With the failure of the electric car concept in America what impact will this have on the lithium ion battery global supply chain? (Part 1)

Posted on December 1, 2011


The coming glut of automotive lithium ion batteries will make for quite a fire sale. Forecasts made as recently as three months ago predicted that electric cars would become the leading application for lithium ion batteries by 2015, surpassing laptop PCs and other handheld devices. Who are they kidding? How many portable electronic devices do you own? How many electric cars have you ever even seen? By any rational standard the introduction of the Chevy Volt and Nissan Leaf, with fewer than 2,000 units sold between them last month, can only be described as disasters.

from the December 1st, 2011 Forbes article “Watching The Wheels Come Off The Green Machine” by Bill Frezza

It never ceases to amaze me how truly interconnected we all are in a six degrees of Kevin Bacon kind of fashion.

As someone with an extensive IT background, I have always viewed lithium ion batteries within the context of mobile computing devices – remember the old days when you had to let the batteries lose their charge completely before recharging otherwise you would experience decreasing levels of none electric, mobile computing?

Well another electric interruption relating to lithium ion batteries is on the horizon and it has nothing to do with the devices they had traditionally been used to charge.  I am of course talking about the advent and subsequent demise of the electric car in America.

Apparently and according to an article by Bill Frezza, the imminent collapse of the electric car market will leave not only a glut of lithium ion batteries on the market, but will somewhat dampen . . . okay obliterate the industry’s previous forecasts that boldly proclaimed that “lithium-ion will emerge as the world’s leading rechargeable battery technology and achieve a 350 percent growth from 2010 to 2020.”  The latter pessimistic outlook is based on the fact that said growth was going to be driven by “usage in cars” that were predicted to “fuel the bulk of sales growth.”

The problem with these numbers is that here in the real world, brands such as the Chevy Volt and Nissan Leaf only sold 2,000 units combined last month and A123 Systems, the “poster child for successful clean tech investing,” pushed out the door a paltry 40 units.  Hardly the demand that will stimulate the aforementioned 350 percent growth.

So here is the question, if as many pundits are predicting the electric car market is still a long on hype short on tangible traction industry what happens as a result of the unrealized growth and glut of lithium ion batteries that will almost certainly deluge the market starting in 2012?  Even more interesting what impact might this have on supplier stability?  After all, someone has got to eat the costs of a failed pot of gold at the end of the rainbow expectation?

In tomorrow’s post I will examine the fallout from the unrealized expectations of the electric car market on both those directly as well as indirectly involved with the industry as well as what it means to the market as a whole.