Under fire for its reliance on fossil fuels, electric vehicles are a welcome lifeline for BASF SE.
The world’s largest chemical maker has done some rough calculations and estimates the market for cathodes materials, the key component of an EV battery, is set to expand by more than 20% a year to EU100 billion in size by 2030. That’s equivalent in size to the current global market for polypropylene, one of the mass-produced plastics that too often ends up in oceans as waste.
“The magnitude of what we’re talking about here is of a market going from very small to 100 billion in a decade. It’s not something you see typically in the chemical industry,” BASF board member Markus Kamieth told investors on Monday.
An EV typically contains 2.5 times the chemicals that a combustion car does, in value terms. As well as the powertrain, they need more coolants and lightweight plastics. Given some EU12.5 billion in BASF’s sales last year were derived from the automotive industry, largely from materials and emissions-reducing catalysts for diesel and petrol cars, the rapid shift toward EVs is coming at the right time.
BASF’s new CAM plant in Schwarzheide Germany is still under construction but has already sold its entire 24kt of planned output. Kamieth says discussions about the next phase of expansion are already happening. It’s already earmarked about EU4 billion in investment.
The way BASF sees it is that the cathode market will be dominated by a few large players that are capable of providing carmakers with the full range of materials, security of supply, and a steady flow of innovation. Via partnerships, it’s created a supply chain network spanning metals, precursors, cathodes.
An added bonus is recycling cathode materials from spent electric-vehicle batteries. Tight supplies of metals like nickel will coincide with EU regulations that require that a new battery contains a percentage of recycled cathode content.
For now, it’s guarded about the details, but there are hints of a lucrative add-on service that can be charged to carmakers that BASF says could be “pretty sizeable.” In preparation, the company claims it has developed in-house technology that can squeeze more lithium from old material than before.
“If you do it right, it can be a very profitable business model,” Kamieth said. “You need to have scale, you need to have superior returns off the metals.”