Batteries are everywhere, from electric vehicles to stationary energy storage to make renewable energy more versatile, whether for houses with PV systems to utility-scale systems to manage the energy of a small city. The industry’s compound annual growth rate (CAGR) will be more than 27% for the next 5 years, which is both linked to regulation changes, new market needs and also availability of key technologies. The new report from Yole Développement Li-ion Battery Packs for Automotive and Stationary Storage Applications provides all the details on the expected growth of the battery pack industry.
(Source: Li-ion Battery Packs for Automotive and Stationary Storage Applications, Yole Développement, April 2018)
The 27.6% total 2017-2023 CAGRs for battery packs, shown in the graph, is mainly driven by battery electric vehicles (BEVs), for which battery pack sales will surpass $51.6 billion by 2023. The hurdles for faster deployment of BEVs are the high price for batteries and still relatively short driving range. Strongly decreasing battery cell costs, together with continuously improving cell technologies, play in favor of using larger-capacity battery packs, enabling longer driving range, and thus greater BEV deployment.
Additionally, the high level of air pollution in some big cities is driving deployment of electric buses. Buses stop frequently and can potentially charge at each stop or terminus station, making them well-suited for battery power. Electric trucks can then benefit from battery development for buses. The use of electric trucks in the urban environment can in turn help further reduce air pollution.
Large-scale deployment of renewable energy sources and distributed energy supply models put greater demands on electricity grid frequency voltage and frequency stabilization. Batteries can serve these purposes well, enabling better integration of intermittent renewable energy sources, such as photovoltaics, with the grid. As detailed in the report, big battery packs for grid applications will feature the second-fastest market growth, with 2017-2023 CAGR of 57.1%. Small stationary battery packs, driven mainly by residential photovoltaic-plus-storage installations and back-up energy supply will grow fastest, with a 58.7% CAGR. Battery cells form the main part of the global battery pack market studied in this report: They will represent 58.8% of the total market value in 2023. The second largest part of the battery pack market will be represented by Battery Management Systems (BMS). The importance of BMS is growing with increasing requirements to accurately determine remaining battery capacity, and with increasing cell and pack energy capacities.
But how can companies differentiate themselves in such a highly dynamic market? According to Yole Développement’s analysis, there is no big technology breakthrough expected in coming years regarding battery cells and other battery pack components. The main trends will involve existing technology solutions, which will be further improved and more widely deployed. Technology and cost improvement will be steady. The big changes, such as the transition to 800V battery pack voltage for BEVs, will be realized first by a limited number of car manufacturers and then progressively implemented by other companies. Nevertheless, the growth of the battery pack market is attracting ever more players. Those companies enter the battery pack market either as newcomers, or players already involved in some battery segments get more integrated.
Yole Développement has identified that battery pack makers are addressing increasingly tough market conditions either by technology and supply chain consolidation to drive costs down, or by differentiation via their product offering.
A growing number of companies, especially carmakers, purchase cells from established manufacturers with high-volume manufacturing capacity that have mastered both technology and manufacturing processes. The carmakers define the cell designs and desired characteristics. This enables them to keep a certain level of product differentiation at the cell level, while keeping cell costs and performance at better levels compared to in-house manufacturing. Cell makers are becoming increasingly integrated, offering cells packaged in module form. The modular battery pack approach enables further manufacturing cost reductions but keeps the design flexibility for battery packs. Battery pack makers can then increase this differentiating added value further by carefully designing the battery pack, and choosing components including the BMS, thermal management solutions, safety devices, electrical interconnects, housing and assembly.
The battery pack is the place where industrial companies can best differentiate themselves by adding value to the battery. The new Yole report Li-ion Battery Packs for Automotive and Stationary Storage Applications analyses how they do this, as well as the market and technology trends and the main players’ strategies.
Dr. Milan Rosina is a Senior Analyst for Energy Conversion and Emerging Materials at Yole Développement. Before joining Yole, he worked as a Research Scientist and a Project Manager in the fields of photovoltaics, microelectronics, and LEDs. Dr. Rosina has more than 15 years of scientific and industrial experience with prominent research institutions, an equipment maker, and a utility company. His expertise includes new equipment and process development, due diligence, technology, and market surveys in the fields of renewable energies, energy storage, batteries, power electronics, and innovative materials and devices.
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