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Summary:

As the automotive industry transitions to electric vehicles, companies developing lithium-ion battery technology will be in the driver’s seat – and they’ll be carrying Chinese driver’s licenses. Li-ion technology is quickly replacing nickel-metal hydride batteries in hybrid electric vehicles, and the advanced battery market for emerging […]

As the automotive industry transitions to electric vehicles, companies developing lithium-ion battery technology will be in the driver’s seat – and they’ll be carrying Chinese driver’s licenses. Li-ion technology is quickly replacing nickel-metal hydride batteries in hybrid electric vehicles, and the advanced battery market for emerging plug-in hybrid vehicles will be worth billions of dollars within a decade, according to a new report by market research firm GBI Research. But while Japanese manufacturers currently control a majority of the global advanced battery market, South Korean and especially Chinese firms are nipping at their heels.

If you own a hybrid-electric vehicle today, chances are it has nickel-metal hydride battery technology. These batteries today account for 97 percent of the hybrid electric vehicle market, by revenue. But the nickel-metal hydride technology has reached its maturity, according to GBI researchers, and Li-ion technology is advancing more quickly and offers better overall performance characteristics, such as longer life, high energy density, and is more light weight. The report estimates that hybrid electric vehicles will make up 10 percent of new sales by 2020 and that Li-ion batteries will be in more than 60 percent of those cars and trucks.

But plug-in hybrid electric vehicles could be an even bigger opportunity for advanced battery makers. The report’s authors believe the automotive industry will evolve from hybrid electric to plug-in hybrid electric vehicles “in the near future” and that the pace of the transition will be much faster than expected. This shift will provide a “huge sales growth” opportunity for advanced batteries, Li-ion batteries in particular, according to GBI researchers.  The report estimates that global plug-in vehicles sales will reach 1 percent of the light-duty vehicle market by 2015 and 5.3 percent by 2020. That could translate into a global plug-in vehicle battery market of $17.3 billion by 2020.   

So the market for advanced batteries is clearly large, but which countries will likely lead the development of the technology? Advanced battery manufacturing currently is dominated by China, Japan and South Korea, together accounting for 98 percent of the market in 2009. While Japan’s share of the market will remain significant in the near term, GBI researchers say that the country’s dominance is “fading away.” Japanese manufactures controlled 55 percent of global advanced battery production last year, down from 78 percent in 2002. Meanwhile, China’s share rose to 25 percent in 2009 from 11 percent in 2002, and South Korea’s reached 18 percent last year from just 6 percent in 2002 (See chart below).

GBI researchers seem most impressed with China’s advantages in the market: attractive government incentives and cheap labor, which has allowed manufacturers there to replace a conventionally capital-intensive business using automated production lines with a labor-intensive one that relies on people-power in its production lines. Aware of these advantages, Japanese and Western companies are fast entering into partnerships with Chinese battery manufactures.

Warren Buffet, for example, has invested $230 million into BYD Company, a Shenzhen-based battery and electric car maker that has said it will sell electric cars in the U.S. starting in 2011. To date, however, BYD’s sales of its F3DM plug-in hybrid model have been weak. But according to previous reports, hybrid cars will be truly mass-market in China by 2011 or 2012, and the country’s fleet will begin a minimum 10-year transition to plug-in hybrids and battery-electric vehicles as early as this year.

Related GigaOM Pro Research:

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How to Build Better Apps for Electric Vehicles

Chart courtesy of GBI Research.

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By Justin Moresco

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  1. You and most others predicting the future of the battery market overlook one important fact. Tibet has a large portion of lithium reserves that are in low cost extraction brine. Most comments about Tibet worry about politics. China resolved that problem when they took control of Tibet.

    Al

  2. Plug-In Hybrids are all talk and no action. The $40K Volt is dragging GM to its death. It’s battery is way to big and to costly. Dumb, Dumb, and Dumber in Detroit have to think small steps. First of all, make kits to modify previous NiMH Hybrids to be Plug-Ins. It by itself would get an extra 5 MPG for about $100; what a bang for your buck. Secondly, the 2010 models should have been NiMH Plug-Ins; please try not to blow it in 2011. The Volt’s Li-Ion battery is 4 times to big and too costly. Get you foot in the door first with a smaller battery and then get bigger or even better only put 1/4 of the battery at first and allow owners to upgrade to more batteries as the Economy rebounds from our Kiss with Communism and Redistribution of Wealth thanks to the $4 Trillion Bank Robbery by Fannie Mae, Freddie Mac and the Obamanista Democraps that forced the banks to make the bad loans in the first place.

    And while we are thinking Green, how about make all new cars including the precious Plug-In Hybrids E100 FFV’s. This way we actually do something to become Greenier next year, not in 2020.

    1. Chip,

      Nice writing. You nailed everything, especially placing the blame for where we are. According to G. Beck, the worst is still ahead.

      Wonder who will pony up the $40K just to say they own an electric car? Not many in The D where I live.

  3. i want every information about the electric car engine’s mechanism that is how it works, for my project preparation on electric cars.

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