September 3, 2010

SAE Shanghai Battery Summit 2010: Opportunity Report for EVs and PHEVs.

Chairman Menahem Anderman, President of Advanced Automotive Batteries, kicked off the SAE Battery Summit 2010 in Shanghai, summarizing his recent market report on PHEVs and EVs, explaining market trends for EVs and batteries. He is adamant in that batteries are the pivotal issue in EV deployment.

Dr. Anderman opened the event with a presentation of key findings of the “2010 Plug-In Hybrid and Electric Vehicle Opportunity Report”, published in April 2010. This report delivers a critical assessment of the emerging global market for EVs and PHEVs and for automotive li-ion batteries as the key enabling technology.

The report, based on findings from onsite visits to 20 OEMs, 15 battery manufactures and 6 other stakeholders such as utilities, identified as key challenges for electric vehicles in the short term (2010-16) and assuming low volume production:
  • Battery reliability and safety
  • Range, charging time and charging infrastructure
  • Battery cost and battery life
  • Verification time
  • Production and transition costs
And in the longer term (2020 and beyond) and assuming moderate volume production, key issues to be:
  • Range versus market acceptance and battery size
  • Cost versus price (when subsidies subsides)
  • Charging time & infrastructure
  • Battery life reliability and safety

The basic question is still: “Will mass market customers pay more for a vehicle that does less?”

This question is exacerbated by the fact that users of EVs are likely to drive less - a fact that has been concluded from analysing the driving habits of HEV owners in California. The results showed that they yearly driving habits when accumulated to 10 years would only be were 60,000 miles, which is half of what the average American ICE user is driving.

Presenting these facts, Anderman raised another pertinent question: What would be the business model for EV and battery manufacturers in regards to selling a car that costs more and is likely to be used less?

The costs of batteries

The information collected by talking to the OEMs and battery manufactures shows that the price of a 24-kWh battery for a plant producing 50,000 battery packs a year is in the order of $12,000-$14,000.

“This is not even close to mass market pricing”, Anderman pointed out. Bringing down battery costs is clearly a key factor in the mass marketing of electric vehicles.

Priorities in the development of li-ion batteries are seen in
  • safety (chemistry, cell design, pack design, pack integration, manufacturing quality)
  • reliability (cell design robustness, manufacturing quality, pack design robustness)
  • durability (cell chemistry, cell design, operating temperature, duty cycle)
  • cost volume (manufacturing yields, cell design, pack design)
  • performance (cell chemistry, cell design, pack design)

In Anderman's view, the reliability of batteries is the single biggest risk in the deployment of EVs. Government subsidies will not suffice to alleviate this risk, which does not only refer to performance and durability, but also to crash protection and overcharge protection. Safety is an absolute necessity.

Market prospects

In the U.S., federal and state incentives strongly support EVs and PHEVs, which are, however, likely to be used as 2nd cars only. If oil prices in the U.S. are kept as low as $3-$4 per gallon, there is no room for an EV mass market.

In Europe, there is strong political will to push electric mobility. Fuel is more expensive, distances are shorter and more traffic is concentrated in the cities. Europeans furthermore drive generally smaller cars and automakers have interest to invest in alternative drive technologies to reduce their average fleet emissions. Also, the high percentage of renewables in the European energy mix gives the move to cleaner transport a more holistic approach.

In Japan, city cars make sense in limited markets but are still very costly. Despite the Japanese government investments in infrastructure, charging is a challenge. The promotion of EVs is strongly driven by Nissan who wants to outdo Toyota and Honda who so far monopolize automotive environmental leadership in Japan with their hybrids.

In China, the government seems to have adopted electric mobility as the technology to drive sustainable growth. The threshold for minimum reliability is lower than in the Western countries and Japan, but reliability and durability are critical for mass market and China's low-cost manufacturing might be less of an asset in this respect. Home charging furthermore seems to be more difficult in China.


The report predicts 1.8 million annual units of HEVs by 2015 (3% of market) and li-ion batteries to secure 35% of share in the HEV market. This translates into a $900 million business by 2015.

PHEVs and EVs will start entering the market in 2011, but volumes will be limited to a few thousand units per year through 2015, with the eventual exception of Nissan who might be able to sell higher volumes.

The growth pattern after 2015 will depend primarily on battery reliability and government policies but the market share for both PHEVs and EVs is likely to stay below 1% through 2020. However, even if the market share of EVs only reaches 0.5%, that of PHEVs 0.6% and 4% for li-Ion-powered HEVs, the automotive li-Ion battery market will exceed $8 billion by 2020.

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 in the international automotive industry and related sectors, forums to meet and discuss latest energy storage technology progresses and market developments.