|Battery Technology Drags On Electric Car Market |
Published: Thursday, 1 Mar 2012 | 12:51 PM ET
By: Trevor Curwin,
Special to CNBC.com
Electric vehicles will continue to generate hype at auto shows around the world, but today’s limited battery technology will prevent them from crowding dealer lots for years to come.
“I’m a skeptic about EVs,” says Greg Payne, VP of portfolio management with Toronto-based Greenchip Financial, a firm specializing in sustainable investment. “You’re talking about a premium product.”
The industry-standard lithium ion battery has plateaued in terms of capacity, and Payne says new technologies to stretch that capacity don’t look promising for the near term.
“Rapid charging is years away,” he says, and plans to swap out batteries at a service station along your commute is “not going to work” since no battery or car manufacturer can agree on a single format of battery.
Even though a dozen models at the recent Detroit Auto Show incorporated advanced battery power, and new EV models from companies including Ford Motor [F 12.72 0.06 (+0.47%) ] , Tesla [TSLA 34.04 -0.37 (-1.08%) ]and Mitsubishi will hit showrooms this year, clean teach research analyst John Gartner expect EVs to remain a tiny part of the market for several more years.
“We’ve scaled back our sales forecasts,” says Gartner, of Pike Research. “It’s still looking like it’s not going to crack 1 percent [of total vehicles sales] until 2015.”
Current battery technology will drag on EV market growth, since the cars have a higher sales price and more limited range on a single “tank” of fuel than a typical mass market, gas-powered vehicle, and government tax breaks for car buyers are under threat.
Moreover, one tax-based buyer incentive ended Jan. 1 and another may not survive past 2012.
Of course, that's not to say that manufacturers are not busy working on potential breakthroughs in the lab, says one battery maker.
David Vieau, CEO of A123 Systems [AONE 1.82 -0.08 (-4.21%) ], says component substitution with newer materials currently in development promise “50 percent improvement in density of a battery cell,” effectively doubling the range of the vehicle.
That would boost the range of Ford’s 2012 Focus EVfrom 100 miles to 200 miles, well within the requirements of the average car trip to work or the mall.
Zinc-air technologies to replace lithium ion could triple the energy density of the battery system within the decade, allowing for smaller batteries or a wider range. “A few years ago the question was ‘do they work?’” Vieau says about the state of the battery business today. “Now it’s ‘how much do they cost?’”
“In the next four to five years, we’ll see the price of batteries come down dramatically,” he predicts.
While Pike’s Gartner cautions that battery development will more likely be “evolution not revolution” for the next decade, his firm’s third quarter 2011 estimate is that the “electrified vehicles” market will still grow 19.5 percent annually between 2011 and 2017, compared with 3.7 percent for the overall vehicle market.
The report adds that the EV market alone will grow 48.4 percent annually, although Gartner points out that that kind of jump is typical of segments “in their infancy.”
No matter what improvements happen in battery technologies in the coming years, one green vehicle trend touted in the early 2000s is now considered dead: the offering of drive-train options across popular-selling vehicle platforms.
This means buyers could choose from a gas, diesel, natural gas, EV or hybrid Ford F-150, for example, just like choosing other paint schemes or seat configurations.
Vieau says the technology requirements beyond the battery packs is simply too different, and would likely need to be done on a different assembly line.
And despite the bad headlines in 2011 concerning the crash-test performance of the Chevy Volt’s battery pack, analysts say these results will have limited impact on battery production and implementation.
In recent National Highway Traffic Safety Administration crash tests, Volt battery packs — made by South Korean firm LG Chem— were found to catch fire, but only weeks after the crash.
“It’s definitely a negative reflection on the industry,” Gartner says about the battery fires. “But it’s kind of an anomaly in that it was an artificial (circumstance).”
Nevertheless, A123 will be providing the battery system for GM’s [GM 26.45 -0.02 (-0.08%) ] newest EV, the 2013 Chevy Spark, and for 20 other transportation clients, using a less volatile phosphate-based lithium-ion format.
Despite his skepticism of EVs, Greenchip’s Payne agrees that issues like the Volt’s are “noise around the edges” in the life span of new technologies.
Improving battery technology itself goes beyond EVs anyway, he adds, pointing out that while batteries drive up the price of EVs and therefore “exposure to economic conditions,” the rising price of gasoline could push more drivers to extend fuel efficiency with battery technology, like with hybrids.
“That’s an area where you could get more growth,” he says.