Lithium-Ion Batteries to Drive Electric Vehicle Market

Short battery life, long charge time and short driving range are all factors that deter the development of electric vehicles. According to DRAMeXchange, with practical requirements in mind, lithium-ion batteries are the key to success–its attributes include long driving range (at least 125 miles) and long lifetime (a minimum of 10 years), at an affordable price. Many manufacturers have already begun the production of these batteries.

Headquartered in Troy, Michigan, in the United States, Delphi, a global auto part supplier, decided to develop batteries for automobiles, and received $2.4 million subsidies from the federal government. Delphi focuses on developing batteries for commercial vehicles.

General Electric Co. (GE) provided $15 million in Lithium-ion battery maker A123Systems Inc.’s $69 million private financing, making it A123’s biggest cash investor with more than a 10% stake. Also, Mark Little, GE’s Senior Vice President and Director GE Global Research, joined A123’s board directors.

DRAMeXchange states that A123 is the spotlight of the market due to the upcoming IPO in NASDAQ. A123 plans to build an advanced battery plant in Michigan. After the fund raising, it is expected that A123 could ramp up the capacity, making electric vehicles more price-competitive on price through mass production. The target capacity is expected to supply 500,000 Plug-in hybrid electric vehicles or 5,000,000 traditional HEV (hybrid electric vehicle).

A123 was born out of the research labs of the Massachusetts Institute of Technology (MIT) and was funded initially with a $100,000 grant from the U.S. Department of Energy in 2001. Among the companies using A123 batteries, battery systems and technology in the fields of transportation, grid energy storage and portable power are AES, BAE Systems, Better Place, Black and Decker, Cessna, Chrysler, Daimler, Delphi, Duke Energy, General Motors,, LADWP, Madison Gas and Electric, Magna Steyr, Mercedes Benz High Performance Engines, Procter and Gamble, Sempra and Volvo Truck and SAIC in China.

LG Chem (LGCLF.PK) also enjoyed strong appreciation of its share price recently as well, given LG Chem owns advanced lithium-ion rechargeable battery technology which adopted STMicroelectronics’ controlling chips, ensuring safety and durability while maintaining price competitiveness, even at the strict standards set for automobile power system.

Amid rapid development of electric cars in the United States and Japan, Taiwan’s capability in the R&D and production of lithium batteries has been well-recognized, Japan’s world-class battery makers have recently visited Taiwan in search of a business partner – companies that have been actively involved in the field of lithium-iron battery, such as E-one Moli Energy Corp.(3127), Delta Electronics, Inc. (2308), and Changs Ascending Enterprise Co., Ltd. (8038), are all striving for the opportunity to collaborate with Japanese manufacturers.

According to estimates from DRAMeXchange, this year’s global battery market, including lead-acid batteries, nickel hydride batteries and lithium batteries, will reach $46.3 billion, with lead-acid batteries as the mainstream; however, the attributes of lithium batteries, such as their high-voltage output, long lifetime, short charge time and high conversion efficiency, will become the key technology in the next generation of lithium batteries.

Panasonic, Sony, and SANYO are the leading Japanese battery makers. Market consensus is that, having missed the business opportunity in the battery market for consumer electronics, Taiwan’s battery manufacturers should seize the business opportunity in lithium batteries to stay abreast of technological advances among international players; in addition, more growth potential may arise through close collaboration with Japanese manufacturers and direct application in the automotive industry.

Currently, companies with lithium-iron battery technology are: E-one Moli Energy Corporation (3127), a subsidiary of Taiwan Cement Group’s, Tatung Group’s Tatung Fine Chemicals (4738) and CLP’s Guanso Electronics Equipment Company Ltd. Taiwan has also successfully developed a variety of super-lithium batteries, which have already entered the supply chain of China’s automakers, and begun mass production.

Furthermore, Hirose Tech Co., Ltd, invested by iD SoftCapital Group, is also engaged in the development of cathode materials used in lithium-iron phosphate batteries. Formosa Energy & Material Technology Co., Ltd., a joint venture between Changs Ascending Enterprise Co., Ltd. and Formosa Plastics Group, is expected to produce an annual output of 52.8 million tons of lithium-iron battery materials, in an effort to become Taiwan’s leading supplier of lithium-iron batteries.

About DRAMeXchange

DRAMeXchange is a global leading provider of market intelligence, in-depth analysis reports and consultant services on major electronics components. The company consists of three major research divisions–DRAMeXchange, WitsView and LEDinside which cover the DRAM, NAND Flash, PC, display and LED research sectors.