Navigant Research Blog

Winners Emerge in EV Battery Race

— November 4, 2013

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.


Lessons From the Lithium Ion Leaderboard

— May 22, 2013

With the publication of Lithium Ion Batteries for Stationary Energy Storage, we launched our first Navigant Research Leaderboard report, which is the rebranded version of the Pike Pulse series.  This report looks at the landscape of lithium ion battery vendors in the stationary energy storage space.  To score each market participant, we looked at six elements of strategy and six elements of execution.  Once the results were tabulated, we ended up with a few surprises.  Here are some of the lessons learned from this report:

Entering bankruptcy is a surefire way to damage a reputation.  A123 Systems, the historical market leader in stationary storage, has placed more than 100 MW of batteries into stationary systems since its inception in 2005.  Its team of engineers, marketing executives, and senior managers is world renowned.  So how did it end up in the Followers category, the lowest quadrant of the Leaderboard?  The answer rests primarily with the fact that it entered bankruptcy after a series of manufacturing setbacks with its automotive batteries.  The company recently emerged from bankruptcy under new ownership.  Now it’s part of Chinese automotive parts manufacturer Wanxiang Group and is re-entering the business of manufacturing and marketing batteries.  As the company formulates and articulates its strategy going forward, it will likely recapture its market leadership.  But the immediate after-effects of the bankruptcy severely damaged the company’s scores.  We anticipate that A123 will score significantly higher next year.

It Only Takes One Fire

Battery fires burn more than just the battery.  Fires struck several battery makers, such as Electrovaya and GS Yuasa, driving some to the point of failure.  Unfortunately for the industry, these incidents have received an inordinate amount of media attention, leading to lost sales and severe public relations problems (luckily no deaths or severe injuries have been caused by any of the fires).  In other industries, safety breaches can be tolerated.  In the advanced battery space, however, a single fire event can lead to the company’s collapse.

China is still playing catch-up.  While Chinese lithium ion companies have made tremendous gains in the last 3 years in the consumer electronics sector, they are still market laggards in stationary storage.  ATL, Lishen, China BAK, and BYD (the four horsemen of the Chinese lithium ion industry) have all either avoided the global stationary storage market or failed to make a lasting impression with buyers.  Don’t expect this to continue, though.  All four companies have plans to develop their stationary storage businesses in North America and Europe as soon as they feel an investment is warranted.

There’s more than one way to score highly.  The two market Leaders in the Leaderboard, LG Chem and Johnson Controls, both scored much higher than any competitors.  However, they got their scores for very different reasons.  LG Chem bet the house in 2008 and 2009, building large factories on multiple continents and blitzing customers with an all-out marketing push.  The results have put LG Chem into the driver’s seat in the automotive space and made it a major competitor in the stationary space.  Johnson Controls, on the other hand, kept its powder dry.  It invested heavily in basic research into the nickel manganese cobalt chemistry that most industry participants agree will dominate the space in the next 5 years.  The company kept its scientists busy while making relatively small investments on manufacturing capacity.  Now Johnson Controls is in an excellent position to invest in manufacturing even as many of its competitors are struggling to keep factory doors open.


The Cleantech Resource Boom

— May 10, 2013

The United States may be in for another resource boom.  Data from researchers at the University of Wyoming suggests that brines in the Rock Springs Uplift in that state could contain 228,000 tons of lithium.

It’s easy to forget how reliant we are on natural resources, such as lithium, for our clean technologies.  We typically think of natural resources in concert with energy ‑ it’s hard to forget that natural gas, oil, and coal are natural resources since we literally drill and mine them out of the ground.

However, new energy technologies are also reliant on natural resources.  Certain metals are key components in clean energy technologies.

For instance, fuel cells are reliant on platinum and platinum group metals (found primarily in South Africa and Russia).  Lithium ion batteries require lithium (found primarily in China, Bolivia, and perhaps now the United States).  Rare earth metals are used in smartphones, electric vehicles, wind turbines, and oil refining.  China famously – or infamously – instituted an informal ban on exports of rare earth metals.

Blood and Treasure

The reliance on these natural resources is frequently cited as a downside of new energy technologies.  The distribution of these metals is inequitable, and demand for them creates an inherent risk to changing the energy paradigm and adopting new energy technologies.

Why risk a conflict over rare earth metals, when we have the means to keep drilling for gas?

For one thing, we alredy risk conflict daily – and spend piles of money – to develop fossil fuel resources.  In the United States, we’ve had a century and a half to perfect the science and engineering behind finding, exploiting, and delivering petroleum resources.  In contrast, it’s still early days for new energy technologies.  As these metals become more desirable and valuable, more treasure ‑ and, likely, blood ‑ will go toward exploration and production of these elements.

By way of example, in 2011, Total’s exploration budget was $2.1 billion (independent of production).   Petrobras recently announced that it would spend $236 billion over the next 5 years on oil exploration and production.  In 2013, PEMEX, Mexico’s state oil monopoly plans to spend $19.98 billion on exploration and production.  Chevron’s budget for exploration and production in 2013 is $33.03 billion.

The magnitude of these investments far outweighs that for exploitation of lithium, rare earth elements, and other resources required for new energy technologies.  Needless to say, if there’s a run on lithium for EV lithium ion battery packs – it’s likely a forward-thinking miner or two who will put some resources to finding more.


Lithium Ion Batteries Can’t Stand the Heat

— June 22, 2012

Lithium ion batteries are truly fair weather friends – just like people, they fare best in a comfortable climate.  Lately, we at Pike Research have been delving deep into how environmental factors, such as temperature, affect battery performance and the rates at which vehicles are charged or discharged.  Our discussions with automotive companies and battery pack assembly companies have revealed numerous approaches for optimizing performance and extending a battery’s life – comparable to the many ways people dress to beat extreme heat.

According to our research, lithium ion batteries perform optimally, and will last longer, if they are kept at temperatures between -10°C and +30°C.  This range is consistent with findings by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE).

In very cold temperatures, batteries don’t achieve their full rated power until the battery cells warm up.  According to Ford engineers V. Anand Sankaran and Bob Taenaka, this short-term effect has greater implications for battery electric vehicles (BEVs) than for plug-in hybrids (PHEVs).  A PHEV can rely on its gas engine for power during warm up, but BEVs don’t have that other power source.

As the accompanying EERE graphic shows, batteries exposed to hotter average temperatures lose their ability to store energy; the hotter the temperature the faster they lose their storing ability.  So BEV owners in Phoenix will likely be looking to replace their batteries faster than owners living where the thermometer doesn’t often reach 110°F.

To combat the extreme temperature effect and keep batteries within their optimal temperature range, automakers use thermal management systems relying on either air or liquid cooling.  As the EERE data shows, liquid cooling is generally more likely to preserve a battery’s capacity than air cooling, though performance variations will occur depending on how well a battery management system was designed to control temperature.  According to Ford, the liquids used in cooling systems can retain a temperature for a long time, which contributed to Ford’s decision to use liquid cooling on the Ford Focus EV.  Ford has also used air cooling on its hybrid Escape and Fusion, as have Nissan and other BEV manufacturers on their vehicles.

In addition to external heat potentially shortening the usable life of a battery, operating batteries at high charge and discharge rates can have another negative impact.  That is particularly true for fast DC charging a battery pack at a rate of 50 kW for as little as 30 minutes (the expected time to charge a BEV 80%).  If done every day, that would generate enough heat to reduce the battery’s capacity.  BEVs that offer fast charging were designed with this fact in mind, so their battery management systems can force an EV charging system to slow down, thus protecting the batteries well before the pack is fully charged.

The interaction of batteries and fast charging is one of the many EV topics that Pike Research will explore at the Plug-In 2012 conference, the premier North American EV industry event, on July 23, 2012, in San Antonio.  I’ll be representing Pike Research at the conference where Ford and many of the leading companies will be discussing business models, technology challenges, and EV rollout strategies.


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