Frost: Demand Grows for Hybrid Electric Vehicle, Electric Vehicle Batteries
October 21, 2008 // Published as a news service by IHS
According to Frost & Sullivan, skyrocketing oil prices, combined with concerns over tailpipe emissions, are increasing the demand of HEV/EV vehicles and HEV/EV batteries.
Recent analysis from Frost & Sullivan of the world HEV battery market found earned revenues exceeding $710.9 million, with a growth rate of 31% in 2007.
As climate change is a dominant theme, analysts said a radical shift to new technologies such as EVs is needed. The steady progression toward zero emission, pollution-free vehicles will augment conservation strategies to mitigate the impact of global warming.
"To reduce the dependency on oil, governments of various developed countries offer promotional initiatives and legislative regulations that provide tax credits and concessions to users of environmental friendly vehicles," said Frost & Sullivan industry analyst Suba Arunkumar.
"Battery manufacturers have also stepped up efforts to roll out an impressive array of new technologies to deliver more efficient, high performance batteries in the future."
As these vehicles are predominantly battery-powered, batteries play a major role in pricing. The HEV segment is more dynamic compared to the EV segment, analysts said, as HEVs prove more cost-efficient. While EVs are constrained by their heavy dependence on batteries, HEVs combine a conventional propulsion system with an on-board rechargeable energy storage system.
The challenge for battery manufacturers is to provide the right battery chemistry that delivers superior performance, while maintaining cost-efficiency. With an intense focus on research, analysts said high performance and affordable batteries will soon be a reality.
Analysts said the market is still in the growth phase and will take a few more years to achieve higher volumes. For now, there is great possibility for battery replacements in the next five years. This results in the cyclic behavior in demand pattern, augmenting market growth.
"The heavy expenditure involved in research has a spillover effect on the cost of these vehicles," said Arunkumar. "While this can dampen uptake in this growth phase, prices are expected to decline with the rise in sales volumes."
Further refinement of new technologies, such as lithium-ion batteries, will play a pivotal role to ensure future market expansion. Analysts said the responsibility is for auto manufacturers and battery companies to strive to reduce costs to enable these vehicles of the future to become affordable realities.
HEVs are being adopted in the Asia-Pacific region, with the maximum demand stemming from Japan, where they are utilized for a host of applications. EVs in the form of motorcycles, delivery vans and other vehicles are also increasingly used.
Analysts said the booming economies of China, South Korea, Taiwan and Australia also significantly contribute to the growth of this market and spike demand for batteries.
Source: Frost & Sullivan.