more accurate
number. The two slides on screen state that Tesla was able to decrease the process cost by 76% and that the process cost is 35% of the cathode cost. 76% of 35% is a 25% reduction in cost at the Cathode level. For a high nickel battery, the cathode makes up roughly 40% of the materials cost of a battery at the at the pack level. A 25% cost reduction applied to 40% is 10%. That is, it looks like 10% of the 12% cost reduction Tesla cited in this slide could be due to manufacturing cost reductions. The remaining
2 percent is split between cost savings from removing cobalt and increased energy density. Although the material cost wasn’t the most significant cost reduction unveiled at Battery Day, it was one of the most important. Why? Any manufacturing process when done at a large enough scale eventually asymptotes at the material cost. In other words, with high volume manufacturing, the materials cost dictates the price floor for the manufacturing cost of a product. Tesla’s new cathode manufacturing process will allow them to create a new, lower price floor. This means that if competition does eventually show up for Tesla, they have one more moat to cross and one more technology to master. That is, Cathode manufacturing
will be a new core competency for Tesla and it indicates to me that Tesla will master whatever technology is required to accelerate the world’s transition to sustainable energy. They’ve done this with their entire technology stack from software to hardware. This year it’ll be cell production, and in the next couple of years cathode materials. After that, if Tesla sees an opportunity to reduce the cost of the raw materials going into the cathode or to create those materials in a more environmentally friendly way, they’ll get into mining. Too what extent, we’ll see. Mining isn’t monolithic and every mine is a different chemistry and materials
problem to solve. This will be discussed further later in the video and also in the next video. Let’s get into the technical details of cathode manufacturing. The slides Tesla showed at Battery Day for the Cathode production process didn’t include the steps between the Nickel Mine and the Cathode factory, and so that’s where we’ll begin The process used to extract Nickel from Nickel ore can vary based on the chemical composition of the Nickel ore. The composition of Nickel ore can be Silicon, Oxide, or Sulfide based. The process we’re looking at here uses a Nickel Sulfide based ore with a conventional process. The material is mined, ground, and run through
flotation tanks. Flotation tanks are machines that use water and air bubbles to separate the valuable materials from an ore. The flotation results in a Nickel concentrate, which is 5-25% Nickel. From there, the Nickel concentrate is run through an energy intensive process using furnaces to smelt the nickel, bringing the concentration up to 65-78%. At this stage it’s called Nickel Matte.
The Nickel matte is refined to 90% purity Nickel Oxide or Nickel Metal, which results in what are called briquettes, cathodes, and pallets. In the final step, the Nickel Oxide or Nickel Metal are processed at a Nickel Sulphate plant. This step adds unnecessary expense and complexity. Nickel Sulphate is the type of nickel used for conventional cathode production processes because it’s widely available and water soluble. Water solubility allows the Nickel to be used by a conventional cathode reactor process which’ll be covered later in the video. Tesla claims that instead of Nickel Sulphate, their process uses pure Nickel metal. My assumption is that this nickel metal will come in the form of a powder because powder is easier to react and combine with other chemicals. I’ll refer to the pure nickel metal powder as simply
Nickel powder for the rest of the video. Tesla’s pure nickel metal claim had me stumped because pure nickel isn’t water soluble. My basic assumption was that any water based cathode production process would require inputs that were water soluble, which would allow the reactants to dissolve and then react more easily. That view changed a few days ago when Nano One published a press release stating that their process uses Nickel Powder. I called Dan Blondal,
CEO of Nano One, to investigate this. Dan confirmed that their reactor can use powders that aren’t water soluble. No further details were provided but I inferred that so long as the powder can be suspended with some type of agitation or stirring process, insoluble powders can be used in the Nano One reactor. Why would Nickel powder be better than Nickel Sulphate or Nickel Oxide? First, Nickel sulphate comes in the form of hexahydrate which weighs 5 times as much as Nickel powder to provide the same amount of Nickel. This is due to the sulphate tail and hydrate, which adds extra weight per molecule. In other words, you can move the same amount of
Nickel with one truckload of Nickel Powder as you can with nearly 5 truckloads of Nickel Sulphate. Second, Nickel Powder should be cheaper than Nickel Sulphate because it can be produced without heat or acid. That is, the process to create Nickel Powder can be carried out in ways that are low energy and less toxic. Third, because Nickel Powder can be produced in ways that aren’t energy intensive and that don’t require toxic chemicals, it’s more environmentally friendly. Let’s take a look at how Nickel Powder
could be produced. Bear in mind, depending on whether the Ore is Silicon based, Oxide based, or Sulfide based, the process could vary quite a bit. For each type of ore, there are multiple ways to extract the Nickel. In this example, we’ll again start with a Sulfide based ore. As with the conventional process, the Nickel Sulfide ore would be mined, ground, and then would go through a flotation step to increase the concentration of the nickel to 5-25%.
Next, we skip the high energy, high cost smelting process and jump directly to the refining process. The refining process would involve two steps: First, a hydrometallurgical process using a high pressure ammonia leach. The ammonia leaching dissolves the Nickel Sulfide into solution. Next, the Nickel is precipitated from the Nickel Sulfide solution through a process called hydrogen reduction. Hydrogen reduction is where hydrogen is agitated through the Nickel Sulfide solution
at elevated temperature and high pressure. The Nickel sinks to the bottom of the reaction tank as a powder. The longer the process is run, the larger the powder particles become. In other words, the particle size is controllable. After the desired powder size is reached, the excess liquid is drained off and we’re left with a slurry. The slurry is dried resulting
in the finished product – pure Nickel Powder. This process is far simpler than a conventional sulphate process, uses less energy because it doesn’t use energy demanding tools like smelters, and is more environmentally friendly because it uses ammonia instead of sulfuric acid. This all adds up to a cheaper material that also happens to be easier to transport because it’s a pure product rather than a compound. This is a good time to talk about how deep into the Nickel supply chain Tesla will go. Based on Tesla’s slides, there’s no indication that Tesla’s getting into Nickel Production. If they do wade deeper into the supply chain, the next steps would be refining, concentrating, and then partnering in or purchasing a mine.
I view mining, refining, and concentrating as processes that should happen together at the same location. If Tesla does wade deeper into the Nickel supply chain, my view is that they should take on all three steps, either alone or with a partner. Before Battery Day, I would have rejected this idea, however, as discussed earlier, Tesla will develop whatever core competency is required to accelerate the world’s transition to sustainable energy. The primary argument I see against Tesla getting into Nickel mining is that it comes with so many environmental and governance concerns. This would be followed by my expectation that Tesla will eventually shift to Nickel free cathodes, but that’s probably at least 10 years away.
Let’s take a step back to get our bearings. We’ve just covered off the steps from mine to cathode factory for both a conventional process and Tesla’s process. Now that the finished Nickel product, whether it’s Nickel Sulphate or Nickel Powder, has arrived at the delivery bay of the factory, what happens next? Currently, cathode materials are produced using a piece of equipment called a Continuously Stirred Tank Reactor, or CSTR. A CSTR is a tank where solids are dissolved in an aqueous solution at an exact ratio, temperature, concentration, and pH while being stirred. When the right conditions are met, some of the
materials react and form solid particles that are suspended in the solution by the stirring motion. This process typically uses Nickel Sulphate because it’s water soluble. The nickel sulphate is dissolved and then reacted with carbonates and other metals in the CSTR. The result is carbonate based particles containing a mix of metals such as Nickel, Cobalt, and Aluminum suspended in solution. The water containing the mixed metal carbonate solids is drained off. If the reactants are changed the result can be mixed metal hydroxide particles instead of carbonates. Hydroxides are what is used for chemistries that use greater than 80% Nickel like Tesla’s. However,
to keep it simple, we’ll stick with carbonates. The next step is to wash and filter the carbonate particles which is followed by drying. The drying process is energy intensive and involves fans and heaters. After the carbonate particles are dry, they’re ground down to the correct shape
and size. This is because the CSTR method creates particles that are range of shapes and sizes. The grinding and classifying ensures the particles are a uniform size. Grinding and classifying are necessary because the size of the particles can affect the energy and power density of the battery. A uniform particle size creates batteries that have consistent power and energy density, which has positive knock on effects for product consistency and battery management electronics. At this point in the process, the precipitate material is now what’s referred to as a precursor. The precursor is then heated with lithium carbonate to form crystals (video). The crystals are usually the size of a red blood cell,
and at the human level appear to be a black powder. That black powder is the finished cathode material that is used to produce lithium ion batteries. If the cathode crystals require a coating, they go through another set of CSTR processes to apply that coating. Overall, CSTR as a manufacturing process has some serious drawbacks. It uses large volumes of water and generates waste water containing heavy metals. A typical production facility using CSTR to produce cathode materials uses 99,000 litres of water per day to produce 6,500 kilograms of cathode material. What are the alternatives to a CSTR process?
Before Battery Day, some people were suggesting that Tesla would use Novonix Dry Particle Microgranulation, or DPMG. My view was that although Tesla could use Novonix’ process, it was unlikely. The slide on screen indicates that although Tesla eliminated many of the same steps that Novonix DPMG would, Tesla is not using a dry process. This, among other things, such as the equipment in the picture, suggests that Tesla is not using DPMG. In several of my battery day predictions videos, I did suggest that Nano One could be involved. Let’s take a look at the similarities between Tesla’s process and Nano One’s process: First, both processes claim to use pure Nickel metal powder.
Second, both processes claim to significantly reduce the number of process steps. Nano One calls their process a one pot process, where all of the active materials are added to the reactor at the same time, which reduces the number of process steps. Tesla also claims to have reduced the number of process steps and complexity as shown by their diagrams of a conventional process vs the process Tesla has developed. Third, Nano One’s patents indicate that their process would allow for the reaction solutions to be reused, which by extension should mean no wastewater. That is, the process would still use
water, but I’m assuming it would not release water containing the valuable metallic reactants. This aligns with what Drew Baglino said on stage and the massive reduction in wastewater and chemicals we see in this slide. The zero waste is not only better for the environment, but also better for the bottom line because all the materials used in the process would turn into a finished product. As a final note, if Tesla is using Nano One’s process or is similar to Nano One’s process, any additional coating materials would also be added to the reactor rather than processed in a separate step. As you’ll recall from the CSTR process, if a coating is required, the cathode must go through a separate process. This means a process like Nano One’s can create coated cathode
for about the same cost as uncoated cathode. I can’t say for certain whether Tesla has created their own process or if they’re using Nano One’s process, but the processes are remarkably similar based on the information we have. However, for technologies on Tesla’s critical path, they tend to acquihire or develop processes in house. That is, it’s not guaranteed the Tesla is using Nano One’s process. Even if Tesla doesn’t partner with Nano One, there’ll be plenty o f other large players that’ll be interested in Nano One’s process. Let’s do a quick recap. This is a very high level overview of how a
Nickel atom progresses through a typical cathode production process vs Tesla’s process. Nickel Oxide from the refining process is converted to Sulphate, sulphate is converted to carbonate in the CSTR, the Nickel carbonate is combined with lithium carbonate in the sintering step to form Lithium Nickel Oxide compounds like NCA and NCM. If Tesla is able to directly use Nickel Powder, the journey of a Nickel atom in Tesla’s process might look like this: Nickel Powder from the refinery is dumped into Tesla’s cathode reactor where it’s combined with some form of lithium, like lithium hydroxide or carbonate. The dried material is sintered to form Lithium Nickel Oxide compounds like NCA and NCM. Process complete. The next slide shows how Tesla is reducing the
distance each kilogram of battery material travels. Distance means higher cost and a sprawling supply chain. Proximity means lower cost and tighter control of the supply chain. A North American supply chain also means resilience to the monopoly power China has over the battery materials supply chain. Tesla didn’t state this in their Battery Day presentation,
possibly because of the Chinese governments’ hypersensitivity to perceived slights. However, Benchmark Minerals did a great job pointing out what a drastic impact Tesla’s localisation of supply will have on battery material flows. This is huge. When the western world moves off of oil, it’s important that the mistakes of the last 100 years aren’t repeated, where the entire global economy was dependent on a few countries in the middle east. In summary, Tesla’s decision to move into Cathode production is a wakeup call for the industry and will repoint the global Battery Supply lines to Tesla’s factories. If what we see in Tesla’s slides is accurate, they’ve eliminated the steps of needlessly converting Nickel Oxide to multiple other chemicals in different factories and then converting it back to an oxide. This is likely
what Elon meant by digging the ditch, filling the ditch, and then digging the ditch again. The process will be more environmentally friendly, possibly 100% yield rate, and allow Tesla to use cheaper feedstock. If that’s the case, then Tesla may have been sandbagging on the potential cost savings. All the cost savings were attributed to process costs rather than material costs. It could also explain the 15% cathode cost reduction on this slide, which was never explained or accounted for in the stacking it up slide. Tesla isn’t just getting into cathode production to knock a few percent of their materials cost. They’re reshaping a cathode manufacturing process that’s been in place for 30 years to lower the absolute lowest cost a battery cell can reach by lowering the cost of materials that go into that battery cell.
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2021-03-20