Can Lithium Batteries Be Made Competitively In The United States?
In a recent article we saw that Panasonic, BYD and LG Chem were the biggest players in the battery market.
Although this CEMAC study was published in summer of 2015 and focuses on 2014 data, there are still some interesting trends pointed out in their analysis: most importantly that the US can be competitive given the proper conditions.
The primary variables effecting US competitiveness are presented along with some other interesting data relative to the percentage of total demand for automotive versus consumer electronics and unused manufacturing capacity.
First, Asian companies dominated the Lithium battery market.
Second, consumer electronics consume the majority of lithium battery manufacturing with some 69% of the market going to consumer electronics and 31% going to automotive and grid storage in 2015. Growth forecasts to 2020 predict the auto and storage market expanding to 40% in 2020.
The 2014 data shows huge overcapacity in almost all regions. For example, the US only utilized 20% of its manufacturing capacity in 2014.
Even with conservative growth forecasts, this excess capacity will be easily used up by 2018
Excluding the cost of capital, material costs are the biggest driver of battery cost.
The US could be competitive in the Lithium battery market given low materials cost and an approximate 8% cost of capital.
Tesla’s current cost of capital is approximately 9%