cars21.com: Your company Advanced Automotive Batteries has published the “2010 Plug-In Hybrid and Electric Vehicle Opportunity Report” delivering a critical assessment of the emerging global market for EVs and PHEVs. What are your market projections for the EV and PHEV market until 2020?
M.A.: Currently we see EVs at about 0.5% of total vehicle market and PHEVs at 0.6% to 0.8% of total vehicle market in 2020. EVs have a chance to find niche markets in Europe and China but their prospects in the rest of the world are quite limited. The largest PHEV market will be in the US, particularly California.
cars21.com: Many different estimates are being heard, ranging from 1-4% market penetration of EVs and PHEVs by 2020. On what factors do you base your own market projections?
M.A.: Our Report and market projections are based on face-to-face discussions with the people who are developing the cars and their most critical component: the battery. They are also based on a thorough understanding of Li-Ion battery technology and 20+ years of experience with EVs and EV batteries, including lessons learned from the French and German initiatives in the nineties and from the CARB demonstration project with six car companies in California between 1999 and 2003.
To get a realistic assessment, you have to differentiate between what marketing people (including some CEOs) say at auto shows and what seems to be the level of development and commitment inside the company. You also need to separate visionary statements and targets from actual executable plans. We have the unique good fortune of being in direct contact with the top technologists and business development people at essentially all major car companies and automotive battery developers.
cars21.com: Are there conditions sine qua non to the broad introduction of electric vehicles, one factor that could block all efforts of bringing EVs on the roads?
M.A.: Definitely. If there are significant safety incidents, it will slow down the introduction dramatically, particularly if the safety incidents originate in products from major automakers.
cars21.com: How do you evaluate the concept of battery leasing and battery switching that Renault and Better Place are putting into place?
M.A.: Battery leasing takes the battery-durability risk away from the buyer; it is a wise marketing move, even though it will cost Nissan an arm and a leg. In contrast, I am in full agreement with the vast majority of automakers who have rejected the battery-switching concept - the approach has many drawbacks, including added cost and complexity and the likely reduction of battery and vehicle reliability. I have provided consulting to several of the carmakers on this approach and the overwhelming assessment is that it is a bad idea.
cars21.com: Which governmental initiatives to promote electric mobility do you personally estimate to be the most effective ones? Which country does it right?
M.A.: We have to go back to the basics: what society needs is a continuous reduction in fuel consumption. Vehicle electrification should be assessed as one potential means to that end, but not as the end in itself. From that point of view, most governments, and in particular the US government, have created the wrong incentives and initiatives.
Governments carrying heavy debts will not be able to keep offering large subsidies. The current high subsidies will generate a superficial market that is as likely to shrink as grow five years from now. We need dollar-neutral policies that are sustainable. In the US, this means increasing fuel taxes (directly or indirectly) and using the money to incentivize low-emission, low-fuel-consumption vehicles in proportion to the environmental benefits.
cars21.com: Seen the impressive sums that are invested into battery companies around the world, how do you evaluate the risk of a “battery bubble”?
M.A.: There will be notable overcapacity starting in 2012 - and it is likely to continue for 5 or more years - which we have analyzed in detail in our report. This imminent overcapacity is prompting battery makers to ‘buy’ the business - some are very aggressive in their quotations to carmakers to avoid the risk of running empty factories. In the long term, it is not a healthy situation. We expect that, in the longer term, the industry will consolidate and that only a half a dozen major battery makers and few smaller ones will remain.
cars21.com: Who do you consider the leading players in the battery market in terms of innovation and technological development? Who do you consider the leading players in the battery market in terms of strategic partnerships with OEMs and market weight?
M.A.: Actually the successful players will be the ones able to achieve cost-effective, high-volume, high-throughput manufacturing of a reliable cell. The giant Japanese and Korean manufacturers that have already established high-volume production of Li-Ion cells (for the consumer market) have the lead.
I suspect that the Li-ion industry will end up with a nickel-based cathode and a prismatic cell packed in a metal can. Sanyo, PEVE, Samsung, Hitachi, GS Yuasa and JCS are all going in that direction, and some of them are ahead of the others. From the perspective of volume, AESC and LG Chem have made the biggest investments so far, but I am concerned about the reliability of the laminate-based pouch-cell technology, which they both use. If they meet the automotive reliability requirement, they have a head start in large cell production and will remain notable players.
cars21.com: What kind of developments do you expect in the EV battery market in the short-term, over the next 12 months?
M.A.: We are starting to see cooperation between suppliers and we will later see mergers and takeovers, which is inevitable when there is overcapacity and too many suppliers. The Germans are also leading the effort in cell-size standardization, which will be helpful to all.
cars21.com: What kind of developments would you wish to see?
M.A.: More emphasis on life and safety, less on cost. This is what most (but not all) of the major players are doing. Unfortunately, uninformed governments, consulting and market research groups, the media, and the investment community have the wrong focus. If the industry is not successful in developing safe and reliable batteries with sufficient life, there will be no market, in which case cost does not matter.
M.A.: So far there really is only one sector, the HEV sector; the EV sector exists predominantly in the media. Consequently, the companies that are not too distracted by the hype and will stay focused on viable technologies (such as hybridization at all levels and advanced ICEs such as turbo diesel) with continuous improvement in design and cost will win—as they continue to develop improved mass-market products. We, as many of the most experienced industry players, are quite confident in this assertion and there is a comprehensive discussion of the subject matter and its implications for individual companies in the Report.cars21.com: If you would be asked to formulate a global action plan for a rapid introduction of electric vehicles, what would be your top 3 points on the agenda?
About Advanced Automotive Batteries
Advanced Automotive Batteries is a leading market research company specialized in the electric vehicle field. The company organizes the AABC conferences that have become respected as a venue for the international automotive industry and related sectors to meet and discuss latest energy storage technology progresses and market developments.