Bad News For Lithium-Ion Investors?

Today’s Wall Street Journal offers good and bad news for those who invest in lithium-ion batteries.

            First, the good news: According to the newspaper, the Daiwa Institute of Research projects that sales of lithium-ion batteries will more than double by 2020, reaching $22.3 billion annually. A year ago, the sales figure was $9.1 billion.

            But here’s the bad news: The newspaper suggests that a multitude of Japanese companies are rushing to raise production, potentially creating a future situation in which supply exceeds demand. As a result, battery prices could plummet, even while the cost of creating the batteries is still high.

            Battery experts have repeatedly told us that they don’t foresee a time when lithium-ion battery costs will drop below $300/kW-hr. If that’s true, and if The Wall Street Journal’s production assessment is accurate, don’t be surprised if we see makers of plug-in hybrids starting to search for some less costly battery alternatives. After all, manufacturers of plug-ins don’t necessarily need lithium-ion’s long range as much as the pure electric vehicles need it.