Turn the clock back a couple of years and few of us even knew of the potential of lithium-ion batteries as power sources for electric vehicles – yet now the market is heading towards overcapacity.
A new report from Roland Berger Strategy Consultants outlines that investments in lithium-ion manufacturing will result in overcapacity between 2014 and 2017 relative to the demand generated by growth. Even though the share of electric powertrains will surge largely due to a dramatic fall in battery costs over the next 10 years, Roland Berger predicts that only six-eight global battery manufacturers will survive over the next five-seven years.
The study suggests that in an aggressive scenario, plug-in hybrid electric vehicles and battery electric vehicles will account for no more than 1.2million vehicles in key regions by 2015, while lithium-ion battery demand will account for 0.82million “electric vehicle equivalents”, while installed capacities will be more than 2.6million. It expects that demand for lithium-ion batteries will surge until 2020 but three million electric vehicle equivalents won’t be reached until 2018 at the earliest.
As such, planned investments, particularly in the US and Japan, will result in significant overcapacity. It is expected that in 2015 capacity will reach 200 per cent of demand. In addition it states that high levels of research and development will be needed if costs are to fall.
The study suggests that Western governments should act now to avoid losing future technologies to Asia and investors should be aware of the risks.
