As large Asian corporations rush into the burgeoning electrified automotive market, analysts forecast excessive battery supply, and prices dropping to one-third of today’s rates by 2020.
In only the next two years, according to a report yesterday by Bloomberg, companies such as LG Chem and Johnson Controls will be able to double expected demand by automakers.
This was determined by estimating 18 gigawatts needed for 839,000 projected plug-in vehicles built by 2013, and comparing it to a projected available battery capacity of 35 gigawatts.
As a result, smaller battery making companies competing today may be forced out of business, Bloomberg said.
“The larger, mainly Asian, conglomerates can cope with limited demand and compete by lowering prices but smaller pure-play battery makers will be left vying for an increasingly limited number of supply contracts,” said Ali Izadi-Najafabadi, an energy technologies analyst at New Energy Finance.
The report said battery prices may also decline to $350 per kilowatt-hour in 2020 from $800 to $1,000 today.
The Asian battery makers likely to dominate in coming years are South Korea’s largest chemicals maker, LG Chem, SK Innovation Co. of Seoul, Tokyo’s Toshiba Corp., and, a joint venture between Samsung Electronics Co. and Robert Bosch GmbH, called SB LiMotive.
The U.S. market and auto companies are pushing demand, and Bloomberg said by 2015 domestic capacity could be as high as 40 percent of the world’s total.
This would be a 2-percent rise before certain companies received $2.4 billion in Recovery Act stimulus funds, according to the U.S. Energy Department.
According to New Energy Finance analyst Shu Sun, the fund-receiving company expected to struggle the most is Ener1 Inc. (HEV)’s EnerDel unit.
This company received a grant of $118.5 million for a plant in Indianapolis, but could have its hands full competing against larger companies.
The largest U.S. government grant under the program – $299.2 million – has gone to Johnson Controls for a factory in Holland, Mich. Also A123 Systems (AONE) of Walthham, Mass. received $249.1 million for plant at Romulus and Brownstown in the state.
Thanks largely to GM’s getting the ball rolling, LG Chem is looking like the kingpin as the shakeout begins.
In April the company said it would spend 2 trillion won ($1.8 billion) by 2013 to expand battery production for electric cars.
Additional credit goes to Nissan Motor Co., which plans to make 500,000 batteries a year by 2015 through its Automotive Energy Supply Corp. venture.
With an eye toward world leadership, Renault-Nissan’s CEO Carlos Ghosn recently revealed that company to date has spent $5.6 billion on electrified vehicles, with more spending to follow.
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