Electric cars and hybrids will be the biggest drivers of battery sales over the next five years
Link copied to
The global market for car batteries will pass $US54 billion by 2022, driven by growing demand for expensive lithium-ion batteries required by electric cars and hybrids.
Electric and hybrid cars are now the biggest driver of the battery market, pushing the automotive sector to account for 38 per cent of total battery sales by 2022 — up from 34 per cent today.
These new forecasts — from US researcher The Freedonia Group’s latest Global Batteries report — are good news for ASX-listed explorers focused on so-called battery metals such as lithium, cobalt, nickel and graphite.
“Increased penetration of [hybrid electric vehicles] will fuel rapid demand for batteries worldwide, with lithium-ion products absorbing the bulk of gains,” Freedonia Group reported.
The hybrid car market was expected to quadruple over the next five years, but electric cars — which use more expensive batteries than hybrids — would account for a large part of the overall boost in market value.
“Growth will be particularly strong for products used in electric vehicles, as cost reductions will fuel increased use of high-value high-capacity batteries.”
Electric car makers use two main lithium-ion battery technologies: nickel-cobalt-aluminium (NCA), which has been favoured by Tesla, and nickel-cobalt-manganese (NCM) which is more popular among Tesla’s rivals.
“Massive investments in lithium-ion battery production capacity will support price reductions due to improved economies of scale, allowing HEVs to increasingly compete on cost with conventional vehicles.
“While falling prices for lithium-ion batteries (on a kWh basis) will be a major contributor to growth for HEVs, a shift toward batteries with higher capacities will boost prices on a unit basis and contribute to the expanding market size,” Freedonia Group reported.
“Lead-acid batteries account for the vast majority of automotive market demand, but lithium-ion and nickel-based types have steadily become increasingly prevalent with the commercialisation of HEVs.”
The total market for all battery types would grow 9.8 per cent per year to $US141 billion by 2022.
Grid energy storage
Grid energy storage would be the next biggest demand factor — driving demand not only for lithium but for other battery metals such as vanadium.
“Battery-based grid storage systems have proliferated rapidly in recent years after commercialisation began at a large scale in 2014,” said Freedonia Group.
“Cost reductions for lithium-ion batteries have abruptly made this technology economical, and it is expected that these grid storage systems will become increasingly common as the technology’s efficacy is established.
“Rapid growth in renewable energy capacity worldwide – particularly for solar energy – will further contribute to an increased need for grid-scale energy storage systems.”