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Anderman: Li-ion capacity far outstripping demand as automakers focus more on hybrids, less on full EVs

Global automotive Li-Ion battery production capacity is outstripping demand five-to-one as automakers refocus on hybrids and away from full electric vehicles, according to Dr. Menahem Anderman’s recently released xEV Industry Insider Report. Anderman is founder and chairman of the Advanced Automotive Battery Conference (AABC); the 13th annual conference is scheduled for February 2013 in Pasadena, California.

The report notes that despite heavy subsidies by governments and automakers, 2012 EV sales are coming short of meeting many automakers’ sales and production plans. Conversely, those of HEVs are in line with plans. As a result, production plans for EVs and plug-in hybrid electric vehicles (PHEVs) for the next 4-5 years are being slashed. Anderman projects a global EV/PHEV 2016 market at around 0.6% of anticipated 2016 new vehicle sales, leaving the over-invested battery industry in a trying environment.

On the positive side, opportunities will emerge for HEV batteries, with battery design, size, and dollar value per vehicle varying considerably. Anderman says that multiple configurations of HEVs with various functionalities, voltages, power levels and energy-storage requirements are under development with potential for large vehicle sales volume later in the decade.

The xEV Insider Industry Report notes that the higher the level of electrification, the more problematic the cost/performance ratio of the vehicles—which explains the weak customer demand. Consequently, Anderman sugests, government policies including the California Zero Emission Vehicle regulation; the European tailpipe CO2 regulations; and the Chinese ‘new energy vehicles’ rules will continue to have an overriding impact on the development of the xEV industry.

According to the report’s baseline estimate:

  • The global EV market will grow from 65,000 units in 2012 to 450,000 in 2020;

  • The PHEV market will grow from 57,000 units in 2012 to 750,000 units in 2020;

  • The HEV market will grow from 1.57 million units in 2012 to about 4.1 million in 2020; and

  • The associated Li-Ion automotive battery business will expand from $1.4 billion in 2012 to $8.5 billion in 2020.

The report is based on Anderman’s on-site interviews with senior battery technologists and business development executives at 15 global automakers and 25 of their current and prospective battery suppliers. It includes an assessment of the current status of Li-Ion battery technology, including design, performance, durability, safety, and cost, and prospects for improvement. The Report also explores the manufacturing status of battery producers and which ones are best positioned to succeed in the world market, with individual forecasts for each battery supplier.

Roland Berger’s projections of xEV sales through 2015. Source: Roland Berger. Click to enlarge.

Roland Berger: the Li-ion bubble bursts. In October, strategy consultancy Roland Berger updated its 2010 report on the Li-ion battery business in which it warned that only six to eight global players in rechargeable battery business would survive through to 2017. In the 2012 update, the consultancy reported that the process of consolidation across the Li-Ion battery market is progressing even faster than expected.

The tremendous hype around Li-Ion batteries has left us with a bubble. Government support and far too optimistic growth assumptions about electro mobility have led to major overcapacities. What is more, the ambitious drive to achieve economies of scale as fast as possible has triggered a fierce price war between the established market players in Asia and new players in the US.

—Thomas F. Wendt, Partner at Roland Berger Strategy Consultants’ Chicago office

The Roland Berger study starts with a bottom-up calculation of cell and material costs right along the value chain. It shows that, in many cases, producers of large-formal Li-Ion batteries will not be able to generate sufficient earnings to cover their costs of capital as the automotive OEMs have been able to force significantly lower prices on their battery suppliers. OEMs will be paying between €180–200 per kWh for large-format battery cells until 2014/2015.

In this environment, battery producers can’t generate sufficient cashflow to make vital investments in new and more efficient production systems and in the R&D needed for next-generation batteries. Yet this spending is important for driving down material costs.

—Thomas Wendt

The tight margins and lack of capital for new investment will result in a major market shake-out over the next few years, Roland Berger suggests. Both the battery manufacturers and their customers, the OEMs, will be forced to rethink their strategies, according to this report. Alternative technologies, such as start-stop systems or light-hybrid engines, do not offer a promising market for battery makers. New developments in lead-acid batteries also present some big challenges for suppliers of Li-Ion batteries as they seek to remain competitive, according to the report.



The overcapacity in battery manufacturing suggests that there's an opportunity to radically expand hybridization.  If even "mild" hybrids can get launch assist to make a better driver experience, they'd sell well.


Again, more proof that EVs will not make it to the market this time either (maybe in a couple of decades...). If HEVs become cheaper, they will have a chance to substantially increase their market share.


The world can't find uses for several times better battery cells sold at minimum prices?

Centralized banks give us 'global financial meltdown'. Total oil dependence gives us unplanned, but doubled transportation prices on a war or a whim. Centralized electric power gives us the next Enron in the wings.

Solar cell efficiency rises as costs have fallen. A hundred million lead-acid Chinese ebikes could go li-ion.

The federal 555 plan - 5X more battery density, 1/5th the cost, in five years - is based on the repeated lab breakthroughs we have read about on this site during the last five years.

People should be able to find a use for better batteries more easily than paying for more decades of oil wars, oil climate change, and oil extortion.


Life is just not fair !


Yes, both Menahem Anderman and Roland Berger have copious amounts of personal experience developing new and emerging technology markets. Hey, I am going to be a world widget expert and you can come to my 1st annual widget conference. We will have widget experts from around the world, and it will only cost you $1000. 10% of which goes to me, and I hope that the widget market doesn't develop for another ten years because I have kids to send to college. By the way, for a minimal fee, I will spin the industry any way you want.


To rephrase, people will find a use for better batteries more easily than paying for more decades of oil wars, oil climate change, and oil extortion.


Despite all the predictions of HarveyD EV case don't look so good these, let's put it clearly batteries are not up for the job yet for mass introduction of EVs and ICE are getting more efficient every day, this decade will be HEV and PEHV and improved ICE(and still PHEV will only make 3% of sales by 2020), yes pure EV will have to wait another decade that is pretty clear now.


I think the most interesting thing to take from this is that the leading battery suppliers are able to provide OEMs with cells at E180 (~$234) per kWh. That's equivalent to $3,744 for a Volt-size battery. It's no wonder that the smaller players can't compete with that. Such figures also suggest that if anything the rollout of PHEVs will be quicker than expected.


Obama gave Israel 5,000 deep penetration bunker buster bombs recently in return for their not taking Iran's nuclear plants out until months(2013) after the election.

As ever since the 1973 Israeli/Arab war and oil embargo, once again, the oil supply gets endangered, oil prices double, gas guzzler prices collapse, and minimum/oil-free vehicles are the smart buy.

This time, instead of just ICE vehicles that "couldn't" and didn't improve mpg in a century before modern electric vehicles, there will be dozens of full and partial EVs - including the Motor Trend Car of the Year, Prii, Volt, Leaf, EV Focus, C-Max, etc. besides hybrid or plug-in versions of dozens of other auto models.

The "EV is dead" arguement rings of the Republican Presidential victory - the breakfast of Fox, fools, and liars.


This time again, instead of just batteries and electric vehicles that "couldn't" and didn't improve in the century before gas became a problem, there will be dozens of improving ICEs and mild hybrids - while the Motor Trend Car of the Year, Prii, Volt, Leaf, EV Focus, C-Max, etc fill a small percentage of sales and an even smaller percentage of cars on the road.

Bob Wallace

" leading battery suppliers are able to provide OEMs with cells at E180 (~$234) per kWh"

If this is correct why would we not see significant drops in EV/PHEV prices?

EVs with their current limiting ranges are niche vehicles, but it's a fairly large niche. Most households with more than one vehicle and many people who take longer trips by pubic transportation.

It should take $5k off the price of a Volt, bringing it down into the mid-$30k range and shortening the years to break-even. A PHEV like the Volt should be an adequate "only" vehicle for almost anyone.

I think it unwise to make projections on costs alone. A significant portion of the public is quite concerned about climate change and most are willing to spend some of their own money to help prevent the worst from happening. The ability to forego oil should be of value to many. A PHEV/EV needn't be as cheap as an ICEV, just not too much more. Cheaper batteries lower the gap.


Wishful pie in the sky thinking has given way to the realities of the market place. How sweet it is.


Few people expected bevs to sell this badly. Now everyone is trying to figure out what is needed to make a bev that will sell well enough...

Bob Wallace

Decent range increase along with a modest price drop.

"Sixty miles" scares off too many people.


Broad brush, ICE was little(majority/women couldn't crank start, backfire broke bones,..) for ten years until electricity(the starter system, then lights, then accessories,..).

Now, ALL vehicles have electrical systems, Prius had to create a family of hybrid cars to meet demand and their sales increase double digit percentages annually while everyone else is trying to catch up.

The firm that betrayed EVs went bankrupt.

Have those commenting against EVs driven an EV? Owned a electric vehicle, even a ebike? Noticed the masses of hybrids/EVs, esp. on CA roads?

Or just failed to realize that annual EV unit sales are already greater than failures like the fifty year Corvette?

And the nearly maintenance-less expense of one moving part motors and no transmission drive trains hasn't even begun to sink in.

Test drive a Volt or Leaf or even Zero motorcycle before believing Fox.

"Now everyone is trying to figure out what is needed to make a bev that will sell well enough..."

Everybody seems to be ignoring the elephant in the room. Tesla. Their Model S is a smash hit. Their production is sold out until the second half of next year. They prove that BEV's can be competitive with ICE's. The 7500 tax credit is a mild subsidy compared to the price of the car.

I think the uptake of EV's will be a gradual incline from now on. People are conservative by nature and want others to try out the new technology first.

The 'EV sales are sluggish' trumpet is blown far too much. You can't point to just one or two bullish CEO's as proof. Most industry insiders did not predict anything more than what is being sold now. At least I never expected it.

And the battery manufacturing oversupply? What about that? Didn't they expect more sales? Not necessarily. The explanation is simple. It is a matter of conquering market share. All manufacturers are trying to get a piece of the pie. Now is the time to put your stake in the ground. If you wait, your late to the party. You can only compete if you're a big boy. Without large scale manufacturing you are dead certain to lose the price war. Every infant industry has these bubbles. Everybody remembers the dotcom bubble. Was that the end of the internet?

Most people are burying the EV too soon. Again. Give it another 10 years and EV's will be accepted as a normal choice, not some gamble as it is perceived now by many consumers.


If I could afford a Model S with a tzero-style generator trailer, you bet your @$$ that's what I'd have as soon as I could get them delivered.

Bob Wallace

I'm certainly not ignoring Tesla but I'm trying to not get my expectations too high on their ability to produce an "affordable" long range EV.

They can cut the cost of building the car itself. Right now they build a "luxury" car. Just build a "non-luxury" car and the price comes down. But battery price remains the constraint. I don't think the average new car buyer would pay for the battery capacity that the > 200 mile range Tesla's depend on.

That said, only a fool would sell Elon Musk short.


You do understand tesla is still a tiny company right? With a half billion dollar loan to pay off...

No so far it sounds like people are going to wait longer then expected.


Tree....I mentioned a few dozen times that the magic year for competitive high performance batteries and affordable EVs is 2020. By that time, the 5-5-5 program would have been out-finished for about 3 years. Lower cost higher performance batteries should be mass produced and find their way into affordable 2020 EVs.

For the remaining of the current decade, there are 20+ good HEVs and a few good PHEVs to fill the gap. The Toyota, Prius III (and the soon to come 60 mpg Prius IV), Camry XLE Hybrid and Avalon Hybrids are all excellent choices at $22k to $42K for 2013. They will all last to 2020+ without major maintenance. The extra cost for Camry-Avalon hybrids is a mere $2K or so and would be fully recovered in a lot less than 5 years.

Anne....your observations make sense and are not incompatible with what I said above.

BW....Tesla will have lower price (200 to 300 miles) BEVs by late 2014 or early 2015. Will a Chinese or middle-East oil billionaire buy it by 2015 or before?


wintermane, you don't understand. The size of the company doesn't matter. It's the technology, stupid ;-)

Bob Wallace

Tesla isn't a battery manufacturer. They seem to be able to get the best possible out of batteries available, but they're still limited to the batteries that are available.

It sure would be nice to see some 1.5-0-0 batteries.

150% of current capacity. Same price per cell. Now.

Get range up and sales volumes will increase. Volumes will drive prices down. Get the show underway.

150% would make the Leaf a 90 to 200 mile EV. Much, much more acceptable.


We need better batteries.

And making more to bring the price down is indeed foolish.

Bob Wallace

"And making more to bring the price down is indeed foolish."

Are you suggesting that economies of scale will not operate in battery manufacturing?


Once again the "True Beleivers" are proven stupid and unthinking. But its getting closer. The First Generation EV's mostly simple garage shop converted ICEs, except for the EV-1, were proved very wanting,and uneacceptable. Two decades later the Second Generation EVs and PHEVs and HEVs were found wanting but were closer to being acceptable . Nonetheless they still fail in the nmarketplace.

We will have to wait another generation before technology advances enough to make the PHEV practical.

Meanwhile the "True Beleivers" still reject the wisdom of the marketplsce and think that governmental Central Planning by the Psuedo-Intelligencia can outperform the collective wisdom of individuals exercsing their singular wisdom in millions of individual purchase decisions, that satisfy their individual needs.

If and when the electrical revolution in ground transport arrives, it may well find that it must share with the genuinely clean ICE. It may well prove to be a distinction without a difference, as the truly clean ICE wil have had its warts removed in the process.

But then that is the true collective wisdom that we call the "marketplace".

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