Among the 920 attendees at the 10th Advanced Automobile Battery & EC Capacitor Conference concluded today in Orlando there was a wide diversity of opinion concerning the best approach to Li-Ion technology. But there was unanimity in the view that Dr. Menahem Anderman puts on a very good conference and that he has a sobering outlook for the Li-Ion automotive market.
Dr. Anderman expects that the market for EV’s and PHEV’s will remain distinctly limited for the foreseeable future. He expects that PHEV and EV volumes for all automakers, with the possible exception of Nissan, will not exceed a few thousand units through 2015 and will constitute less than 1% of the market through 2020.
A small silver lining may be found in the HEV market. Although HEV applications require substantially less energy storage than EV/PHEV applications, Dr. Anderman predicts that by 2015 Li-Ion batteries may capture up to 35% of that market, which is expected to grow robustly in the United States through 2020. Mary Ann Wright of JCI-Saft described a two-pronged strategy for Li-Ion battery makers, with one prong aimed at the emerging EV/PHEV market and the other at the more established HEV. Ms. Wright’s presentation left little doubt that JCI-Saft intends to concentrate primarily on the second prong. JCI-Saft’s decision may be a bell weather for the industry.
The upshot of the presentations is that the near term market for automotive Li-Ion batteries may turn out to be much smaller than many had hoped. At least one presenter speculated that installed Li-Ion battery production capacity may soon be 200% of demand. The problem lies in the Li-Ion batteries themselves, specifically their deficiencies in price, range and reliability (all three problems being somewhat related).
Properly understood, Dr. Anderman has raised a storm warning. And we could be in for quite a storm. American taxpayers have just spent the better part of $2.4 billion to purchase Li-Ion battery manufacturing capacity. Millions more are being spent at the state and federal levels to subsidize the purchase of EV’s and PHEV’s by what, if Dr. Anderman’s forecast proves correct, will be mostly wealthy, early adopter consumers. Television pictures of expensive new factories sitting idle and Tesla Roadsters in Beverly Hills showrooms will not play well with the average American voter during what promises to be an upcoming period of relative austerity.
The time to deal with this approaching storm is now, not after it hits. Crossing fingers and hoping to be one of the survivors is not a strategy. It is a prescription for industry-wide disaster.
Three things must happen to prepare for the storm. First, we must be honest about the problems with Li- Ion technology and proactive in identifying the solutions. Dr. Anderman and others at the AABC Conference provided some much needed honesty this past week. The problems are not difficult to identify. But we must now also identify the solutions, or at least how we are going to get to them. The industry needs a roadmap for Li-Ion technology, so that when the general public and their elected representatives become aware of the problems in the government funded Li-Ion battery industry (which is likely to happen suddenly, dramatically and in a political context), the industry will have a specific, identified solution to point to. That solution, or roadmap, must explain exactly how the price, range and reliability problems are going to be solved, exactly when those solutions are expected to be found, and exactly who is working on what solutions.
As many know, for the past several months, NAATBatt has been trying to organize a roadmap project for Li-Ion battery technology. The going has been slow, as many in the industry continue to resist participation in a cooperative project for fear of compromising intellectual property or competitive advantage. These are legitimate concerns, and cause for structuring a roadmap project appropriately. But they must not be an excuse for inaction.
Second, we must redouble efforts to find new markets for Li-Ion production capacity so that that capacity, and the Li-Ion expertise developing with it, will not be lost if short term sales of advanced automotive batteries disappoint. One obvious new market is grid-level storage technology. Development of gridlevel storage, to support renewable energy and smart grid applications, is largely dependent upon legislation and regulatory changes. Some helpful initiatives, such as The STORAGE Act, have already been proposed. But as those of you who listened to Dave Berick, Senator Wyden’s senior energy adviser, at a recent NAATBatt Webinar already know, the battery industry has been AWOL in supporting those initiatives and their prospects are now questionable. Again, it is time for industry to work together through NAATBatt and get serious about addressing its problems.
Third and finally, the advanced battery industry must engage more heavily with the electric utility industry, which is a natural long term business and political ally. We must explore new business models and find new ways that energy storage can become a good business opportunity for electric utilities, not just the pointed end of a mandate. One possible model might even see utilities, rather than automobile companies, become the ultimate customers of advanced battery companies. If such a model could be developed and utilities bought into it, Dr. Anderman’s pessimism might still yet prove unfounded.
The storm warnings are up, but there is still time to seek shelter. Whether the advanced battery industry does what it needs to do over the next several months to get ready will determine in large part how bad the storm will be.
Written by James J. Greenberger