roland berger li ion batteries bubble bursts 20121019
TRANSCRIPT
1 Li-Ion-Batteries_Bubble_final_E.pptx
Stuttgart, October 2012
Lithium-ion batteries – The bubble bursts
2 Li-Ion-Batteries_Bubble_final_E.pptx
Consolidation in the lithium-ion battery (LiB) market is inevitable – Stakeholders need to revise their strategies
Source: Roland Berger
SUMMARY
The large-format lithium-ion cell market will face overcapacity and price wars: - Demand is lower than expected - A lot of capacity has been built up – but new equipment to be installed will be more efficient - Prices are down to 180 and 200 EUR/kWH in 2014/2015
Bottom-up calculations show that with an expected EBIT margin at or below 5%, "early movers" in particular cannot generate enough EBIT to finance their cost of capital
New developments on the material side (mainly cathodes, electrolytes/separators) as well as in production technologies will lead to further cost reductions – but require more cash for introduction and industrialization
Therefore only the already large players or companies will survive the shakeout, as their parent companies might be willing to provide the business with sufficient capital
That's why cell manufacturers as well as their customers – the OEMs – need to rethink their strategies
A
B
C
3 Li-Ion-Batteries_Bubble_final_E.pptx
OEMs will increase xEVs sales significantly in the short term – Toyota will remain the main player
Hybrid light HEV1) BEV
A
2015
0.8
2011
0.3
2015
2.6
1.3
1.3
2011
1.1
0.7
0.3
2015
0.6
2011
0.1
Comments
1) FHEV, PHEV
Source: Roland Berger
OEMs xEV sales plans by xEV type [m units]
• Figures are a summary of OEMs' sales targets for their xEV programs
• They do not include sub-A-segment vehicles (vehicles not classified as "passenger cars")
• Sales targets tend to be on the optimistic side – but were not adjusted by Roland Berger
38%
17%
25% 80%
OEMs excl. Toyota Toyota xx CAGR 2011-2015
DEMAND
4 Li-Ion-Batteries_Bubble_final_E.pptx
However, in one 2020 scenario, xEVs will represent only a minor share of powertrains in EU, US and China – Introduction delayed
Base scenario: xEV market share in the EU, US and China, 2020 [%]
COMMENTS
• Market share calculated based on an assessment of push (legislation-driven) and pull (customer-driven) factors for xEVs in the EU, US and China
• The market shares shown represent the minimum required xEV share to meet push and pull in each region – Higher xEV market shares are possible and even likely
• The EU's xEV market share achieves the level required to meet EU CO2 emissions targets in an aggressive scenario regarding ICE optimization and driving resistance reduction
• The US's and China's xEV market shares are primarily required to fulfill pull factors for xEVs
• Further legislative action might increase share
• Japanese/Korean figures expected to fall between the US and EU
1% 1% 1%
97%
0% 2%
2% 0%
95%
1% 2%
0%
26%
70%
BEV/RE
PHEV
FHEV
Hybrid Light
Conventional incl. Start-Stop
Source: Roland Berger
A DEMAND
5 Li-Ion-Batteries_Bubble_final_E.pptx
5
The EU's xEV market is primarily legislation-driven – The US and China are driven primarily by customer pull
EU 1 USA 2
PU
SH
• Even under optimistic assumptions regarding ICE improvements and light- weight measures, all OEMs will need xEVs to comply with 2020 CO2 emissions targets
• In terms of costs, hybrid light and PHEVs are most favorable
• CAFE emissions targets can be met by utilizing ICE improvements and some weight reduction technology – OEMs also have no cost incentive to apply xEV technologies on a large scale
• However, the ZEV mandate and the ability to earn credits will lead OEMs to build at least some PHEVs and EVs
• Technology penetration is driven only by government targets for PHEVs and EVs
• Fuel consumption targets can be met by optimizing ICE in all segments
• Fleet emissions are possible, but there is no clear indication yet
• If fleet emissions will be set, high xEV penetration expected
China 3
PU
LL
• No TCO advantage for FHEV, PHEV or BEV powertrains
• Hybrid lights will become neutral as regards TCO, but will provide additional functions
• In larger-car segments, customers will be willing to pay more for higher performing hybrids
• Only niche demand for BEVs
• No TCO advantage for xEV powertrains due to low fuel costs
• However, some customers are willing to pay for xEVs for environmental image reasons
• Almost no customer pull for xEVs – except in luxury segment
• Light and full hybrids would offer significant consumption advantages, but TCO advantage is limited due to low cost of fuel
• No willingness to pay for "green" image – in luxury segment, innovativeness of xEVs is an important purchase criteria
Summary of push and pull factors for xEVs
Source: Interviews; Roland Berger
A DEMAND
6 Li-Ion-Batteries_Bubble_final_E.pptx
To meet CO2 emission targets, OEMs will mostly introduce xEV only according to the cost of CO2 emission reductions in their fleet
1) Based on interviews, validation with TCO calculations 2) Assessment is based on a calculation of xEV CO2 emission reduction potential, customer willingness to pay and cost (components and other cost)
Gap between CO2 fleet emissions and CO2 targets Usage of xEVs types to close the gap at OEMs1)
Cost of cutting CO2 emissions2)
OEM will offer xEVs in segments to fulfill customer requirement and skim willingness to pay – Hybrid light in large/luxury cars and minor share in medium size cars, PHEVs in large/luxury cars, BEVs in mini/small cars
0
Intensify usage of hybrid light in medium size and small cars and PHEV usage in larger cars
1
Expand PHEV usage to medium size cars 2
Increase EV penetration in smaller cars and expand usage to medium size cars
3
OEM
108
2020 CO2 emission target
101
Assumption for xEV usage at OEMs to comply with EU CO2 emission regulation
2020 CO2 emission
0 High
Source: Interviews; Roland Berger
A DEMAND
7 Li-Ion-Batteries_Bubble_final_E.pptx
Hybrid light will become at least TCO neutral – Buyers of large/ luxury vehicles will be willing to pay for full hybrids and PHEVs
COMMENTS
• Assessment of TCO is based on a detailed calculation – taking into account necessary uplift of 200% on material cost for OEMs to maintain EBIT margin per vehicle
• Willingness to pay in large and luxury segment is driven by social pressure to be environ-mental compliant and additional functions enabled by xEV power-trains (e.g. comfort start-stop, idle AC)
Pull factors for xEVs Europe, 2020
Vehicle size
xEV type
Luxury
Large
Medium
Small
Mini
Light Full PHEV EV
TCO neutral/advantage to best ICE-technology Willingness to pay Other reason
Esp. sport cars
CO2 emissions limits in company car fleets
Source: Interviews; Roland Berger
A DEMAND
8 Li-Ion-Batteries_Bubble_final_E.pptx
A significant share of powertrain electrification are stop-start and micro-hybrid systems – but here, LiB are not competitive
Source: Roland Berger
• Conventional starter batteries cannot be used effectively in start-stop and
micro-hybrid applications due to poor cycle life and poor charge acceptance
• Initially, most of the start-stop systems used a 2 battery approach in order to fulfill
the requirements: 1 conventional starter battery (for starting only) plus 1 AGM
battery for power supply. Problems are cost for 2 batteries and limited life of the
AGM battery – Lithium Ion cell makers did expect a chance here
• Recent developments in Lead-acid batteries (called Enhanced Flooded Battery )
have now be presented and are likely to become a viable and cost effective
solution for start-stop and micro-hybrid applications
• Companies like JCI, Exide, Banner, Moll, Shin Kobe, GS-Yuasa and others will
probably be able to offer Lead-based products that will meet start-stop and
micro-hybrid requirements exceeding 200,000 km or 6 to 8 years of operation
at lower system costs than lithium-ion batteries.
Source: Roland Berger
A DEMAND
9 Li-Ion-Batteries_Bubble_final_E.pptx
Price levels around 200 EUR/kwH (approx USD 250) in 2015 do not provide sufficient EBIT to finance cost of capital
Source: Roland Berger LiB Value Chain Cost model 2011
Cell P&L breakdown, 2015 Cell material cost split, 2015
6%
10%
18%
EBIT
5% SG&A
Overheads
1% Labour
Energy/Utilities 0%
D&A Equipment
D&A Building
0%
Quality / Evironmental
2%
Raw material 58%
Total cost: approximately USD 22.1/cell (~ 237 USD/kWh)
18%
39%
Separator
Housing and feed-througs
Anode
Electrolyte
11%
Cathode
13%
19%
Material cost breakdown
USD 13.4/cell
~24% of total cell
costs)
B CELL ECONOMICS & TARGET PRICES
1) Including carbon black content, foil and binder cost
Typical 96 Wh PHEV cell – Cell cost structure 2015
10 Li-Ion-Batteries_Bubble_final_E.pptx
Our calculation takes into account declining material prices– Driven by strong competition to capture market shares
Impact on the cell manufacturing material prices (mid-term - 2015)
1) Investment, energy, labor 2) Process cost reduction potential for LFP available
Increasing the price Limited impact Decreasing the price
Input materials
Raw material cost
Process cost1)
Standardization Competition/ capacities
Overall impact
IMPACT FACTORS ON PRICES
SEPARATOR
ANODE
ELECTROLYTE
CATHODE 2)
Overall strong price decrease
Source: Roland Berger "Battery material cost study V.2.4 / Q1 2011"
• NMC 25 $
• LMO 15 $
• NCA 35 $
Price per kg 2015
• 18 $
(50-50 mix)
• Solution:
20 $ (LiPF6:25-30$)
B CELL ECONOMICS & TARGET PRICES
11 Li-Ion-Batteries_Bubble_final_E.pptx
Material manufacturer need to improve their materials to drive down costs – resulting in additional R&D demand on cell level
Comment
• According to latest analyst reports the prices of Nickel, Cobalt and Manganese will decline through 2015
• Largely as a result thereof CAM material costs will decrease by between 7% and 22% between 2011 and 2015
• The costs of LFP will increase largely as a function of higher energy and utility costs which account for 30% of total cost
• If high-capacity materials (HCMA) is ready by 2015, this will offer a significant cost advantage over other CAMs due to higher energy density compounded by lower material cost
Manufacturing cost calculation 2015 [USD/kg]
~56.49 ~34.49 ~37.8 ~36.54 ~35.27 ~34.12 ~27.3 ~20.4 ~27.46 [USD/
kWh]
2%
66%
14%
4%
NCM
523
63%
13%
13%
NCM
111
64%
2%
13%
13%
14%
4%
NCA
12%
12%
4%
LCO
73%
10%
10%
HV
spinel4)
54%
2%
16%
17%
5% 5%
HCMA3)
57%
2%
15%
16%
5%
LMO
49%
3%
5%
20%
15%
8%
LFP -
FePO4
40%
2%
22%
21%
7%
7%
NCM
424
62%
Raw materials Labor Energy/Utilities D&A Equipment D&A Other Maintenance Quality/Environment
~32.5 ~25.5 ~24.5 ~23.7 ~22.8 ~17.5 ~12.8 ~20.2 ~19
TM
C1
)
1) Total manufacturing costs 2) High quality differences 3) not available until >2015 4) not available until 2020
2)
B CELL ECONOMICS & TARGET PRICES
Source: Roland Berger LiB Value Chain Cost model 2011
12 Li-Ion-Batteries_Bubble_final_E.pptx
Declining cell prices will result in massive pressure on cell and CAM manufacturer margins - not enough to finance costs of capital
22.023.3
22.1
13.4
8.2
2.3
2.1
4.3
4.6
Market
price
Market
price
1.3
Cell
Price
Cell
margin
1.2
Cell
cost
Cell
SG&A
Labor/
utilities
Cell
D&A
Cell
material
cost
CAM
margin
0.3
CAM
SG&A
0.4
Cathode
material
cost
Other
Comment
• For a typical CAM manufacturer
– Raw materials account for up to 55% of total cost
– D&A and utilities account for up to 25% of total cost
• For a typical cell manufacturer
– Raw materials account for up to 58% of total cost
– D&A and utilities account for up to 19% of total cost
CAM
margin CAM cost Cell cost Cell
margin Other
materials1)
Cell price
• Any price decrease beyond 24 USD / cell (lower than EUR 200 / kWh) will have direct impact on CAM and cell manufacturer margins
Margin pressure
Typical 96 Wh PHEV cell – Cell price breakdown 2015 [US $ / cell]
1) Anode, separator, electrolyte, housing 2) Expected market price based on expert interviews
• In view of their limited ability to offset sales price declines, CAM and cell manufacturers will compete over a shrinking profit pool
Market price2)
Delta
7.5% 6.0 %
B CELL ECONOMICS & TARGET PRICES
Source: Roland Berger LiB Value Chain Cost model 2011
13 Li-Ion-Batteries_Bubble_final_E.pptx
To significantly reduce cell costs beyond 2015, major innovations in CAM technology and introduction of new CAMs are necessary
13
Comment
• Const. cell energy (at 96 Wh) assumed
• In 2016 introduction of higher density NCM CAM, resulting in:specific cell energy increase to141 Wh/kg and concurrent reduction in NCM usage to 113 g
• In 2018 introduction of high-density HCMA CAM: further increases specific cell energy to 144 Wh/kg with HCMA usage to 100 g
• HCMA price includes a license fee of 2%
• No changes in anode, separator and electrolyte cost assumed in figure: add. potential 10..20$ /kWh
• Add. cell manufacturing process improvement: potential ca. 10..15$ / kWh
• Cell price forecast 2018..2020: 200$ / kWh (incl. approx. 15% margin for both CAM and cell manuf.)
Typical 96 Wh PHEV cell – Impact of material improvements on cell prices (cost for Auto. customers)
CAM cost share
-10% -6%
HCMA
cell cost
2020
19.9
16.5
0.9
NMC
cell cost
2020
20.8
16.5
3.4 4.3
Labor
0.1
Energy
density1)
1.0
Manu-
facturing
0.4
NMC
cell cost
2015
22.1
16.9
5.2
HCMA
• Unless HCMA material is introduced, further price reduction potential of CAM materials is limited and margins remain at unacceptable level
• Also cell manufacturer need (and will) improve processes and yield rate
Innovation pressure
Cost reduction NCM cell 2015 – 2020 NCM cell
2015 NCM cell
2020 HCMA cell
2020 Potential cost
reduction HCMA
Source: Industry reports, experts interview, Roland Berger analysis
(230 USD/kWh
204 USD/kWh
1) Based on a high-density 50-50 mixture of NCM 111 and LiNiO2
B CELL ECONOMICS & TARGET PRICES
14 Li-Ion-Batteries_Bubble_final_E.pptx
The value chain is therefore expected to further consolidate (1/2)
Source: Roland Berger
CHANGES BY 2020 TODAY (2012)
Raw materials Lithium mining
> Some selected new players
> New recycling companies
> Business models integrating recycling
> Oligopoly
> New players (from specialty chemical sector ) especially for Automotive and ESS
> More integration of precursor manufacturer
> Cathode manufacturing by cell manufacturer only for top 2..3 with large chemical business
> Dominated by Asian (Jap.) players
> Partially specialized precursors sourced
> Some cathode materials manufactured by cell manufacturer
Anodes, Cathodes, Separators, Electrolytes and Precursors
C IMPLICATIONS
15 Li-Ion-Batteries_Bubble_final_E.pptx
The value chain is expected to further consolidate (2/2)
Source: Roland Berger
Battery cells / stacks ("LiB manuf.")
> Massive consolidation (cost pressure, innovation)
> Auto-Cell manuf. JV's as exemption
> Some JVs disintegrating
> Established players gaining share, research spin-offs with public & IPO funding leaving the market
> Increased outsourcing, but still dominated by in-house assembly
> Some cell manufacturers try to deliver larger part of system (incl. electronics) as Tier-1
> Mainly by OEMs (JVs LiB) inhouse
> Selected supplier – LiB JVs
> Limited LiB alone
Battery assembly
CHANGES BY 2020 TODAY (2012)
C IMPLICATIONS
16 Li-Ion-Batteries_Bubble_final_E.pptx