5. How to Succeed in the EV Battery Business?
How to succeed in the emerging Li-ion battery market for Evs? What kind of preparation and response are necessary to be the winner in fast growing Li-ion battery for EV market? Based on the previous various studies about LIB, EV and external conditions, below 4 things should be prepared in advance.
- Technology Innovation
- Cost Reduction and Long-Term Sourcing Plan - Strategic Alliances for Win-Win
- Developing New Business Model.
5.1 Technology Innovation.
The first priority to win the battery business in EV market is to achieve the technology innovation. The most important technical factors for battery of EV are safety, high power and long life span based on the improvement in the related technology and localization of the raw material.
The nationwide efforts are being collected in Japan to achieve the technology innovation.
About 20 organizations and companies joined the next generation battery development project
‘All-Japan System’ in Japan. They are trying to make triple longer driving distance than current by year 2020 and the government will use total 210billion Japan dollar for next 7 years. 5 Japanese automobile companies, 7 battery manufacturer and 10 University joined this union.
5.1.1 Safety
The safety concern of Li-Ion battery is one of the big reasons for delaying of mass production of EV which adopted the LIB. The Li-ion battery has been used for mobile devices such as laptop computer and mobile phones but experienced several safety issues such as heating and explosion. Originally Li-ion battery is very weak for impact and high temperature. Even though these weakness was not so important in mobile devices but it is very important in EV because cars can receive the big impact in case of small car collision and can be exposed to very high temperature during the summer.
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To prevent the safety issue, the LIB manufacturers have to reinforce the safety features of the Li-ion battery for EV. The application of ceramic coated separator to improve the mechanical strength and application of Phosphate contained cathode materials which is very stable in high temperature will be very helpful for more safe Li-ion battery. In the other hand, the co-development of BMS (Battery Management System) between LIB manufacturer and automobile companies will be also good choice.
5.1.2 High Power
HEV and Plug-in HEV have their own internal combustion engine and the extra energy during driving could be restored in the battery which does the role of supportive supplying power. The combined power of both engine and battery should be superior to the conventional engine type vehicles. The high power of battery is much more important than the capacity which is related the battery consumption time in HEV and PHEV.
Different from the battery of HEV and PHEV, the capacity is also important in BEV (Battery Electric Vehicle, Full EV) because the BEV only apply the battery as a power source.
5.1.3 Long Life Span
Besides the cost reduction and safety improvements, several problems still need to be solved.
To minimize the exchange cost for the battery, the life span of Li-ion battery is very important.
For the mobile application devices, 2 or 3 years of life span guarantee were enough but more than 10years of life span for EV battery is necessary because average possession period for cars were 9years in USA and 8years in France. Which means that the users buy the EV can use the vehicle around 10 years so the life span of Li-ion battery for EV is very important.
Frequent exchange of battery in EV will be a big burden to user because the exchange cost of NiMH battery need around US$8,000.
5.2 Cost Reduction and Long Term Sourcing Plan 5.2.1 Cost Reduction
Toyota tried to apply the Li-Ion battery to their Prius HEV but the mass-production data was delayed 2 years from year 2007 to year 2009 because they didn’t solve cost, safety and other problem of Li-Ion battery for EV.
First of all the cost of LIB for EV is still expensive than NiMH (nickel-metal hydride). The
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price of Toyota Camry HV which adopted the NiMH battery is US$ 25,350 which is US$4,000 expensive than conventional Camry model. But if the Li-ion battery is adopted, the battery cost will be tripled than Ni-MH battery. Battery occupies 15% of total manufacturing cost of automobiles. If automobile company couldn’t reduce the cost of battery, they have to increase the sales price of cars. So the Li-ion battery suppliers have to make continuous efforts to decrease the cost of Li-ion battery for EVs. Applying the low cost active materials such as Mn, Fe than current widely used expensive Cobalt can be a necessary effort for LIB manufacturers.
5.2.2 Long-term Sourcing Plan for Lithium
Lithium is basic raw material for the Li-ion battery so, it is very important to secure the sourcing of Lithium in advance. The demand for the Lithium will be increased continuously and the securing of Lithium sourcing will be the biggest task to solve. The China took the very positive foreign policy for Bolivia because Bolivia has the 50% share of overall buried Lithium amounts in the world.
5.3 Strategic Alliance for Win-Win
The 3rd important thing for the Li-Ion battery manufacturer is to secure the confirmed customer through the strategic alliance with major automobile companies.
5.3.1 Purpose of Alliances
If the battery manufacturers do not build the cooperative relationship with automobile companies, it is very difficult to survive in very competitive market and will die out. The Toshiba which succeed in the commercialization of Li-ion battery for mobile devices next to Sony gave up the business in 2004 because they didn’t have the secure customer.
Providing the battery for more than 2 major automobile companies and achieving the scale of economy based the good product quality and cost leadership are necessary. The automobile companies will need more than one battery supplier to hedge the risk.
For example, Panasonic merged the Sanyo and invested huge amounts of moneys for the battery of EV market. Automobile companies such as Toyota, Nissan and Mitsubishi made the joint venture with battery companies for stable battery supply for their EVs. LGChem became the battery supplying partner for the GM Volts.
To build the battery manufacturing site very close to automobile companies will be a good
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strategy to be became long-term battery supplying partner for them. LG Chem decided to build the Li-ion battery factory in USA to support the GM.
5.3.2 Types of Cooperation – JV and Alliances
Various companies joined the battery business for EV from different business fields such as electronics, automobile, chemical and energy.
Joint venture and strategic alliances can be win-win strategy for both automobiles company and battery manufacturer. The automobile companies can have the stable supplying partner of battery and battery companies can have fixed customers. Japan companies prefer the Joint venture and strategic alliances are more common in USA. The Ford is developing the battery for HEV which will be launched to sell in 2012 with Johnson Controls and Saft together (JCS).
Some automobile components companies cooperate with battery companies. The world largest car components company, Bosch, entered the joint venture with Samsung SDI which is world 2nd largest Li-ion battery manufacturer.
5.4 Developing of New Business Model.
The last important thing to be considered was the new business model related to the battery for EVs. The one of the worst disadvantage of EVs is that it needs long charging for the batteries. The ‘battery exchange system’ needs to be reviewed to solve this problem. One of USA Company, Better Place, is preparing the battery exchange business which is very similar concept with mobile battery exchange. Automobile companies can sell the car without the battery to consumers and the battery exchange companies provide the batteries to customers and charge the usage fee to consumer based on the mileage. If the consumer can save US$1,500 with using the EVs, they can pay that amount as a cost of battery exchange fee Israel, Denmark and Japan are preparing the networking of battery changing station and battery exchange station. When the Smart Grid became common in the future, the application of battery for EV will be expanded. The expensive battery of EV can be recycled for home application as EPS (Emergency Power Supply) or accumulation of electricity for another use.
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