This article first appeared in The Edge Malaysia Weekly on May 3, 2021 - May 9, 2021

ON the evening of Saturday, May 8, Elon Musk, the CEO of electric vehicle (EV) pioneer Tesla Inc, will host one of the most popular TV shows in America — Saturday Night Live. The long-running, award-winning programme that has broadcast live from New York every Saturday since October 1975 welcomes guest hosts, mostly entertainers, every week. Only once, in late 2015, a businessman, New York developer and presidential candidate Donald Trump, hosted the show.

In the lead up to the appearance, America is abuzz with what the controversial billionaire will use the platform for. Will he tout Dogecoin — a joke that has become the third largest cryptocurrency behind Bitcoin and Ether? Will he smoke weed as he did during a live radio interview two years ago? Or will he use the platform to talk up Tesla, energy storage, space travel or climate change? Remember, it is a live TV show that can’t be edited or censored.

Whatever tricks Musk has up his sleeve, it is clear he will probably have the biggest live TV audience of the year lapping up every word he utters. While his firm is a pioneer in EVs, a key edge that it has against rival start-ups as well as legacy automakers like General Motors Co, Toyota Motor Corp and Mercedes-Benz is its batteries.

From Wellington to Washington DC, policymakers around the world are trying to tackle the challenge of decarbonising their economies by driving carbon emissions out of key segments of the economy. On April 28, President Joe Biden addressed a joint session of the US Congress to outline his audacious US$4 trillion (RM16.4 trillion) infrastructure plan and his climate change agenda.

A key plank in the strategy to shun fossil fuels like coal or natural gas is renewable resources such as the sun, wind or hydro. The more renewables you use, the more you need balancing technology for the electric grid. One of the things that might help America and the world wean themselves off fossil fuels and help decarbonise the world is batteries, which are a great short-term balancing technology — storing energy when it is plentiful and releasing it when it is not. With solar energy, the sun is up for 12 hours a day, at best. Similarly with wind — because sometimes it is windy and sometimes it is not, you are not generating electricity 24 hours a day as you are with fossil fuels. But if you can store spare electricity in a battery, it is much easier to power up a grid that is connected to your home, office or the mall near you.

About 110,000TWh, or terawatt-hours, of energy is consumed globally each year — about 30% each for manufacturing, transport and buildings, with other uses taking up the remaining 10%. About 300TWh of energy storage would be required to fully electrify the energy industry in order to supplement periods when renewables do not generate power, assuming one day of storage. Studies show the world is currently heading towards a 3.5°C global warming by 2050, compared with the 1.5°C target in key climate agreements. That means the world needs to accelerate the move towards renewables and embrace energy storage.

In recent years, batteries have emerged as an alternative, cheap source of energy. In late 2017, Musk won a US$50 million bet by building the world’s largest ever lithium-ion battery for South Australia following severe blackouts after a storm there a year earlier. The bet was that Tesla would get the battery installed and working within a hundred days of the contract being signed or would install it for free. The giant battery stores energy from a nearby wind farm. More recently, Tesla came to the rescue of Texas to prevent blackouts there after a bout of freak cold weather in February. The company built a giant battery on the outskirts of Houston to plug into the state’s power grid. Fancy EVs aside, over the years, Tesla has invested billions in energy storage and solar panel technology, and Musk is betting that its technology can develop far beyond EVs and become a key swing supplier to local power grids, particularly in emergencies.

To be sure, the main sector that batteries are currently helping to decarbonise is transport. Think not just the Teslas and an array of electric cars that will be rolled out by the likes of Volkswagen Group and others this year, but also the billions being raised by start-ups building electric-powered motorbikes, buses, trucks and delivery vans through blank cheque companies or SPACs as well as venture capital firms as they mould the next Tesla into shape. Billions more are being spent by Boeing Co, Airbus SE and a number of small aircraft makers that are working on battery-operated electric planes, or start-ups working on solar-powered drones that can stay airborne for months if not years.

While I use the word batteries generically, I am talking mainly about lithium-ion batteries that are the new workhorses of energy storage. These batteries have been around since the 1980s when they were developed in Japan. They were first used in consumer electronics by Sony in the early 1990s. The advent of laptops and later smartphones helped lithium-ion batteries acquire huge economies of scale and helped them become more powerful, efficient and cheaper.

There has been a lot of innovation in batteries in recent years addressing areas like higher energy density, a longer life cycle, improved safety, increasing charging speed and, of course, dramatically lower costs.

In 2010, Tesla was launched as one of the first battery EVs. There had been hybrid cars like the Toyota Prius, basically internal combustion engine cars that could also drive on electricity when needed. Tesla ditched the hybrid part and went straight for pure BEV, or battery-powered electric vehicles. Tesla simply moved the flat smartphone lithium-ion batteries to EVs. That kicked off an enormous race that is only gathering pace this year. The world is finally on the cusp of a real transition in the automotive industry from internal combustion engine-based vehicles to pure electric battery ones. EVs are no longer a niche product. They made up 4.1% of the total global auto market last year. EV penetration is expected to rise to 12.8% of all vehicles sold worldwide by 2025 and 22.9% of total global vehicle sales by 2030.

Until now, China has been a big driver of EV adoption. Over the next few years, Europe will emerge as a major force as companies like Volkswagen, BMW and Daimler AG electrify between 50% and 60% of their total car production by 2030, in compliance with aggressive European carbon targets set for that year.

Until about two years ago, smartphones were the principle drivers of lithium-ion battery demand. EVs are now driving scale and innovation in the battery space. This year, they will account for over 70% of total lithium-ion battery demand worldwide. In 2010, the price of top-range lithium-ion batteries was around US$1,100 per kilowatt hour. The current EV battery cost is around US$130 per kWh. By next year, it is expected to fall to under US$100 per kWh. Essentially, over 11 years, battery costs have declined more than 90%. Indeed, Musk thinks we are headed for batteries that are under US$50 per kWh in two to three years.

Until a year or so ago, EVs needed government subsidies to be competitive against petrol-based cars. Now the total cost of buying a battery-powered car and running it for two years is cheaper than a similar petrol-based car. “Tesla sells its cars today for less than comparable internal combustion engine vehicles at margins that legacy carmakers can only dream about,” notes Pierre Ferragu, a tech hardware analyst at New Street Research in New York.

There is a lot of innovation going on in the battery business and costs are plummeting faster than most optimists predicted a few years ago. In four or five years, people will be shunning petrol-based cars not because it will be trendy and cool to drive around in an EV but because they will be far cheaper too. Why would you buy a petrol-based car if it costs 15% or 20% more?

As the battery costs come down to US$50 per kWh, and eventually far lower, the debate will shift from how many car owners are eager to switch to EVs, to what we would do with all the electricity being generated by lithium-ion batteries.

After Thomas Edison, a key proponent of the direct current (DC) system beat Nikola Tesla, the main protagonist of the alternating current (AC) system, to steal the title of “inventor” of electricity at the turn of the last century, the big problem was finding new uses for electricity. So, lightbulbs, fans, refrigerators, washing machines, air conditioners and an array of appliances were invented that used all the new power that was being generated.

As the age of renewable energy dawns, the primary challenge is going to be electricity storage and new usages in all sorts of devices. Until now, the high cost of generating electricity has held back new usage. As battery storage costs plummet, innovators will be in overdrive to push out new products and applications that use cheap and abundant power.

Total EV battery sales in US dollar terms are expected surge 80% this year, their highest-ever annual growth, as the number of new EV model launches soar to over 50 in 2021 and 2022 compared with a total of 30 launches in 2019 and 2020. Nomura Securities in a recent report estimated that global EV battery demand would rise from 140 gigawatt hours last year to 717GWh in 2025 and leap to 1,534GWh by 2030.

Here is what’s going on. Batteries are getting smaller, so tiny that they are just like slivers of film. Tiny batteries means everything that uses batteries will become smaller and lighter. Apple Stores are starting to showcase the new ultra-slim and light iMacs that go on sale in mid-May. New EVs will be far lighter as would just about anything that uses a lithium-ion battery.

Five years ago, lithium-ion batteries’ future was uncertain. There were plenty of competition technologies on the horizon that seem destined to end its dominance. But in recent years, so much money has been thrown into lithium-ion battery technology and so much innovation has taken place that it has got the sort of head start that would make it difficult for competing technologies to catch up in the next five years or, indeed, even 10 years.

It is already cheaper to generate electricity from renewable sources like solar and wind than it is from coal and gas. The cost of solar has declined 85% and wind energy 65% over the past 10 years while gas prices have remained flat during the same period and coal prices have actually risen. As governments get more serious about climate change, the focus will turn to energy storage or batteries to expedite the switch to renewables. That will help push battery costs lower and make EVs more affordable. Maybe Musk should keep his Saturday night message simple and focus on batteries.

Assif Shameen is a technology writer based in North America

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