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.
Tags: Advanced Batteries, Electric Vehicles, Energy Storage, lithium ion batteries, Smart Energy Program
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