Tesla's Cathode Production Process // Breaking the Price Floor

Tesla's Cathode Production Process // Breaking the Price Floor

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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. 

If you enjoyed this video, please consider  supporting me on Patreon with the link at the end   of the video or snag something off the merch shelf  below. I am also active on Twitter and Reddit. You   can find the details of those in the description  and I look forward to hearing from you.  A special thanks to Howard Klein,  Brad, Ahmad Zafar, David Kronenberg,   and John Morpeth for your generous support of the  channel, my YouTube Members, and all the other   patrons listed in the credits. I appreciate  all your support, and thanks for tuning in.

2021-03-20 00:23

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