INTRODUCTION
For EV manufacturers, one of the most crucial aspects of their strategy will be how they obtain their batteries, and how they ensure the quality of the batteries is up to the highest standard. For those that have decided to purchase complete Lithium-Ion Batteries (LIBs) rather than producing them in house, identifying the best supplier will give them the edge on their competitors, both financially and in terms of their business viability.
This guide has been created to share some procurement best practices specific to the sourcing of LIBs, with the aim of helping EV manufacturers identify the right supplier partner, as well as achieve the optimal technical and commercial outcomes.
UNDERSTAND YOUR NEED
Before embarking on a shopping spree, it is crucial to clarify the business requirements internally. This is to streamline the dialogues with supply market and avoid subsequent re-work or delay due to internal misalignment. Two main topics to focus on are Vehicle Functional Attributes and Target Volume Requirements.
1. What are the fundamental design principles of the vehicle? How does that shape the battery requirements?
| Design Dimension | Useful Questions | So-What |
| Vehicle Type |
Is the vehicle going to be Hybrid (HEV), Plug-in Hybrid (PHEV), or Battery Electric Vehicle (BEV)? |
These are the three main types of electric vehicles. HEV uses batteries to support acceleration, while PHEV and BEV use them as a primary or sole source of energy and power. The required energy to power ratio increases as the vehicle type transits to BEV, or fully electric. |
| Range & Power |
What's the required range of the vehicle? What level of battery power is required? |
The longer the range within one charge, the higher capacity is required; the higher the speed requirement, the higher power is required. For BEV, the common capacity is 30-80kWh, with a 100kW power, while for PHEV, the common range is 5-20kWh, with 40-60kW power. HEV still relies on ICE for propulsion therefore battery capacity and power matter less. |
| Condition |
Does the vehicle expect to operate in urban or rural areas? What's the operating temperature range? Does the vehicle expect to be recharged frequently? |
Urban and rural journeys often differ in distance and braking frequency. The normal operating temperatures for Li-ion batteries are -20C to 60C, but extreme high or low temperatures tend to accelerate battery degradation, impacting both the capacity and power. Vehicles may be recharged frequently or have a long full charge every few days. LFP / NMC batteries are agnostic to recharging pattern. |
| Cost |
What's the budgeted battery cost? What's the strategic position on owning or leasing the batteries? |
Batteries can be up to 45% of the full vehicle BoM (BEV). An accurate budgetary estimate helps kicking off the right dialogue with suppliers. It also adds to the agility of organisational strategy to understand early on if owning batteries is a key requirement (for IP or other purposes), since if not, operational leasing is becoming a more and more popular option. |
| Life & Sustainability | Does your organisation have specific sustainability goals, both within and beyond first life? |
Within the battery first life, sustainability metrics such as carbon footprint can be tracked with a fit-for-purpose Battery Management System and analysed by specialised software solutions. Beyond first life, batteries can be recycled for raw materials, reused, or traded with a professional vendor, each involving a specific segment of market. |
2. What is the target volume ramp-up?
| Volume Level | Customisation level | So-What |
|
Low |
Low |
If the product required is off-the-shelf but with a low volume with no clear ramp-up, a distributor may be preferred to get more favourable commercial and logistical terms |
| High | For initial, low volume of a highly customised design, a prototype partner with strong R&D capabilities may be preferred | |
|
High |
Low | Securing suppliers with the right capacity and manufacturing efficiency is crucial for a known high volume of off-the-shelf products |
| High | Both capacity and R&D capabilities are crucial in a supplier partner in this scenario | |
| Evolving | Evolving | If the volume forecast is evolving but hard to commit to, and the customisation requirement is uncertain, it may be required to develop multiple supplier conversations in parallel and prepare for a multi-phase partnership from low to high volume. It is also possible to select a partner who would grow with your organisation to meet evolving capacity requirement. |
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
