LONDON (Reuters) - Three kinds of batteries can power the new generation of environmentally friendly hybrid vehicles, but the one that wins will be the one that has the best balance of price and performance.
“It will be a question of cost benefit and cost performance,” General Manager Jean-Pol Wiaux, at the European Rechargeable Battery Association, said.
Lead, nickel and lithium producers all want their share in the booming battery market supplying various hybrid vehicles.
These gasoline-powered vehicles are made fuel-efficient by an electric motor whose batteries recapture power when the vehicle goes downhill or brake.
But as the nickel price has tripled, and lead has doubled during the past year, battery makers are under pressure.
"Car manufacturer always want everything, they want fabulous performance and total security -- and they would like cheap prices as well," Communications Director Jill Ledger at French battery manufacturer Saft SAFT.PA told Reuters.
The firm expected the number of hybrid vehicles in the United States and Europe to thrive, reaching 2.7 million in 2012, citing the Society of Automobile Engineers.
Hybrids represents less than 0.2 percent of all new cars and small trucks purchased between 1997 and 2006, just under a million vehicles, a report from Sanford C. Bernstein said.
All commercial hybrid cars run on nickel-metal hydrid batteries. Panasonic, the main brandname for products made by Japanese electronics giant Matsushita 6752.T, is the world's largest supplier due to its joint venture with the leading hybrid producer Nikkei-listed Toyota 7203.T.
The battery of the best selling hybrid, the Toyota Prius, weighs in at a hefty 41 kg (90.4 lb), of which nearly one quarter is nickel.
The Nickel Institute said the auto sector accounts for about 7-8 percent of new nickel use, some 90,000 tonnes each year but its high price made the lithium-ion battery more attractive.
“Nickel can account for 30-40 percent of the price of a battery” Johnson Controls-Saft Chief Operating Officer Franck Cecchi said, adding a lithium-ion battery contains of less than 5 kg of nickel.
A lithium-ion battery has the same capacity but with half the weight it makes the vehicle even more fuel-efficient.
“This is the biggest issue in the market...the price of the raw materials is increasing more than the cost of the batteries,” Committee Secretary Erwin Marckx at European Storage Battery Manufacturers Association, Eurobat, said.
The price of lithium was around $7,000/8,500 per ton, some 15 percent of the price of nickel, a lithium producer said.
“There is a huge increase in demand from battery makers...the auto sector is probably the most interesting sector in terms of growth,” the producer said, adding the battery sector accounted for 25 percent of total demand in 2006.
Despite competition from nickel and lithium the more conventional lead-acid battery was not going to disappear, Senior Manager Mikael Lesser at the Swedish Boliden-Bergsoe AB BOL.ST 50,000 tonne-per-year smelter said.
“Many battery makers focus on lead, it is heavier but very cost efficient,” Lesser said. Batteries represent 70 percent of the global lead offtake.
VALUE IN A LOOP
Price is the biggest challenge for a hybrid as it costs $4,500 to $6,000 more to build, the Sanford report said.
Metal prices play a vital role in the development of the hybrid battery but on the other hand some countries recover over 90 percent of the metals in a conventional lead-acid battery.
“It is a capital investment but as you can recover 99 percent of the metal -- you recover its value,” Wiaux said.
The leading manufacturer Toyota has a recycling process where up to 74 percent of the battery weight is recovered.
"We have six recycling companies that are approved by Toyota Motor Europe, the biggest one is Umicore ACUMt.BR," Alaa Salama, environmental engineer at Toyota Europe, said.
The future lithium-ion battery could also be recycled.
“They will just have to be integrated into the current systems of take backs,” Saft’s Ledger said.
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