Ferg's Finds
This is a short weekly email that covers a few things I’ve found interesting during the week.
Article
Kopernik: Mitigating portfolio risk in potentially volatile times via positive asymmetry
This is the first time I've heard of the "shadow-backed price of gold."
This chart also caught my attention as in my experience the belief that there is no probability of a tail event, sets the stage for a tail event.
Podcast/Video
Really enjoyed this one: Small-Cap Value Opportunities (Guest: Tucker Scott)
Quote(s)
“An expert is a man who has made all the mistakes which can be made in a very narrow field.”
— Niels Bohr
Tweet
I've always been sceptical of projections of EV demand, particularly the assumptions behind demand for battery metals, such as lithium, nickel, or cobalt.
The jury is still out on which chemistry is the ultimate winner.
Charts
Lithium iron phosphate (LFP) has accelerated from 52% of Chinese sales to 67% as of last year.
This is before touching on the potential of sodium-ion batteries.
BYD breaks ground on new 30GWh sodium-ion battery facility in China
Sodium-ion cells are much cheaper to manufacture than Li-ion batteries. According to S&P Global Mobility research, the cost of manufacturing sodium-ion cells is about $50/kWh, compared with $70/kWh for Li-ion batteries. The cell manufacturing process for sodium-ion cells is also almost identical to that of Li-ion cells. This means heavy investments would not be required if any supplier decides to switch from Li-ion cells to sodium-ion.
Something I'm Pondering
I’m pondering if sodium ion could replace LFP for PHEVs.
Sodium-ion batteries will probably be an alternative to LFP batteries, given their closely matched energy density figures. Sodium-ion batteries offer energy density of approximately 160 Wh/kg, compared with about 200 Wh/kg offered by LFP batteries. This low energy density, combined with a lower life cycle, is a big disadvantage that could keep sodium-ion batteries confined to low-cost, entry-level cars.
However, there are several factors that could prove to be catalysts for higher adoption of sodium-ion cells in the light-vehicle segment. In terms of technology, sodium-ion batteries are much safer, less reactive than lithium and able to operate more efficiently over a wider temperature range, offering comparatively good performance at lower temperatures.
This matter because PHEV is where the future demand looks to be.
PHEV sales* saw a significant rise with a 46% YoY growth, while BEV sales increased by just 7% YoY as OEMs gradually pulled off their BEV supply targets.
China remained the global leader in EV* sales with a 28% YoY growth, while the US experienced a modest 2% YoY growth.
Or consider the top selling plugin electric vehicles globally and in China (November 2023)
Here is China in April 2024 and notice more PHEVs sold and Tesla falling down the rankings.
The BYD Song was China’s most popular EV in April, thanks to 54,300 deliveries. This includes 8,403 BEV units.
Why China Could Dominate the Next Big Advance in Batteries
Out of 20 sodium battery factories now planned or already under construction around the world, 16 are in China, according to Benchmark Minerals, a consulting firm. In two years, China will have nearly 95 percent of the world’s capacity to make sodium batteries. Lithium battery production will still dwarf sodium battery output at that point, Benchmark predicts, but advances in sodium are accelerating.
While salt is abundant, the United States accounts for over 90 percent of the world’s readily mined reserves for soda ash, the main industrial source of sodium. Deep under the southwestern Wyoming desert lies a vast deposit of soda ash, formed 50 million years ago. Soda ash there has long been extracted for America’s glass manufacturing industry.
With minimal natural reserves of soda ash and a reluctance to rely on imports from the United States, China instead produces synthetic soda ash at chemical plants fueled by coal.
So, the sodium battery boom will be fuelled by coal…. I bet you didn't see that curve ball!
China is the world’s largest producer with 27 million tons, the vast majority of which was synthetically produced. The United States comes in second with about 11 million tons of largely natural production
I hope you’re all having a great week.
Cheers,
Ferg
P.S. This is how I’m positioning for PHEVs to outperform (besides owning coal, I guess).
I now have a directory for all my articles (free and paid).
Or, if you’re interested in my story and why I started this Substack, you can read the story here.
PHEV vs HEV. I guess its convenient to have a plug but not really necessary Just Regulation Subsidies keeping them relevant in the US. Not sure what the extra cost is?.
The plug in Infrastructure was a Pipe dream.from the get go if you'd have done the math. Long distance driving is impractical and having a charging plug at every lamppost in the City was not practical from a grid supply point of view or cost. Or in basement Garages of Apartments the same.. But of course we were sold Battery Storage which has failed to live up to projected fantasies.
And I won't mention self driving except to say it further puts you in their control grid. And yet again in certain controlled situations it works like highways that are totally wired like Korea but no way in Hell I would trust my life to this Silicon Valley hubris.
Hey Ferg, I’m not so sure about sodium batteries. The price of lithium has fallen 70-80% down from recent highs, so the cost of the lithium in a battery down to about $2 per kWh. I don’t if there are other factors that contribute towards sodium batteries being cheaper than lithium, but even with the $20 per kWh you quote, by the time you add on other components like a BMS, charger, inverters, packaging, installation, etc the difference is insignificant and likely to be outweighed by the performance differences. Currently the lower density for sodium batteries puts them at a disadvantage for mobile use and the shorter lifespan makes them unsuited for fixed energy storage which typically has a daily charge-discharge cycle… for example, 13.5kWh Tesla PowerWall costs over US$10k installed, so definitely not worth sacrificing its lifespan to save a few percent. Maybe there’s a use case for sodium batteries in bottom end vehicles, but unless there are dramatic advances in performance, I can’t see much displacement of lithium batteries.