The Battery Market

korea-china-japan

Due to their extensive use in portable electronic devices and growing use in electric tools, electric vehicles and grid and distributed energy storage systems, the market share of lithium-ion batteries has increased markedly in recent years. The Republic of Korea, China and Japan together account for 85% to 90% of global lithium-ion battery production. In 2011, The Republic of Korea became the global leader in lithium-ion battery manufacturing, overtaking Japan, the leading lithium-ion battery producer since 1991.

As a result of the continued increasing market share of lithium-ion batteries, several additional countries have entered the battery manufacturing industry.  Germany, Switzerland and the United States have recently established operations with more sure to follow. The world produced 28 gigawatt hours (GWh) of lithium-ion battery cells in 2012. While current global production stands at around 35 GWh, a new era of lithium-ion battery “Megafactories” is upon us and is set to significantly increase the consumption of lithium.

Courtesy of: Visual Capitalist

 

The Gigafactory

The most well-known of these Megafactories is Tesla’s Gigafactory, a lithium-ion battery manufacturing facility located near Sparks, Nevada, forecasted to produce 50 GWh. Tesla broke ground on the Gigafactory in 2014 and held the official Grand Opening on July 29, 2016.

Electric Vehicles

Any discussion of electric vehicles must begin with Tesla Motors. Incorporated in 2003, Tesla launched its Roadster in 2008, a car capable of accelerating from 0-60 mph (97 km/h) in 3.7 seconds and travelling 245 miles (394 kilometres) per charge on a lithium-ion battery. Four years later in 2012, Tesla launched the world’s first premium electric sedan – Model S. The following year, Model S was named Motor Trend’s Car of the Year and achieved a 5-star rating from the United States National Highway Traffic Safety Administration. In 2013, owing to its anticipated strong demand for lithium-ion batteries, Tesla announced its intentions to build a large scale factory to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead. The large scale factory, known as “The Gigafactory,” is designed to reduce cell costs much faster than the status quo and, by 2020, produce more lithium-ion batteries annually than were produced worldwide in 2013. Tesla broke ground on the Gigafactory in June 2014 near Sparks, Nevada. In 2015, Tesla launched its new crossover vehicle, Model X and, in March of 2016, Tesla unveiled plans for its future mass market electric vehicle – Model 3. On July 29, 2016, Tesla held the “Grand Opening” for the Gigafactory.

Electric Vehicles Going Mainstream

Global electric vehicle sales have been gaining significant momentum, increasing by at least 50% year-over-year for the last three years, with electric vehicle infrastructure development and technological advancements being the main catalysts for this growth. Following Tesla’s lead and recognizing the potential size of the opportunity, mainstream manufacturers have been responding by increasing the amount of resources deployed on electric vehicle development.

WW-A-6-2016


Stationary Energy Storage

The march towards renewable energy production is gathering steam with installed capacity exceeding expectations in recent years. According to the International Energy Agency, wind and solar photovoltaics are the fastest-growing sources of electricity globally. Critics of renewable energy proliferation often rely on the tired old adage that “the wind doesn’t always blow and the sun doesn’t always shine.” While it’s true that electricity generation from both technologies is intermittent, constrained by the variability of wind and sunshine, electrical energy can be stored during times when production exceeds consumption and returned to the grid when production falls below consumption. How is electrical energy stored? In batteries, of which an increasing proportion is lithium-ion. Global revenue from energy storage increased from $462 million in 2014 to $2.1 billion in 2015. The U.K.’s Department of Energy and Climate Change (DECC) has stated that the energy storage market will reach $17 billion in 2020 and nearly $30 billion in 2030.

According to CRU Group, sodium sulfur batteries have the largest share of the global battery storage market accounting for 50% in 2015. While lithium-ion batteries accounted for approximately 35% of the market, they are expected to surpass sodium sulfur batteries and account for the majority of batteries used in the global battery storage market.

Grid-scale and Distributed Energy Storage

Energy storage is proliferating on both a utility and residential (distributed energy storage) level. While large storage projects on the utility’s side of the meter currently dominate deployments, smaller batteries in homes and businesses on the customer’s side of the meter will become the largest segment in terms of capacity. Tesla has developed solutions for businesses and residences with the introduction of the Powerpack and Powerwall, respectively. At a Tesla meeting of shareholders, Elon Musk stated that the rate of growth of stationary storage will be several times that of the car side of Tesla.

Research Reports

To download the Deutsche Bank Markets Research Report on the EV battery industry, click the image below:

db-report