PRTM Analysis Finds Li-ion Battery Overcapacity Estimates Largely Unfounded, with Potential Shortfalls Looming; Total Market Demand in 2020 Will Require 4x Capacity Announced To Date
22 March 2010
| PRTM concludes that the large format Li-ion battery market could be under-supplied by nearly 10% by 2016. Click to enlarge. |
Recent market reports have predicted that the global market for large format lithium-ion batteries—such as those used in plug-in vehicle applications—will see a substantial overcapacity in the coming years, with some predicting an excess of more than 100% in 2015. (Earlier post.)
However, Oliver Hazimeh, Director and Head of Global E-Mobility Practice at global management consulting firm PRTM, asserts that the notion of overcapacity is largely unfounded, and that, in fact, significant additional capacity may be needed to support the long-term growth of the electric transportation market. PRTM’s assessment, based on what it called a thorough review of the operational market dynamics, found the following:
Under a “Most Probable” scenario, battery manufacturing capacity will hit a shortfall by 2016. Additional capacity investments beyond those recently announced by battery manufacturers will be required to avoid a Li-Ion battery shortfall of 30% by 2017.
The total Li-Ion battery market demand in 2020 will require about 200 GWh capacity, which is 4x the 50 GWh capacity that has been announced to date.
A global footprint assessment of top battery manufacturers suggests that the United States and Europe are facing a shortfall in cell manufacturing capacity—the largest value-added step in battery production and a rapidly increasing source of global competitive advantage. Approximately 70% of the value of a Li-Ion battery pack resides in the Li-Ion cells, and low labor needs make manufacturing investments strategically sound.
Asia has been the center for consumer electronics-based Li-Ion battery manufacturing to date. As many countries worldwide consider building out automotive cell manufacturing to meet rising demand in the electric transportation sector, Asia is positioned to remain a leading net exporter of automotive battery cells under their current level of investment. Under-investments in cell manufacturing in the US and Europe to date—while offshore investments continue to rise—have wide-ranging consequences in global competitiveness. These outcomes include an inability to capitalize on an automotive battery market estimated to be $60 billion in 2020. The risks also include missing high-quality job creation opportunities in this sector.
PRTM’s assessment includes the following key aspects:
All manufacturers will base future capacity investment on market demand. While battery companies are making initial investments slightly ahead of the market to optimize cost and scale, future investments will be made only when the market conditions justify such an investment.
Capacity expansions will not take place in one tranche—they will be rolled out in several phases, through 2015 and beyond. Many companies plan to build large facilities capable of supporting future volume, but initial machinery capex will remain relatively small.
Companies funded through US DOE stimulus may be incented to build ahead of the market, however stimulus-funded investment represents only 1/3rd of planned global capacity expansion—the remaining 2/3rds will remain driven purely by market demand.
Previous reports matching market growth to planned capacity were relatively bullish on capacity expansion while being bearish on market growth. Moreover, large format cells can also be used in utility applications, which are not included in most market growth forecasts. This combination almost definitely would lead to an overcapacity projection.
There are only a handful of capable and qualified suppliers of the capital equipment required for a Li-ion battery manufacturing facility. PRTM believes that lead-times are currently in the range of 18-30 months, significantly impacting the rate at which capacity can be installed.
| PRTM finds that the US and Europe have under-invested in cell manufacturing capacity, which could lead to a potential shortfall in domestic Li-Ion cell supply. Click to enlarge. |
PRTM analysis finds that EVs and plug-in hybrids (PHEVs) could account for nearly 10% of the global market by 2020, assuming significant barriers are addressed first.
At that rate we would need to build up to perhaps 3,000GWH in battery production to run cars on electric, using around 3 million tons of lithium carbonate a year.
That's do-able, but we need to expand production a heck of a lot!
Hopefully by around 2030 that might be possible.
Other battery techs may come in to help lithium by then.
Posted by: Davemart | 22 March 2010 at 10:51 AM
Maybe the study claiming overcapacity had stock market motives behind it.
Posted by: GdB | 22 March 2010 at 12:15 PM
"low labor needs make manufacturing investments strategically sound."
This could be one of the next big things for the U.S. Highly automated plants could turn out lots of batteries while creating manufacturing and jobs right here.
Posted by: SJC | 22 March 2010 at 02:41 PM
I suspect that the study claiming overcapacity had OPEC money behind it. The major issue is going to be the economy, as an economy in contraction isn't going to want much in the way of batteries or be able to pay much for oil.
The biggest irony is probably that batteries, by helping to decouple economies from oil prices, will allow oil to command a much higher price than if greater dependency forced a lower cap on total activity.
Posted by: Engineer-Poet | 22 March 2010 at 05:36 PM
Ive been looking at some "headway" LiPo batteries recently and the 28mm * 65? size unit rates 10 amp and 10c or 100 amp discharge with 150amp burst peak. @~ US $20 each.
My reading says eight of these will suit most automotive starting battery application without any special management. This means cost competitive with standard lead acid.
Sadly ther is as yet no Australasian licensee for the aussie csiro desighned asymetrical lead acid caacitor battery the was claimed to be a cheaper manufacture cost than conventional, so I cant comment on that.
Any "wild prediction" for lithium batteries now that battery management is (from my reading) more robust and less demanding than lead acid, wil almost certainly be tooo small an estimate.
Posted by: Arnold | 23 March 2010 at 12:42 AM
EP,
Oil will be a luxury commodity? Also a proper carbon pricing should mean higher price lets hope that the people via govt's tax reap the extra for socially and environmentally useful purpose.
Rather than a bigger paycheck for the environmental and social vandals.
Posted by: Arnold | 23 March 2010 at 12:48 AM
Last year, about 52,000,000 cars were produced. By 2020 every car will probably be at least a mild-hybrid with at least 5 kWh battery capacity. If car production doesn't increase, that would make 250E9 kWh or 250 GWh. If 10% of the cars has 50 kWh capacity, you are at around 500 GWh...
Probably the average capacity will be higher and the number of cars will be higher. (of course, it may be other types of batteries than Li-ion).
And there are also electric trucks, busses, boats, buffersystems, ...
As long as the price is not too high, the market can absorb any 'overcapacity'.
Posted by: Alain | 23 March 2010 at 12:49 AM
Highly automated plants could turn out lots of batteries at low cost because of lower labor costs (fewer US battery manufacturing jobs), but this is better by far than no US battery manufacturing, even fewer jobs and no factory equipment demand.
Batteries, by helping to decouple economies from oil, will force oil prices lower; if fewer people are buying oil, good luck raising the price.
Posted by: ToppaTom | 23 March 2010 at 01:18 AM
TT:
I agree with you that automated manufacturing facilities will produce lower cost batteries. Some level of over production may required to reduce prices.
When oil demand goes down, price should level or even fall, that would be the appropriate time to increase gas taxes to steady the price at the pump.
Eventually, e-energy used by electrified vehicles will have to be taxed to replace deminishing gas taxes and maintain government revenues + paying off some of the extremely high accumulated deficits. People who do not want to pay energy taxes could install their own Solar panels + storage units. Of course, road usage and vehicle registration fees could also generate essential revenues.
Posted by: HarveyD | 23 March 2010 at 08:29 AM
Actually, Bolivia and Chile are the countries to keep an eye on. Both have the world's largest reserves and Chile is the leading producer of Lithium metal.
China is just the big "booga-booga" man we're being told to focus on.
Posted by: sheckyvegas | 23 March 2010 at 09:56 AM
"appropriate time to increase gas taxes"
Absolutely, it is sort of like running a budget surplus and THEN cutting taxes, first things first. You want no back sliding to oil when the supply/demand function starts up.
Posted by: SJC | 23 March 2010 at 02:55 PM
Posted by: Engineer-Poet | 23 March 2010 at 08:37 PM
correction
38mm*160mm $23.00 ea
http://www.e-mtb.com.au/headway-32v-10ah-cell-38120s-p-181.html
Normal capacity 10Ah
Normal voltage 3.2V
Max.charging current 5C(50A)Max.charging voltage 3.65±0.05V
Contiune discharging current 10C(100A)
Pulse discharging current 15C(150A)
End-off voltage for discharging 2.0V
Cycle life 2000 timesOperating temperature -20~60℃
Dimension φ38×H120(38120L)/H145(38120S) (mm)
Weight 300g/330g
Operating temperature (charging) 0~45℃
Operating Temperature (discharge) -20~60℃
Store temperature (one month) -20~45℃
Storage temperature (six months) -20~35℃
Posted by: Arnold | 23 March 2010 at 11:15 PM
We can all wait for market mechanisms to kick in after the fact or we can plan ahead and minimize the problem. Making sure that gasoline prices remain high to pay all of the true costs of using gasoline makes sense.
People may not like taxes in general nor gasoline taxes in particular, but if gasoline is cheap people will continue to use more of it and become dependent on cheap gasoline. They will expect the politicians to keep providing cheap gasoline to ensure "the American way of life"...right up until the end.
Posted by: SJC | 24 March 2010 at 07:12 PM
Normally I'd just agree with you, SJC, but this time I'll add "SJC has spoken, everyone else can stop thinking now." ;)
Posted by: Engineer-Poet | 25 March 2010 at 04:58 PM