Battery and EV Industry Review

Report Highlights

INTRODUCTION

For the most part, bad news in 2003 was good news for battery manufacturers. The war in Iraq drove military demand higher while in the U.S., electrical blackouts and Hurricane Isabel drove higher consumer battery demand. Despite increased unit sales, intense price competition and greater advertising, spending dampened profits from increased sales. The three events increased battery sales in the U.S. by approximately $90-$110 million dollars. However, profits were also affected by bad debt resulting from the Kmart bankruptcy. Patents for rechargeable lithium batteries dominated patents in the battery market. Overall battery and battery related patents were granted at the rate of about 50 per month.

The global rechargeable battery market reached $7.6 billion in 2003 as it grew at about 12% from 2002. Japan, which controlled 94% of the global rechargeable battery market in 2000, saw its market share drop to about 65% of the global market in 2003.

In 2003, lithium battery sales grew at about 15% from the previous year; that trend is expected to continue in 2004. China and Korea continued to take market share from Japanese manufacturers. A number of U.S. manufacturers of lithium batteries saw their stock prices increase by more than 200%. Lithium AA batteries grew 25% versus a year ago and are helping to drive growth in the battery category.

In 2003, the U.S. the retail primary alkaline category grew an estimated 10% in units shipped compared to 2002, while category value increased 5%. These batteries have a market value in the U.S. of close to $6 billion dollars at the manufacturers' level. The chief U.S. manufacturers are Duracell, Energizer, and Rayovac. These companies must compete with foreign manufacturers such as Gold Peak, Panasonic, Japan Battery Storage, Sony and Sanyo.

In the automotive sector, more than 110 million lead acid batteries for vehicles were manufactured in 2003 for more than 650 million vehicles on the world's roads. Approximately 81 % of automotive battery sales worldwide in fiscal 2003 were to the automotive replacement market, with the remaining sales to the original equipment market

Major U.S. lead acid manufacturers include Johnson Controls, Exide Technologies, Delphi Corporation, Fiamm, and East Penn Manufacturing Company. Johnson Controls makes batteries for more than 35 million vehicles annually; the batteries were worth an estimated $1.8 billion. In 2003, Johnson Controls acquired European VARTA Automotive GmbH and its 80 % majority ownership in VB Autobatterie GmbH (Varta), a major European automotive battery manufacturer headquartered in Germany. More than 50 million Chinese sealed lead acid batteries were shipped in 2003.

Hybrid vehicle growth drove growth for nickel metal hydride and lithium batteries as more than 120,000 hybrid passenger cars have been sold. Demand is expected to continue to exceed production. A variety of military and specialty hybrid vehicles were also introduced in 2003.

The $14 billion annual industrial battery market segments generally fall into two major categories: traction batteries, also called motive power batteries and stationary batteries, also referred to as standby power batteries or uninterruptible power supplies (UPS).

Industrial trucks and rail and mine vehicles represent two major subcategories of motive power batteries. Industrial trucks include forklifts, automated guided vehicles (AGVs), various types of towing vehicles, and floor cleaning equipment. Battery powered mine and rail vehicles are used in mines where gas could be ignited by spark ignition engines. Locomotive starting batteries and railcar emergency power batteries are also included in this subcategory. Golf cart or marine batteries electric road vehicles, electric boats and non-military submersible vehicles are also included in this sector.

Exide is a dominant player in the Industrial Battery segment, with more than $2.4 billion in sales. Exide has the largest market share for motive power products on a global basis. The Hawker Battery Group acquired in 2001 by EnerSys is number two in Europe. Other competitors in Europe include Fiamm, Hoppecke, BAE and MIDAC. Exide ranks second to Enersys in market share in North America. In North America, the other major competitors are C&D Technologies and East Penn. In Asia, JSB, Panasonic, Yuasa and Hitachi are the major competitors with Yuasa being the market leader. In countries such as Brazil, China and India, local manufacturing is required and U.S. and European corporations often partner with local companies.

This anthology is based on BCC, Inc.'s Battery & EV Technology Newsletter. It keeps readers abreast of the rapid technology developments, which characterize the battery and EV industry. It covers breaking technology developments and industry news in:

• Primary and secondary battery technology
• Fuel cells
• Markets
• Advanced batteries
• Load-leveling batteries
• Government and industry R&D

• The EV market
• Recent patents
• Environmental issues
• Foreign competition
• Emerging markets
• Chargers and monitoring