• Aug 31st 2010 at 11:54AM
  • 31

According to a report from Bloomberg, a looming price cut stemming from oversupply in the rechargeable battery industry, may make electric vehicles more affordable, but could drive small-scale lithium-ion battery producers right out of the market. Panasonic Corp. and Samsung SDI Co., the world's largest producers of rechargeable batteries, are expected to engage in a price war as oversupply of li-ion batteries continues to worsen.

"Lithium-ion battery prices may tumble 19 percent in 2010, the biggest drop in five years," one industry analyst told Bloomberg, while another noted that "the worsening oversupply may push prices down as much as 25 percent." This drop indicates that some of the big players in the li-ion market are willing to sacrifice profit for market dominance. With sales of electric vehicles expected to take off soon, lithium-ion battery demand could explode to triple its current volume in just six years time.

Mitsushige Akino of Ichiyoshi Investment Management Co. offered this insight into the future of the li-ion industry:
Battery makers will probably go through a tough time with falling prices. The business may become lucrative only for a couple of companies with dominant market share. Others may never be able to make money.
Which companies are expected to gain a dominant market share? Well, the South Korean battery makers such as Samsung and LG Chem, with their ability to source cheap materials and quickly increase production capacities, should hold the upper hand over Japanese rivals like Panasonic. But, we wouldn't drop the Japanese companies from the list of dominant battery makers just yet. Akira Kadota, a spokesman at Osaka-based Panasonic, outlined the company's commitment to compete with South Korean battery producers:
We anticipate the harsh price competition with South Korean makers will continue. We are reviewing our production process to strengthen our cost competitiveness so that we can win the battle.
Oversupply, price wars and fierce competition could rip apart the industry, leaving just a handful of battery producers around. This game of constantly lowering prices is eroding profitability and will eventually cease, but which companies will survive?

[Source: Bloomberg]

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    • 1 Second Ago
      • 5 Years Ago
      It's time for everyone that has written an article in the press that has been saying that Lithium batteries cost $1000/kWh and will do so until around 2010....to stand up and take responsibility for their ignorant statemtents.

      We keep letting people who make incredibly irresponsible and damaging "studies" and statements write articles about it have a free pass. We need to discredit these people and the agendas they are clearly pushing for big oil and other interests and we need to have other people in the press who call them out.

      Their credibility needs to be out there for all to see so it no longer affects policy. It is a free country and they can publish their garbage all day long...but people should have a way to check the credibility of these "sources". These people can not be allowed to spew their slanted numbers and keep affecting the opinion of people who regulate our energy policy.

      I'm not sure what the platform should be used for calling these people out, but something needs to be done.

      Hedge funds have a rating to see how well they've performed and it's easy to watch a stock and see how it has performed. Prognosticators for energy matters should be rated the same way: based on their actual performance. How good were there predictions last year? How bout two years ago? If they are TOTALLY off the mark all the time, then why should anyone take them seriously?

      Maybe that would be a great blog to start? One that tracks all these types of predictions and rates them over years to see who is accurate and who is pushing an agenda.

        • 5 Years Ago
        It certainly is not all intentional bashing. Many people do take the bogus $1K/KWH number on good faith and then produce useless reports & studies based on it. But those studies need to be modified or withdrawn. GIGO.

        Some people definitely have been pure financially interested bashers. Most notably, the financially-interested lead-carbon champion John Petersen who runs his Swiss boiler-room operation to crank out propaganda to boost Axion. He has been spewing out amazingly misleading garbage for years. Definitely the type that gives lawyers a bad name.
        • 5 Years Ago
        The reports weren't so much based on Government contracts for batteries, as on information supplied by US battery companies and their trying to get money out of the Government to develop their technology.
        In fact in practise what has been used are Japanese batteries by Nissan, and Korean by GM and others, and it is US branches of foreign companies that are having factories built.

        The report you link is a typical example of the damage that has been done to US research by the success of the Manhattan project and the moon program, so that it tends to be about leapfrogging and so on and not about steady development work, whilst a lot of the manufacturing capacity and development is off-shored by the same companies getting the grants for research.
        It will be extraordinarily difficult to move the centre of the battery world from the far east, as not only are much of the value trains located there but China is the biggest car market in the world and with economic difficulties in the West the difference is likely to grow, not shrink.
        • 5 Years Ago
        A blog on the predictions would be very interesting. Of course, you need to watch both sides as there are often too many on the pro-EV side that over-hype battery technology as well. For example, the recent Martin Eiberhart claim about 500 mile range coming relatively soon was garbage as well. And predictions about soon seeing $200/KWH prices are also probably garbage . . . perhaps that can be reached with some unreliable chinese batteries but I don't see it as a realistic number any time soon.

        This would be very interesting . . . with peak oil, there are all sorts of people making predictions on oil prices and when oil peaks. It would be nice to see the same sort of thing with regards to battery technology. Because it is truly the combination of oil prices and battery prices that will ultimately decide when EVs become mainstream.
        • 5 Years Ago
        Petersen is an abulance chaser who will twist any argument of support his bias, and relies on evasion and misdirection when he is nailed.
        However, he was not the one who invented the $1,000kwh estimates - it was government bodies that did that.
        My main computer is down so I can't provide references, but much of the info seems to have been got wrong seems to be because they relied on what they were told by American companies, who since they would have to presumably give cost information to attract Government grants did not want to admit how far they had dropped behind Japanese, Korean and Chinese manufacturers, and so quoted their own costs, which were way behind.
        The cheapest Chinese manufacturers prices are in fact relevant to the cost argument, as the report I am thinking of (NRL?) siad that 85% of their cost is due to materials, which from a cost of maybe $700 they quoted as the lowest makes it impossible for the Chinese to build batteries for $500kwh, however poorly made, since the cost of materials woud still be the same.
        I believe that they may have been thinking of lithium cobalt technology, and including a lot of things in materials which are in fact post processing, and obviously processing can be reduced in cost.
        In cost and works accounting, what a final product assembler calls materials is simply what they buy in, and has nothing to do with the raw materials cost which the sub-contractor, or sub-sub-contractor may have paid.

        $200kwh although certainly not immediately in sight is by no means unreasonable as a goal, as chemistries such as lithium iron phosphate are a darn sight cheaper than lithium cobalt, and around $200-250 is the commodity price of laptop batteries etc.
        • 5 Years Ago
        Martin . . . . interesting point on the price coming from government reports which may have received quotes in regard to government contracts. The government isn't going to hand out contracts to foreigners. And when getting government contracts, it seems that everyone overcharges the government. So I could see how they get a ridiculous number.

        Well, perhaps the government can make up for it a bit by getting it wrong in the other direction. Recent reports touting stimulus spending on green energy programs have battery cost reductions that I find to be a bit over-optimistic. Here:

        According to this new analysis, the U.S. is now on-track to achieve four major innovation breakthroughs thanks to Recovery Act investments:
        * Cutting the cost of batteries for electric vehicles by 70 percent between 2009 and 2015, putting the lifetime cost of an electric vehicle on-par with that of its non-electric counterpart.

        Yeah . . . . 70% cost reduction? . . . I don't think so.
        • 5 Years Ago
        Big oil corps can keep whining via paid bad press for EVs, the only effect they are going to have is lining PR company pockets. Only the ignorant are listening, then again, the ignorant aren't buying electric cars in the first place :)

        It's like how Microsoft got pissed off about open source/linux as people started choosing it over outdated and out of touch Windows NT/Windows Server. When you can't compete, rigging the media can, at best, delay your demise.

        So don't get too worked up! Peak oil and cheaper batteries will level the playing field in the favor of electrics in time.
        • 5 Years Ago
        There's something similar done for video game analysts by Kotaku.

        The main difference is a lot of the "studies" are commissioned by organizations who want certain results and don't necessarily care about accuracy, whereas for video games they are solely for investors and there is no other agenda.
      • 5 Years Ago
      It is sad the small producers will be pushed out and later when their is a effective monopoly the large corps that are left can lower the quality and raise prices similiar to the oil industry.
        • 5 Years Ago
        @polo - even in the face of major collusion and price fixing from those big manufacturers. (Google it)

        I wonder how cheap LCDs would be now without that happening?
        • 5 Years Ago
        I think batteries will go the way of lcd screens. There will also be a few top major players, and some smaller players, and the price will continue to going as the tech gradually improves.
        • 5 Years Ago
        Oil prices are supported by commodities investors and speculators. OPEC itself doesn't like high oil prices because that lowers demand... and they no longer have the power to limit production enough to affect prices (as there are non-OPEC members with control over a large amount of supply).

        LCDs? Is it my imagination that 32" LCDs are now cheaper than my three year old CRT? Maybe it's just me. The price drops so dramatically every year that major manufacturers are pushing up new technologies (OLED, higher high-def... 3D) quickly just to convince people to move up to newer, more expensive sets. And all the while, regular LCD sets just get cheaper and cheaper... I think pointing at cartel economics and linking it to LCDs is waaaay off the mark.

        As Dave R notes... if the majors slack off on quality, it'll give smaller companies a chance to get their foot in edge-wise. This is precisely what started the decline of the "Big Three" when the Japanese came a-knocking. Being big and able to underprice the little guy is no protection against customer dissatisfaction.
        • 5 Years Ago
        If they slack off and lower quality while raising prices, that will only re-open the door for smaller companies - so I don't see it happening.
        • 5 Years Ago
        edit: price will continue going DOWN, as the tech improves.
      • 5 Years Ago
      Middle Way,
      In the long run, you're right. But that takes a long time. Right now, there is too much money being poured into adds to convince people of false things and into campaigns to buy candidates who are friendly to their needs.

      Have you seen the huge advertising campaign that has been launched by the petroleum industry to "fight new taxes on energy"? What they are actually fighting is the closing of a tax loophole and making Exxon and friends pay ANY income taxes...which they failed to do in the US last year!

      Right now, they can claim to be a located in the Caymans and not pay a penny. If that is a tax increase, then that is one tax increase I will gladly vote for. Let them pay their share like everyone else in this country.

      And they use that same lobbying money to fund studies which they then feed to politicians to get them to back more subsidies and tax breaks for petroleum as they convince them that EV's are not viable because of wild cost estimates like $1000/kWh.

      If you guys think that is ok and don't want to get emotional about it, that's cool. Me? I'm tired of getting screwed.
      • 5 Years Ago
      Who's screwin' ya Dave ???

      There are more government taxes on gasoline than profit for the dastardly oil companies.

      by about a 2 to 1 ratio

      When the tax revenues start to dip on gas, they'll raise the tax on electricity.

      Gotta Happen.

        • 5 Years Ago
        No, that is not true. The retailers receive only a tiny cut. The refiners also receive a small cut. But those all add up.

        But the oil companies . . . as in Saudi Aramco? They are making a huge profit on $75/barrel of oil that is much more than the gasoline tax.

        The oil companies generally sell oil, not gasoline. There are big profits in oil. Not such good profits in gasoline. Where you are in the chain matters. A lot.

        This is why oil companies largely got out of the gasoline station biz.
        • 5 Years Ago
        First, I'd like to ask if you are intentionally being personal and condescending when you talk to me or does it just feel that way?

        " Before you pee in your pants, read the headline again.
        It says MAY - - - like in "may tumble 19%" "

        " now how about some more emotional rants "

        " Who's screwin' ya Dave ??? "

        If you disagree with my position, then I'd be interested to know the facts as to why and understand them. I don't like to say something to people online that I wouldn't say to their face if we were sitting and having lunch. Makes it much easier to debate with calling each other names like children.

        Yes, I feel very strongly about this subject.
        1) The taxes you talk about are amount to 18.4 cents per gallon. We use about 115 billion gallons of gas a year in the US for our consumer fleet. That 18.4 cents yields about $21B in federal taxes plus another $32B in state and local taxes. Total ~$53B.
        a. We spend over $400B on foreign oil in this country this year. A number that is not disputed by anyone. Simple math price of barrel x number of barrels we use x 70% foreign.
        b. We have approved $1.03 Trillion in direct and indirect military spending in 2010. How much of that goes towards supporting parts of the world where we protect or provide stability to keep oil flowing? 1/3? 1/2? who knows....but it is a lot of money.
        c. We spend between $25B and $45B on subsidies for oil and gas exploration (depending on whose numbers you believe, but regardless it's a lot).
        d. Exxon Mobile made $443B in revenue for 2009 and $45B in profits yet didn't pay a single penny in US income taxes (another well reported and undisputed fact).

        Does that ~$53B in taxes you speak about make up for the money that is bleeding out of our economy on all those other expenses? Not even close.

        I'm not even going into the environmental problems because everyone likes to take sides on that like it's a religion. So let's put that aside and talk about easily verifiable numbers that nobody disputes.

        Whose screwing me...and all of us? The petroleum industry. When they fund studies that lay out false claims about EVs or other alternatives that could be viable and fund the campaigns of politicians who vote to favor them and vote against alternatives...they screw us and perpetuate a system we can no longer sustain. What household can buy a new Porsche every year? And a new mansion every year? Why do we think we can spend that way as a country?

        In my opinion, our economy can not heal fully with those kinds of expenses. I'm not saying the petroleum companies are evil. They are simply companies doing what companies try to do: make money.

        We as a country have to have some kind of balance to let people know what is really happening and what they are truly paying for petroleum as a society and that the petroleum industry spreads fear and uncertainty to keep us on this path so they can make more money. That is what companies do.

        Mis-information has ramifications. Would we have ever been in Iraq had we not been told there were WMDs? I'm not ignoring them and the lies they spread any longer.

        It has consequences.

        If you have a different viewpoint, then please share some facts to support your position with us and lets debate them.
        • 5 Years Ago
        "This is why oil companies largely got out of the gasoline station biz."

        I'm not sure if this is true. Do you have anything to back that claim up with?

        I thought that most gas-stations were pretty tightly controlled by the respective oil company...

        In the cases where an oil company doesn't outright own a location, there is usually a "lessee-dealer" situation going on where the station operator lease the station from the oil company and agrees to only buy gas from a specific refiner at a specific price.

        Over all, though, the profit margin on gasoline is pretty slim. The oil companies make up for small margins with high volume.
      • 5 Years Ago
      A wisse man buildeth his house but a foolish woman plucketh it down with her hands!

      I really don't believe in supporting big business in making huge profits but I do see practical means to make lithium batteries remain in constant suppy at reasonable prices just like any norma product!
      I tried scoping out a simple 12 volt lithium car battery here in europe and found it to be 476 euros. So I'm waiting for a lower more practical price.

      By the wat hardly anyone sells these batteries
      here. -- Impossible to find in regular shops! Why?
      I don't know unless there's a conspiracy going on in the market controlling these types of batteries!
        • 5 Years Ago
        You are not finding them in the shops because a 12 volt car battery would be 476 Euros, and like you people don't buy at that price. No demand.
        • 5 Years Ago
        I'm confused...

        Are you complaining that you can't get a 12 volt li-ion battery, or are you complaining that you "...found it to be 476 euros. So I'm waiting..."

        Because right after you said you were waiting for the price to come down, you said "What I meant to share was it's impossible to even order such batteries like 12 volt lithium of any sort."

        Why would you want one, anyway?
        • 5 Years Ago
        Ok! First Im not complaining but sharing what happened when trying to search regular auto parts distributors for a lithium batteries for a camper & car which are available online if you really search with distributors in europe. Only one was available based in Czech offering 476 euros each! I didn't clarify this so that caused you to be a bit confused. Sorry for that. I'm lousy at being specific at times. Any how thanks for reading & showing an interest!
        • 5 Years Ago
        What I meant to share was it's impossible to even order such batteries like 12 volt lithium of any sort. Suppliers refuse to local shops where normal lead acid batteries can cost up to 300 euros & lithium 470. Campers are big here & people have money no problem to buy at that price but these batteries remain off the market to this day period which is unusual.
      • 5 Years Ago
      I give some credit to Steven Chu & Obama that aggressively supported Li-Ion battery makers. Not only did that get battery makers in gear here but in Asia they also responded by heavily investing in the sector.

      The price drops in the solar business have been very impressive in recent years. If the same happens with Li-Ions (and gas prices go up a little more in the next few years) then EVs are here to stay.
      • 5 Years Ago
      Caption Time!!

      Guy on left thought bubble
      "oh my his skin is so soft and youthful he should be a hand model"

      Guy on right thought bubble
      "seriously we couldn't find a hand model to hold this?"
      • 5 Years Ago
      Dave D
      Before you pee in your pants, read the headline again.
      It says MAY - - - like in "may tumble 19%"

      and, I didn't see anywhere in the article where any price per kw-hr was mentioned.

      now how about some more emotional rants
        • 5 Years Ago
        Well, you may notice that prices are already well below $1000/kWh even before this predicted drop in price. So I stand by what I said.

        • 5 Years Ago
      • 5 Years Ago
      Dave D and anyone else. I apologize if I offended. I'm just tired of being lectured to, told facts that are just opinion, and people demonizing everything and everyone that has a different opinion.
      I'm as green as you. But, I'm not going to demonize EXXON. I know for a fact that they do a danm good job of filling our tanks, and providing lots of good jobs to Americans that pay taxes. Exxon paid a sheetload of taxes in 2008, but 2009 was a bad year for them and almost everyone else.

      I'm not going to quote a price on batteries. I work in the industy, and know that you get what you pay for - and usually not even. I don't want junk 18650 cells rolled in some sweatshop in you know where. Been there. Sure, you can get a great price on them, and then spend as much on labor building them into a safe system. Is it?

      Li batteries - less than 24 months ago Toyota decided not to use them in the 2010 Prius because . . . not quite ready for prime time.
      And how do you know that they'll last ten years unless you've tested them for ten years?
      Accelerated testing? doesn't prove much

      I'm also of the opinion that our gov. shouldn't be granting, investing, or loaning money to any business. Examples Tesla and Fisker, with no real collateral.
      1st - it screws the free market.
      2nd - 99% of Americans would probably resent this money being thrown into a toilet.
      If they want to build vehicles for rich folk - rich folk should be the investors.
      I have another dozen examples of our brilliant leaders throwing money into the toilet - but
        • 5 Years Ago
        Sorry to butt in here, I was bored. Good night.

        EV nerd Gene said, "I'm as green as you. But, I'm not going to demonize EXXON. I know for a fact that they do a danm good job of filling our tanks"

        That is the problem, you praise them for keeping you addicted. You cheer at contributing to our trade deficit which increases our national deficit. Your all about that the government should not spend money but you think it just fine the oil corps in conjunction with OPEC suck 400 billion out of the country annually because they do a great job of keeping your tank full of 60% foriegn fuel. Why change a thing? These are good paying jobs especially when there is a blow out on a well, jobs for everyone, just BP's way of stimulating the economy I suppose. To use Dave D's words, " the oil corps perpetuate a system we can no longer sustain." It is beyond me how you EV nerd or anyone else can praise these corps for using your own money to keep you addicted. It's like Tom Sawyer when he had to paint the fence, he duped everyone into thinking it was fun, just and right that they be his slave.

        EV nerd Gene said, "Li batteries - less than 24 months ago Toyota decided not to use them in the 2010 Prius because . . . not quite ready for prime time.
        And how do you know that they'll last ten years unless you've tested them for ten years?
        Accelerated testing? doesn't prove much"

        Nickle metal hydride batteries should have never been put in the Rav4 and the EV1 using the same reasoning. I am glad you were not around to tell them not to do it.

        EV nerd Gene said, "Exxon paid a sheetload of taxes in 2008, but 2009 was a bad year for them and almost everyone else."

        Read Dave D's post again he said Exxon made 45 billion in profits in 2009.

        EV nerd Gene said, "There are more government taxes on gasoline than profit for the dastardly oil companies.
        by about a 2 to 1 ratio"

        Dave D said, "Does that ~$53B in taxes you speak about make up for the money that is bleeding out of our economy on all those other expenses? Not even close."

        Hmm, I am no mathematician here but Exxon is only one of the dastardly oil corps and your numbers are completely erroneous EV nerd. I suggest you provide some links to make your points next time so we don't think you pull numbers out of the air again. For a person who says they are tired of being lectured to and told facts that are just opinion, well the only facts you did mention were incorrect. Complacency seems to be your forte.

        BTW you did not offend me Ev nerd, I found your comments humorous as they were not directed at me. Had they been directed at me I would have said similiar to what middle way said one time, "EV nerd, you have awoken my anger and offended my honor, prepare for cyber battle" :~0
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