Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicles Market

To help businesses, investors, and policy makers avoid mismatched expectations, we have forecast the markets for the energy storage technologies used in electric vehicles, including lithium ion batteries, supercapacitors, and fuel cells. We find that the overall market for storage technologies will grow into a $30 billion market by 2016, fueled mostly by sales of lower profile e-bikes and micro-hybrids, while plug-in electric vehicle sales depend heavily on oil prices.

The overall market for energy storage technologies that power electric vehicles is set to grow from $13 billion in 2011 to $30 billion in 2016, a compound annual growth rate (CAGR) of 18%. But, while prominent plug-in passenger cars like the Chevy Volt and Nissan Leaf grab most of the headlines, the bulk of future growth will be driven by more humble vehicles, such as e-bikes and micro-hybrids, according to a new report from Lux Research.

“Although battery prices for all-electric and hybrid passenger cars are dropping, they’re not dropping far enough or quickly enough to fuel the sort of broad adoption that advocates expect,” said Kevin See, a Lux Analyst and the report’s lead author. “Instead, the substantial growth we see for vehicle-related storage technologies will be powered mostly by e-bikes – which are shifting from lead acid to Li-ion battery technology – and microhybrids, which offer a more incremental, low-risk way for automakers to improve fuel efficiencies.”

Micro-hybrids offer auto OEMs the shortest road to improved fuel efficiency. Micro-hybrids, which apply energy storage only toward start-stop and/or regenerative braking applications, require neither the drastic redesigns nor the more expensive battery costs that all-electric or hybrid electric vehicles do. Thus, they are set to surpass these other passenger vehicle types in terms of both total storage and dollars in 2016, growing from 5.1 GWh and $495 million, to 41 GWh and $3.1 billion – CAGRs of 52% and 44%, respectively.
E-bikes pack minimal storage but compensate with sheer volume. Although their 0.4 kWh to 1.0 kWh of storage is a far cry from the Nissan Leaf’s 24-kWh battery pack, e-bikes will continue to dominate the overall market in terms of dollars and MWh. Replacement batteries for the currently deployed base – largely in China – plus strong growth in new sales will drive growth from 84.2 GWh and $12.0 billion in 2011, to 156.6 GWh and $24.3 billion in 2016, a CAGR of 13% in kWh and 15% in dollars.

Advanced lead-acid batteries dominate the current and future storage market. While Li-ion technology will eat into lead-acid sales for e-bikes, and supercapacitors will steal share in micro-hybrids, lead-acid will maintain a comfortable lead in both of these high-volume and growing markets. Overall, the market for lead-acid batteries will grow from 83 GWh and $9.4 billion in 2011, to 165 GWh and $16.1 billion in 2016, CAGRs of 15% and 12%, respectively.