Battery Prices May Drop 19 to 25 Percent in 2010, Fueled By Korean-Japanese Price War

· · 4 years ago

While many of us wait for the competition between plug-in car makers to heat up with the introduction of the Nissan LEAF and Chevrolet Volt later this year, the battle to be the king of the lithium-ion battery market is already in full swing.

South Korean and Japanese battery suppliers account for 75% of the world's production of lithium-ion batteries, with names like Panasonic, Samsung, and LG dominating the arena. In preparation for the arrival of mass-market EVs—and trying to stake their respective claims as the go-to supplier for lithium-ion battery cells—battery makers have built out their capacity rapidly, and, as a result, are now making too many battery cells for the demand that currently exists.

The looming glut has forced the major players to plan steep price cuts for 2010—resulting in price drops of between 19 and 25 percent, according to some estimates.

"Battery makers will probably go through a tough time with falling prices," said Mitsushige Akino at Ichiyoshi Investment Management Co., in a Bloomberg article. "The business may become lucrative only for a couple of companies with dominant market share. Others may never be able to make money."

Even with the risk associated with building out so quickly, the companies seem hell bent on risking it all to become the major players in what is expected to be a $30 billion industry by 2015.

Earlier this year, Deutsche Bank estimates had battery prices declining 50% by 2015, but if we're seeing prices decline 19-25% by the time 2010 comes to a close, it seems to me that 50% by 2015 might be a conservative guide. Sure, you could say that the 19-25% drop (if it comes to pass) is a temporary hiccup to account for a dramatic oversupply and that it will eventually come back up, but even the major players don't think this is likely to happen soon.

“We anticipate the harsh price competition with South Korean makers will continue,” said Akira Kadota, a Panasonic spokesman, in the Bloomberg report. “We are reviewing our production process to strengthen our cost competitiveness so that we can win the battle.”

Source: Bloomberg

Comments

· Anonymous (not verified) · 4 years ago

Very good news!!!!

· · 4 years ago

Obviously we all want battery prices to be lower -- but not if price wars put well-run ambitious companies out of business. Better ways to get to lower prices are more R&D and higher demand.

And as it turns out, the best way to vastly increase volumes would come from what we at CalCars.org call "The big Fix" -- conversion of millions of existing gas-guzzlers into safe, affordable, warrantied EVs and PHEVs. (See http://www.calcars.org/ice-conversions.html to prove there are solutions, a business case, and companies getting started on this new industry.)

As a non-profit advocacy and rechnologyndemonstration group, we're looking forward to the day when on or more battery companies recognizes this opportunity and we can work together to get the tax incentives in place to accelerate this

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