U.S. electric vehicle battery suppliers shakeout begins

Article by Christian Andrei, on February 20, 2012

The electric vehicle battery suppliers in North America are experiencing various challenges. Ener1 Inc. filed for Chapter 11 reorganization last January. This New York-based battery maker had owned a stake in bankrupt Norwegian EV producer Think Global. Also in January, A123 Systems of Waltham, Mass. lowered its revenue outlook for 2011. It had laid off about 35% of its employees at two of its plants in Mich. On the other hand, Boston-Power Inc. of Westborough, Mass., intends to transfer a huge part of its operations to China, where the government is offering big subsidies to bolster the EV industry. With the sluggish sales of the Chevrolet Volt and Nissan Leaf, a few industry insiders predict that it will take one more decade at least for the U.S. market to generate high-volume sales of EVs.

It appears that battery makers have gotten ahead of the market. Industry consultant Jon Bereisa said that a shakeout couldn’t be avoided. One study said that "excessively grand expansion plans" would result in production capacity at two times the level of market demand by 2015. Bereisa, CEO of Auto Lectrification, a suburban Detroit consulting firm, said that there was a “mad scramble" by startup companies to make lithium ion batteries. He said that the EV industry won’t be able to absorb all that capacity. Roland Berger Strategy Consultants published a story last September about an industry study.

It was mentioned that these major suppliers have emerged. It’s expected that A123 would be a leading supplier of batteries for EV buses. In addition, it makes batteries for the Chevrolet Spark EV. LG Chem Ltd., South Korea's largest chemical company, manufactures batteries for the Chevrolet Volt. Meanwhile, NEC Corp., a Japanese electronics multinational, created a joint venture with Nissan Motor Co. to produce batteries. Panasonic Corp., the consumer electronics giant, produces batteries for the Toyota Prius hybrid. Lastly, SB Limotive, a joint venture between Korean electronics giant Samsung SDI and Robert Bosch GmbH, will be the supplier of EV batteries for BMW.

Topics: united states

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