Thread by @simonahac

i visited CATL, the world's largest battery manufacturer, in china early this week and saw the production process from lithium compounds through to tested cells.

i asked our host if the company would consider opening a factory in australia and he gave me a sobering answer…

australia mines about half the world's lithium and battery manufacture is _highly_ automated, requiring relatively little labor per unit of production.

…and we're installing a *lot* of grid storage.

so i thought it might make sense to locate some cell production here 🇦🇺…

my host explained that just a few years ago a large battery factory could make 1 GWh of batteries/year…

…but factories under construction will produce 20 GWh/year.

new economies of scale are behind the big falls in battery cost.

(2022 an exception, 2023 looks back on trend)

about 85% of batteries go into electric vehicles, with 15% going to grid storage.

while australia is installing a lot of storage — about 16GWh over the next ~2 years — our domestic grid storage market is just not big enough to justify a full battery production plant here…

if 50% of the cells in our grid-scale storage buildout came from a local 16 GWh/yr battery factory, it'd still have 16GWh of production looking for a market.

…about as much as is needed for 250,000 EVs a year.

(assuming 64kWh/EV)

well, if:

we still had car manufacturing here
…and it had successfully made the transition to EVs
…and the sector used only local supply

then ~250,000 EVs a year is perhaps not too far fetched.

…but alas, without a car industry, it's hard to build a business case for high-volume, low-cost lithium cells production here.

so when joe hockey dared GMHolden to leave 10 yrs ago, he helped shut the door to a future lithium cell production industry.

theage.com.au/politics/feder…

…but that's not the end of the story.

we have the world's best hard rock lithium reserves, and we have _some_ processing here in australia.

we have an opportunity to work our way up the value chain, from the ore up, capturing more and more value here.

let's not waste it.

as @globallithium advisory says:

"the guy with the rock wins… and australia’s got the rock."

australia is once again the lucky country, and with the right industrial policy and investment signals, we can play a strong hand in this massive new industry.

nytimes.com/2023/05/23/bus…