Growth Could Be on the Way for Lithium-Ion Battery Market

July 24, 2013

Lithium-ion batteries sales are expected to grow over the next five years, even though electric vehicles and plug-in hybrids aren't expected to hit the high figures that were once projected for them.

A new Lux Research study (registration required) says the worldwide market for these batteries will jump almost 50 percent from $28 billion in 2013 to $41 billion worldwide in 2018.

"The growth will be lower than many people expected, but we'll still see some solid numbers over the next five years," Cosmin Laslau, a mobile energy analyst at Lux Research and author of the study, told us.

The biggest chunk of sales (about $25 billion in 2018) will be in the consumer electronics market -- cylindrical batteries for laptops, tablets, and smartphones. Batteries for electric vehicles will generate approximately $3 billion of sales. Plug-in hybrids will generate roughly $1 billion, and electric bikes (especially in China) will generate about $5 billion. With some exceptions, those batteries will be pouch- and prismatic-type form factors.

"We're going to see a lot more traction for lithium-ion, even in sectors where it wasn't used previously," Laslau said. "For instance, e-bikes used to use lead-acid, and now they're moving to lithium-ion. And some hybrids, like the Toyota Prius, which have been sticking with nickel-metal hydride, could move to lithium-ion."

Lithium-ion isn't expected to make gains in the micro-hydrid (start-stop) arena, where two lead-acid variations -- enhanced flooded batteries (EFBs) and absorbent glass mats (AGMs) -- will see an uptake, according to the study. Those two formats are expected to generate about $2.5 billion in sales, mostly to the auto industry, over the next five years.

"Some automakers are exploring lithium-ion for start-stop micro-hybrids, but it's just too expensive right now," Laslau said. "Because EFB is an evolution of lead-acid, it's cheaper than lithium-ion, and automakers love that."

Laslau cited two automakers that are migrating to lead-acid batteries. Volkswagen is employing EFBs on a future platform, he said, and Chevrolet has said it will use two AGM batteries in the new Malibu start-stop system.

For suppliers of lithium-ion electric car batteries, the latest projections could be good news. In the last few years, a market glut has caused a shakeup among battery manufacturers. Daimler and Evonik are trying to sell their EV battery venture. A123 Systems filed for bankruptcy late last year, and Ener1 Inc. filed early in 2012. The US Department of Energy's inspector general's office reported last year that idle workers at LG Chem's battery factory in Michigan spent time watching movies and playing video games. The agency called for a $1.6 million reimbursement of federal grant funding.

Still, Laslau said the next five years may offer hope for lithium-ion battery makers. He predicts compound annual growth rates of 22 percent for plug-in hybrids, 22 percent for electric bikes, and 34 percent for hybrids.

"Companies that rushed into the business of making lithium-ion batteries for electric vehicles found there was an overcapacity and a lack of customers," he said. "But the next few years will offer some growth, even though it's not quite what the industry had expected."

Coming tomorrow: What happens if you take the government subsidies away?

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