Battery Giants See Potential Disruption as Sodium Technology Gains Traction

Major players in the battery industry are showing increased interest and investment in emerging sodium-based technology, signaling a potential shakeup in the sector crucial for the ongoing energy transition.

Sodium, abundant in rock salts and brines worldwide, is emerging as a promising alternative for energy storage and electric vehicles.

It boasts cost advantages and greater availability compared to lithium, the current dominant material in batteries.

Despite its chemical and structural similarities to lithium, sodium has yet to be widely utilized, partially due to the superior range and performance of lithium cells of similar sizes.

Recent developments suggest a shift is on the horizon.

Northvolt AB in Sweden announced a breakthrough in sodium-based technology, while Chinese electric vehicle manufacturer BYD Co. inked a deal to construct a $1.4 billion sodium-ion battery plant.

China's CATL had already revealed plans in April to incorporate sodium-based batteries in some vehicles this year.

Rory McNulty, a senior research analyst at Benchmark Mineral Intelligence, described the investments as "serious," instilling confidence in the scalability of sodium-based technology for commercial use.

Successful implementation of sodium products could reduce lithium consumption and reshape the metals landscape in the battery industry.

Sodium-ion batteries, with their lower energy density, may find application in smaller, shorter-range electric vehicles or in power-grid energy storage, where size is less of a concern.

BloombergNEF estimates that sodium could reduce lithium demand by about 272,000 tons by 2035, or over 1 million tons if lithium supplies fail to meet demand.

Changes in the battery metals mix have disrupted supply-and-demand dynamics, affecting price trends.

Sodium is being considered as a cheaper alternative following a surge in lithium prices, driven by a buying frenzy that later subsided with disappointing electric vehicle demand and improved supply prospects.

Sam Adham, Head of Battery Materials at consultancy CRU Group, anticipates that sodium-ion technology will contribute to stabilizing the lithium supply-demand balance, mitigating extreme price fluctuations.

Despite the recent dip in lithium prices, sodium remains a cost-effective option.

If the market expands, sodium could follow the trajectory of lithium-ion phosphate (LFP) cells, favored for their lower cost over higher-performing alternatives.

Sodium's notable advantage lies in grid energy storage, where low cost outweighs battery performance.

However, its success hinges on improving cycle life — the number of charge and discharge cycles before replacement.

Currently averaging 5,000 cycles, sodium cells trail behind the most cost-effective lithium products with about 7,500 cycles.

The key challenge is enhancing cycle life, and if achieved, there could be increased demand from the energy storage sector, according to Duo Fu, an analyst at Rystad Energy.

For now, the emerging sodium-based cell sector appears dominated by Chinese producers, leveraging their extensive lithium battery production operations for cost efficiency.

This gives them a competitive edge over European and American counterparts, who, according to CRU's Adham, have limited experience in mass-producing sodium or lithium batteries, making cost competitiveness achievable through economies of scale.

Eddie Spence and Annie Lee / Bloomberg