http://www.bloomberg.com/news/2010-...ice-war-to-escalate-on-glut-analysts-say.html
Sell your A123 and BYD shares(if you have any) while you can.
Battery war is to be fought between Japanese and Korean vendors, others(American and Chinese) do not need to enter the scene as there is no room for them.Panasonic, Samsung SDI Battery Price War to Escalate on Glut, Analysts Say
By Mariko Yasu and Maki Shiraki - Aug 25, 2010 7:27 PM GMT-0400
Panasonic Corp. and Samsung SDI Co., the world’s two largest makers of rechargeable batteries, may deepen price cuts this year as overproduction worsens a glut in the industry, analysts said.
Lithium-ion battery prices may tumble 19 percent in 2010, the biggest drop in five years, said Hideo Take****a, an analyst at the Institute of Information Technology Ltd. in Tokyo. Shiro Mikoshiba, an analyst at Nomura Holdings Inc., said the worsening oversupply may push prices down as much as 25 percent.
The price drops highlight how battery makers in Japan and South Korea, accounting for 75 percent of global production, may be sacrificing profit for market share as automobiles with no gas tanks are projected to help triple sales of lithium-ion cells in six years. Cheaper batteries may lead to lower costs at carmakers such as Nissan Motor Co., whose all-electric $32,780 Leaf sedan is scheduled to go on sale in November.
“Battery makers will probably go through a tough time with falling prices,” said Akino Mitsushige at Ichiyoshi Investment Management Co., who oversees about $450 million in assets in Tokyo. “The business may become lucrative only for a couple of companies with dominant market share. Others may never be able to make money.”
South Korean battery makers including Samsung and LG Chem Ltd. may better cope with lower prices than Japanese rivals because they purchase materials more cheaply from China and have faster production, said Take****a. The weaker won against the yen also makes Korean products more competitive, he said.
Winning the Battle
“We anticipate the harsh price competition with South Korean makers will continue,” said Akira Kadota, a spokesman at Osaka-based Panasonic. “We are reviewing our production process to strengthen our cost competitiveness so that we can win the battle.”
Panasonic, which vaulted atop the rechargeable-battery industry with its purchase of Sanyo Electric Co., has fallen 21 percent in Tokyo trading this year. Samsung SDI, the battery- making unit of South Korea’s largest industrial group, has gained 23 percent in Seoul in 2010.
Samsung SDI, based in Yongin, South Korea, will likely overtake Panasonic’s Sanyo as the world’s top producer of lithium-ion batteries this year, according to estimates at Information Technology. Samsung SDI spokesman Seo Hae Soo declined to comment on the outlook for prices.
LG Chem, the third-largest maker of rechargeable batteries, expects price drops to persist, spokesman Terry Lee said. Falling prices of the product won’t have a serious impact on the company’s profit because LG Chem is buying lithium at competitive prices, he said.
$30 Billion Industry
At stake is leadership in an industry that Panasonic estimates will grow to 2.5 trillion yen ($30 billion) by 2015 from 926 billion yen last year. Shipments of lithium-ion batteries will probably increase 31 percent in 2010, after a 2 percent decline last year, according to Information Technology.
While lithium-ion cells are mainly used to power laptop computers and mobile phones, electric vehicles may fuel most of the growth. Sales of batteries in electric, hybrid and plug-in hybrid cars will increase to 1.7 trillion yen in 2020 from almost zero in 2009, according to March estimates at Daiwa Securities Group Inc.
Panasonic, which has pledged to invest 300 billion yen in energy-related products over three years, started production of lithium-ion cells at a factory in Osaka in April, aiming to double its annual production to 600 million units. The company aims to triple sales of lithium-ion cells by March 2016, Naoto Noguchi, president of Panasonic’s battery unit, said in an interview this month.
Difficult Environment
Sony Corp. is spending 40 billion yen to boost its monthly production capacity this year 80 percent from 2008. The company built a battery plant north of Tokyo in March and is adding facilities in Singapore and China.
Sony anticipates a difficult environment for the battery business because of competition and price declines, said Tomio Takizawa, a spokesman at the Tokyo-based electronics maker.
Samsung Group, whose units include SDI and top television- maker Samsung Electronics Co., said in May it plans to invest 5.4 trillion won ($4.5 billion) on batteries for electric vehicles by 2020.
“It’s a battle between the South Korean and Japanese makers,” said Take****a. “They’re playing a game of endurance that’s eroding profitability.”
Sell your A123 and BYD shares(if you have any) while you can.