Facing a looming energy crisis, the battle to produce lithium ion batteries to power hybrid and battery cars is heating up. Germany’s Robert Bosch and Samsung of South Korea recently formed a joint venture SB LiMotive Co to compete with the likes of BorgWarner, Johnson Controls, TRW and Continental. By Andrew Cave and Karryn Miller.
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If bullish forecasts such as the Spanish government’s goal that Spain could have one million electric cars by 2014 are to be believed (although many experts have reacted to this particular claim with undisguised scepticism) the prize for taking market leadership will be lucrative.
Demand for such vehicles is rising with US sales of hybrid electric cars increasing by 39% in 2007, when 13 hybrid electric models were available – a number expected to grow to at least 75 by 2011.
Some forecasters predict that hybrid electric and electric vehicles will represent 50% of Western European car sales by 2015 and up to 65% by 2020, while scientists at the University of Applied Sciences in Gelsenkirchen, Germany, reckon that all passenger cars sold in Europe will be electric or hybrid by 2025.
Deutsche Bank said in a research note in June that it found electric vehicles “destined for much more growth than is widely perceived,” adding that makers of lithium ion batteries stand to be “even bigger beneficiaries” of this trend than motor manufacturers.
Deutsche believes the market for large-format lithium ion batteries market could grow from US$7 billion to up to US$15 billion by 2015, while the automotive market for lithium ion batteries could reach between US$30 billion-US$40 billion by 2020.
Bosch predicts 650,000 vehicles with hybrid drives will be registered worldwide this year, with hybrid and electric vehicles accounting for 2.7 million of the 91 million new vehicles produced in 2015.
“The combustion engine will be the dominant drive form for the next 20 years,” said Wolf-Henning Scheider, president of Bosch’s gasoline systems division.
“In the future, however, people’s individual mobility requirements will determine which drive they choose.”
Indeed, mileage restrictions – most batteries will need recharging every 100-200 km – are a limiting factor and some experts believe the lithium-ion projections are wildly overblown.
“There are too many people hyping electric vehicles,” said Jamie Borwick, chairman of UK, electric-powered commercial vehicles group Modec.
“This is going to be an enormous market. Electric vehicles will come back, first trucks and then cars. There’s inevitability about it but I don’t believe Spain will have 1 million electric cars by 2014.”
He still predicts that 50% of the European car market will be plug-in or hybrid electric by 2023 but says difficulties include battery size, with some of the new hybrid and electric vehicles needing batteries weighing up to 100kg. Modec’s commercial vehicle batteries are even larger and need to be leased separately.
Another barrier is population density, especially in cities. “You can’t expect people to lay cables across the street at night to charge up their vehicles,” said Borwick. “You need a garage or at least a drive.
Robin Dickeson, manager for commercial vehicle affairs at the Society of Motor Manufacturers and Traders (SMMT) in the UK, highlights the strain that electric vehicles could place on electricity networks.
He said Lotus made modifications after worrying that if there was an overnight power cut in an area where 100 of its Tesla electric sports cars were plugged into cables, the resumption of charging on power restoration could cause power outages.
“It shows how fragile the technology is at the moment,” said Dickeson. “It’s not the batteries themselves that are the problem. Most of the problems are to do with battery management.”
Other issues concern battery recycling and the legislative and fiscal environment. The Emergency Economic Stabilization Act in the US provides a tax credit for the purchase of plug-in-electric drive vehicles, calculated against the alternative minimum tax.
Plug-in electric drive vehicles with batteries of at least 4 kilowatt/hour will qualify for a US$2,500 tax credit, with an additional US$417 provided for each additional kw/h, up to US$7,500 for vehicles up to 10,000 lbs; heavier vehicles will qualify for credits of up to US$15,000.
Brian Wynne, president of the Electric Drive Transportation Association, a US trade association promoting battery, hybrid, plug-in and fuel cell electric drive technologies, said that in passing the Act in early October this year “Congress provided the paving stones for a comprehensive electric drive transportation policy.”
However, the credits scheme will begin to phase out after 250,000 qualifying vehicles are sold in the US, expiring at the end of 2014.
“The degree to which governments will support electric vehicles is a concern,” said Dickeson, “because people are nervous that these sorts of subsidy schemes can be turned off as easily as they are turned on.”
The new generation of battery-makers also may not have the market all to themselves. Car-maker Nissan, for example, is to begin mass production of lithium ion batteries in co-operation with Japanese electronics group.
Bosch is undaunted, arguing that technical barriers of entry mean it has an advantage over motor manufacturer players in the batteries market.
“This is not a sprint,” said Scheider, “but a marathon or even a triathlon requiring advances in three disciplines – internal combustion engines, hybrid drives and all-electric drives.
“Our new SB LiMotive joint venture brings together expertise in lithium in technology, systems competence in the automotive industry, experience in large-scale series production and independence from original equipment manufacturers – a unique combination of skills that none of our competitors can match.”
Despite all this, few observers doubt the way that the industry is going. As General James Jones, president and chief executive of the US Chamber Institute for 21st Century Energy, has stated: “The race is on as to who solves the battery problem but there’s no question in my mind that it’s quite possible that if you were to buy a car tomorrow and if you keep it for
five or six years, it may be the last gasoline-powered car that you will buy.”
In Asia, the trend is also moving towards batteries, although in much of the region, gasoline is still king. “The South Korean market is at a very nascent stage in terms of the hybrid market compared to the European Union and North America,” said research firm Frost & Sullivan’s automotive & transportation industry manager, Vijayendra Rao: “Presently [South] Korea has 780 test fleets and that is likely to increase to around 3,500 vehicle by 2010. Forecasts suggest that South Korea is expected to have around 10,000 hybrid vehicle sales per year from 2013.”
Neighbours China and Japan are also broadening their hybrid offering. “Japan is the biggest market for hybrid and electric vehicles in Asia Pacific region,” said Mr Rao. “The hybrid vehicle market size of Japan in 2007 was around 350,000-360,000 vehicles and forecasts suggest market size to be around 8,000 to 10,000 electric vehicles (sales per year) in Japan in 2010. “China is a little slower off the mark with forecasts suggesting the hybrid market to be 13,000 vehicles by 2013.
“China has just entered the hybrid market compared to Japan. Hybrids have been selling in Japan since 1997,” said Mr Rao. “Also, the incentives from the Chinese government are not attractive to mass market hybrid vehicles in China. Electric vehicles are likely to be more popular in China compared to hybrid vehicles.”
With these figures the future looks bright for the SB LiMotive hybrid vehicle battery joint venture between Bosch and Samsung.
But despite predicted growth there are also still a few concerns surrounding lithium ion batteries (the type SB LiMotive will produce) in Asia. “High costs have been the factor holding back their use in mass production but, hopefully, economy of scale will make them viable,” said Tianshu Xin, Global Insight’s director of global technical research in the automotive market division. Mr Rao added: “At higher temperatures, lithium-ion batteries are likely to catch fire due to the property of the metal.”
With lithium ion, Mr Rao cited benefits of a higher power density (10%-15% more than Nickel Metal Hydride batteries (NiMH) and higher energy density (around 20% more than NiMH) as key reasons for the technology’s viability. Globally he predicts the market to evolve by 2010. “Chevrolet Volt is likely to be equipped with lithium-ion batteries. A range of other vehicles from GM, Chrysler, BMW, and Mercedes, will also be equipped with lithium-ion batteries post 2010. It will take at least another five years for mass commercialization of these batteries in the market.”
As automakers are eager to move forward with hybrid and electric vehicles SB LiMotive is a promising choice. To begin, Hyundai and Kia will be the main customers for SB LiMotive. “Hyundai plan to launch a range of hybrid vehicles in the next three to five years for both domestic and export markets,” explained Mr Xin. The Korea Herald (June 17, 2008) reported that SB LiMotive aims to grab a 30% share of the global battery market for hybrid cars by 2030.
As the market grows one of the big questions is whether automakers will produce their own batteries or choose an independent supplier. “European and US automakers still use battery suppliers for their vehicles while Japanese automakers are establishing joint ventures with battery companies,” said Mr Xin. Therefore, it really depends on each company’s strength and its strategies in the area.”
