Going green has been the buzzword in the automotive market; electric vehicles (EV) and hybrid electric vehicles (HEV) are results of the green mantra. A large number of battery chemistries is being developed to power the EV and HEV such as lead acid, NiMH, zinc air and lithium, and so on. Lithium, with its high energy density, high energy capacity, and higher operating voltage outruns the rest of the pack as the battery of choice for EV. However, lithium batteries powering HEVs are a good number of? years away to replace NiMH batteries. Lithium batteries have invigorated the perception of consumers toward EV, who associated them to slow and unattractive machines. For example, the Tesla Roadster, based on the Lotus Elise powered by 6831 lithium ion cells with 248 hp output, is one mean machine sought by speedsters.

Existing battery technologies do not offer driving experience similar to that of vehicles powered by IC engines. Government initiatives to speed up the research into HEV development, in the recent economic stimulus plan a sum of $2.4 billion has been allocated and will be granted by Department Of Energy toward development of plug-in HEV development. Besides, owners of EV and HEV are likely to get benefits such as road tax exemption, parking spaces exemption from congestion charges.

Lithium batteries have been widely used in consumer applications such as mobile phones, radio-controlled toys, cameras, and so on. These batteries offer improved performance for EV and HEV, offering a complete makeover to the automotive industry. Several cathode and anode chemistries exist for lithium batteries such as lithium manganese, lithium titaniate, lithium phosphate, and so on. Each of these chemistries differs by its characteristics such as energy, power, safety, lifecycle, and cost. The above mentioned chemistries are identical and have a trade-off among the five characteristics. Currently, HEV are powered by either lead acid or NiMh batteries such as the Priuses, Civic, and EV such as Tesla Roadster and Lightning GT are powered by lithium batteries.

All the above advantages are available for a cost, which is around $1,000 per kilowatt hour at present, and 30 percent of which is toward the chemicals used in the production of the cell. Manufacturing cost of the cell and the assembly of the battery modules account for around 40 to 50 percent of the total cost. Currently, the production volume of EV is very less for the battery prices to come down. However, with the increase in cash flowing from the United States toward greener vehicles, the global market will witness a surge in EV powered by lithium from 2010, and around late 2012 or early 2013, HEV powered by lithium will enter the market.

Lithium battery suppliers from Japan and South Korea have the technical know-how with experience derived from the consumer electronics industry. AESC, LG Chem, Lithium Energy Japan, Panasonic EV Energy are some of the large scale battery manufacturers who are focusing toward development and production of lithium manganese cells for EV and HEV. Lithium phosphates are widely used by North American and European companies such as A123 Systems, Valence and LiFeBatt. Key trend is the involvement of leading OEMs such as Nissan, Mitsubishi, and Daimler through strategic joint ventures with battery manufacturers and electronics providers to develop complete battery modules.

The chart below provides a snapshot of the key players in the EV market with strategic partnerships

Chart 1
Who Supplies Whom and Key Joint Ventures among the Key Industry Participants in the Automotive EV and HEV Market

                                                                                                  Source: Frost & Sullivan

Dynamic and Growing Market in a Chaotic Way

The lithium batteries market is very dynamic and fragmented in nature, with several small players holding key roles in pilot projects. Lack of standardization of batteries has given rise to vehicles with a multitude of energy capacities and batteries with varying capacities (Ah ratings) for EV. For example, AESC offers capacity rating of 13 Ah and is working on 21 Ah cells, and LEJ offers 50 Ah cells. In addition, EV architectures are not standardized to a fixed operating voltage and the absence of any regulatory body to govern and mandate such standardizations leaves the market open?. Eventually, lack of standardization would lead pricing fluctuations in the future.

Chart 2
Factors Influencing the Pricing of Automotive Lithium Batteries for EV and HEV

                                                                         Source: Frost & Sullivan

So What

Lithium batteries have offered a fresh lease of life EV and going green has never been so much fun. Pricing of lithium batteries currently is hazy, and once the actual vehicles start rolling out on the roads the mist will clear. All said and done, it is sure that the lithium batteries are here to stay for EV and HEV. Sheer number of ongoing research activities such as nano fabrics for cathode material by South Korean universities and the likes of MIT researchers, who have developed a strategy for using genetically engineered multifunctional viruses to design cathode materials for high-power lithium-ion batteries, are proof enough that lithium batteries will be a long time contender and not a stop gap arrangement. Some questions still remain unanswered, which chemistry will lead the market? Will there be localized manufacturer of these batteries in North America and Europe? Which other industries are likely to be benefited or hold market potential due to the rise of EV and HEV?

These questions and further analysis on the value chain within the lithium batteries and second life opportunities focusing on the revenue potential of the market and growth opportunities for battery manufacturers, cell manufacturers, and battery electronics providers are the focus of a new Frost & Sullivan study on the “Global Market for Battery Technologies and Management Systems for Hybrid and Electric Vehicles”. If you are interested in participating in this upcoming study, or would like to order a copy, please contact Roshan Gowri Devadoss on rdevadoss@frost.com.