Battery technology has traditionally lagged behind the innovative ideas that surround it. However, the electric bus market could be changing this, as the demand for more effective and efficient batteries increases.
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Lithium-ion batteries are often used in consumer electronics, such as smartphones, but there has been a big jump in the demand for higher capacity batteries thanks to the electric vehicle industry. IDTechEx technology analyst Victoria Adesanya-Aworinde says that the market has "grown remarkably well".
"In our forecasts we predict that by 2020, the lithium-ion battery market for electric buses is going to overtake consumer electronics," she says. "[This] is a large accessible market for lithium-ion batteries at the moment."
New niches power interest
Adesanya-Aworinde says that 2015 was a very good year for lithium-ion batteries, because new niche-driven markets are appearing, such as the electric buses and the hybridisation of marine vessels.
These vehicles require massive battery capacities compared to electronics. The energy needs vary a lot between buses, from smaller 50kWh to over 300kWh depending whether they are fast charging or slow charging, Adesanya-Aworinde says. Marine vessels even reach 1,000kWh per instalment.
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By GlobalData"Because of this huge project, although they’re not produced in mass volume, as one will compare to consumer electronics, the large capacity makes them a large accessible market for lithium-ion batteries," she says. "So at the moment it’s doing extremely great. Now the question is, is it going to remain that way?"
Worldwide sales of e-buses have been growing at a rate of 20% a year. This mounting interest means that sizable batteries are needed to power them, to keep up with the electricity demand. This has created an emerging market for large sized batteries, and according to IDTechEx Research report, the market could grow to be worth $30bn by 2026.
"My general feeling is in the coming years there’s going to be a shortage and that’s just because they are new addressable markets," says Adesanya-Aworinde. "There’s going to be a huge demand for lithium-ion batteries over the coming ten years."
China’s electric vehicle rule
Currently, China dominates the electric bus and battery market, with 97% of e-buses and 75% of their batteries produced there. They manufacture the most common batteries, lithium-iron phosphate (LFP), while nickel manganese cobalt (NMC) batteries are largely made elsewhere.
BYD, the $38bn Chinese conglomerate, owns a factory that manufactures e-buses which can travel 155 miles on one charge, and cost $800,000. They’re powered by a 324kWh lithium-iron phosphate battery (LFP), which can also be used to store renewable energy from solar panels or wind turbines.
There’s also a smaller battery pack version which powers an electronic SUV, giving it a range of 186 miles on a charge. In comparison, most electric cars currently get on the market get about 75 miles.
China is on course to be a massive game changer in the market, and currently has the biggest electric vehicle market in the world.
"To put this in context, in 2015 around 97% of all the electric buses were produced domestically in China," says Adesanya-Aworinde. "That is huge."
The success stems from China’s desperate need to deal with its pollution. Last December there was a red alert in Beijing – the highest-level air pollution warning – because there was particulate matter everywhere.
"They had to shut down schools, factories and everything," says Adesanya-Aworinde. "They are one of the most polluted countries and they’re taking measures."
China is keen to bring the entire electric bus value chain inside the country to stay on top of the sector. One of the most popular lithium-ion batteries, lithium-iron phosphate (LFP), is produced locally in China.
The report states that, if recent Chinese Government policy intervention in favour of LFPs is strictly applied, market dynamics will largely lean towards this technology. Either way, China will remain a major contender in the industry.
"Over the coming ten years the Chinese market is still going to dominate this new energy vehicle market" she says. "Places like Europe are just playing catch-up."
LFP vs NMC
LFP batteries are generally safer than NMC lithium-ion technologies, which is vital, especially for the large ones in electric buses. Bigger batteries cause bigger accidents and hefty ones inside e-buses could result in massive amounts of toxic, flammable leakage. Adesanya-Aworinde says that LFPs also tend to be cheaper, as NMCs contain expensive cobalt.
About 80% of electric car batteries are comprised of LFP, but if the safety of MNC technology improves, these batteries could account for almost half of the whole battery market. Adesanya-Aworinde estimates that this will probably happen by 2025, which could very much open up the market to the whole world and reduce China’s hold.
She says that NMCs are a good competitor to LFP batteries because of their better charging rates and higher energy density, but it’s a wait-and-see situation in terms of where the technology goes in the next few years.
It’s the big players who will benefit from the industry growth, companies such as BYD, LG Chem and Toshiba. Batteries are the reason electric cars are so pricy, attributing to 50% of the vehicles’ cost. So if the industry giants are able to mass produce them in a much cheaper way, then they will play a huge role in the future of the market.
"The key players, the ones that have the production capacity, or the economic scale to actually reduce the size of these batteries, they are going to play a huge role," says Adesanya-Aworinde. "Because with the volume comes the reduction in price, and that would make it more accessible for customers to buy."
Charging the future
Going forward, manufacturers and engineers will be working on reducing the cost and improving the energy density and power density of batteries. One exciting innovation is a product that uses nano-materials in its batteries from developer A123 who have just been acquired by Wanxiang Group in China.
"We’re also seeing a shift of companies researching poly-electrolytes, and that’s important in terms of safety," Adesanya-Aworinde adds. "If you’re using larger batteries like you do in electric buses, you have to put in place battery management systems at cell, modal and system levels.
"So using solid electrolytes or polymer which is a gel electrolyte also helps in terms of safety, flammability and also leakage. These are some of the innovations that are being done by companies."
An online version of the report can be accessed here.
