Griffith Hack Clean & Sustainable Technologies

Some people project that the market for lithium ion batteries will grow 11% per annum to US$6.9 billion per annum by 2012.  But I think this is too conservative.

Why?  Because that projection does not account for one of the biggest growth opportunity yet - powering electric and hybrid cars.  The CEO of NISSAN says that the electric cars – let alone hybrid cars – could make up 10%  of the market by 2020.  

Neither does that projection account for lithium ion batteries storing energy from alternative energy sources such as wind and solar – which is expected to be a $1 billion dollar industry by 2018.

The prospects for the technology are so great that this article describes lithium based car batteries as becoming a “major disruptive force”, dictating the fate of the world’s largest vehicle makers, and reshaping the electronics industry.

The Toyota Prius is just one example of a hybrid car that has a very big battery in it.   Sales of the Prius – and the battery packs in them – grew by about 500% when the Japanese government introduced inducements worth around US$4,000 per purchased car.  In fact, the Prius recently became the most sold car of any type in Japan.

Expect this to be repeated across the globe.  Other governments are now introducing strong measures to increase the fuel efficiency of their countries’ car fleet to improve energy security and reduce greenhouse gas emissions.  United States President Obama wants national fuel efficiency to increase by 5% each year from 2012 to 2016.  The United Kingdom government has confirmed it will offer from ₤2,000 to 5,000 to purchasers of electric and hybrid cars.  Highly efficient hybrid and electric cars are expected to flourish under the new measures – and the sales of Li-ion batteries will boom.

Tech-savvy readers may point out that the Prius does not use lithium ion batteries. But Toyota’s Prius is the exception. Lithium ion batteries are, in fact, the prefered choice by vehicle manufacturers. Volvo, Subaru, GM, and VW are all developing hybrids with Li-ion batteries. The Nissan Leaf, Tesla Volt and concept cars by Audi, Ford all use lithium ion batteries. 

Graph 1 shows the number of published International Patent Applications (PCT) by year describing a secondary cell (that is, a rechargeable battery) having lithium as a component – including lithium ion and lithium air cells.  Since year 2000, the number of published International Patent Applications has nearly quadrupled.

Graph 1 - Published International Patent Applications by year

In fact, there are many more patent applications because not all patent applicants go down the International Application route.  Our searches indicate that there are about 10 times as many patent applications per year as shown in Graph 1-  around 2,500 per year!

Graph 2 shows the breakdown for the country of origin of the International Applications.

Graph 2 - International Patent Application Country of Origin

If we look at country of origin for all patent applications, not just International Applications, the slices of the pie change but the top five countries remain.  They become China 13.4%, Korea 11.7%, Japan 11.2%, US 6.3% and Germany 1.3%. 

Clearly China’s IP position in battery technology is becoming very strong and it is challenging  Japan and Korea in this area. 

According to this report, Japan currently meets half of world demand for lithium batteries, Korea is the second-largest manufacturer with a market share of 27 percent, with China standing at third place with a 23 percent market share.

Already fortunes are being made in China.  According to this report, Wang Chuanfu, the founder of car and lithium ion battery maker BYD has become China’s richest man.

The US has recently injected $1.5 Billion in grants to US-based manufacturers to produce batteries and their components and to expand battery recycling capacity.   A123 Systems, a manufacturer of nano-iron phosphate lithium ion batteries was awarded $249 Million, presumably in an attempt to bolster the US industry.  We found 10 published international patent applications by A123.

Given the dominant patent position of Asia, howver, it may be difficult for US manufactures to make a big impact. 

We found that the top industry players had roughly somewhere from 10 to 102 published International Patent applications.  In no particular order, the companies that have strong patent positions include SAMSUNG SDI CO. LTD, SANYO ELECTRIC CO LTD, MATSUSHITA ELECTRIC IND CO LTD, SONY CORP, MITSUBISHI CHEMICALS CORP, LG CHEM LTD, PANASONIC CORPORATION, 3M INNOVATIVE PROPERTIES COMPANY, and BYD COMPANY LIMITED.

According to this report, SANYO and SAMSUNG SDI Co. are the worlds first and second largest markers of lithium ion batteries.  This is reflected in their patent positions with the second most and most patent applications respectively.  SAMSUNG SDI just reported its biggest profit in 5 years, aided by its commanding patent position. 

Breakthroughs in alternative lithium based battery technologies are being regularly reported by many groups.  These typically have vastly superior storage capacity than today’s commercial lithium ion batteries. Recent breakthroughs have occurred in lithium air batteries, lithium sulfur batteries,  and nanotechnology based batteries, for example.  With so many alternatives it is hard to know which technologies and companies are going to be the long term winners.  However, the patent filing rate will accelerate and the winners will have well protected technology.

While for sure there are great opportunities, the secondary cell patent landscape is rapidly becoming a mine field that needs careful mapping before being traversed. 

The patent landscape will undoubtably shape the direction the various industry players will take – depending on what options they can secure.  For example, some may license or cross license patents or try to work around existing patents to ensure they are free to operate. 

Those that don’t have patents to bargin with may find themselves locked out of this growing clean technology market. 

Justin Blows