In the fall of 2007, General Motors announced the launch of a new program to develop a plug-in car called the Chevy Volt, officially launching the advanced battery industry. For such a car to work, a new kind of battery had to be created that was affordable but with more energy dense than existing batteries. Soon, every carmaker, battery manufacturer, electric utility and consumer electronics company sidled up to the table and placed their bets on this emerging industry. Now, 6 years later, the first stage of this horse race is over and the judgment can begin to determine winners and losers. Here are the initial winners, in my view:
Lithium Ion: By far the biggest winner is the chemistry that has taken up more than 99% of the market: lithium ion. While the drawbacks to Li-ion are well-known (fire potential from thermal runaway, cost, lithium supply constraints), each has been mitigated by a combination of engineering advances and economies of scale. Li-ion batteries have completely taken over markets, a few years after entering them. This happened in consumer electronics, power tools and electric vehicles. And the price of Li-ion batteries has dropped dramatically—so much so that other, supposedly cheaper, chemistries have had no chance to compete. For a closer look at the current state and the future of the Li-ion battery segment, please join us for our webinar, “The Lithium-Ion Inflection Point,” at 2 p.m. ET on Tuesday, November 5.
Tesla/Panasonic: Of all the players in this space, the ones who made the biggest bets on the future of advanced batteries either don’t exist anymore (Better Place, Coda Automotive) or have triumphed. In the latter category, the best example is the Tesla-Panasonic partnership. Both companies bet big that their battery solution would win out. And both have reaped the rewards.
Tesla’s concept of using small-format batteries in combination with an expensive and sophisticated thermal management system has worked very well. Panasonic put all of its chips on its new nickel cobalt aluminum cathode battery that powers the Tesla Model S. The success of that car has saved Panasonic’s battery business and its factories are now operating at full capacity while its Japanese brethren such as Sony and NEC see the demand for their batteries declining.
The Observers: Ironically, the other big winners of the initial stage of the advanced battery race are the companies that haven’t placed any bets at all — yet. Hyundai Motors is one example. The company has not made any big investments in the electric vehicle space, but is now poised to enter that market in a big way, without being dragged down by stranded manufacturing investments. Likewise, Johnson Controls, whose Li-ion subsidiary is overshadowed by its massive lead acid battery business, is now able to enter the market in manner of its own choosing, with a keg full of dry powder and a much more visible path to success.
In my next blog I’ll review the losers, so far, in the advanced batteries space.
Tags: Advanced Batteries, Clean Transportation, Electric Vehicles, Energy Storage, lithium ion batteries, Smart Energy Program
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