Recent demand for battery cell manufacturing has slowed with the stalled electric vehicle (EV) market, and many factors are contributing to demand slowdown and industry quality issues. Bill Kephart, senior management consultant at P3, a global consulting agency, discussed some of the factors for slowing battery cell production at the 2024 Honeywell Users Group conference.
Kephart’s work supports industrialization in the battery cell market, strategic planning for ramping up cell operations and helping to assess new companies looking for investment. Based in Germany, P3 is focused largely on automotive applications with a heavy focus on battery charging and powertrain. It has worked some on U.S. projects, but more so in Europe, where battery cell manufacturing started earlier than in the U.S. His presentation focused on the lessons learned in Europe and an overview of the trends affecting industrialization slowdowns and future production projections.
By 2030, the global market size for batteries is expected to be 4-5 terawatt-hours (TWhs), but recent slowdowns over the last year could further impact that projection, Kephart said. “There’s a demand slowdown obviously,” he said. As an example, he cited a Mercedes facility in Tuscaloosa, Ala., that can’t sell enough of its electric SUVs, so is switching back to manufacturing gas engines at that facility. “This is a common thread with a lot of the industry,” Kephart said.
Another major contributing factor to demand decreases is industrialization slowdowns and supply issues. “While EV makers are not selling what they want to sell, it’s because they can’t get it on cost like they thought they would,” Kephart said. Overall, the majority of the future capacity is projected to come from China at about 2-3 TWhs, and 1.5 TWhs will come from each the U.S. and Europe.
U.S. projections overly optimistic
While cell producers have announced future facility development for a production capacity of about 6.5 TWhs by 2030, P3’s assessment of the industry indicates that about quarter of that capacity won’t happen. “We don’t think these companies are going to reach what they say they’re going to reach,” Kephart said. Battery cell manufacturers face major obstacles in ramping up production capacity, particularly quality issues during the initial years of operations.
In the U.S., government incentives have made U.S.-made battery cells cost-competitive with Asian products, but lowered demand, transition challenges for auto manufacturers and industrialization delays are still expected to dampen production expectations in North America.
“We have currently quite an oversupply, based on the facility announcements into the U.S. We're expecting that as we go into 2030 that this balance becomes a bit more weighted toward an undersupply,” Kephart said. Incentives from the Inflation Reduction Act (IRA) are a large reason U.S. manufacturers are ramping up quickly now, he said.
As facilities ramp up operation, a typical new manufacturing facility will reach overall equipment effectiveness (OEE) rates between 65% and 70%, with scrap rates around 10%, even after multiple years of operation. Lowered OEE rates are largely coming from poor equipment optimization, Kephart said. “A lack of software and integration between equipment and into the facility is a huge reason why these issues persist for longer than they should,” he added.
Quality a key stumbling block
Various quality-related yield losses exist in battery cell manufacturing, and each manufacturing sub-process massively affects the overall battery cell production. “One thing to keep in mind always with metrics like scrap and OEE, is that they stack over each process,” Kephart explained. Scrap rates for each process in electrode manufacturing, cell assembly and cell finishing, such as mixing, coating, welding, packaging and many more, fall between 0.2 and 1.5% scrap, which combined reaches an 8-12% level of scrap across the facility. “The key thing to mention here is that with most of these issues, you can’t tell what’s wrong until way later in the process,” Kephart said. “Electrode manufacturing is where the majority of issues happen and the issues that are harder to control and to optimize.” Consistency in mixing solutions and laying thin layers of materials also tend to produce higher scrap rates and material quality issues.
Collaboration of equipment suppliers and uniform software development is also an issue. “If you go to any cell facility, almost every piece of equipment is not tied to other pieces of equipment,” Kephart said. In China, by contrast, one company sells entire battery facilities and all the equipment as one. “This helps the Chinese players a lot in terms of quality and integration,” Kephart said.
For U.S. and European installations, machinery is largely segmented and doesn’t play well together. “In terms of root-cause corrective analysis and increasing performance, there are not a lot of tools being used,” Kaphart said.
Current solutions on the market do address some of these challenges, including pre-lithiation (a process that involves adding extra lithium to a battery during manufacturing), laser cutting or alternative cathode solvents, but the big one is using a quality management system (QMS) to ensure all processes are based on clear quality standards. A QMS also relies on the equipment integration via software, in order to track back those root cause issues with quality.
Cleanliness also an issue
Technical cleanliness is another important preventive measure to ease quality problems by detecting and preventing contamination using controlled environments. “Cell makers have a lot of issues with foreign contaminants inside of the cells,” Kephart said. A consistent, software-defined quality concept will help the manufacturer to collect, analyze and interpret production data, but the industry is lacking strong definitions for what technical cleanliness is for battery cell manufacturing.
“There's a lot of clean room and air lock concepts, a lot of things being done to support keeping poor material out of the cell process. To be honest, we haven't seen many of these in practice,” Kephart said.
In the software space, artificial intelligence data mining and digital twins are also important development tools, and key for establishing root cause corrective actions is traceability, and all these systems need integration with the QMS. “Especially in cell production, it is important to establish an encompassing QMS along the entire value-chain,” Kephart said.
Where traceability plays a crucial role, an integrated software traceability system can detect those early-stage errors, but also requires interconnected equipment and processes. That’s where a manufacturing execution system (MES) can tie all these together.
“The idea is that you're fully controlled. Your process parameters, your energy data, all of your cell intake and outtake performance values, your process-by-process performance values, all these things are tied together or can be interpreted together, and then you can understand trends and changes as you go,” Kephart said. “It’s very difficult to understand root causes if you don’t have enough data and ability within the process.”
