The event welcomed new members from the global supply chain, to discuss the vision of developing a safe, efficient battery transportation network through an overarching approach to all aspects of sustainable logistics, without compromising
the environment or social needs. Electric vehicles are on the rise and this will create heavy demands on the supply chain. To cater for this change, the automotive landscape needs an agile working group to directly address these
challenges, looking deeper into each topic and debating solutions. So far, the Battery in Focus consortium has focused on a range of important topics, from raw materials to the recycling of end-of-life products. In addition, the
group has looked at market and industry trends to better understand how the landscape is changing and has identified areas to look into further. Fundamentally, it is clear that batteries will be a major growth area for automotive
inbound logistics, and industry leaders need to come together to approach this head-on.
Regions across the globe are taking different approaches when it comes to electric vehicles. China has leapfrogged the traditional market leaders with 577,000 EV passenger car registrations in 2017, with second place America registering
194,479. In Western Europe, Norway has been following an electric-only strategy, including heating, lighting and transport. Governments like this are pushing for the entire automotive industry to move over to this strategy, including
Germany and the UK which are pushing for higher EV adoption rates. However, as these markets are undervalued and undersold, as automakers have been struggling to meet the new market pull, with brands delaying EV launches.
The industry is starting to see growth in this sector, despite the huge issue of supply and demand, and has the opportunity to get both battery logistics and the perception of electrification right. EV leader China already has a relentless
strategy toward EV-subsidies and investment. In order to keep up with the Asian market, approximately $45 billion will be invested in e-mobility from German OEMs by 2020, illustrating the significant market shift across Europe.
This kind of growth will bring EV battery capacity demand towards - and even exceed – 140 GWh by 2024, with forecasters predicting a $50 billion market.
The group first looked at battery cell costs, which vary between $209 and $228 per kWh but could drop to around $100 by 2025, thanks to the leverage of scale effects and more efficient technologies. Producing batteries requires a lot
of energy due to the electrodes and liquids used and there is a need for further development in mineral pre-products and cell technology, which will lead to further cost reductions. Battery in Focus identified the overwhelming
potential in this area, yet others are hesitant to invest as many people involved in the energy sector have been drawing comparisons from the solar industry, where countries other than China failed to keep companies afloat when
overcapacity surged. However, as the group briefly discussed, battery development may even revive the solar sector again, showing yet again the potential of this developing innovation.
PwC figures showed that global new vehicle sales projections by powertrain share and battery capacity demand are set to skyrocket, in a market that has the potential to reach $150 billion. This is credited to the rise of autonomous,
emission-free and shared mobility, which will create a huge expansion of battery cell demand as future transportation turns to the electrification of cities. But the group came to the decision that this vision can only come to
fruition if the industry works together to create a standard practice for efficient, safe and clean battery logistics. Without this preparation, the global market will create tremendous cost and inefficiencies under the exponential
demand growth for EVs that will be pushed by consumers and governments.
The session in Hamburg looked at the how the industry could achieve the most efficient, safe and clean transportation of lithium-ion batteries which, as we have seen in the past, poses a high level of risk during transit. There are
already regulations that cover the movement of dangerous goods, although many within the discussion believed that these needed to be much more specific; the devil is in the detail.
When looking at the geographic distribution of battery production and consumption, it is clear that China is dominating its rivals in planned and existing battery cell production capacity. This presents opportunities for other players
in the field to exploit this potential; players such as TerraE, North Volt, SK Innovations, CATL and LG CHEM are just a few examples of EV players already focusing heavily on the production of batteries. However, says the Battery
in Focus group, this production needs to be supported by the surrounding supply chain, through visibility, alignment, balance, coordination and collaboration which, historically, has been unattainable.
To achieve this end-to-end visibility, the industry must look at technology advances that can enable this vision, through automation, autonomy, the cloud and collaboration. The main market drivers for this, such as an ageing population
and new standards, are flooding the industry with innovations, so it is important to identify the best methods to implement in the supply chain. For example, the Battery in Focus group identified blockchain and smart contracts
as the best enablers through real-time event tracking, eliminating the need for third parties between two customers. This simplifies the process and increases the efficiency of transportation through the ability to ‘act as God’.
Further down the line, the ability to utilise smart logistics through cloud-based control towers can develop into autonomous operations.
For batteries, this kind of data allows the prediction of failures and the ability to proactively respond before failures with lithium-ion in transit - the biggest issue with this kind of movement. In fact, most airlines are still
against any amount of lithium-ion batteries on board, so this is the next step towards using airfreight to help distribute these dangerous goods and help cater for the huge demand for EVs. The biggest roadblock for airfreight is
the vague regulations surrounding the transportation of lithium-ion batteries, including packaging and security, which has come under scrutiny after air disasters. This means that risk assessment is vital and the mitigation must
include training, loading, packaging and aviation security. Technology will help with this, such as EVAS systems for the cockpit that protect the pilot, fire container covers for the batteries in holding and smart modules that
will track and trace.
Even though the technology exists today, many businesses do not want to risk their existing projects without seeing instant profit and so do not bother researching. This is not a cheap process and requires a totally different management
mindset to that of the traditional supply chain executive. Ultimately, this shows a lack of leadership, vision and commitment to the future of logistics. But how do we get people to make this change? To address this, members within
the Battery in Focus group, which includes airfreight experts, are looking into setting up some tests to figure out the best solution to this extremely complex problem.
There is still a long way to go in order to secure a state-of-the-art solution to the transport of lithium-ion batteries through the entire supply chain. Finding a way to optimise the process of delivery through new regulations, testing
and confirmation will be incredibly difficult to achieve without a complete understanding of the supply chain. One of the major topics that the group focused on was packaging and efficiently distinguishing safe from critical batteries,
which has been a huge problem historically. Battery manufacturers can help with this problem and regulators can work towards creating a standard process but it is all really about bringing everyone from the industry together to
push for this change. Without each side being involved, there is simply no way of achieving the visions identified in the Battery in Focus session. However, with a group like this, it creates a constantly evolving environment full
of experts from each corner of transportation that are all passionate about significantly improving the movement of batteries.
Collaboration between OEMs, logistics service providers and battery manufacturers can implement an overall plan that allows the automotive supply chain to efficiently support battery movement and ensure a safe and cleaner way of doing
it. This is all possible with the coming together of experts as we saw in Hamburg last month. The Battery in Focus group has developed tremendously over the few sessions it has already had, and is constantly growing in size and
expertise. The next session (Feb-March 2019, Frankfurt) will bring together old and new faces to continue to work towards this overall solution (as well as discussing the test project implementations with its impact and the benefits).
See you all there.