Analyst predicts severe oversupply of plug-in vehicle batteries

The limited availability of batteries has long been one of the factors keeping the cost of electric vehicles well above that of their gas-powered counterparts, but it may be that we're about to move from drought to deluge. According to the New York Times, the growing capacity of battery manufacturers may shortly outstrip demand and present plug-in vehicle makers with something new: an oversupply of batteries.

But the overabundance isn't all cheery news for electric vehicle enthusiasts.

Part of the reason for the oversupply of EV batteries is simple: The market for electric cars is looking like it's going to be a lot smaller than predicted, at least in the short term.

With many start-up EV makers foundering, and gas prices in most of the United States staying south of $4 (for now), the article predicts that the battery bounty will result more from too few cars sold instead of too many batteries made. Some of the battery makers were highly dependent on partnerships with particular vehicle makes to get their production facilities off the ground, and not all of those partnerships have turned out to be beneficial. That's left battery makers in a fragile state.

Over the long haul, it's expected that battery prices will fall significantly as capacity and technology reduce the costs, but if the battery market fluctuates too wildly, that reduction in cost could be delayed. So, a slight oversupply would be good for EV buyers, but a massive oversupply may be less than beneficial for either companies or consumers.

[Source: New York Times]