Nissan Leaf battery pack

The 24 kilowatt-hour battery pack that fits under the floor of the Nissan Leaf.

The folks at Pike Research, a market intelligence firm specializing in clean technology, have spent most of 2009 looking at various dimensions of electric-drive vehicles. The Colorado-based firm’s latest study, Electric Vehicle Batteries, digs into lithium ion batteries—the enabling technology for robust plug-in hybrids and electric cars.

Pike forecasts that the market for lithium ion batteries for transportation will grow from $875.6 million in 2010 to nearly $8 billion by 2015. That sounds like a steep curve, but Pike’s forecast for 2015 is about one-quarter of the size predicted by the Department of Energy. “The cost challenge, the price of batteries today, puts a lot of these plug-in vehicles out of reach to consumers,” John Gartner, the study’s primary researcher, told We spoke with Gartner about the intertwined future for electric-drive vehicles and lithium batteries.

How does the relative size of the hybrid, plug-in hybrid, and EV markets affect lithium ion battery technology?

The hybrid market is likely to be the biggest market, but you’re talking about a much smaller battery that’s needed—1 to 2 kilowatt-hours for hybrid versus 15 to 16 or so for a plug-in hybrid (for about 40 miles of all-electric driving). Versus 24 to 32 kilowatt-hours for an all-electric vehicle (with about 100 miles of range).

You might think that hybrids will dominate the market, but when you’re talking 1/16th or 1/24th of the batteries required, the other two technologies can catch up quickly in terms of their influence on the lithium ion battery market.

What were the biggest surprises during your four or so months of research into lithium ion batteries for transportation?

There are lots of assumptions about the market segments for sizes of batteries. It could be that the 40-mile extended range electric vehicle is not what consumers want, unless the prices come down in a hurry. We should question the assumptions.

Are you saying that a plug-in hybrid with 5 to 10 miles of range might make more sense, considering the cost of the batteries?

Yes. There’s still a lot that’s uncertain. The challenge for battery makers is how to react—if you’re planning on having X number of 32 kilowatt-hour batteries, and X many 16 kilowatt-hour orders to fill, and the market starts shifting down or up. It could be that micro-hybrids, or the Prius on steroids, and the Nissan Leaf, are all people want—and not something in-between. Battery makers have to be flexible, in case some of these vehicles don’t make it.

After doing this research into lithium batteries, are you more or less optimistic about pure electric vehicles?

Slightly more. Going into this, I wasn’t very bullish on EVs. I’m slightly more. Again, it’s because of the cost. Today, and for the next year to 18 months, still an EV is going to be very expensive. It’s hard to get beyond that. You could say that’s what consumers want, but what about the economics of it? How are automakers are going to turn a profit on these things—and sell them in volume?

How many years did it take to get people comfortable with hybrids in the $22,000 range, and to say, okay, that’s a competitive product with a $17,000 sedan. It’s going to take a while for consumers to make the same argument for a $40,000 plug-in vehicle. It could be that, as prices of batteries come down, there is more interest in plug-in hybrids or all-electric vehicles, I just don’t see that happening in the short term.

Although, in the short-term, I think carmakers will have no trouble selling the number of vehicles they’re expecting to produce. The few available models are going to fly out the door, and there will be waiting lists.

2012 is a critical year. You might have saturation of the passionate early adopter market—people who want to be first in line to buy the first Fisker Karmas, and the Volts, and the Leafs. And it’ll take them until 2012 to get through the original first wave. But after that, and you start having less government subsidies, less support for manufacturing, fewer government purchases of vehicles, then it’s going to be, “Stand on your own, market.” It’s going to be interesting to see what happens.