Lithium car batteries may shift balance of industrial power
The lithium car battery is primed to become a “major disruptiveforce” over the next decade, dictating the fate of the world’slargest vehicle makers, reshaping the electronics industry andsparking possible tensions between the mineral haves andhave-nots.
As carmakers ponder moves into greener manufacturing, the risks ofmistakes grow greater with every new battery maker or technologythat emerges. With the industry rules reset by lithium, analystssay, new businesses are expected to appear from nowhere. Many willfail but some may go on to become the new General Motors orToyota.
Lithium batteries and the prospect of some future worldwide marketfor electric cars have already propelled Wang Chuanfu, the founderof the car and battery maker BYD, to become China’s richest man asshares in his company soared. A year earlier, he was 103rd in therankings.
The prospect of lithium’s rising dominance over a post-oil economyhas begun to draw warnings from government and industrial sourcesthat seismic shifts are about to take place. The investment scenesurrounding batteries, analysts say, may become more complex as newcompanies emerge to challenge the established players andspeculative bubbles inflate throughout all stages of thebattery-making process.
Brokers are touting ways to play the lithium story, from batteryproducers, such as Samsung SDI and Panasonic, to lithium miners,such as SQM and Chemetall. Several analysts believe that Nissan,with its plans to build battery production in Britain and Europe,represents the best carmaker in which to buy shares to invest inelectric cars.
A potentially bloody technology race is under way and mistakes willbe made in the stampede, Kanehide Yahata, a CLSA analyst, said. Hehighlighted the temptation prematurely to view Korean and Chineseproducers as the likely winners because there are still hugediscrepancies in expertise. Japanese research is eyeing a batterythat would allow an 80km drive on a single charge. Korea’s researchefforts are focused on developing one that could manage 32km.
“Some automakers, such as Mitsubishi, have missed the point bycreating commercially unviable electric vehicles,” he said. “Incontrast, Nissan’s Leaf shows great promise. Honda is frettingabout what to do while Toyota is quietly treading water. GM is onthe wrong scent with the Volt and Chrysler’s plan is just abluff.”
Toyota’s senior management pointed yesterday to the lithium batteryas the “deciding technology” by which Japanese and Americancarmakers would survive or perish. The supply of lithium batteriesis expected to redraw corporate partnerships throughout Asia,particularly in the technology’s heartland of Japan: lithiumbatteries lie at the centre of the world’s biggest electronicsmerger between Panasonic and Sanyo.
Nomura Securities analysts predict that lithium will create a newbalance of industrial power. “We think the barriers to entry [inbattery making] could quickly lower over the next four or fiveyears with the switch to electric and hybrid vehicles the maindriver of growth. That could trigger a collapse of the existingbusiness groupings, the adoption of new materials and thedeterioration of Japan’s position as the industry pacesetter,” arecent note to investors read.
On lithium’s upstream, the transformation is visible. “In terms ofinterest and exploration, the lithium industry is experiencing anall-time high. Over the past four months, unclaimed lithiumdeposits have been snapped up at a rate never seen before,” SimonMoores, an Industrial Minerals analyst, said. The majority ofprojects, he warned, would end in failure.
Some see a potentially risky side to the boom. On a visit to Tokyothis week, Lord Mandelson, the Business Secretary, described thecoming competition for resources such as lithium as “the nextbattle we are going to have to take on”.