Impact of the Covid-19 pandemic on the battery sector
The world is in transition from a past of lead-acid batteries to a future in which lithium-ion batteries are poised to replace lead-acid batteries and displace increasing volumes of transportation fuels.
But will this year’s Covid-19 pandemic affect this transition? Today’s article explores the impact of the pandemic on the battery industry.
Lead-acid versus lithium-ion
In a previous article – Lead-acid batteries are on the verge of extinction – I hypothesized that the falling costs and better performance of lithium-ion batteries posed an existential threat to the 160-year reign of the lead-acid battery.
A trade association for lead acid battery manufacturers replied to this article, essentially arguing that the future demand for batteries would be so great that it would ensure that lead-acid batteries still have an important role to play.
I subsequently examined the environmental advantages and disadvantages of these two types of batteries. One of the case studies for this article was Exide Technologies, a lead acid battery manufacturing company. Exide had previously had problems with regulators because of pollution from factories in Tennessee and California.
Now, it appears that a combination of legal responsibilities and pressures on its business related to the current Covid-19 pandemic has pushed Exide into Chapter 11 bankruptcy for the third time in 20 years. It’s not quite extinction, but the company is going to have to sell its business in North America to survive. Exide’s struggles will likely benefit the lithium-ion industry.
Impact of Covid-19 on the lithium-ion sector
Meanwhile, the pandemic has not left the lithium battery industry untouched. Although lithium batteries are used in many important medical devices – including ventilators which have been critical during this pandemic – the biggest area of growth has been in electric vehicles (EVs). But Wood Mackenzie recently screened that global EV sales will drop 43% this year due to the impact of the Covid-19 pandemic.
Monthly EV sales in China fell by 39% in the first quarter of 2020, but the International Energy Agency (IEA) is more optimistic about the numbers for the full year. In its Global EV Outlook 2020, the IEA predicts that the Covid-19 pandemic will cause the passenger car market to contract 15% this year, but they expect sales of light passenger electric vehicles and Trade remains broadly at 2019 levels. They add that a second wave of the pandemic or a slower-than-expected recovery could lead to a worse outcome.
China, which dominated global production of lithium-ion batteries, has seen its largest lithium-ion manufacturers, Contemporary Amperex Technology Co. Ltd. (CATL) and BYD, cut production due to lack of workers and access to raw materials.
Industry experts weigh in
To better gauge the impact of the pandemic on battery space, I spoke with several industry contacts. Lampros Bisalas is the CEO of the Greek company Systems Sunlight, which specializes in the development and production of lead-acid and lithium-ion batteries and energy storage systems.
Mr Bisalas said many customers in the industrial sector have gone out of business, resulting in a 70% drop in demand for new orders. He expects the market to gradually recover. Nonetheless, he added that Sunlight continues to invest heavily in technology and R&D for energy storage industry technologies. The company is currently investing $ 10 million in a North Carolina facility and $ 3 million in a new Athens-based research and development center focused on lithium technologies. The company is also expanding its operations in Europe through mergers and acquisitions activities.
“The recovery has been steady but slow, with many investors still trying to identify how the pandemic will develop in the months to come. Continuing uncertainty will affect the industry for the coming months, with only absolute needs being met (with an estimate that the market will be -50% of demand for the year 2020). We are seeing demand and it has been shown after the locks started to lift and orders started pouring in. Governments are trying to help, and the focus on green energy will help investors recognize the importance of batteries and the long-term benefits of these green investments. . “
I also spoke to Tim Karimov, president of the California-based lithium-ion battery supplier. OneCharge, and Alex Pisarev, CEO of OneCharge, on the impact they see from Covid-19.
Mr Karimov said that despite opinions that the industrial electric vehicle market will contract 20-40% year-over-year, OneCharge has not seen any slowdown in lithium-ion battery sales over the past few years. last months. He added:
“We are cautiously optimistic about OneCharge’s revenue growth this year, but it’s already clear that the lithium-ion segment’s share is growing much faster than expected in early 2020. The need for the most efficient power solution and safest with a proven solution ROI puts more pressure on operations managers to take action and switch to proven lithium-ion technology (by early adopters). “
Mr Pisarev said that although lithium-ion technology is now ubiquitous in our lives, industrial applications still lag behind as many users are unaware of the efficiency improvements in switching to lithium-ion batteries. However, this is one of the reasons he is bullish in the market this year because he believes we are in the midst of rapid change.
He quoted Tesla
Systems Sunlight’s Lampros Bisalas agrees the future looks bright, says “The energy storage market continues to be propelled by disruptive and innovative technologies. The future is expected to be solid with strong growth and continued disruption due to new technologies, AI, machine learning and cloud-based solutions that will accelerate the integration of batteries into internal combustion applications today. served.
So maybe the current crisis will only be a temporary boost – unlike the meteoric growth in the lithium-ion battery space in recent years.