Is Sodium the new Lithium (ion)?

Chart of the week

About two years ago, the promise of sodium-ion batteries as a substitute for lithium-ion batteries began to percolate into the mainstream. Theoretically, there are at least five reasons to be excited about sodium-ion:

1. Just like “lithium-ion”, the phrase “sodium-ion” refers to a family of battery chemistries with a variety of electrode materials, which all rely on sodium ions shuttling back & forth to charge and discharge. And in fact, these two families are very close. They’re battery cousins. Most importantly, they can be manufactured with a very similar set of equipment and processes, which means that sodium-ion can piggyback on the past twenty years of progress in lithium-ion production. In fact, this is already happening (mostly in China).

   

   Source: Benchmark Minerals Intelligence, “Sodium ion 2030 pipeline capacity hits 150 GWh as cathode trends emerge”

2. Lithium-ion is the king of batteries in large part because lithium is the lightest metal — in fact, it’s the third lightest element. This makes it a patently attractive option for lightweight energy storage. Sodium is heavier, but not so heavy that lower-range transport applications are completely out of the question. In fact, there are already at least two Chinese electric vehicle brands rolling out products powered by sodium-ion.

   

3. Lithium is a relatively scarce element, comprising just about 0.002% of the earth’s crust — with known, concentrated deposits clustered in a relatively small number of locations worldwide (e.g. the South American “Lithium Triangle” at the intersection of Chile, Bolivia, and Argentina). This kind of scarcity can lead to price volatility, such as the spike in lithium prices we saw in 2021-22. Meanwhile, sodium is about 1,000 times more abundant in the earth’s crust than lithium, and is easily accessible just about everywhere. (Nobody ever complains about the price of table salt.) It’s true that lithium has turned out to be a lot like hydrocarbons, in that high prices have proven to be a fantastic solution to high prices; the more we go searching for lithium, the more we seem to find. Yet, there is something inherently attractive about a battery based on a much, much more abundant foundational mineral.

4. This abundance is especially attractive for those of us who want to see more robust battery supply chains built outside of China. China is currently the third largest producer of raw lithium, and controls about 70% of the world’s lithium refining capacity. While China is also the breakout leader in sodium-ion battery manufacturing, sodium has a clear advantage when it comes to the geopolitical dynamics of the supply chain. Here’s a map from the Volta Foundation which highlights why the US should take sodium batteries especially seriously…

   

   Volta Foundation, “2024 Annual Battery Report”

5. Sodium also has some safety advantages over lithium-ion. Although the lithium-ion industry has made great progress on fire risk mitigation over the past decade, sodium-ion batteries have an inherently lower risk of thermal runaway, and can utilize non-flammable electrolytes. This can further reduce the cost of batteries at the full pack or system level, by limiting the need for fire suppression equipment.

So, sodium-ion has some pretty compelling advantages!

On the other hand, the lithium-ion industry is a juggernaut… In particular, lithium iron phosphate, or LFP, just keeps getting cheaper. Even if sodium-ion is theoretically cheaper, on a fundamental materials cost basis, it’s not clear how sodium-ion could gain enough of a foothold in the market to catch up.

That brings me to the chart of the week, from a paper published in Nature called “Critically assessing sodium-ion technology roadmaps and scenarios for techno-economic competitiveness against lithium-ion batteries”. The authors have employed a clever combination of learning curves and bottoms-up cost analysis in order to generate a range of scenarios for future LFP and sodium-ion (“NIB”) prices.

The headline is that sodium could begin to outcompete lithium by the mid-2030s — at least, in applications where energy density isn’t a major constraint, like stationary storage.

But of course, this headline “forecast” depends on a bunch of assumptions about the pace of deployment and the underlying mineral market dynamics for both classes of battery. For example, if we see another runup in lithium prices, or a similar spike in the price of graphite (which is needed for lithium-ion anodes, but not sodium-ion), then sodium might gain an opening to scale up faster.¹

So, instead of focusing on the exact shape of the cost curves in this forecast, I’d instead direct your attention to the mineral price floors.

LFP has a material price floor around $25 per kWh, which is mostly just the cost of the lithium, iron, and phosphate. And, because of lithium’s relative scarcity, the odds are much greater that this price trends higher than lower. Meanwhile, the material price floor for sodium-ion — specifically, for sodium-ion formulations which avoid using nickel in their cathodes — is just a couple of dollars per kWh… and very unlikely to increase. The cost is practically all in the manufacturing. Hence, this paper finds that the total cell cost could dip into the $25/kWh range.

This possibility should leave nearly all other aspiring energy storage technology developers quaking in their boots.

So: Is sodium the new lithium? Not yet. And maybe it will never get the chance to be, if LFP’s dominant status prevents sodium from scaling up sufficiently to make rapid progress down the cost curve. Yet, we’re already seeing sodium taking its first steps towards meaningful scale, in China. And in my view, the combination of sodium-ion’s mouthwatering material cost entitlement combined with its potential independence from the existing Chinese battery supply chain makes it a technology worth pursuing.

North American & European policymakers and investors, take note.

1. Note: The paper includes analysis of some of these kinds of scenarios.