BETTER BATTERIES A BUDDING BUSINESS BOOM

Lithium Ion Batteries for Plug-in Hybrid and Battery Electric Vehicles: Market Analysis and Forecasts
Clint Wheelock and John Gartner, 4Q 2009 (Pike Research)

"Battery-powered cars as well as hybrid-electric vehicles that also include a gasoline engine have been a part of the automobile industry since its inception…The success of mass-produced internal combustion engine (ICE) vehicles relegated lead acid batteries to the reduced role for mainstream vehicles of primarily starting vehicles. In the 1990s, automakers began to bring both hybrids and EVs back to life…At the same time, advances in lithium ion (Li-ion) battery technology created a quickly growing market for more energy-dense and lighterweight batteries for laptop computers, mobile phones, and consumer electronics devices.

"The convergence of the automotive industry towards battery power and the engineering of safe and reliable Li-ion batteries will slowly reshape the automotive industry as it moves towards electrification and away from fossil fuels. Pike Research forecasts that the market for Li-ion batteries for transportation will grow from $875.6 million market in 2010 to nearly $8 billion by 2015…the cost of Li-ion batteries will fall by half between 2010 and 2015 to less than $500 per kWh (kilowatt hour)…primarily driven by plug-in hybrid and all-electric vehicles, which require much larger battery packs than hybrids…"

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"Despite the potential to reduce fossil fuel consumption and greenhouse gas (GHG) emissions, and to provide the convenience of home charging, electrified vehicles will continue to be a niche market in the global transportation industry. Even with broad global interest in EVs, less than 2.5% of the world's fleet in 2015 will be driving at least part of the time on battery power only…Automakers that have studied consumer driving habits estimate an average of approximately 33 miles per day…PHEV engineers have focused on designing vehicles with a 30 to 40 mile all-electric range. However, whether or not a broad audience of consumers would be willing to pay 50% or more for a vehicle than can drive most of its miles on battery power is unknown… if all-electric vehicles with 80 to 100 mile range are able to satisfy consumer tastes as primary vehicles, a smaller universe of PHEVs may emerge.

"The market for Li-ion batteries could grow beyond our current projections if financing programs are developed that can separate the cost of batteries from the vehicle purchase price. Consumer purchasing decisions on fuel efficient vehicles have been greatly influenced by short-term gasoline prices and the upfront cost of the vehicle. A new model that influences consumer perception to consider the annual cost of driving between gasoline and electrified vehicles could increase the attractiveness of electric vehicles…"

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"Asia, which has dominated the global market for Li-ion batteries to date, will also be the global leader in both Li-ion production and consumption in the transportation industry. The governments of China and Japan have pledged to rapidly move their automotive industries towards battery-powered vehicles through aggressive goals for production, creation of charging infrastructure, and incentives for consumer purchases. The Asian Li-ion battery market will surpass $4 billion in 2015, a 53% market share.

"Despite the support of the federal government, U.S. battery companies have struggled to gain market share while the Asian battery market for vehicles has taken off…Billions of dollars were loaned or given to the automotive industry and the battery companies for research and manufacturing. In 2009, consumer incentives for purchasing electrified vehicles were established as the current administration makes an exerted effort to prevent the failure of the U.S. auto industry. The commitment to avoid this "catastrophic" event will shore up the U.S. battery industry through 2012, but a change in philosophy could remove a vital safety net."