Too many lithium-ion batteries? That's not something battery makers want to hear, but it's music to our ears. It's also the prediction of Munich-based Roland Berger Strategy Consultants

Over the next few years, as battery makers like AESC, LG Chem and A123 Systems ramp up for what's expected to be a surge in electric-drive vehicle purchases, we could be awash in li-ion batteries. Global lithium-ion battery sales will total $9 billion by 2015 and will be marked by what the consultants say will be "massive overcapacity." While about four million hybrids, plug-in hybrids and battery-electric vehicles will be produced worldwide that year, battery supply will be about twice as high as demand, potentially driving battery costs down to less than 200 euros ($261 U.S. at current exchange rates) per kilowatt hour.

Either way, AESC, LG Chem, Panasonic/Sanyo, A123 Systems and SB LiMotive will control about 70 percent of the global market by 2015, when light-duty vehicles will account for more than 85 percent of the world's lithium-ion battery demand, according to RBSC.

Batteries are said to account for 25 percent or more of an electric-vehicle's total costs, making the subjects of lithium-ion battery capacity and costs particularly important to the overall EV market. Last month, Bloomberg New Energy Finance reported that lithium-ion battery-pack costs fell 14 percent during the past year and have declined 30 percent during the past three years because of technical advancements and higher production capacity. Specifically, EV battery costs dropped to $689 per kilowatt hour during the first quarter from $800 a year earlier, BNEF calculated.
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UPDATE TO THE ROLAND BERGER STUDY ON AUTOMOTIVE LI-ION BATTERIES: FIVE FRONTRUNNERS SHARE MOST OF THE MARKET. MARKET CONSOLIDATION DRIVEN BY PRESSURE ON PRICES
Munich/Detroit, April 19, 2012
The global automotive Li-ion battery market will grow to more than USD 9 billion by 2015
New and confirmed programs, especially in Asia, are being partly offset by volume reductions in Europe and America
Five frontrunners are set to control 70% of the world market by 2015: AESC, LG Chem, Panasonic/Sanyo, A123 and SB LiMotive
Major overcapacity and falling prices will lead to strong market consolidation
Chinese competition is growing, while China could become the leading market for e-mobility by 2020
The worldwide market for Li-ion batteries for electric vehicles is extremely dynamic. In light of recently presented or annouced vehicle models with electric, hybrid or plug-in-hybrid drives (xEV), Roland Berger experts expect the global LiB market to reach more than USD 9 billion by 2015, despite scaled-back forecasts for previously announced models. This growth will, however, be accompanied by massive overcapacity. The resulting pricing pressures are already affecting orders for 2015. Market consolidation therefore looks certain. The five frontrunners – AESC, LG Chem, Panasonic/Sanyo, A123 and SB LiMotive – will control almost 70% of the market by 2015. These are the key findings of a new update to the international study by Roland Berger Strategy Consultants on the market for lithium-ion batteries in cars, light and heavy commercial vehicles as well as buses with hybrid and electric drive systems.

The experts at Roland Berger estimate that the light vehicle segment (cars and light commercial vehicles) will account for more than 85% of the total market for Li-ion battery systems in 2015. By then, there will probably be in excess of 4 million vehicles with electric, hybrid or plug-in-hybrid drive systems (xEVs) coming off production lines each year.
"We still expect the global market for Li-ion batteries to reach USD 9 billion by 2015," says the study's author, Thomas Wendt of Roland Berger Strategy Consultants. "Although forecasts for many existing programs have been downgraded, there are new xEV models coming out in Asia, especially hybrids." Even if Japanese and Korean carmakers opt for alternative drive technologies, the majority of hybrid vehicles produced will be equipped with nickel-metal-hybrid batteries by 2015.
Although nickel-metal-hybrid batteries will remain entrenched in certain segments through 2015, the Roland Berger experts reckon with continued penetration of the Li-ion technology. "We are starting to see some signs of Li-ion batteries being used in start-stop systems," notes Wolfgang Bernhart, Partner at Roland Berger and co-author of the study. "Start-stop will not make up a large share of the LiB market by 2015, but we can expect to see micro-hybrids vehicles with Li-ion batteries coming onto the market over the next couple of years."
Market consolidation – five top players to dominate the market
Over a hundred companies worldwide are currently active in the market for automotive Li-ion batteries. Yet production capacity in this market will probably be twice as big as demand in 2015. "Some of the battery producers have excessively grand expansion plans. The ramifications are already being felt and LiB suppliers have started to cut their forecasts," notes Thomas Wendt. "This is why we'll see considerable market consolidation going forward. Pricing pressures will certainly increase." For 2015, Roland Berger envisages OEMs facing prices in the EUR 180-200 /kWh range for high-energy packs on large orders. "This means the current margins of approx. 5 to 10% will also drop in the medium term," says Bernhart.

In the course of this consolidation, five top players will share most of the battery market in 2015. The frontrunners are: AESC (20%), LG Chem (15%), Panasonic/Sanyo (13%), A123 (11%) und SB LiMotive (9%). "Some OEMs have lowered their market forecasts for electric and hybrid vehicles, and some new automakers have already failed. But we still expect strong growth in the e-mobility battery market going forward," adds Thomas Wendt. What is more, from 2016/2017 one or two other companies will join the ranks of the top players controlling 80-90% of the market. This development will be triggered by new vehicles coming onto the market and by the use of new material composites that promise higher energy densities at the same price.

Problems are arising above all for the small suppliers, whose combined share of the global market will only amount to 2% in 2015. "The first companies are already facing insolvency," says Wolfgang Bernhart. "Consolidation in the industry is going to happen. Large companies like JCI, who are not in the limelight yet, will play a more important role. Smaller players, on the other hand, will disappear. We also expect that cell manufacturers will supply directly to the OEMs."
Chinese manufactuers gaining ground
There is also growing competition from China in the battery market. By 2015, Chinese manufactuers will control about 8% of the world market. And China itself could emerge as the biggest market for e-mobility by 2020. For international battery producers, this trend presents both an opportunity and a challenge: "Battery manufacturers must best-position themselves on the Chinese market, too, if they want to secure long-term success," says Wendt.




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    • 1 Second Ago
  • 35 Comments
      Anne
      • 3 Years Ago
      " speculative over-investment." Yup, that's what I think. Now's the time to claim your territory in what will be a huge market. The losses now are peanuts compared to the profits that can be made after 2020.
      PR
      • 3 Years Ago
      If manufacturing of these batteries is exploding this quickly that there will be this huge overcapacity, there is only one explanation. The profit margin right now on mass-producing these batteries must be enormous. Such a surge to manufacturing capacity only happens when there is a huge profit margin being chased by many different companies. I'm speculating that the cost savings going from small batch to mass production is even bigger than anyone has imagined. All of these factories want to reap the profits found in competing with the current small batch battery prices.
        Spec
        • 3 Years Ago
        @PR
        There are other explanations. For example, speculative over-investment. A lot of of investors may simultaneous chase something viewed as desirable growth market. And I think that theory has better support. Enerdel went bankrupt. A123 has been losing money pretty much every quarter. I'd really like to believe your theory but I also need to reconcile it with the facts that I am aware of.
        Greg Y
        • 3 Years Ago
        @PR
        with all due respect that is almost always the case, since currently the batteries are probably being sold at pre-production (i.e. prototype) prices, which are enormously inflated to cover development and testing costs in addition to the much higher manual labor costs. That profit margin will rapidly drop to "normal" rates once the batteries are delivered as volume production units and suppliers are pushed for immediate cost reductions on their production part sales costs.
      Letstakeawalk
      • 3 Years Ago
      *news flash* A Fisker Karma has been involved in a garage fire. Fisker's response: "Last week, Fisker Automotive was made aware of a garage fire involving three vehicles, including a Karma sedan, that were parked at a newly-constructed residence in Sugar Land, Texas. There were no injuries. There are conflicting reports and uncertainty surrounding this particular incident. The cause of the fire is not yet known and is being investigated. We have not yet seen any written report form the Fort Bend fire department and believe that their investigation is continuing. As of now, multiple insurance investigators are involved, and we have not ruled out possible fraud or malicious intent. We are aware that fireworks were found in the garage in or around the vehicles. Also, an electrical panel located in the garage next to the vehicles is also being examined by the investigators as well as fire department officials. Based on initial observations and inspections, the Karma's lithium ion battery pack was not being charged at the time and is still intact and does not appear to have been a contributing factor in this incident. Fisker will continue to participate fully in the investigation but will not be commenting further until all the facts are established." Read more: http://www.autoweek.com/article/20120508/CARNEWS/120509860#ixzz1uJQspB30
      Ryan
      • 3 Years Ago
      They still won't make batteries for the home DIY'er out there... I'm not sure why there isn't a small company that targets the home converter and offers battery kits. Maybe there is and I will learn something here.
        Smith Jim
        • 3 Years Ago
        @Ryan
        I'm no expert on EV conversions but here's one company that is known for converting Prii to PHEVs http://www.enginer.us/
        PR
        • 3 Years Ago
        @Ryan
        Ryan, there are a number of EV kit companies out there. Especially for VW / Porsche air cooled cars. The problem is that there is not enough of a mass market for batteries compared to the market for supplying OE manufacturers. If you own a small company that caters to home converters, your sales volumes will be very, very, very low compared to a multi-year contract for hundreds of thousands of battery packs for Nissan or some other company. On top of that, the battery manufacturer knows that his battery will only last a long time if the electronics that are connected to that battery treat it correctly according to that manufacturer's specifications. If you are a big name in batteries, why would you risk your reputation for your batteries on a bunch of DIY'ers out there doing god-knows-what with the charging and control system? Not to mention the financial risk of having to warranty batteries going dead, when the real problem is with the control system... I appreciate the whole DIY mentality. I even seriously researched and considered converting a couple of older European cars. But I don't see any top tier manufacturer distributing cheap batteries into the DIY market. The best luck for DIY'ers is for there to be a consolidation and maturity in the home converter market, where no more than 2-3 really good companies with solid background and experience break out and build good reputations. Then start contracting directly with some second tier asian battery companies for larger sized batches. I don't know if there is enough of a DIY conversion market for this sort of market sector maturity to happen before 2nd or 3rd generation cheaper EV's completely undercuts the conversion market.
      goodoldgorr
      • 3 Years Ago
      To these costs we should add the cost of having a second gasoline car plus two insurance to pay plus more space needed for two cars.
        Sasparilla Fizz
        • 3 Years Ago
        @goodoldgorr
        Gorr, don't be a troll - your comment doesn't have anything to do with the topic of this page - expected dramatic decreases in future battery prices for EV's and Plug-Ins. Regarding your comment, if you are a two car family then you can get an EV or plug-in hybrid for one of the two and use it most of the time (since electricity is $1.25 gallon equivalen,t or much less for some people, compared to $4 a gallon gasoline or higher in the years ahead). If you only have one car you just get a plug-in hybrid, like the Chevy Volt, so you cover all the bases with just one car.
          brotherkenny4
          • 3 Years Ago
          @Sasparilla Fizz
          Your point is correct. I would just add as clarification that most families are multi-car families. The contention that a familiy that has one car is typical is a false statement. It's often stated that poor families with one car cannot aford or use an electric vehicle. However this is a very minority section of the populace. There are more personal vehicles in the US than there are licensed drivers. The poor family however, that we know the right is sooo concerned with, will benefit in the long run by having cheaper gasoline than if the threat of an alternative were not hanging over the oil industry.
      Sasparilla Fizz
      • 3 Years Ago
      Nice to see, but what do these guys know about 3 years from now. That said, this would make a current Leaf battery ~$6k. A true 100 mile Leaf battery ~30kWh would be $7700. With those kinds of prices Nissan should definitely be able to build and sell the vehicle with true 100 mile range for less than $30k. Disruptive technology you just keep marching forward, we'll see you big time around 2015/2016.
      • 3 Years Ago
      All your battery prices are belong to us.
      Spec
      • 3 Years Ago
      @Anne I think Li-Ion batteries will definitely become a HUGE market eventually. I think the real trick is technology and/or timing. If you have great technology, you may win by starting now. But as long as gasoline remains reasonably cheap, it is hard to build a big business with it. Timing . . . eventually oil will be so expensive that even EV haters will line up to buy EVs or PHEVs.
      jthomas35712
      • 3 Years Ago
      I want to see lithium ion batteries in ALL types of products. I just bought a Black and Decker LST136 36V lithium ion battery powered weed whacker and it is awesome. This lithium ion weed whacker is going to make gas powered weed whackers obsolete. It will easily trim any kind of weed or small plant you want. The battery will easily last 30 minutes which is all I usually need. It has a fast 1 hour charger if you want to go another 30 minutes or so (or you could buy an extra battery if you can't wait an hour). I'd like to see affordable, POWERFUL lithium ion batteries for lawn mowers that can go for at least 30 minutes. I'd have to get a 2nd battery since it usually takes me 45 minutes to cut my lawn ... or I could just take a one hour break so my one battery could recharge. I want to see better lithium ion batteries to replace all those IC engines for power equipment out there. It would make my neighborhood a lot quieter and less polluted. Better batteries for motorcycles too. I have one neighbor a few houses down with kids that ride off road motorcycles. I get tired of hearing all the IC engines in the world. Peace and quiet is wonderful.
        skierpage
        • 3 Years Ago
        @jthomas35712
        It'll happen. Honda Power Products has shown a Loop battery concept that you drop into their teeny electric scooters and "When not powering the Motor Compo, the Loop battery can be used as a portable power source or provide accessory power for the Micro Commuter." It's going to be a wrenching change for all those Honda small engine wizards to become buggy whip designers.
        Anne
        • 3 Years Ago
        @jthomas35712
        " Peace and quiet is wonderful." +100 Btw, your story about 'ICE' powered becoming obsolete. That reminded me of this Renault ad: http://www.youtube.com/watch?v=qKg-LPOXIMs (that I think was not aired in the States)
      oollyoumn
      • 3 Years Ago
      Maybe with the extra capacity someone will come up with a reasonably priced plug-in conversion for existing Prius models.
      Spec
      • 3 Years Ago
      It sounds nice but it really might not be so nice. You might think that would me low prices . . . but it might just mean (more) bankruptcies. What we need to new technology innovations.
        EZEE
        • 3 Years Ago
        @Spec
        There probably would, but at the same time, to force some companies into bankruptcy, there needs to be others to maintain this pricing structure, unless there is dumping by a country or cartel (which could happen). In the case of electric vehicles, one wold hope that as demand increases, so will supply (duh) and as a result, prices will drop, thus causing demand to further increase. If this were an established market place, say for computer chips for home PC's, ruining a competitor would help out another company as the market is somewhat constant. In the case of EV's, I believe (certainly could be wrong) that as the market grows, there will be others who jump in, hoping to grab a piece of the growing pie. One need not ruin a competitor to be successful (and if one did....meh....they did it through low prices, range, capacity, etc.). HEY MARCO! - I put a little of my MBA to work just then - do I have it basically right on a growing market vs, static? Would be nice to see Leaves at less than mid 30's, Focii at less than upper 30's, and rav4's at less than (holy sh*t) $49k. Side note - since it was a Sebastian article, I obviously didn't read it (why hand him the rope?), but was everyone else a bit appalled by the price and disappointed by the range? Just curious....(I was hoping that since it was the tesla system, we might have better range....and a price not bordering the Model S)
          brotherkenny4
          • 3 Years Ago
          @EZEE
          There will be some consolidation too. Larger companies hoping to capture a piece will just buy up smaller technology companies. BASF has been doing this for a few years already. The amazing one that hasn't happened is that the car companies have not bought their own battery companies. What the car companies lose most in the EV is the profit from engine manufacuring and service/parts. They can replace some of this by snapping up the profit on the batteries, and there are some battery companies that are stand alone relatively small operation with technical skill. It may be that the tech is changing too fast or that the car companies are just hoping this goes away like a fad. Or, maybe they just don't see it or are incapable of judging and evaluating the technology. It seems like an obvious move to me, that the car companies should make their own batteries. By the way, I think down to about $350/kWh will be a done deal just based on capacity, but going lower than that is not a sure thing. The article suggests that because of overcapacity the companies will be driven to sell low, but there are other applications. Some of the grid load leveling and power back-up applications are very large cell counts and may take up a significant capacity for some time.
          Ziv
          • 3 Years Ago
          @EZEE
          The way these cars are selling so slowly, the tax credit is going to last a long time. If the car makers had hit their early sales goals it would have been cut in half 3-4 years after the cars came on the market. Now it looks like it will last for 4 years at least and maybe for much longer than that for several of the BEV's. Nissan keeps telling us, 'Wait til our Tennessee plant opens' but it is beginning to look like the Leaf just isn't that popular. The Volt is loved, but it is just too expensive for most people to choose. 200,000 cars then another 3 months of sales WITH the full credit then 6 months of sales at $3750... This credit is going to last a LONG time! http://www.fueleconomy.gov/feg/taxevb.shtml
          Dave
          • 3 Years Ago
          @EZEE
          "Would be nice to see Leaves at less than mid 30's, Focii at less than upper 30's, and rav4's at less than (holy sh*t) $49k." They'll have to be. The $7,500 gov't subsidy doesnt last forever.
          Spec
          • 3 Years Ago
          @EZEE
          But the prices need to be reduced by sustainable technical achievements. Any price reductions caused by over-investment in the sector are useless since a car is something that requires service and spare parts. You don't want to buy a car with a battery that can't get replacement cells for. You can buy a Think City for $20K apparently but most people won't take it because what are you going to do when it breaks down? Who is going repair it? Where are you going to get spare parts?
        EZEE
        • 3 Years Ago
        @Spec
        Hmmmm. You say one thing, I say the opposite, and we both get voted down. Tough crowd!
        • 3 Years Ago
        @Spec
        don't be so pessemistic
        Anne
        • 3 Years Ago
        @Spec
        More bankruptcies is a good thing. It is the way the capitalist system works. The cheaper, more competitive companies stay alive. Because they had the technology innovations that made their product better than the competition's. Competition is what drives innovation. As soon as you have a stable market, a guaranteed margin, why innovate?
      2 Wheeled Menace
      • 3 Years Ago
      Good, good.. daddy needs another kilowatt hour.. :D
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