Battery Technologies for Automotive Applications

20 January 1999
Battery Technologies for Automotive Applications Forces a Potential Shift in Technology
    LITTLE FALLS, N.J., Jan. 19 -- The global automotive battery
industry may be on the cusp of large-scale change opening the door for new
competitors.  This is due to the increasing amount of high-profile
announcements by leading automobile producers and their plans for hybrid
electric vehicles (HEVs) in the United States, Europe, and Japan.  Such major
Japanese auto producers as Honda, Toyota, and Nissan are planning to launch
new HEV models in 1999, while U.S. and European automobile producers have new
products on the horizon.
    To make these new platforms attractive to consumers and commercially
viable, many of the automobile producers are utilizing such advanced battery
technologies as nickel metal hydride and lithium ion.  The implication of this
to the automotive industry is that now the leading rechargeable battery
producers can apply new technologies and chemistries to the automotive market,
which has been dominated by lead-acid rechargeable batteries.
    The breadth of new technology choices includes nickel metal-hydride
(NiMH), nickel cadmium (NiCd), lithium ion, and lithium polymer.  It is
apparent that many of the leading automotive original equipment manufacturers
(OEMs) are looking to nontraditional suppliers to meet their future
rechargeable battery requirements, as shown below:

    Company         Developmental efforts                Partners

    General Motors                   NiMH                  Ovonic
                      Lithium ion polymer          Delphi/Valence
                                                       Technology

    Nissan                    Lithium ion                    Sony

    Toyota                           NiMH      Matsushita Battery

    USABC-a       Lithium polymer (metal)         3M/Hydro Quebec

    a - Includes Chrysler, Ford, and GM.

    A parallel example of a rapid and dramatic change that may occur in the
automotive industry can be found by reviewing the recent development and
commercialization of advanced batteries in the portable electronics industry.
Before the explosion in growth of portable electronics, nickel cadmium-based
chemistry was the battery technology of choice for small, portable devices.
NiCd was developed in the latter part of the 1940s and met the requirements of
portable equipment users up to the late 1980s.
    However, with the rapid miniaturization of portable electronics, NiCd no
longer met electronic 0EMs' demands regarding such important criteria as light
weight and self-discharge.  At this point, companies involved in NiMH
technology saw the opportunity to position this chemistry as a better solution
to NiCd.  Then in 1993, Sony launched its lithium ion technology to better
meet portable electronics 0EMs', as well as consumers' increasing needs and
demands.  This new product helped strengthen Sony's leadership position in the
portable electronics business because it was able to deliver such value-added
enhancements as lighter weight and longer run devices.
    The changing value proposition of the consumers and OEMs is what led to
the commercial development of two new chemistries -- lithium ion and NiMH.
The successful introduction of these two new chemistries, based on a
market-pull, also substantially changed the competitive structure of the
advanced rechargeable battery industry, and allowed new world-class
competitors into this market.
    Revenues for the global battery business reached an estimated $30 billion
in 1998.  Starting, lighting and ignition (SLI) and related secondary battery
applications represent approximately one-half of the overall market, while
primary batteries represent approximately 35% and high-performance secondary
batteries represent the remaining 15%, or $4.5 billion.  Many of the leading
high-performance secondary battery producers are targeting automotive
applications as their next long-term growth objective.
    What is not certain at this time is the final configuration(s) and
commercialization of electric vehicles (EVs) and HEVs that will drive the
final value proposition as well as adoption and implementation of advanced
battery technologies for automotive applications.  To help better understand
the performance and value needs of this enormous opportunity, Kline & Company
is launching the multiclient study GLOBAL OPPORTUNITIES FOR ADVANCED BATTERY
TECHNOLOGIES IN AUTOMOTIVE APPLICATIONS, 1998 TO 2008.  This study will
investigate and analyze the emerging opportunities in the battery industry.
For more information please contact Michael Corbett at 973-435-3457 or email
mike_corbett@klinegroup.com.