1、Battery 2030:Resilient,sustainable,and circularBattery demand is growingand so is the need for better solutions along the value chain.This article is a collaborative effort by McKinsey in cooperation with the Global Battery Alliance and its members.The authors include Jakob Fleischmann,Mikael Hanick

2、e,Evan Horetsky,Dina Ibrahim,Sren Jautelat,Martin Linder,Patrick Schaufuss,Lukas Torscht,and Alexandre van de Rijt.Global demand for batteries is increasing,driven largely by the imperative to reduce climate change through electrification of mobility and the broader energy transition.Just as analyst

3、s tend to underestimate the amount of energy generated from renewable sources,battery demand forecasts typically underestimate the market size and are regularly corrected upwards.In an earlier publication,a joint 2019 report by McKinsey,the Global Battery Alliance(GBA),and Systemiq,A vision for a su

4、stainable battery value chain in 2030,we projected a market size of 2.6 TWh and yearly growth of 25 percent by 2030.But a 2022 analysis by the McKinsey Battery Insights team projects that the entire lithium-ion(Li-ion)battery chain,from mining through recycling,could grow by over 30 percent annually

5、 from 2022 to 2030,when it would reach a value of more than$400 billion and a market size of 4.7 TWh.Although battery growth will confer multiple environmental and social benefits,many challenges lie ahead.To avoid shortages,battery manufacturers must secure a steady supply of both raw material and

6、equipment.They must also channel their investment to the right areas and execute large-scale industrialization efficiently.And rather than just greenwashingmaking half-hearted efforts to appear environmentally friendlycompanies must commit to extensive decarbonization and true sustainability.Faced w

7、ith these imperatives,battery manufacturers should play offense,not defense,when it comes to green initiatives.This article describes how the industry can become sustainable,circular,and resilient along the entire value chain through a combination of collaborative actions,standardized processes and

8、regulations,and greater data transparency.By emphasizing sustainability,leading battery players will differentiate themselves from the competition and generate value while simultaneously protecting the environment.The strategies and goals presented here are aligned with both McKinseys battery supply

9、 chain vision and the GBAs principles.Global market outlook for 2030Global demand for Li-ion batteries is expected to soar over the next decade,with the number of GWh required increasing from about 700 GWh in 2022 to around 4.7 TWh by 2030(Exhibit 1).Batteries for mobility applications,such as elect

10、ric vehicles(EVs),1 These estimates are based on recent data for Li-ion batteries for electric mobility,battery electric storage systems(BESS),and consumer goods.Exhibit 1 Li-ion battery demand is expected to grow by about 33 percent annually toreach around 4,700 GWh by 2030.Global Li-ion battery ce

11、ll demand,GWh,Base case1Including passenger cars,commercial vehicles,two-to-three wheelers,of-highway vehicles,and aviation.Source:McKinsey Battery Insights Demand ModelLi-ion battery demand is expected to grow by about 33 percent annually to reach around 4,700 GWh by 2030.McKinsey&CompanyBy sector

12、By region202270020251,70020304,700202270020251,7002030ChinaEuropeUnited StatesRest of worldMobilityStationarystorageConsumerelectronics4,700+27%per annum6x2Battery 2030:Resilient,sustainable,and circularwill account for the vast bulk of demand in 2030about 4,300 GWh;an unsurprising trend seeing that

13、 mobility is growing rapidly.This is largely driven by three major drivers:A regulatory shift toward sustainability,which includes new net-zero targets and guidelines,including Europes“Fit for 55”program,the US Inflation Reduction Act,the 2035 ban of internal combustion engine(ICE)vehicles in the EU

14、,and Indias Faster Adoption and Manufacture of Hybrid and Electric Vehicles Scheme.Greater customer adoption rates and increased consumer demand for greener technologies(up to 90 percent of total passenger car sales will involve EVs in selected countries by 2030).Announcements by 13 of the top 15 OE

15、Ms to ban ICE vehicles and achieve new emission-reduction targets.Battery energy storage systems(BESS)will have a CAGR of 30 percent,and the GWh required to power these applications in 2030 will be comparable to the GWh needed for all applications today.China could account for 45 percent of total Li

16、-ion demand in 2025 and 40 percent in 2030most battery-chain segments are already mature in that country.Nevertheless,growth is expected to be highest globally in the EU and the United States,driven by recent regulatory changes,as well as a general trend toward localization of supply chains.In total

17、,at least 120 to 150 new battery factories will need to be built between now and 2030 globally.In line with the surging demand for Li-ion batteries across industries,we project that revenues along the entire value chain will increase 5-fold,from about$85 billion in 2022 to over$400 billion in 2030(E

18、xhibit 2).Active materials and cell manufacturing may have the largest revenue pools.Mining is not the only option for sourcing battery materials,since recycling is also an option.Although the recycling segment is expected to be relatively small in 2030,it is projected to grow more than three-fold i

19、n the following decade,when more batteries reach their end-of-life.Companies in the EU and US are among those that have announced plans for new mining,refining,and cell production projects to help meet demand,such Exhibit 2 Our model projects that the Li-ion battery value chain will provide revenueo

20、pportunities of over$400 billion by 2030.Revenues,base case 2030,$billionSource:McKinsey Battery Insights,2022opportunities of over$400 billion by 2030.McKinsey&Company2022203040085110(27%)74(18%)Rest ofworld TotalChinaEuropeUnitedStates34(9%)13(3%)121(30%)52(13%)35253372034221

21、122RefningMiningActivematerials CellPack Reuse andrecycle39611851185x3Battery 2030:Resilient,sustainable,and circularas the creation or expansion of battery factories.Many European and US companies are also exploring new business models for the recycling segment.Together,these activities could help

22、localize battery supply chains.Todays value chain challengesThe global battery value chain,like others within industrial manufacturing,faces significant environmental,social,and governance(ESG)challenges(Exhibit 3).Together with GBA members representing the entire battery value chain,McKinsey has id

23、entified 21 risks along ESG dimensions:Environmental:The extraction and refining of raw materials,as well as cell production,can have severe environmental effects,such as land degradation,biodiversity loss,creation of hazardous waste,or contamination of water,soil,and air.Unprofessional or even ille

24、gal battery disposal can cause severe toxic pollution.This is a problem within todays lead-acid battery value chain.Social:Unless strictly managed,operations across the battery value chain could have unfavorable effects on regional communities through violations of labor laws,child and forced labor,

25、and indigenous rights,especially in emerging markets.Governance:Businesses in the battery value chain may encounter conflicts of interest or other companies with subpar management practices.To meet longstanding expectations for ethical businesses,companies must avoid financial situations involving c

26、orruption,bribery,funding armed conflicts,and tax evasion.To conduct business in a socially and ecologically responsible way,it is crucial for stakeholders in the battery value chain to consider and address these ESG risks.(See sidebar,“Industry perspectives on sustainability”for more information on

27、 priorities).Success will likely depend on deploying sufficient resources as well as greater transparency and better mitigation measuresregulations and early planning could help ensure that companies alleviate risks along the entire value chain.Further,compliance and corporate risk will have to incl

28、ude ESG issues in their operational risk-management practices and processes to tackle them holistically.Many companies,however,still see mastering ESG as a cost and a burden.We strongly believe they need to embrace this challenge and view it as one of the greatest business opportunities of the centu

29、ry.Its time to stop playing defense and start playing offense.Exhibit 3The battery value chain continues to face numerous environmental,social,andgovernance challenges.governance challenges.McKinsey&CompanyGreenhouse-gas emissionsAir pollutionWater pollutionLand pollutionEnvironmentalSocialGovernanc

30、eRadioactive pollutionNeed to protect biodiversityDeforestation,land degradationResource drainageNeed to ensure health and safetyChild or forced laborDiscrimination and harassment Need to ensure fair workingconditions and wagesNeed to protect indigenous rightsand local communitiesWarlords or terrori

31、stsChallengesTax evasionAnticompetitive practicesNeed for sustainable supplier management Information managementCustomer health and safetyTransparency and reportingCorruption and bribery4Battery 2030:Resilient,sustainable,and circularIndustry perspectives on sustainabilityHere are what some battery

32、industry leaders and experts have to say about sustainability:“Our Battery 2030 report,produced by McKinsey together with the Global Battery Alliance,reveals the true extent of global battery demand and the need for far greater transparency and sustainability across the entire value chain.The lithiu

33、m-ion battery value chain is set to grow by over 30 percent annually from 2022-2030,in line with the rapid uptake of electric vehicles and other clean en-ergy technologies.The scaling of the value chain calls for a dramatic increase in the production,refining and recycling of key minerals,but more i

34、mportantly,it must take place with ESG considerations at front and center.It is time we transition to a more circular,sustain-able,and just value chain that protects our planets biodiversity,resources,and ensures that human rights are respected globally.We can achieve the sustainable future we all d

35、esire,but only if we work together for it.”Benedikt Sobotka,CEO,Eurasian Resources Group“The transformation towards battery electric mobility is a gigantic challenge for industrial structures and workers.The social impact will depend on the application of a just transition concept:investment in skil

36、ls,creation of new and decent jobs,social dialogue/collective bargaining and a more balanced value creation model between the Global North and the Global South.”Atle Hie,IndustriALL General Secretary“Umicore is a proud founding member of the Global Battery Alliance and a strong supporter of its Batt

37、ery Passport project,as they align with our ambition to roll out a decarbonized and responsible battery supply chain.Acceleration in EV sales will go hand in hand with unprecedented growth in the production of rechargeable batteries that are sustainably sourced,manufactured,used and recy-cled.By sha

38、ring our longstanding industry expertise in battery materials and battery recycling through partnerships like the GBA,we aim to raise the bar to reach true clean mobility.”Mathias Miedreich,CEO of Umicore“When we published our first GBA Vision for Sustainable Batteries 2030,with McKinsey in 2019,we

39、understood and laid out the dramatic shift in the demand for batteries,critical minerals and assurances of sustainable and ethical practices that would be required.What we did not predict was how the scale and urgency of that demand would escalate so quickly and at a pace rarely seen in history.This

40、 updated report brings essential and timely new data to inform the actions needed going forward.Given this shift and pace,now more than ever,our work as the Global Battery Alliance,and the importance of collaborative,multi-stakeholder action has never been more relevant or needed.”Gillian Davidson,S

41、ustainability Advisor,Eurasian Resources Group,GBA Chair of the Board of Directors“The members of the Global Battery Alliance are committed to achieving sustainable,circular,and responsible battery value chains by 2030.The results of the McKinsey analysis underline both the continued relevance and h

42、ighlight the sense of urgency with which we need to achieve this vision.The GBA battery passport is a key tool to enhance transparency in battery value chains and enhance sustainability impacts including the progressive reduction of greenhouse gas emissions within battery value chains.”Inga Petersen

43、,Executive Director,Global Battery Alliance“Three years ago McKinsey supported GBA and demonstrated the importance of a pre competitive transparent battery value chain to drive the energy transformation,todays updated report magnifies not only the importance but also the magnitude and urgency.”Guy t

44、hier,Past Chairman of the Board of Directors,Global Battery Alliance5Battery 2030:Resilient,sustainable,and circularBesides the much-publicized ESG challenges,GBA members have pointed out that the battery value chain confronts massive economic barriers(Exhibit 4).Historic price peaks and extreme vol

45、atility,as well as quickly changing national regulations,can massively affect the economic viability of projects.Higher battery prices also make some green applications far less attractive than they were previously,which could delay much-needed attempts to accelerate decarbonization.Although economi

46、c viability is the most urgent issue for leaders,a more complex challenge involves the industrialization and historic scale-up of the battery industry.Dealing with shortagesShortages of manufacturing equipment,construction material,and the skilled labor required to ramp up production are a few reaso

47、ns why many battery-cell factories experience significant delays.Vertical supply-chain integration and long-term contracts,as well as greater collaboration,could mitigate some of these issues.Additionally,open dialogue and education with local communities and stakeholders are likely key to achieving

48、 more widespread acceptance and support for the battery industry.The metals and mining sector will supply the high quality raw materials needed to transition to greener energy sources,including batteries.If companies can provide sustainable materialsthose with a low CO2 footprintthey might capture a

49、 green premium,since demand is ramping up for such products.It may be difficult to provide sustainable materials in the quantities needed to meet demand,however.Producers and purchasers could mitigate potential shortages of raw materials by redefining their strategies and operations to be economic,t

50、ransparent,sustainable,and circular.For instance,producers need to build or re-create a growth agenda based on economic viability to ensure execution.Further,they need to strive for continuous innovation in productivity and decarbonization of operations while simultaneously pursuing diverse partners

51、hips that will embed them in downstream supply chains.Purchasers,on the other hand,must adapt technology rollout plansfor instance,by increasing flexibility regarding battery technologies and raw-materials requirementsand accelerate innovation on product design and material usage.They must also send

52、 clear signals about long-term demand.to decrease the uncertainties about market size that often deter producers from undertaking multi-billion dollar mining and refining projects,which often have 20 to 30 year lifetimes.Purchasers should aim for strategic-green-procurement excellence by identifying

53、 potential mines and refineries across different geographies and then assess their volume,quality,environmental Exhibit 4 While economic challenges to the battery industry are obvious,the realdifficulty lies in implementation and industrialization.difculty lies in implementation and industrializatio

54、n.McKinsey&CompanyAbove the surfaceEconomics:Raw material and energy price peaks and volatility Regulatory harmonization and standardization Incentives,subsidies,and taxesIndustrialization:Constrained and disrupted supply chains Need for collaboration and intellectual property protection Technology

55、disruption and uncertainty Material and machinery shortage Need for talent and skilled labor Societal acceptanceBelow the surface6Battery 2030:Resilient,sustainable,and circularimpact(looking not just at greenhouses gases but all planetary boundaries).It will also be important to evaluate the societ

56、al risks involved in securing an adequate supply.Players along the entire value chain must step up their game to enable true circularity by creating tight loops,such as those for life extension,rather than just focusing on the wide loop of recycling.Last,the entire value chain needs to step up their

57、 game in enabling true circularity with tight loops like life extension,rather than just the wide loop of recycling.This article and the underlying data and analytics can help promote better planning by the relevant stakeholders in the private and public sectors,as well as by investors.These stakeho

58、lders require a reliable fact-base and transparency on raw-material demand and supply imbalances to de-risk their investments.Batteries require a mix of raw materials,and various pressures currently make it difficult to procure adequate supplies.McKinseys MineSpans team,which rigorously tracks globa

59、l mining and refining capacity projects,has created several future scenarios based on available information.The base-case scenario for raw-material availability in 2030 considers both existing capacity and new sources under development that will likely be available soon.The teams full potential scen

60、ario considers the impact of pipeline projects that are still in the earlier stages of development,as well as the effect of technology innovation and the potential addition of new mining and refining capacity.While some battery materials will be in short supply,others will likely experience oversupp

61、ly,making it more difficult to plan.The success factors for ensuring a sufficient global supply include obtaining greater transparency on supply and demand uptake,proactively identifying the need for new mining and refining capacities to avoid bottlenecks,channeling investments into new capacity,and

62、 improving investment returns and risk management.Almost 60 percent of todays lithium is mined for battery-related applications,a figure that could reach 95 percent by 2030(Exhibit 5).Lithium reserves are well distributed and theoretically sufficient to cover battery demand,but high-grade deposits a

63、re mainly limited to Argentina,Australia,Chile,and China.With technological shifts toward more lithium-heavy batteries,lithium mining will need to increase significantly.Meeting demand for lithium in 2030 will require stakeholders to strive for the full potential scenario,which factors in the Exhibi

64、t 5Lithium could be in extremely short supply if no further projects are developed.GlobalRest of worldChileChina2030 demand2030 base scenario2021 supplyAustralia05001,0001,5002,0002,5003,0003,500Lithium carbonate global equivalent demand 2030,supply 2021 and 2030 by country,ktSource:McKinsey MineSpa

65、ns,2022McKinsey&Company55%46%45%16%20%28%10%17%17%7impact of almost every currently announced project in the pipeline and will require significant additional investment in mining projects.The full potential scenario also involves putting greater emphasis on smart product technology choices,such as t

66、he use of silicon anodes instead of Li-metal.Nickel reserves are dispersed across various countries,including Australia,Canada,Indonesia,and Russia(Exhibit 6).In our base scenario,there would only be a small shortage of nickel in 2030 because of the recent transition to more lithium iron phosphate(L

67、FP)chemistries and plans to increase mining capacity.Although McKinseys full potential scenario projects a significant oversupply of nickel if stakeholders achieve their planned mining and refining potential,companies could still have difficulty acquiring sufficient quantities because of quality req

68、uirements(for instance,the need for class 1 nickel rather than class 2 nickel in the form of ferroalloys)and the limited geographic distribution of mines.No matter how supply evolves,the industry will need to consider one critical question:How to find sustainable nickel for batteries?In answering th

69、is question,companies must consider CO2 intensity differences across assets.Approximately 75 percent of todays mined cobalt originates from the Democratic Republic of Congo(DRC),largely as a by-product of copper production(Exhibit 7).The remainder is largely a by-product of nickel production.The sha

70、re of cobalt in batteries is expected to decrease while supply is expected to increase,driven by the growth in copper mining in the DRC and of nickel mining,primarily in Southeast Asia.While shortages of cobalt are unlikely,volatility in supply and price may persist because it is generally obtained

71、as a by-product.Supply of manganese should remain stable through 2030 since no announcements of additional capacity are expected(Exhibit 8).Demand for manganese will likely slightly increase and,thus,our base scenario estimates a slight supply shortage.The industry should be aware that some uncertai

72、nty surrounds manganese demand projections because lithium manganese iron phosphate(LMFP)cathode chemistries could potentially gain higher market shares,especially in the commercial vehicle segment.Exhibit 6The current project pipeline suggests a slight undersupply of nickel.Rest of worldFrancePhili

73、ppinesIndonesia01,0002,0003,0004,0005,0002030 demand2030 base scenario2021 supplyGlobalNickel global demand 2030,supply 2021 and 2030 by country,ktSource:McKinsey MineSpans,2022The current project pipeline suggests a slight undersupply of nickel.McKinsey&Company8%32%7%9%52%29%14%9%47%8Battery 2030:R

74、esilient,sustainable,and circularExhibit 7Cobalt supply will be more than sufficient because of the higher market shareof low-cobalt cathode chemistries.IndonesiaCubaAustraliaDRCRest of worldGlobal05003003502030 demand2030 base scenario2021 supply78%13%7%75%19%Cobalt global demand 2030,su

75、pply 2021 and 2030 by country,ktSource:McKinsey MineSpans,2022of low-cobalt cathode chemistries.McKinsey&Company3%2%3%+15%Exhibit 8Manganese demand could slightly exceed supply.Manganese global demand 2030,supply 2021 and 2030 by country,ktSource:McKinsey MineSpans,20228%Rest of the worldAustraliaGa

76、bonSouth AfricaGlobal2030 demand2021 supply2030 base scenario05,00010,00015,00020,00025,00036%20%14%30%38%20%13%29%9Mitigating emissionsBattery electric vehicles(BEVs)often are criticized for their greenhouse-gas footprint throughout their life cycle.However,although results vary significantly depen

77、ding on factors such as milage,production,and electricity grid emissions,our models clearly indicate that BEVs are the most effective decarbonization option for passenger cars.Our calculations show that total emissions are much lower today for BEVs than vehicles with internal combustion engines(ICE)

78、,because BEVs emit lower emissions during the use phase(the time that vehicles are on the road)(Exhibit 9).In the worst case scenario,with no low-carbon electricity,total life-cycle emissions for BEVs are about 50 percent lower in Europe and 72 percent lower in the United States compared with ICE ve

79、hicles.Once recharged with low-carbon electricity during the use phase,BEVs achieve even better life-cycle carbon footprints than ICE vehicles,with about 77 percent lower emissions in Europe and 88 percent lower emissions in the United States.Although BEVs are superior in life-cycle emissions,their

80、material and manufacturing emissions per vehicle are double those of ICE vehicles.These greenhouse-gas emissions before the use phase are responsible for 40 to 95 percent of total life-cycle emissions of BEVs,depending on the grid electricity used for charging.Decarbonizing production,primarily for

81、battery,aluminum and steel,is therefore much more critical for BEVs than it has been for ICEs.In the next five to seven years,ambitious players might cut the carbon footprint of battery manufacturing by up to 90 percent,but this would call for changes throughout the whole value chain.Different tacti

82、cs can aid in abatement.In the best-case scenario,some of these would result in cost savings,while others would entail large expenditures.Under the most beneficial circumstances,companies might potentially decarbonize up to 80 percent of emissions at a minimum additional cost(Exhibit 10).The site of

83、 manufacturing and the intended market,including its carbon price,customer demand,and willingness Exhibit 9Lifecycle emissions are lower with battery electric vehicles than internalcombustion engine vehicles.020406080100Lifetime COe emissions by vehicle powertrain type,metric tons1Estimated use phas

84、e of 243,000 km.2Production emission references global average vehicle C-segment.3BEV models account for 10%charging losses.4Clean grid perspective for use phase only;excluding additional emission savings by,eg,green steel and clean battery cathode/anode material.5Estimated BEV average energy consum

85、ption of 15 kWh per 100 km and electricity generation according to European 2021 EU energy mix and US energy mix.6509 g/mile of CO2e emissions for average US ICE gasoline.Source:McKinsey Center for Future Mobility,McKinsey Sustainability Insightscombustion engine vehicles.McKinsey&CompanyUnited Stat

86、esBEVClean grid mix4BEV,ICEgasolineBEVClean grid mixBEV,ICEgasolineEuropeUse phaseProductionemission02040608010010Battery 2030:Resilient,sustainable,and circularto pay potential green premiums,will help determine how cost competitive low-carbon batteries may be.The most effective decarbon

87、ization levers include the use of circular materials and low-carbon electricity.Their economic attractiveness may vary,however,primarily because of local issues,such as electricity feed-in-tariffs,subsidies,and available materials.Technological advancesSome recent advances in battery technologies in

88、clude increased cell energy density,new active material chemistries such as solid-state batteries,and cell and packaging production technologies,including electrode dry coating and cell-to-pack design(Exhibit 11).When making investments decisions,battery manufacturers could find these rapid advances

89、 challenging.After choosing the battery technology that fits their application needs best,they should then quickly secure the required raw material upstream,acquire the capable machinery mid-stream to suit the battery chemistry and application,and recruit the indispensable talent required for those

90、projects.The uncertainty about cell technologies and form factors supplied by different producers also imposes significant complexity costs and risks to the after-sales,repair,and maintenance of batteries.Vehicle OEMs need to ensure that EV battery modules and packs can be replaced at a low cost lon

91、g after the typical eight-year warranty period.To manage uncertainty,battery cell manufacturers need to plan their target investments carefully and scout for external funding opportunities,such as green bonds or subsidies in relevant regions.Simultaneously,they should accomplish several other import

92、ant tasks:plan their manufacturing plants,optimize short-and long-term costs to ensure agility and adaptability of production lines,and steer investments into new technologies.Exhibit 10For batteries with nickel-manganese-cobalt cathode chemistries,most carbonabatement levers can be implemented for

93、less than 50/tCO2.1Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organization but that have indirect impacts in its value ch Suppliers are assumed to be in China for all components.Source:Catalyst Zero,McKinsey,2022;McKinsey MineLens,2022;McKinse

94、y analysis for 2025abatement levers can be implemented for less than 50/tCO.McKinsey&CompanySwitch togreen electricitySwitch tohydrogenfor heatRecycle allscrap from cells2506030250350Abatementcostto 2025,/tCOAbated emissions,kgCO/kWhSwitch fromwet to dry coatingProcure recycledraw materia

95、ls(vs virgin)Cathodeactive materialHousingAnodeactive materialAnodecurrent collectorCathodecurrent collectorCell manufacturingand pack assemblingRaw materials11Battery 2030:Resilient,sustainable,and circularBattery 2030:resilient,sustainable,and circularThe 2030 outlook for the battery value chain d

96、epends on three interdependent elements(Exhibit 12):Supply-chain resilience.A resilient battery value chain is one that is regionalized and diversified.We envision that each region will cover over 90 percent of local cell demand,over 80 percent of local active material demand,and over 60 percent of

97、refined materials demand.In addition,by recycling raw materials that are primarily found in one location(such as cobalt),countries can reduce their dependency on others.A recycling target of 80 percent,as recently specified in the EU battery directive,could become an aspiration for 2030 for all regi

98、ons globally.Across the entire value chain,the industry could contribute to up to 18 million jobs in 2030 by securing existing positions and creating new ones.The number of projected jobs80 percent higher than in our 2019 reportrelates to the higher expected battery demand estimates for 2030.A focus

99、 on sustainability.Batteries are a major tool in the challenge to decarbonize the mobility sector and other industriesa task that is essential to avoid triggering irreversible climate tipping points.The battery revolution could reduce cumulative greenhouse-gas emissions by up to 70 GtCO2e between 20

100、21 and 2050 in the road transport sector alone.However,the battery industry will need to prioritize the decarbonization of its own industry to maintain its credibility.Our analysis suggests that material and manufacturing emissions could fall 90 percent per kWh battery on the cell level by 2030.Furt

101、her pack level emissions will mostly depend on achievements in decarbonizing aluminum,steel,and plastic production.The Exhibit 11Innovations in the battery industry affect all cell components.Common battery chemistries and form factor available 1234567Source:McKinsey Battery Insights,2022Lithium cob

102、alt.Lithium manganese oxide.Lithium,iron,phosphate.Lithium,manganese cobalt.Lithium,nickel,cobalt,aluminum oxide.Lithium manganese iron phosphate.Lithium,manganese nickel oxide.2020s 2030s2010s 1234LMO2 LFP NMC/NCALFP NMC/NCALFP NMC/NCALMFP/LMNONMC/NCALMFP/LMNOSulphurLCO LMFP/LMNOSulphurPolymer/liqu

103、idPolymer/liquidPolymer/liquidPolymer/liquidPolymer/liquidAdvanced liquidSemi-solidAdvanced liquidSemi-solidSolidSeparator/electrolyte Graphite Graphite GraphiteGraphiteGraphite andGraphite andsiliconsiliconGraphite andLithium metalSilicon anode Lithium metalSilicon anode Anode Cylindrical Cylindric

104、al Pouch Prismatic Cylindrical Pouch Prismatic Cylindrical Pouch Cylindrical Pouch Prismatic Cylindrical Pouch Casing Cathode 12Battery 2030:Resilient,sustainable,and circularindustry could also benefit from setting ambitious improvement targets in the nine planetary boundaries that the Stockholm Re

105、silience Center defined and quantified.These include freshwater change,stratospheric ozone depletion,atmospheric aerosol loading,ocean acidification,biogeochemical flows,novel entities,land-system change,biosphere integrity,and climate change.Significant improvements for all social and governmental

106、challenges mentioned earlier are also necessary to achieve true sustainability.Creation of a circular value chain.The battery industry has to move from a linear to a circular value chainone in which used materials are repaired,reused,or recycled.This transformative approach may also create huge econ

107、omic potential,with some opportunities already available today(for instance,scrap recycling).A large cross-industry effort and coordination will be needed for stakeholders to achieve the full potential of a circular value chain.Companies could benefit from investigating sustainable and economically

108、viable applications that would increase circularity,or by leveraging technological advances that contribute to this goal.At a minimum,the battery industrys growth must help fulfill basic human,product,and economic needs.Important goals include social welfare,inclusive value creation,adherence to int

109、ernational law,emphasis on human rights,creation of durable and performing products,and economic viability for businesses.To create a well-functioning value chain,companies should attempt to avoid any shortcomings in these areas.For sustainability,the battery industry can only achieve true sustainab

110、ility if it does not overshoot any of the nine planetary boundaries that the Stockholm Resilience Center defined and quantified.Exhibit 12Our 2030 vision for the battery value chain focuses on resiliency,sustainability,and circularity.1CtCOe equals one billion tons of carbon dioxide equivalent.Sourc

111、e:McKinsey&CompanyOur 2030 vision for the battery value chain focuses on resiliency,sustainability,and circularity.McKinsey&CompanyA resilient supply chainboosting social value6 An industry enhancingsustainability footprintcarbon footprint per kWhof battery produced in2030 versus 202290%A circular v

112、alue chain fosteringinnovative technologiescontinents with large scale batteryvalue chains covering majorityof domestic demandadditional proft with arobust recycling ecosystemby 2040$6 billionThe scale up of the global battery value chain will likely support about18 million jobs(new and existing)alo

113、ng the entire value chain and could reducecumulative road transport emissions from 2021 through 2050 by about 70 GtCOe.13Battery 2030:Resilient,sustainable,and circularBased on our extensive experience in the global battery value chain,we have identified ten transformational success factors that wil

114、l pave the way for our 2030 vision in which batteries power a resilient,sustainable,and circular future(Exhibit 13).Establishing value chain circularity.Achieving circularity along the entire value chain could increase resilience against supply shortages and price volatility.It will also mitigate ri

115、sks related to battery-waste disposal.Companies could gain additional value by adopting circular business models,such as battery as-a-service or mobility as-a-service,repair,refurbishment and second-life applications.If none of these options is available,then battery recycling is essential.Circulari

116、ty will necessitate cross-industry collaboration and partnerships,as well as data transparency and harmonized standards.Increasing energy efficiency and electrification share.Most large-scale battery factories that will be operational in 2030,and for many years beyond,are now being built.As such,mas

117、tering energy efficiencyfor instance,via building insulation or heat recoveryis key.Exhibit 13Ten transformational success factors are essential to build a resilient,sustainable,and circular battery value chain by 2030.Source:McKinsey Sustainability Insights inspired by the 2015 article“Planetary bo

118、undaries:Guiding human development on a changing planet”in Science by Will Stefen et al and the 2018 article“A good life for all within planetary boundaries”in Nature Sustainability by Daniel W.ONeil et al.sustainable,and circular battery value chain by 2030.McKinsey&CompanyMinimizingenvironmentalim

119、pactsbeyondclimateSustainableResilientCircularFactors for a successful battery value chainPlanetary boundariesShortcomingIncreasingenergyefciency andelectrifcationshareCreating positive,just,and inclusive social impactSourcing 24/7low-carbonelectricity and heat Embracingtechnologyinnovation andfexib

120、ilityEstablishingfull supply-chaintransparency andcomplianceExcelling incost andregionalexecutionSecuring rawmaterial andmachinerysupplyEstablishingvalue chaincircularityHarmonizinginternationalstandards andregulationHuman,product,and economic needsOvershoot14Battery 2030:Resilient,sustainable,and c

121、ircularMinimizing environmental impacts beyond climate.A truly holistic approach will have to go far beyond producing low-carbon batteries.Stakeholders will have to take into account other planetary boundaries to ensure the global battery industry has a truly positive environmental impact along the

122、entire value chain.Adhering to the 2022 Kunming-Montreal biodiversity agreement(which includes a target to protect 30 percent of Earths surface by 2030)is especially important as it is a landmark in the global effort to safeguard natural habitats.It can be viewed as the equivalent to the Paris agree

123、ment for fighting climate change.Creating positive,just,and inclusive social impact.By ensuring health,safety,fair-trade standards,human rights,and inclusive dialogues,the battery industry could provide a positive impact on many local communities around the globe as it scales up.The GBA has publishe

124、d various rulebooks on these dimensions.Sourcing 24/7 low-carbon electricity and heat.A 2022 report by the Long Duration Energy Storage Council and McKinsey showed that traditional clean power purchase agreements only enable a 40 to 70 percent decarbonization of buyers electricity consumption while

125、exposing them to market price risks stemming from renewables variability.Companies might achieve better results with time-matched green energy solutions,enabled by long-duration storage technologies,which can help match supply and demand for electricity and heat during every hour of the year.The bat

126、tery industry could become a frontrunner in accelerating deep decarbonization of the grid,despite its additional energy demand,if companies procured time-matched clean energy to meet all their needs.Establishing full supply-chain transparency and compliance.Data availability and transparency are fun

127、damental requirements to ensure that the industry achieves its growth and ESG targets.This will require harmonized,credible,and trusted data.The Global Battery Alliances Battery Passport may be a resource here.Embracing technology innovation and flexibility.For cell manufacturers and OEMs to become

128、leaders in technology,process optimization,and modularity,they could aim to understand market dynamics,be flexible,and adopt promising innovations.Securing raw material and machinery supply.Companies could explore long-term agreements,and co-funding,acquisition,and streaming arrangements with raw ma

129、terial and equipment machinery companies to ensure adequate supplies.This might help avoid supply shortages in construction materials,skilled labor,and machinery and thus mitigate the significant delays that often occur in new production capacity projects today.Further,companies could consider secur

130、ing access to capital,rigorously plan and execute complex permitting processes,and navigate import and export bureaucracy to ensure a scheduled execution.Excelling in cost and regional execution.There have been tremendous improvements in battery costs,manufacturing efficiency,and required capital ex

131、penditures over the past decade.Companies will need to continue excelling in these dimensions to remain competitive.Harmonizing international standards and regulations.Diverging manufacturing standards and local regulations increase costs and pose barriers to faster scale-ups.GBA members see harmoni

132、zation as one of the most critical goals to achieve around the globe.Private-public partnerships,as well as industry alliances,could help significantly in orchestrating the alignment process by fostering dialogue in multi-stakeholder environments.In many respects,the current battery industry still a

133、cts as a linear value chain in which products are disposed of after use.Circularity,which focuses on reusing or recycling materials,or both,can reduce GHG intensity while creating additional economic value(Exhibit 14).15Battery 2030:Resilient,sustainable,and circularA circular battery value chain ca

134、n effectively couple the transport and power sectors and is a foundation for transitioning to other sources of energy,such as hydrogen and power-to-liquid,after 2025 to achieve the target of limiting the increase in emissions to 1.5 C above pre-industrial levels.Despite the accelerated emphasis on s

135、ustainability during the COVID-19 pandemic,global CO2 emissions reached an all-time high in 2021 and 2022meaning that just over six years are left before the 1.5C carbon budget is depleted.This requires the highest urgency to act.Current regulations encourage circularity,and a shift to this model co

136、uld bring many benefits.For instance,companies would encounter fewer supply bottlenecks resulting from the limited availability of raw materials.Circularity could benefit the environment since companies would less frequently engage in virgin raw material mining and refining.On the financial side,com

137、panies might capture additional value if they reuse raw materials contained in end-of-life batteries.Digital technology could increase circularity by providing the transparency and data management required to create an efficient ecosystem in which batteries and critical materials can be traced throu

138、gh end-of-life.Improving recyclingBattery manufacturers may find new opportunities in recycling as the market matures.Companies could create a closed-loop,domestic supply chain that involves the collection,recycling,reuse,or repair of used Li-ion batteries.The recycling industry alone could create a

139、$6 billion profit pool by 2040,by which time revenue could exceed$40 billionmore than a three-fold increase from 2030 values(Exhibit 15).Current recycling business models are costly and heavily dependent on various factors,including battery design,process quality,and shifts in market supply or raw-m

140、aterial demand.In addition,operational challenges,such as limited Exhibit 14The battery value chain can transform from linear to circular.Source:McKinsey Battery Insights,2022The battery value chain can transform from linear to circular.McKinsey&CompanyTransportsectorPowersectorBatteryindustry341512

141、111098762Active materials1Cell and pack2Application3Repair and refurbish4Recycling(including urban mining)5Second life6Decentralized energy storage(eg solar power and storage)7Centralized storage8Vehicle to grid(including moving power storage)9Smart charging10Purpose-built urban EV11Shared mobility1

142、216Battery 2030:Resilient,sustainable,and circularaccess to battery materials,inefficient processes,and low yields resulting from immature technologies,remain persistent problems in the recycling sector.Regulatory incentives,as well as corporate sustainability goals,provide companies with strong rea

143、sons to improve their recycling efforts by optimizing access to feedstock,technological processes,and strategic partnerships throughout the battery value chain.Companies could also improve recycling by drawing on knowledge gained from lead acid battery recycling.Regional variations in the value chai

144、nValue chain depth and concentration of the battery industry vary by country(Exhibit 16).While China has many mature segments,cell suppliers are increasingly announcing capacity expansion in Europe,the United States,and other major markets,to be closer to car manufacturers.Partially because of recen

145、t regulatory changes,these new locations could provide almost 40 percent of global capacity in 2030.Although current globally-announced nameplate capacity of Li-ion cell factories exceeds our market demand projections,there are several reasons why it will likely remain a suppliers market with tempor

146、ary supply bottlenecks:not all announced projects will be executed,not all will operate at full capacity,and many will be delayed.Further,battery cells are not sold on a free-floating spot market but via long-term supplier contracts.Despite rising local demand,China will likely continue to have sign

147、ificant overproduction capacity,while Europe and North America might not be able to meet their own local demand for cell production.Although companies in many locations are still announcing new capacity,local growth comes with challenges.Management of the upstream supply chain will remain critical g

148、iven the nature of regional raw material availability.Players in the battery value chain who want to localize the supply chain could mitigate these risks through vertical integration,localized upstream value chain,strategic partnerships,and stringent planning of manufacturing ramp-ups.Exhibit 15Recy

149、cling could open new possibilities for battery manufacturers.Available battery material for recyclingby source,kt EV battery recycling economics 2030,$per ton of battery 1Values represent an average across all battery types.Source:McKinsey Battery Insights,2022McKinsey&Company2020200202580020301,400

150、20353,400204017%83%7,300+20%per annumExtractioncost MaterialvalueMarginProductionscrapEnd of life4,8005,2003,6004,0008001,60017Battery 2030:Resilient,sustainable,and circularThe battery value chain is facing both significant opportunities and challenges due to its unprecedented growth.It is probably

151、 one of the most ambitious scaling and ESG transformations that this highly complex and global product value chain has seen.It will require stringent efforts,cross-industry collaboration,technological disruptions,public-private-partnerships and increased research activities to succeed.If mastered,ho

152、wever,the industry scale-up will potentially create more than$400 billion in value-chain revenues by 2030,contribute to up to 18 million jobs along the entire value chain and around 70 GtCO2e avoided cumulative road transport emissions from 2021 to 2050.We strongly believe that a resilient,sustainab

153、le,and circular global battery value chain is not only possible but also admirable to achieve sustainable inclusive growth.Copyright 2023 McKinsey&Company.All rights reserved.Jakob Fleischmann and Patrick Schaufuss are partners in McKinseys Munich office,where Martin Linder is a senior partner;Mikae

154、l Hanicke is a senior partner in the Gothenburg office;Evan Horetsky is a partner in the Stockholm office;Dina Ibrahim is a consultant in the London office;and Sren Jautelat is a partner in the Stuttgart office,where Lukas Torscht is a consultant and Alexandre van de Rijt is an associate partner.The

155、 authors wish to thank the Global Battery Alliance and its members for providing deep real-life insights and expertise to this article.McKinsey has collaborated with the Global Battery Alliance since their inaugural report in 2019,A Vision for a Sustainable Battery Value Chain in 2030:Unlocking the

156、Full Potential to Power Sustainable Development and Climate Change Mitigation.Further,the authors wish to thank Marcelo Azevedo,Nicol Campagnol,Bernd Heid,Russell Hensley,Patrick Hertzke,Evan Horetsky,Raphael Rettig,Daniel Schmid,Markus Wilthaner,and Ting Wu for their contributions to this article.T

157、hey also wish to thank the broader Automotive,Sustainability,Global Energy and Materials Practice partnership and their solution colleagues at MineSpans,Battery Insights,Sustainability Insights,the McKinsey Platform for Climate Technologies,and the McKinsey Center for Future Mobility for their input

158、 and guidance.Exhibit 16Current global battery cell capacity announcements suggest a move towardregionalization in Europe and North America.Global announced nameplate capacity for production of Li-ion battery cells,GWh/yearSource:McKinsey Battery Insightssupply model,team analysis,Q4,2022regionalization in Europe and North America.McKinsey&Company13%13%6%62%20227%68%9%Europe11%74%North America6%202513%6%19%6%2030ChinaRest of Asia1,8505,4006,50018Battery 2030:Resilient,sustainable,and circular