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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

 

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What is the Best Approach to Determine the Leaders in the Advanced Automotive Battery Market?

As we discussed in a post earlier this week, a common opinion at the Advanced Automotive Battery Conference (AABC)— and from many other industry analyst assessments—was that the global leaders in the advanced automotive battery market are starting to separate from the pack. 

We generally agree that there is likely to be a shakeout over the next few years, and, as with many burgeoning industries, there should be a handful of suppliers that retain a bulk of the market share. But which of the many studies and forecasts of this market are most accurate? How can we decide which studies are especially credible and which ones need some work? 

When trying to determine which suppliers will emerge as the industry leaders, some prognosticators base their forecasts only on publicly announced supply contracts. While this may be an accurate assessment of market share in the moment, it does not paint the entire picture. Over the next few years, the number of EVs, hybrids and PHEVs being built is expected to increase exponentially. For instance, our analysis shows that in the 2010 model year, 27 automakers globally developed 50 different electrified models. For the 2012 model year, those figures should grow to about 36 automakers and more than 110 different models. And into 2013 and beyond, we expect these numbers to continue increasing.

 Also important to the discussion are the factors automakers consider when selecting battery suppliers. The performance, safety, longevity and durability of the technology are critical, of course, but this is only part of the equation. Automakers tend to award contracts to companies that also have advanced manufacturing capabilities as well as financial stability, which indicates the ability to serve as a long-term supplier capable of fulfilling high-volume orders over an extended period of time. 

Taking these factors into consideration, strategy consultancy Roland Berger conducted its own study about projected market share in the lithium ion battery industry, which we feel uses one of the best approaches to reach its conclusions. As highlighted in the chart below, Roland Berger also determined that in 2015, more than two-thirds of the global market share for advanced automotive lithium ion batteries will be controlled by just five suppliers. 

Roland Berger study graph 1But unlike previous market share predictions, the methodology used by Roland Berger took into account all of the vehicle models projected to use lithium ion batteries in 2015 based on sales estimates from a globally respected automotive forecaster. The likely battery supplier for each program was then derived from existing contracts, manufacturing capabilities, overall company financial strength and proprietary data obtained from both battery suppliers and automakers. The result is a projection that we believe more accurately reflects what the market will look like in 2015 and beyond. 

(It is worth noting that while Roland Berger projects AESC, the battery supplier to both Nissan and Renault, as the market leader in 2015, one of the biggest uncertainties in Roland Berger’s models is the sales volumes for these OEMs. This is likely part of the reason why the recently issued Pike Research Pulse Report on Electric Vehicle Batteries, which assesses both the strategy and execution of 10 leading automotive lithium ion battery suppliers, ranked AESC lower on its strategy. This supports one of the commonalities in many market studies that the majority of the leaders will be independent suppliers that are not captive to a single automaker.) 

Ultimately only time will tell which battery companies will emerge as the industry leaders, but there are key predictors available that can help formulate an accurate assessment that should closely resemble the market landscape. Not every study uses the most important factors, however, so it is important to thoroughly evaluate the metrics and methodologies used to obtain the results before taking them as a certainty. This will allow for a more educated, informed decision-making process that cuts through the headline-grabbing F.U.D. (fear, uncertainty and doubt) created by otherwise reputable news organizations that are reportedly publishing stories riddled with misleading information and factual inaccuracies.



Comments

What is the progress on the battery second-use program and battery leasing? Wouldn't these methods lower the upfront cost for EV type vehicles and bring parity to the ICE vehicles, to enhance demands? How do you prove battery life and have confident that a second-use works? 
 
Does the useable energy on a second-use battery be 90% (A123 usable energy %) of the 80% (EV end of life declaration) or higher? 
Thanks. 
Posted @ Friday, February 17, 2012 9:48 AM by Sparky
Sparky,  
That is a great topic and one that deserves more space than a simple reply comment would allow. Perhaps we can devote a future blog post to exploring this in more detail.  
 
In summary, secondary use must balance three factors:  
1) residual value of the battery, 
2) risk to the secondary user or company offering the battery warranty, and 
3) cost to repurpose the battery for secondary use. 
 
The right solution must balance these three factors to maximize value. Given our expertise in chemistry, transportation and grid applications, systems integration, and the extensive database that we have built, A123 is uniquely positioned to implement battery leasing and secondary use.
Posted @ Friday, February 17, 2012 11:43 AM by Andy Chu
Appreciatte the info on autos and predictions to 2015.....why is it predicted that A123 dominates the truck market (ie, 33%) and yet only 11% of autos??? is the ability of a truck or bus to carry heavier battery the difference in A123 dominating the truck market??? and what amount in dollars is trucks and busses predicted to be in 2015?? thanks in advance and I appreciate the information sharing you are providing!
Posted @ Friday, February 17, 2012 4:35 PM by Keith Bare
Simple question, Why? 
 
A123 has and energy core pack ready to go. 23kw,great,110kw coming, even better. Now just try to get your hands on one, or three. BUT, * "Packs are not available for consurer use or aftermarket conversion kits". Why? 
 
I've read the MSDS, they are not particularly dangerous. At least not as dangerous as a lead acid battery. They are not dangerous either unless you break them open. The only issue that comes to mind is fear. Fear of lawyers and stupid people. At those voltages all electronics are dangerous. Is that why you would rather fail than sell to a market eager to buy?
Posted @ Wednesday, February 22, 2012 9:26 AM by tim
When will you announce a battery leasing program with a partner. Seems to me, that is the only way to go to lower upfront costs, increase EV demand and fill the factory production capacity. 
 
"Renault said battery lease prices, which are separate from the purchase price, will start at 70 euros a month under a three-year contract that covers 12,500 km a year." http://www.automotiveit.com/renault-prices-entry-level-zoe-ev-at-e15700/news/id-005362
Posted @ Thursday, March 15, 2012 9:42 AM by Sparky
I don't know how applicable this is, but I love history, especially automotive. 100 or so years ago the competitors in the car biz kept trying to build a better car, and the cost kept going up. Henry Ford tried this, at least twice, and his companies failed. Then he tried to make a very practical, but affordable car. It worked. His focus was now profit, rather than ever more elaborate low volume and costly cars. Cars and tractors were the way to achieve profit.  
 
If your clientele is looking for financial stability, then A123 must first be profitable, and provide a good and reliable product, not necessarily the finest one on the planet which is too costly. Profitbility is also the only thing the shareholders care about. Having the best product in the land the one that makes the most money. Then you can do all the fancy stuff. Again the Ford analogy.
Posted @ Saturday, March 17, 2012 9:32 AM by chippewajohn
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