Johnson Controls CEO: Hybrid and EV Battery Market Is Immature
Published May 12, 2010
Skepticism from an insider who stands to gain from hybrid and EV boom.
One of the world's leading battery makers says the lithium ion batteries that will power tomorrow's electric vehicles and hybrids are gradually improving, but that cost will continue to stunt the demand for the technology for some time. Steve Roell, CEO of Johnson Controls believes reaching economies of scale will be a big challenge. “The industry is a very immature market, it lacks scale and it lacks standards," Roell told Reuters. "What we're going to see over time is that we'll see chemistry and cell format and even battery management systems to begin to form standards, but it's going to take some time.”
Steve Roell
Roell still had a relatively optimistic projection for the early success of hybrid and electric vehicles, saying that they could make up as much as 12 to 15 percent of the domestic auto market by 2020.
Last August, the Department of Energy announced $2.4 billion in grants to accelerate the development of electric vehicles and the batteries that will power them. So far, $1 billion of that money has been awarded to companies like Johnson Controls, A123 and LG Chem, but that money has yet to pay real dividends. Johnson Controls received the biggest grant, $299 million to build a hybrid battery manufacturing facility in Michigan, scheduled to open next summer.
As optimism grows leading up to the releases of the Chevy Volt and Nissan Leaf plug-ins, battery cost remains an impediment to the widespread adoption of EVs. Sure, the all-electric Leaf will start at around $25,000—making it as affordable as some hybrids—but that's because a $7,500 government subsidy aims at getting as many EVs on the road as soon as possible.
Planners from Johnson Controls map out a new battery facility in Holland Michigan.
What happens if the subsidy goes away? For the most popular hybrids, like the Toyota Prius, federal subsidies phased out in 2007. Hybrids, with smaller batteries and therefore a smaller incremental cost than EVs, have mostly outperformed the overall vehicle market. But hybrid sales remain below 2 percent of the new car market.
Roell said the cost of hybrid or electric vehicles must come down, or fuel prices would have to spike to areas seen two years ago, for the vehicles to become more popular.
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1 year ago
Steve Roell is a CEO, and thus he inherently thinks in capitalistic terms of cost-effectiveness, technical viability, supply and demand, liquidity, etc.. Give him time to come around. He simply hasn't been dazzled by the Magic Unicorn yet.
1 year ago
Unfortunately, I'm not sure what the point of this article is....
If I were a journalist I would clarify if Steve Roell was speaking on behalf of Johnson Controls or as an expert in this field. Also, I would speak to competitors of Johnson Controls like LG Chem to see if they had the same outlook. If his comments at the Manufacturing and Transportation Summit were made as a representative of Johnson Controls, to me this seems odd because he leaves room for investor questions about the true direction or intentions of this company.
Economies of scale is a problem becasue "there are so many different suppliers forming their own technologies and their own packaging standards." Steve Roell, Reuters
As the battery market matures you will see more consolidation and better chances of scaling up but at the same time, consolidation may (not always) reduce innovation.
1 year ago
Steve, like many executives doesn't so much miss the boat but has a very narrow understanding of what is going on behind the engineering of battery tech.
Almost everyone is going on an on about the costs of scale, but most of that focuses on existing Lithium-Ion tech. Most don't know much more than what they have put in front of them to read by an assistant. If these executives were more pro-active and took the time to learn a bit more about the science behind the battery storage, they might see that the amount of money and support provided in the last 5 years has been greater than the total amount put towards the electrification of the car in the last 110 years.
Couple that with a renewed vigor to reinvent the car, and you're going to see jumps in tech previously unseen in the last century. Storage capacity will go up, size will go down, and with that cost.
As for standards I have to agree with Steve on that one.
1 year ago
I've never quite seen how a company that is structured like Johnson Controls is going to be able to deliver commodity priced consumer products such as EV batteries.
It isn't surprising that they're trying to 'sour grapes' a market they probably can't make it in.
1 year ago
I do not see the point of this article. It relies on the narrow opinion of one company executive and failed to address the momentum already storming Asia. There are also other notable companies that have commercial scale plant ready to support EV if the US car makers would take action, one of which is a US company - Indiana-based Enerdel.
US car makers fell asleep through the 80s and 90s and were swepted aside by compact fuel efficient foreign cars, then came the hybrids led by Toyota and Honda. If they don't wake up, they too will miss the boat on EVs.
27 weeks ago
how much cost a new hybrid battery by GBR POUNDS
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