Industry Market Trends

Battery Study Maps Out Opportunities, Challenges for Manufacturers & Suppliers

Jan 24, 2013

A better understanding of lithium ion battery supply chains could help the struggling market. Credit: Argonne National Laboratory. Credit: Argonne National Laboratory.

Lithium ion batteries are used in a variety of applications, from consumer electronics, medical and industrial power storage, and autos. The sudden and rapid push for hybrid cars and electric vehicles caused a similar surge in research and development of more powerful and efficient lithium ion batteries.

Unfortunately, this rush also led to a fragmented and inflated industry. Numerous innovations are happening throughout the supply chain, but the industry is too disjointed to see opportunities for collaboration and growth. That's where NextEnergy comes in. The Detroit, Mich.-based non-profit group set out at the end of 2011 to get a better understanding of the size, scope, and other dynamics of the lithium ion supply chain. 

Next Energy's lithium ion battery study has been divided into two phases, the first of which concluded in the fall of 2012. Phase one was a deep examination of lithium ion battery cell supply chains, with particular focus on select components used in battery cell manufacturing. According to Kelly Jezierski, program manager for NextEnergy, phase one included value chain mapping of the entire battery cell supply chain. A major goal was to identify gaps, weaknesses, and opportunities that suppliers could fill.

On Nov. 13, 2012, Dan Radomski, NextEnergy's vice president of new market services, presented preliminary findings at The Battery Show in Novi, Mich. The most significant finding was that the lithium ion battery market is suffering from a gross overcapacity. The study and other research indicates a 300 percent overcapacity, although Jezierski asserted that anecdotal reports place the bloating at anywhere from 700 percent to 1,000 percent.

Other challenges revealed by the phase one study include:

  • Cell materials supply chains are dominated by Asian companies, including suppliers of assembly equipment;
  • Battery manufacturers are suffering from a need for better moisture management techniques in the assembly process;
  • Advanced recycling technologies, such as laser processing to recover key materials, are in high demand and short supply; and
  • Manufacturers and component suppliers are seeking alternatives to clean room and dry room operations.

The biggest opportunity for lithium ion battery manufacturers is in micro-hybrid and mild hybrid vehicles. A micro-hybrid runs a combustion engine, but also employs a battery-powered mechanism that allows the engine to be turned off when the car is idle or braking. Forbes reports that 5 million micro hybrids were sold worldwide in 2011, though none in the U.S. The Street estimates that a basic micro hybrid system would cost a consumer about $300 more but save $80 annually in gas.

A mild hybrid goes one step further by assisting the engine during acceleration. NextEnergy estimates that 3 million units of micro and mild hybrid vehicles will be sold in the U.S. in 2015. Approximately 500,000 of those will use lithium ion batteries.

Micro hybrid systems like the one included in the Volkswagen Passat BlueMotion represents a huge opportunity for lithium ion battery makers. Credit: Volkswagen. Micro hybrid systems like the one included in the Volkswagen Passat BlueMotion represents a huge opportunity for lithium ion battery makers. Credit: Volkswagen.

For material suppliers, phase one of the study shows a potential demand for 167,000 units of electrolyte shipping containers by 2015, representing a $500 million market. The next biggest opportunity would be anode materials, valued at $350 million, and active cathode materials, which could reach $250 million.

The second phase of the study, going on now, is focused on battery packs. "We want to see what the process looks like for putting together a battery pack," Jezierski explained. The value supply chain map for cells developed from phase one has nearly 60 steps. But for battery packs, it is much more complicated. She said, "Because you have all these different types of vehicles, you can have different configurations. You can have a pouch, stacked, canned, jelly-rolled, etc.; plus different materials. That gets a lot more convoluted."

In addition to mapping the pack assembly process, phase two is designed to identify the major players are in pack assembly, discover opportunities for vertical integration of multiple steps, and to help identify and connect companies who are performing innovative and novel work in pack integration.

NextEnergy is also hoping to find new and innovative markets for lithium ion battery manufacturers. "Domestic OEMs have too much invested to turn back now," Jezierski said. "Electric vehicles not selling like we initially thought doesn't mean the industry is failing like some might have you believe. It makes sense that there will be a steady and slower uptake than what was anticipated originally, especially given the fact that gas prices fluctuate, as well as the state of the economy overall."

NextEnergy is hoping to hear from suppliers at each stage in the pack assembly process, including manufacturers of:

  • Active Cathode Materials (i.e. nanophosphates/silicates, lithium)
  • Iron phosphate, NCA, etc.
  • Binders (PVDF, SBR or aqeous-based)
  • C-Black/natural graphite graphene/anode materials
  • Normal methyl-2-pyrollidone (NMP) solvent
  • Carbonates (EC, DMC, etc.)
  • LiPF6 electrolyte salts
  • Tabs (current collectors and connectors), including aluminum, nickel, and copper
  • Polypropylene or polyethylene (or other novel) separators
  • Aluminum or steel cans, pouches and other packaging (covers/caps)
  • Electrolyte additives
  • Polymer precursors
  • Electrical components (buss bars, chipsets for battery management systems, etc.)
  • Valves and fittings for electrolyte shipping containers
  • Thermal management systems
  • Cell testing and grading systems
  • Pack assembly integrators
  • Recyclers (Lithium ion and other battery systems)
  • Other energy storage systems - next-generation systems (flow
  • batteries, etc), ultracap-hybrid systems, AGM, etc

NextEnergy's overall mission is to help develop and commercialize energy technologies, build and disseminate critical market intelligence, and work with federal agencies on energy strategies, funding priorities, and advise on relevant programs. The organization works with the U.S. Dept. of Energy, U.S. Dept. of Commerce, and local and state groups like the MEDC (Michigan Economic Development Corp.). NextEnergy also collaborates with local and national businesses to build relationships and cultivate partnerships that foster innovation, efficiency, and economic growth.

The lithium ion battery study is funded by a $1.2 million award from the Commerce Dept.'s Economic Development Authority. NextEnergy is collaborating on the research with MEDC; Michigan Manufacturing Technology Center (MMTC); the Center for Automotive Research in Ann Arbor, Mich.; Automation Alley in Detroit; and the Corporation for a Skilled Workforce.

Businesses that would like more information about the study findings or other NextEnergy projects contact Kelly Jezierski at 313-268-1807. In addition, companies wishing to participate in the survey can do so here.  The study will run through fall of this year.