Intelligence pass finance learned that LG New Energy, a global electric vehicle battery manufacturer, has revealed its ambitious goal of commercializing a battery manufacturing technology called the "game changer" by 2028, opening up a more competitive path for the South Korean battery manufacturer compared to its Chinese counterparts. And this technology is dry-coating technology.

From Tesla (TSLA.US) to Samsung SDI and other companies are studying dry-coating technology, which aims to replace the high-energy-consuming wet-process technology for manufacturing cathode and anode electrodes (key components of electric vehicle batteries). As the demand for electric vehicles cools down, the search for cheaper and more environmentally friendly battery production methods is becoming increasingly urgent.

Kim Je-Young, who took office as LG Energy Solution's chief technology officer last December, said in an interview, "LG is in a leading position in dry coating technology among battery competitors. We started 10 years ago. LG Electronics plans to complete the demonstration production line of dry coating process in the fourth quarter and start full-scale production in 2028." This is the first time LG Electronics has publicized the timetable for commercializing the technology. Kim estimates that dry-coating technology can reduce battery manufacturing costs by 17% to 30%.

By contrast, Tesla acquired a start-up company called Maxwell Technologies dedicated to dry-coating technology in 2019 and tried to implement the technology in Austin, Texas to produce 4680 batteries, but the results were very limited. Wet-coating technology requires chemicals to be dissolved in toxic solvents and then dried in an oven nearly 100 meters long at temperatures of up to 200 degrees Celsius on the battery production line. This process is costly and energy-intensive.

Previously, it was reported that, due to poor energy density and charging performance and high cost, if cost reduction cannot achieve the expected results by the end of this year, Tesla will consider stopping the production of 4680 batteries at its GigaTexas factory and turning to external suppliers for procurement. In response, a Tesla China spokesperson replied, "4680 battery production is progressing smoothly," as mentioned during Tesla's June shareholder meeting.

Using dry-coating technology, battery manufacturers can save energy, equipment costs, and space. They do not need to invest in drying ovens or solvent recovery systems. Volkswagen's internal battery company, PowerCo, is also experimenting with dry coating. The company says the technology is a "game changer" because it can reduce the company's energy consumption by 30% and space by 50%.

LG New Energy is betting on breakthrough innovations such as dry-coating technology to enhance its competitiveness with Chinese battery makers. So far this year, LG New Energy's share of the electric vehicle battery market has fallen from 14.6% last year to 12.6%. This is largely due to the expansion of Chinese electric vehicle battery giants such as Contemporary Amperex Technology and BYD. Bloomberg reported that as of April, the average price of lithium iron phosphate batteries in China had fallen 44% to $53/kWh.

Batteries have three main components: two electrodes (an anode and a cathode) and an electrolyte that helps the charge to conduct between them. The materials used to make these components determine how much energy the battery can store and how much it costs.

Tesla promoted dry-coating electrodes at its 2020 Battery Day. But according to reports, the US electric vehicle maker can only achieve this process in the anode part of the battery, not the cathode. Experts say that making cathodes with dry-coating technology is more difficult than making anodes because cathodes are often made from materials that are more difficult to process.

Kim Je-Young said: "The dry-coating electrode manufacturing process that LG Electronics is developing is independent of the size of the cathode particles and can be applied to both anode and cathode at the same time." He added that applying dry-coating electrode manufacturing to cathodes with smaller particles is very challenging.

According to a report by SNE Research in April, in addition to Tesla, companies such as Panasonic, CATL, Eve Energy, and Honeycomb Energy Technology are also studying dry-coating electrode technology for high-energy-density 4680 batteries. Park Chul-Wan, a professor of automotive engineering at Seojeong University, said, "Everyone is devoted to this technology because Tesla has initiated it. The three major South Korean battery manufacturers are still in the early stages of dry-coating technology research and development."

For equipment manufacturers, promoting more efficient battery manufacturing processes is also an opportunity.

For example, Hanwha Momentum, a subsidiary of Hanhua Group, and battery production equipment manufacturing company, is collaborating with battery manufacturers to research dry coating technology. Meanwhile, AM Batteries, a Massachusetts-based startup, has recruited senior staff from Tesla to help the company develop equipment for dry coating battery spraying methods.

In addition, Narae Nanotech Corp., based in South Korea, provides coatings for Apple's iPhone and iPad and is also attempting to break into the battery industry through more achievable technology. Narae is trying to improve wet processing by cutting the coating line in half using a xenon flash lamp instead of a dry coating process. Jang Dong-Won, representing Narae, said:"Currently, the electric vehicle industry is going through a difficult phase of crossing the gorge, and many people are considering different production methods. A completely different production method must be used to win against Chinese competitors."