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Despite EV hype, U.S. battery makers are hurting

Oversupply of lithium-ion batteries is causing some companies to go bankrupt.

By Douglas Newcomb Dec 5, 2012 8:54AM

2013 Chevy Spark EV. Photo by GM.Part of the big buzz -- once again -- coming out of the recent 2012 Los Angeles Auto Show was the introduction of more electric vehicles. Chevy took the wraps off its Spark EV, Fiat debuted a 500e plug-in, and BMW trotted out its i3 electric and i8 plug-in hybrid.

The LA Auto Show is the perfect place for electric vehicles to be unveiled, because California is a primary market for such cutting-edge "green" cars. Some of those cars, such as the Fiat 500e and the $50,000-plus Toyota RAV4 EV, are available only in the Golden State due to limited supply.

But even though EVs grab headlines at auto shows, sales not gaining ground. Because of this and other factors such as the availability of more fuel-efficient gasoline-powered vehicles, the slow sales of EVs are leading to a glut of lithium-ion batteries -- and growing bankruptcy among battery makers, according to Automotive News.

In the same way that now-bankrupt solar-panel maker Solyndra became a poster child for an overly optimistic outlook on solar power -- in both funding from the government and the private sector -- EV battery supplier A123 is now filling a similar sad role in the electric-car milieu.

The company filed for Chapter 11 bankruptcy protection in October and may be an early casualty among battery makers that had hoped a growing market for electric vehicles and plug-in hybrids would lead to a business boom. For the time being, it looks to be more of a bust.

Battery maker EnerDel secured a $118.5 million federal grant to build a plant in Indianapolis to supply batteries for Norwegian EV maker Think. Now both companies are in bankruptcy. Automotive News also reports that other battery companies and government-subsidized battery plants are “limping along at a small fraction of their capacity.”

Another element against EV battery makers is the price of gas. When many EV battery plants were being planned and built around 2008, gas prices were hitting record highs, and many predicted $5-per-gallon prices would stay fixed at the pump.

Gas prices eventually lowered, and in the meantime, many automakers, particularly the domestic companies, responded with smaller, fuel-efficient gas-powered vehicles. Because of this -- and the even longer "break-even period" on paying a premium for an EV or plug-in hybrid compared with a high-mpg gas-engine car -- the demand for EVs and their lithium-ion batteries is even lower.

While flashy introductions at auto shows like the one in Los Angeles last week make it seem as if more EVs are on the way, they may not come soon enough to save battery makers in the U.S. But there is one ray of hope for them in developing markets outside the U.S.

Christina Lampe-Onnerud, previously the CEO of battery maker Boston-Power, told Automotive News that the company is supplying battery packs to Beijing Electric Vehicle Co. for an electric version of the Saab 9-5, for instance. "I think there are other regions in the world where it is all going forward very nicely," Lampe-Onnerud said. "In the United States, it doesn't look very nice."

[Source: Automotive News]

Dec 5, 2012 9:49AM
Lower the prices on these EV vehicles and consumers will buy.. Me for one..
Dec 5, 2012 10:05AM
Why do they have to be ugly?? Guess how much that grill to windshield head light assembly will cost to replace? Was that really needed?
Dec 6, 2012 9:59AM

Maybe they could be used for storage purposes for the solar and wind industry? Seems to me green energy is going to require batteries to store up all the produced energy, aren't they? I would take a couple for my solar system in my house, if they were affordable......Maybe they need marketing help?


Dec 6, 2012 3:42PM
Extend the range of the EV vehicles so they're a viable option for people who don't live in cities.
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