Connect with us

Hi, what are you looking for?



Lithium Battery Supply Could Outpace Demand

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

In advance of this fall’s launch of plug-in hybrid and electric vehicles, lithium ion battery manufacturers are breaking ground on manufacturing plants nearly every month.
Nearly $2 billion in stimulus funding has spurred the building of facilities in Michigan and Indiana that will start churning out battery packs by the end of the year, but the escalation in production has the potential to outstrip the demand for the batteries by as early as 2012.
As I said during yesterday’s interview on NPR’s “All Things Considered,” the battery companies have understandable but potentially misguided motivations to quickly ramp up production. For battery companies to receive the full amount of stimulus grants and loans, they must meet specified goals for production capacity.
Their automaker customers are viewing consumer demand for the not inexpensive (starting at $35,000) and unproven electrified vehicles with rose-colored glasses, with several companies expecting to individually sell more vehicles per year than Pike Research’s estimate of the size of the entire market.
During 2010 and 2011, consumers and fleet operators who are hell-bent on owning electric vehicles will scoop up the first units that come off the line without much concern that it would take many years – or perhaps never – to recoup the additional cost of the vehicles in fuel savings.
But that is likely to be a niche market, numbering in the thousands to tens of thousands (remember that only about 1,000 Tesla Roadsters have been sold so far). The market appeal of electric vehicles will have to be broadened beginning in 2012-13 to attract a more cost-conscious consumer, and that adjustment period could impact battery manufacturers who are likely to then be in full production.
If gasoline stays under $4 per gallon for the next few years, the electric vehicle audience is unlikely to take off as quickly as the auto industry hopes. Other confounding factors for the battery market include possible delays in new vehicles, and a slower than expected rebound by the global economy.
A slower than expected increase in the size of the electric vehicle market could hurt start-up battery companies more than their larger diversified competitors because they will feel pressure to lower the prices of the batteries (to make the vehicles more appealing to consumers), and to run plants at lower volumes, which would further reduce revenues.
In the following years, the potential for oversupply will continue. According to Forbes, nearly $7 billion is being invested in lithium ion battery manufacturing, and the total capacity will surpass 36 million kilowatt-hours of batteries in 2015. This is more than double the amount of batteries (16.9 kilowatt-hours) needed by the automotive industry, according to our analysis here at Pike Research.
The good news for lithium ion battery manufacturers is that a secondary market is drafting just behind automotive. The stationary energy storage market to support the power grid is currently in the pilot project stage and will likewise be ramping up. Grid storage has similar requirements for power and energy density, so the same batteries can be used in conjunction with a custom battery management system.
Although the lithium ion portion of the energy storage market is expected to be just 5 percent of the automotive market in 2012 (or 363,000 kilowatt-hours), it could be an important outlet for excess capacity, and grow even more rapidly if the cost of batteries comes down quickly.
John Gartner is a Senior Analyst at Pike Research and editor in chief of Matter Network. Article appearing courtesy Matter Network.
photo: doc_savage_jr

Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.

EV Obsession Daily!

I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it!! So, we've decided to completely nix paywalls here at CleanTechnica. But...
Like other media companies, we need reader support! If you support us, please chip in a bit monthly to help our team write, edit, and publish 15 cleantech stories a day!
Thank you!

Tesla Sales in 2023, 2024, and 2030

CleanTechnica uses affiliate links. See our policy here.
Written By

Derek lives in southwestern New Mexico and digs bicycles, simple living, fungi, organic gardening, sustainable lifestyle design, bouldering, and permaculture. He loves fresh roasted chiles, peanut butter on everything, and buckets of coffee.


You May Also Like


Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News! In the heart of Jutland, Denmark, two guys...


Fiat's new electric crossover is targeting the Model Y's dominance.


Build plug-in or battery swappable hybrid ships. Get big battery range increases every few years of the vessel's life. Run biofuels through a generator...


Meet the all-new Fiat 600e electric crossover!

Copyright © 2023 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.