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GM worker hoisting battery pack for Chevy Volt at Brownstown plant outside of Detroit.
GM worker hoisting battery pack for Chevy Volt EREV at Brownstown plant outside of Detroit.

What Battery Glut?

EV World 'Future in Motion' interview with Oliver Hazimeh

By EV World Audio Production

If you follow EV World, you've seen the headlines. "Electric Car Batteries to Remain Too Expensive." "Battery Production Glut to Cause Industry Shakeout." "Electric Car Market Likely to Remain Small Niche."

Pretty pessimistic projections, no? This is the message being pushed over the last half year or so, as various research groups offer their prognosis on the introduction of plug-in hybrids and battery electric cars in the coming decades.

Then there are the views of the people who actually build the cars and make the batteries, whose attitude towards these gloomy forecasts would seem to echo the sentiment of General McAuliffe at the Battle of the Bugle when he was asked to surrender Bastogne. His famous one word replyt, "Nuts!"

Standing beside the GMs and the Nissans, the LG Chems and EnerDels, is a Michigan-based consulting group called PRTM, the folks who helped Robbie Diamand and the Electrification Coalition put together their Electrification Roadmap to an electric vehicle future. The point man at PRTM in the battery cost wars is Oliver Hazimeh. After months of trying, EV World finally got 30-minutes of his time to talk about his latest response to the "battery glut" study. He had earlier issued a refutation of the "too-expensive-batteries" forecast by a hydrogen fuel cell committee at the National Research Council.

PRTM counter-attacked the "glut" story by stating in its press release that it "believes that the notion of overcapacity is largely unfounded." In fact, it's own research, based on discussions with OEMs and battery manufacturers, is that rather than there being too many batteries, there's a good chance of a 30% shortfall in batteries by 2017. By 2020, they estimate that there could be as much as four times the demand as available capacity, as illustrated by the accompaning chart below.

PRTM Battery Capacity Shortage

According to the company's press release, its assessment is based on a thorough review of the operational dynamics within the market, including the following key aspects:

1. All manufacturers will base future capacity investment on market demand.  While battery companies are making initial investments slightly ahead of the market to optimize cost and scale, future investments will be made only when the market conditions justify such an investment.

2.  Capacity expansions will not take place in one tranche – they will be rolled out in several phases, through 2015 and beyond.  Many companies plan to build large facilities capable of supporting future volume, but initial machinery capex will remain relatively small.

3.  Companies funded through US DOE stimulus may be incented to build ahead of the market, however stimulus-funded investment represents only 1/3rd of planned global capacity expansion – the remaining 2/3rds will remain driven purely by market demand.

4. Previous reports matching market growth to planned capacity were relatively bullish on capacity expansion while being bearish on market growth.  Moreover, large format cells can also be used in utility applications, which are not included in most market growth forecasts.  This combination almost definitely would lead to an overcapacity projection. 

5.  There are only a handful of capable and qualified suppliers of the capital equipment required for a Li-Ion battery manufacturing facility.  PRTM believes that lead-times are currently in the range of 18-30 months, significantly impacting the rate at which capacity can be installed.

EV World's Bill Moore talks with Hazimeh in this exclusive MP3-based "Future In Motion" podcast, which is some 30+ minutes in length. They talk about why Hazimeh thinks battery prices are already much lower than the NRC group states and why instead of the battery glut, we could be looking at -- over the short-term -- a shortage of battery production capacity. To listen to the MP3 podcast, use either of the two players at the right, or down load the 7.11MB file to your computer for playback on your favorite MP3 device.

EVWORLD Future In Motion Podcast

Download MP3 File

Times Article Viewed: 4843
Published: 29-Mar-2010

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