Manufacturing Intelligence Meets Battery Production: Advanced Cost Analysis for Lithium-ion Battery Cells

Manufacturing lithium-ion battery cells is a highly innovative, multidisciplinary challenge. As we have seen recently with Northvolt, even if a company invests significant resources, it can still face financial difficulties if cash flow and profitability are not managed effectively.

Overcoming the Complexities of Lithium-Ion Battery Manufacturing

The challenge in lithium-ion battery production goes beyond technological and process issues. It requires monitoring product quality and understanding how process parameters and scrap rates influence both short- and long-term profitability and cash flow.

Many cell manufacturing companies still rely on Excel spreadsheets, often combining the latest version of BatPac with custom-built spreadsheets to optimize processes and calculate unit costs. This approach not only limits their ability to perform comprehensive sensitivity analyses on production processes, but also hinders scalability.

Transforming Battery Manufacturing with Tset Software

Tset software empowers battery manufacturers to reduce production costs, improve operational efficiency, and make data-driven decisions. 

We decided to implement a Battery Production Process in Tset, led by our expert Kevin Fister. This comprehensive model accounts for the following specific parameters:

Our proven methodology enables us to calculate actual production costs with precision. Additionally, we can forecast target costs for new technologies and assess whether they align with market prices—providing proactive risk management before market entry, an approach that could have benefited Northvolt.

Tset Calculation Methodology

In lithium-ion battery production, accurate cost estimation requires considering multiple factors beyond mere raw materials or labor. This is where Tset's software pioneers, offering an array of current, location-specific multidimensional Master Data including:

• Labor data
• Interest rates
• Space costs
• Energy costs
• Other location factors

By adjusting parameters such as location or production volume, manufacturers can quickly determine the impact of such changes, thereby creating a strong foundation for critical decision-making. Furthermore, the level of process detail can be modified as requested by the operations staff.

Electrode Manufacturing Process in Tset

Let's examine the detailed electrode manufacturing process in Tset's software:

The process includes essential materials and manufacturing steps for producing a double-coated cathode sheet with CAM (Cathode Active Material) and an anode sheet with AAM (Anode Active Material). Tse's software accurately maps the entire workflow — from raw materials to finished components. 

In the following section, we will examine the cell assembly process and finalization of the battery cell:

Our detailed cost breakdown of the lithium-ion battery cells production process in Tset reveals the following insights. Based on the specified cell chemistry and manufacturing process, the production costs are:

• Single cell cost: 14,35 EUR
• Energy-based cost: 68,88 EUR/kWh

The total cost distribution breaks down into:

• Material costs: 78,8%
• Process costs: 21,2%

Note: These calculations exclude potential cost optimizations such as CAM/AAM reuse, electrolyte recycling, or metal refunds. Moreover, there are no general overheads, such as SG&A, profit, R&D, business risk, and packaging, included in the displayed numbers above. However, Tset's software can seamlessly integrate these variables into calculations, thereby offering greater flexibility and precision.