Global study on the development of the automotive Li-ion battery market

• The global automotive Li-ion battery market is forecast to grow from USD 1.5 billion to around USD 9 billion by 2015
• A further USD 50 billion expansion expected by 2020 in best-case scenario
• The five frontrunners, mainly from Asia, will control the worldwide market by 2015: AESC, LG Chem, Panasonic/Sanyo, A123 and SB LiMotive
• Massive production overcapacity will result in considerable market consolidation by 2015

The worldwide market for Li-ion batteries for electric vehicles has taken off. It will reach almost USD 9 billion by 2015, and may even exceed USD 50 billion by 2020 in the best case scenario. This growth will, however, be accompanied by massive overcapacity. Over the next few years, we will see Li-ion battery production exceeding demand by more than twofold. Market consolidation will result. The five frontrunners – AESC, LG Chem, Panasonic/Sanyo, A123 and SB LiMotive – can, between them, be expected to control almost 80% of the market by 2015. These are the key findings of a new study by Roland Berger Strategy Consultants on the development of the global market for lithium-ion batteries in cars, light and heavy commercial vehicles as well as buses with hybrid and electric drive systems.

Roland Berger experts expect the light vehicle segment, i.e. cars and light commercial vehicles, to account for more than 80% of total market value for Li-ion battery systems in 2015. By then, 2.5 million hybrids, 300,000 plug-in hybrids and 500,000 electric vehicles will be coming off production lines each year. "We expect the global market for Li-ion batteries to leap from the current volume of USD 1.5 billion to almost USD 9 billion in 2015," says Wolfgang Bernhart, Partner at Roland Berger Strategy Consultants. "In our best-case scenario, worldwide market volume may even grow to over USD 50 billion by 2020. As sales surge, Japanese and Korean carmakers will be doing everything they can to establish themselves as the leading global providers of alternative drive technologies. Their share of worldwide production will reach about 40% in 2015. But auto production in the Asian factories will be dominated by hybrid vehicles by using, for the most part, nickel-metal-hybrid batteries. This region's share of the Li-ion battery market for light vehicles will remain below 15%.

China dominant in bus market

In the case of electric-drive buses, China will certainly be a frontrunner in coming years. The Roland Berger experts estimate that around 80% of Li-ion batteries for buses will be sold in China by 2015. "This is due to the highly ambitious plans of the Chinese government. It is targeting investment at growth industries and is also keen to improve air quality in the cities," explains Thomas Wendt, co-author of the study. "By contrast, the Chinese electric car market will initially see slower growth than Western markets," adds Bernhart. "Above all, that's due to the changed priorities of the Chinese government. As a first step, it's focusing on hybrid vehicles, with pure electric drives or plug-ins taking second place for a while."

In the commercial vehicle segment, the biggest share of growth will come from the electrification of pickups and delivery vehicles (US categories 3 and 4). Most major automakers in the commercial vehicle segment already have firm plans for hybrid drive systems across their model range.

Market consolidation – five top players to dominate the market

Over a hundred companies worldwide are currently active in the market for automotive Li-ion batteries. The Roland Berger experts expect production capacities in this market to be twice as big as the volume of demand in 2015. "Some of the battery producers have excessively grand expansion plans. The ramifications are already being felt," notes Wolfgang Bernhart. "This is why we'll see considerable consolidation across the market going forward." The study predicts that five leading suppliers will control almost 80% of the market in 2015. The frontrunners are: AESC (26%), LG Chem (18%), Panasonic/Sanyo (15%), A123 (14%) und SB LiMotive (6%).

AESC, a joint venture between Renault-Nissan and NEC will take the lead in the light vehicle battery market, assuming Renault-Nissan largely achieves its target of 500,000 electric vehicle sales by 2015. "The most difficult hurdle will be consumer approval. If consumers don't accept e-cars, the entire industry will face considerable difficulties," says Bernhart.

As for the commercial vehicle and bus segment, the market leader will be A123. "The company is well placed to capture this growing segment thanks to its strong links with the automakers, drive manufacturers and fleet customers," says Thomas Wendt. A123 is also a favored battery supplier for light vehicles.

Problems are particularly arising for the smaller suppliers, whose combined share of the global market will only amount to 2% in 2015. "If these seven or eight small-scale producers are to survive, they must seize a niche segment and secure two big customers," says Wendt. "The only alternative is to merge with a complementary company."

Chinese manufactuers gaining ground

The growing competition from China in the battery market should not be underestimated. By 2015, Chinese manufactuers will control more than 8% of the world market, but this is only the beginning: China itself will probably have emerged as the biggest market for e-mobility by 2020. For international battery producers, this trend presents both an opportunity and a challenge: "Battery manufacturers must best-position themselves on the Chinese market ensure long-term success," sagt Bernhart. "This demands a completely new strategic approach on the part of battery makers."