FOLLOW US

Subscribe

Your email:

About The Pulse

The Pulse provides the opinions, insight and other musings of the A123 Systems brain trust, offering thoughts about a wide variety of topics, including battery technology, electric transportation, grid energy storage, energy policy and more.

And we want you to participate by commenting on our posts to add your own views (just remember that we are moderating your comments so please play nice!). Thanks for reading!

Contributors

Andy Chu

Andy Chu, Ph.D., is the former vice president of marketing & communications at A123 Systems.

Angela Duren

Angela Duren is the low-voltage product manager for the Automotive Solutions Group at A123 Systems. 

Jeff Kessen director of product marketing with Automotive Solutions Group A123 Systems (2)Jeff Kessen is the director of global marketing for the Automotive Solutions Group at A123 Systems.  

Bill Mitchell vice president, business development A123 Systems headshotBill Mitchell is vice president of Sales and Marketing at A123 Energy Solutions.

Roger LinRoger Lin is director of product marketing at A123 Energy Solutions. 

A123pulse

Peddling the Thoughts, Opinions and General Musings of the A123 Systems Brain Trust

 

Current Articles | RSS Feed RSS Feed

Leaders Emerging from the Pack in the Advanced Automotive Battery Market

If you attended the Advanced Automotive Battery Conference (AABC) in Orlando, Fla. last week, you probably noticed consistent theme—the global leaders in the advanced automotive battery market are starting to separate from the pack. 

While various presentations projecting market size differed slightly in their conclusions, the common thinking is that five or six suppliers are starting to emerge as having the lion’s share of the advanced battery market for transportation. Although the rankings on projected market share vary depending on which analyst you speak with, those companies emerging as the industry leaders are LG Chem, AESC, Panasonic/Sanyo, SB LiMotive, GS Yuasa and A123 Systems. 

For example, in his talk, AABC chair Dr. Menahem Anderman showed a chart which projects sales for the top battery companies over the next few years, which shows a clear a separation of the leaders from everyone else. 

Similarly, Pike Research recently issued a Pulse Report on Electric Vehicle Batteries which assesses both the strategy and execution of 10 leading automotive lithium ion battery suppliers.

Pike Research logo

Pike rated battery suppliers on the following criteria:  vision; go-to-market strategy; partners; product strategy and roadmap; geographic reach; market share; sales and marketing; product quality; and reliability, product portfolio and staying power. Pike's findings also indicate a separation of the leaders from everyone else. 

One of the commonalities in these and other findings is that the majority of the leaders are independent suppliers that are not captive to a single automaker.  Some battery suppliers and automotive OEMs believe the best approach is to create a vertically-integrated automaker, as exemplified by the Japanese keiretsu groups. Here, the automaker owns or has deep linkages to major suppliers, which guarantees volume and ensures security of supply. However, it may result in a company that is less open to new technologies and innovation. 

However, most of the industry leaders are stand-alone, “best-of-breed” battery suppliers. While requiring suppliers to compete for every program can be resource-intensive and somewhat time consuming, it offers the significant advantage that each supplier has a strong incentive to improve and innovate in order to continue winning business. 

This becomes increasingly important considering the variety of electrification applications. There is much more to the industry than pure battery electric vehicles and the advanced automotive battery suppliers that have recognized this are best-positioned to move forward. Automakers are building micro-hybrids and mild hybrids in addition to full hybrids, plug-in electric hybrids and pure electric vehicles, each of which require some level of customization in battery design and electronics architecture. 

Best-of-breed battery makers are able to develop products to serve each of these markets. The risk, of course, is that there is no built-in demand, so if these suppliers do not win enough business, they may not achieve the economies of scale required to reduce cost and remain competitive in the long term.  This results in a natural separation of the field, which is projected in these and other studies, and is starting to play out in the marketplace. 

 The top tier suppliers win business and build volume, which in turn helps reduce cost and win additional business. Companies that do not have that commercial success progressively get weaker and weaker until they eventually abandon the market. By going with the “best in breed” supplier, the automaker is able to leverage the free market, minimizing its own risk of picking the wrong technology path. If the battery supplier has a compelling offering, they will win other business and will be a stronger partner.  If they don’t, the automaker can move on to the suppliers that are winning. 

So while the project leaders in this industry tend to be independent battery suppliers that have significant efforts in the area of mild and micro hybrids (in addition to EVs, PHEVs and HEVs), the question becomes, is this analysis based on research that can accurately project the market? 

To attempt to help answer that question, our next blog entry dissect another market forecast for the automotive lithium ion battery industry, this one conducted by strategy consultancy Roland Berger. Its findings are similar to those offered by Anderman and Pike Research, but we think the methodology Roland Berger used may be the best yet in terms of accurately predicting this market.



Comments

i would love to see a blogging post detailing how A123 achieves profitability while burning cash and losing Fisker and dropping battery prices ???
Posted @ Wednesday, February 15, 2012 4:36 PM by Keith Bare
Hey Keith, 
 
 
 
Thanks for the question. Our production program with Fisker is the Karma - production is still running, no changes (around 25 cars a day being built). The program on-hold is Nina, which was a future program. We have 22 auto programs in production or under contract for production (like BMW and GM). We also have a rapidly growing grid business - see the regular press releases on those projects on our web site. We intend to achive gross margin positive results in 2012 and EBIT break even in 2013 - still on track. Pricing is fixed in our contracts and factored into these projections. Thanks for the post. JMF
Posted @ Thursday, February 16, 2012 8:43 AM by Jason Forcier, VP Automotive A123
Thanks for the response and would love to see AONE prosper and kick OPEC's butt to Get us off OPEC foreign oil........however, reviewing financials and comparing your major competitors like LG and Nissan joint venture, the foreign Korean companies seem to have deep sugar daddy pockets and how does AONE compete going forward without more cash given LG and Japan major financial competitors can out spend AONE ??? thanks!
Posted @ Thursday, February 16, 2012 3:21 PM by Keith Bare
There must be reasons why A123 is the leader in trucks and buses. Is it the power attribute of the A123 battery? 
 
Hong Kong and cities in China have a lot of buses. They also have a lot of air pollution problem waiting to be solved as well. How is A123 addressing the bus market in this part of the world in particular and elsewhere? 
 
Thanks. 
Posted @ Friday, February 17, 2012 2:47 PM by Sparky
Certainly the performance of A123's batteries set us apart, particularly when it comes to high-power, high duty-cycle applications, such as HEV transit buses. Other lithium ion batteries can't meet the demanding requirements. 
 
In addition, A123 has developed significant systems capability. Unlike some battery companies that only make cells, we have an extensive team that designs, develops, and manufacturers the full system, including electronics, thermal management, packaging, etc. So, we're a more capable partner, able to offer better customer service and support. In the end, that translates to better value for our commercial vehicle customers.  
 
Our customers sell in markets around the world. So, our approach is to work with leaders in their respective markets. We'll have more to say about this in future announcements and blog posts. So, stay tuned!
Posted @ Friday, February 17, 2012 3:01 PM by Andy Chu
Thanks Andy for your reply. 
 
How does one prove to a customer that A123 has a better life, more safety and higher power? What stops a competitor to come in and make bogus claims? In their mind, winning contracts at all costs even if lying a little bit.  
 
Is there a standard battery test done by customers to determine and compare life, safety and performance with different batteries? Is there a third party battery test results to compare different batteries? 
 
For example, Hyundai guarantees their battery for life as long as the first owner keeps the car. This is a bit of marketing gimmick. 1) Not all owners will keep their car for a long time. 2) if they do and the battery fails in 5 years, they simply replace the inferior battery which had costed half the price of a good battery anyway. 
 
 
Thank you Andy for your reply. 
 
How does one prove to a customer that A123 has a better life, more safety and higher power? What stops a competitor to come in and make bogus claims? In their mind, winning contracts at all costs even if lying a little bit. Is there a standard battery test done by customers to determine and compare life, safety and performance with different batteries? Is there third party battery test results to compare different batteries? 
 
Switching to passenger EV, for example, Hyundai guarantees their HEV battery for life as long as the first owner keeps the car. This is a bit of marketing gimmick.  
1) Not all owners will keep their car for a long enough time to witness the battery failure.  
2) car owner cannot tell if the HEV is not working or not working as designed. For example, if the battery supposed to recover 80% of the energy from braking and it drops to 50%. 
3)even if the battery fails in 5 years, they simply replace the inferior battery which had cost of half the price of a good battery anyway. 
So they can't lose by using inferior battery and it sounds great in marketing. 
 
For a price sensitive application in the passenger EV, how is A123 going to compete with inferior battery? Or is A123 battery only going to play in high-performance cars, pure EV, microhybrids and not the mass PHEV and HEV? 
 
Thanks. 
Posted @ Friday, February 17, 2012 3:39 PM by Sparky
Battery problems are one of the leading causes of vehicle breakdowns. There are things you can do to avoid frequent breakdowns and keep your engine working efficiently.
Posted @ Tuesday, June 18, 2013 6:19 AM by refuse compactors
Post Comment
Name
 *
Email
 *
Website (optional)
Comment
 *

Allowed tags: <a> link, <b> bold, <i> italics