Published on May 15th, 2012 | by Christopher DeMorro3
Study: Lithium Overcapacity, Consolidation Coming
After a year and a half of two mainstream electric vehicles hitting the market, I think it is safe to say that sales aren’t panning out how automakers had hoped. High prices, short range, and a down economy have old made electric cars a hard sell. That means all of the electric battery makers out there aren’t going to have the volume they were depending on. Lithium-ion battery overcapacity and company consolidation is coming, and coming soon.
It’s more bad news for the electric car industry. “Overcapacity” and “consolidation” is corporate speak for too much product and not enough customers. Companies will merge or die, which means more jobs lost, feeding more ammo to the enemies of electric vehicles. It also means some government loans might not ever be paid back in full.
The study, done by Roland Berger Strategy Consultants (RBSC) looks at the lithium-ion battery market and sees that oversaturation is inevitable. RBSC is considered one of Europe’s top-three consulting firms, and they pick five companies who they see as coming out on top when the dust settles.
RBSC picks AESC, LG Chem, A123 Systems, Panasonic, and LiMotive as probable winners when the dust settles. For consumers, all of this consolidation will inevitably be a good thing as battery prices plummet, bringing down the price of electric vehicles. This in turn will spur more sales for the few survivors, and hopefully allow the remaining battery companies to survive on their own.
It’s also worth noting which regions RBSC picks as the biggest players. The firm predicts that by 2020, Europe will make up the biggest chunk of lithium-ion battery usage, followed by China. The U.S. will be in a distant third, which at this rate unfortunately sounds about right. Electric vehicles are having a hard time catching on in the States, but Europe seems to have a much stronger demand for gasless vehicles.
Picking a winner in the race for EV batteries isn’t an exact science; A123 Systems just reported a first-quarter loss of $125 million. This time though, I think electric cars and their battery systems are here to stay. The question then is who thrives, and who doesn’t?
Source: Plugin Cars