Growing demand for plug-in hybrids could mean good news for electric vehicle (EV) battery manufacturers over the next eight years, possibly enabling them to avert a battery oversupply, a new study says.
"We're seeing the emergence of the plug-in hybrid," David Alexander, author of Pike Research's new Electric Vehicles Batteries study, told Design News. "They have smaller battery packs, which make electric vehicles more affordable. So it's possible that they could absorb the (lithium-ion battery) excess over the next few years."
The new study projects a $22 billion worldwide market for lithium-ion EV batteries by 2020. Because battery-electric vehicles (BEVs, like the Nissan Leaf) use batteries that are, on average, 20 times the size of those in conventional hybrids (like the Prius), the market will depend heavily on the success of BEVs and other plug-in vehicles, Alexander told us. As such, the $22 billion market will be broken up into three components: $15.2 billion of it will be in battery-electrics; $5.2 in plug-in hybrids; and $1.5 billion in conventional hybrids.
Vehicles such as Toyota's Prius PHV could be critical to the success of the lithium-ion EV battery market. (Source: Toyota)
It's not known, however, whether the $22 billion market will represent an oversupply or undersupply. Previous studies have suggested that a battery glut was imminent. One such study, from Lux Research in 2010, predicted that worldwide capacity of lithium-ion EV batteries would exceed demand by about 65 percent, as measured in GWh. Since that time, two lithium-ion battery manufacturers, A123 Systems and Ener1, have filed for bankruptcy protection.
The variable in the equation is the EV market, Alexander told us. "The problem is that the sales of electric vehicles haven't gone as well as many were expecting," he said. "That was a contributing factor to the problems at A123."
Pike based its $22 billion figure on the estimated costs of creating a lithium-ion battery pack. For a typical 25-kWh pack, approximately half of the cost is in the cells, and half is in pack components, such as cooling, electrical, and electronic systems. The research firm estimated that today's packs cost about $737/kWh, and that the cost will drop to about $447/kWh by 2020. "The OEMs would like to get the cost down to $300/kWh, so they can get the cost of the EV down," Alexander said.
A cost of $737/kWh represents a significant investment for automakers. At that figure, a 24-kWh battery in a typical electric car would cost more than $17,000. At the projected $447/kWh price, however, the battery would run closer to $10,000.
In that sense, plug-in hybrids could provide a boost to the market because their smaller batteries (5 kWh to 7 kWh) would enable automakers to offer plug-ins for a price that might be more appealing to a large swath of consumers. Alexander cited the Toyota Prius PHV and the Chevy Volt as examples of plug-ins that are starting to generate consumer interest.
According to Alexander, it's possible that more battery manufacturers could be victims of a shakeout as the EV market struggles toward success. "The market will eventually settle down," he told us. "And the remaining battery manufacturers should be able to make a good business out of it."
Chuck, the idea that there will be (is already) a shakeout in a new technology business is normal. Every business segment goes through this. Sometimes it is bigger companies getting into a space by buying early movers in that space. Sometimes, like the battery case, it is a capacity problem. Too much capacity is developed early (investors are notorious for piling on) and cannot sustain itself. Companies with deeper pockets step in and when the market does take off, they are well placed to capitalize. The photovoltaic industry is another that is similar to the battery industry. In both cases, oversupply was encouraged by government intervention and industry hype. There is a place for each of these technologies, they just haven't found it yet.
You are correct and well said. The only solutn fr this kind is need rock sold support by Government until the industry stabilizes. Plug-IN EV Chevy Volt is the future. There is a lot of room to develop still better car which can be mass affordable. Governament should support Chevy Volt type cars more rather than supporting novelty cars
Of course a lot will depend on what happens to the price of electricity. Currently, it keeps going up with the excuse being that people are being more energy efficient (and the electric company telling you how to do so when they raise your rates, because you are). If plug-ins start taking off, will that drive the price down (as one might expect) or will that just be another reason to increase the rates.
Ener1 declared bankruptcy after getting a $115M Gov't grant, they've since been bought for $80M by a Russian friend of the Russian President Dmitry Medvedev.
The government sunk $125M into A123, which was supposed to be matched by private investment, In October, A123's battery plants were being bought by Johnson Controls and they expected to continue operating them. In December, Wanxiang, outbid Johnson Controls to purchase the company and they've said the plants will stay open.
Dow Kokam, a subsidiary of Dow Chemical, is laying off 25% of its Midland workforce, an unspecified number (>0) at its Lee Summit, MO workforce, and Dow Chemical is writing down the value of its investment. Dow received a large tax-payer funded infusion for these plants.
LG Chem makes batteries for the Chevy Volt (also in Michigan) and that plant also received Federal funding but is running at a a small fraction of capacity with many workers on rolling layoffs.
Its a tough world for battery makers, The government made massive investments, but after the plants were built, they are unsustainable. There are not enough people willing to essentially pre-pay for most of their fuel by paying out a huge premium upfront to save day-to-day operating costs.
The title says it all. It's like saying that the tomato market hinges on people eating them or the glass business depends on people using more windows (not the computer kind) or the rain coat business hinges on it raining. Are we getting dumber and dumber or is it just me getting old?
I think we are getting dumber and dumber. We had a nice snow over the Christmas holidays in the Ohio valley, and I heard reports on the radio that the hospitals were reporting a higher incidence of sledding accidents since the snowfall. Go figure!
From Dell / Intel® New Paradigms in Design Work Scott Hamilton, vertical market strategist for Dell Precision workstations, 5/2/2013 3
Early in my career, I worked as a draftsman and remember the days of drawing on vellum with numbered pencils and Mylar with plastic lead. This was a fun experience in the sense that I ...
I've been using workstations for more than 10 years and love finding ways to get more performance from my system. With demanding professional applications that require more power each ...
A lasting memory from my first job as an engineer in an auto assembly plant is standing on hard concrete at six in the morning, vending-machine coffee clutched in hand, listening to ...
A quick look into the merger of two powerhouse 3D printing OEMs and the new leader in rapid prototyping solutions, Stratasys. The industrial revolution is now led by 3D printing and engineers are given the opportunity to fully maximize their design capabilities, reduce their time-to-market and functionally test prototypes cheaper, faster and easier. Bruce Bradshaw, Director of Marketing in North America, will explore the large product offering and variety of materials that will help CAD designers articulate their product design with actual, physical prototypes. This broadcast will dive deep into technical information including application specific stories from real world customers and their experiences with 3D printing. 3D Printing is
To save this item to your list of favorite Design News content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
Tweet This
23 
