EV battery overproduction is a growing trend, according to a major automotive research firm. The trend may lead to multiple startups folding, say the market researchers.  (Source: World Car Fans)
Only six to eight global manufacturers will survive, according to the study

You can hardly browse a tech or automotive news site these days without being overwhelmed by a deluge of electric car news.  From the plug-in Prius, to the Chevy Volt, to the sexy Porsche plug-in concept, there's a wealth of designs; in fact every major automaker has unveiled a plug-in or electric concept in some form over the past few years.

As the automakers race to beat each other to market and achieve the lowest price point in their target sector, an integral component is the lithium-ion batteries that store the energy that powers the vehicle's electronic propulsion systems.  

Recent studies have indicated that there's enough lithium resources to survive the electric vehicle (EV) boom.  However, a new study by automotive strategy consultation firm Roland Berger and Wolfgang Bernhart, an expert on alternative energy powertrains, says that the EV battery industry may be headed for trouble.

The industry's aggressive production increases and cost cuts will likely fuel an unsustainable business model, according to Roland Berger.  It predicts that by 2015 there will be demand for 0.82 million "EV equivalents" (a number representing the diverse production population of hybrids and electric vehicles).  Installed capacity they predict will be 2.6 million EV equivalents.  By 2018 demand will likely jump to 3 million EV equivalents yearly.

By 2015, they predict that there will be a 200 percent overcapacity in batteries.  That overcapacity will be worsened by international government grants, which will push for more investment.

The result will be that many companies will go extinct, states the consulting firm.  Describes Mr. Bernhart, "Manufacturers of lithium-ion (Li-ion) batteries currently enjoy a great amount of hype, but massive consolidation is expected to come in the next 5 to 7 years."

He estimates that in 2015 a new cell chemistry will cost approximately €50-100M (approximately $65-135M USD), while a new 100,000 unit plant would cost €350M ($475M USD) to construct.

He says that despite the threat to companies like LG Chem and A123 Battery Systems, there is hope for those that can weather the overcapacity storm.  He describes, "Unfavorable factors are piling up. But managed correctly, electrified powertrains will still be a profitable market in the future."

"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

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