The hybridization of America's auto fleet once threatened to make lead-acid batteries obsolete, but analysts now believe the veteran technology will serve as a workhorse for battery makers to piggyback the evolving hybrid market on.
"The transition has already begun, because there's more than a million hybrid vehicles on the road today. While those vehicles might not be economical today, there's improving visibility on costs becoming more economic in the future as different subsystems come down in cost," said Craig Irwin, senior vice president of equity research for clean technology in Wedbush Securities' New York office.
While hybrids will dominate new car sales in years to come, analysts differ on how quickly they will penetrate the on-road fleet.
UBS Securities LLC auto analyst Colin Langan takes a conservative view, pointing out that hybrids represent 2 to 3 percent of the 250 million vehicles on the road today. "From a cost perspective, hybrids are still not there and it's probably going to be a long path," he said.
In contrast, Boston Consulting Group Inc. sees the global auto market taking a decided turn toward hybridization during the next decade. "We anticipate that the approximately 14 million electric cars forecast to be sold in 2020 in China, Japan, the United States and Western Europe will comprise some 1.5 million fully electric cars, 1.5 million range extenders and 11 million hybrids. In the same year, the market for electric-car batteries in those regions will be worth some $25 billion," analysts at the Boston-based company said.
That view was echoed by Deutsche Bank, where analysts peg hybrid penetration at 17 percent by 2020. But even at that rate of hybridization, conventional vehicles and their large lead-acid batteries will still rule the road.
Behind the push are international emission control regulations, which original equipment manufacturers (OEMs) must either comply with or face tough penalties.
The quickest and cheapest way to meet the standards is to downsize or introduce smaller vehicles that simply use less gas and thus emit fewer emissions, an approach already taken by Ford Motor Co., Dearborn, Mich. The automaker has focused on bringing smaller cars into the market.
The second strategy has been to phase in fleet-wide integration of stop-start technology. In a bid to appeal to environmentally conscious consumers, automakers have branded all "stop-start" vehicles the micro-hybrid, with micro referring to the level of hybridization rather than vehicle size. A micro-hybrid is just a conventional combustion engine programmed to turn off when the vehicle stops, Langan noted.
Lead-acid battery makers are embracing micro-hybrids as their ticket into the world of hybrids through advanced lead-acid battery technology like lead-carbon and advanced absorbent glass mat (AGM) batteries.
Irwin singled out lead-acid technology as the most promising in this segment as it resolves the sulfur buildup suffered by traditional batteries by replacing the negative lead electrode with one made of carbon. While the small adjustment means that battery makers don't need to alter their production lines, it increases the number and speed of charge cycles and extends battery life for consumers. "You can charge it and discharge it violently and it has much greater tolerances than other flavors of lead-acid batteries," he said.
Lead-acid batteries have eked out a more basic role in hybrid cars. While a lead-acid battery proved unfit to power the electric drivetrains of the high-technology vehicles, the veteran workhorse is well suited to running the accessories and creature comforts that drivers have become accustomed to. From basic functions like headlights, windshield wipers and electric windows to luxuries like heated seats and navigation systems, the modest 12-volt battery keeps everything humming.
"I'm not aware of any single hybrid vehicle that eliminates the lead-acid battery," Irwin said.
The lead-acid batteries in some hybrids are smaller than the standard auto battery, but that's not the case for higher-end hybrids like the Mercedes S400, whose lead-acid battery is the same size as the battery in its gasoline-burning cousin, the S550 luxury sedan. It also occupies the same location in the car's trunk, pointing to another reason for lead-acid's staying power: standardization. Since auto interiors are mass made and electric systems are wired for standard volt requirements, it makes sense to keep the lead-acid battery instead of radically altering the vehicle's design.
This multi-battery design may be a good model for how battery makers should approach the future, as opportunities to diversify into new technologies and benefit from past experience abound.
Boston Consulting Group sees great synergies for OEMs teaming with battery makers. "Such relationships give the OEM exclusive access to the know-how, technology and production capacity of the cell manufacturer and allow the OEM to differentiate its vehicles in terms of a chosen battery technology," company analysts said.
They believe that exclusive partnerships—like the one Toyota forged with Panasonic Corp. to bring its nickel-metal hydride Prius battery to the market—likely will dominate in the medium term. But as the new technologies mature and become commodified, industry participants likely will return to more traditional roles.
The alternative model is for battery makers to join forces in the development of new chemistries, such as the partnership that Johnson Controls Inc., Milwaukee, has forged with France's Saft SA to manufacture lithium-ion batteries, or New Castle, Pa.-based Axion Power International Inc.'s partnership with Exide Technologies in Alpharetta, Ga., to develop advanced lead-carbon batteries.