Consolidation in the lithium-ion battery market

12 June 2012

Overproduction and falling prices of lithium-ion batteries, have led to significant consolidation in the global market. Smaller parties are repressed, and the market will be largely dominated by five major players. These are the main findings of an international study conducted by Roland Berger Strategy Consultants

The strategy consulting firm has been doing research into the market for lithium-ion batteries in cars, trucks and buses with hybrid and electric drive systems for the past years. In 2010, Roland Berger also concluded that a consolidation would take place in the battery industry. In the previous study, released in September 2011, it became apparent that the market for lithium-ion batteries will grow explosively in coming years.

Two electric cars are parked at a parking spot while they are being recharged at a power station

Dynamic Market

The market for lithium-ion batteries for electric vehicles is very dynamic. Roland Berger expects that cars and light commercial vehicles will cover over 85% of the total market for lithium-ion battery in 2015 and predicts that more than 4 million vehicles with electric, hybrid or plug-in hybrid drive systems (xev's) will roll off the production line each year. There are more than one hundred companies worldwide that want to capitalize on it. Production in 2015 will, however, be twice as large as the demand for these batteries, with a lot of pressure on prices as a result.

For 2015 Roland Berger anticipates that car manufacturers have to deal with prices between 180-200 EUR/kWh for high-energy batteries as the demand drops. This represents a decrease of about 5 to 10% of the current margins. Especially the small players, with a market share of only 2% will have a hard time in 2015. The competition will increase in the coming years as almost 70% of the market in 2015 will be dominated by the five major players: AESC, LG Chem, Panasonic / Sanyo, A123 and SB LiMotive.

Chinese manufacturers are gaining ground

In addition to the Western market leaders competition from China is on the rise. Chinese manufacturers will control about 8% of the world market in 2015. René Seyger, partner in the Dutch office of Roland Berger explains: “the Chinese e-mobility market could well be the biggest in 2020. For international battery manufacturers, this trend is both an opportunity and a challenge. Battery manufacturers will have to position themselves in the Chinese market accordingly if they want to remain successful in the long run”.


Private equity firms ramp up sustainability focus

19 April 2019

In line with business leaders across the industrial gamut, private equity firms are increasingly on board with sustainability projects. According to a new study, the investment arms for major funds are implementing a number of strategies aimed at supporting sustainable economic development in line with global goals.

While the business world has finally begun to acknowledge the danger of climate change, effective action plans remain difficult to achieve. The Paris Agreement has stipulated a clear target for the decades leading up to 2100, although massively reducing emissions while not crashing the economy could be a tall order.

Businesses that are able to acquire capital can use it to boost productivity and output, thereby creating a virtuous cycle of development. However, some businesses are better able to utilise resources than others, both in terms of their relative productivity, as well as the value of the respective outcomes relative to costs (including environmental harms). Financing can therefore provide an avenue to select businesses that are aligned with various global sustainability goals, while shunning those that drive little or unsustainable social value creation.

Top moves made by investment arms towards responsible investment

Profit has for the longest time been the central criterion for investment decisions. Yet profit at any cost is increasingly seen as creating considerable social harms, while often delivering only marginal value. As a result, the private equity sector, which was initially sluggish to change its ways with regards to sustainability, has started to see the topic as an opportunity as much as a challenge.

A new study from PwC has explored how far sustainability goals have become part of the wider investment strategy for private equity (PE) firms. The report is based on analysis of a survey of 162 firms and includes responses from 145 general partners and 38 limited partners.

Maturing sustainability

Top-line results show that responsible investment has become an issue for 91% of respondents. For 81% of respondents, ESG (environmental, social, and corporate governance) was a board matter at least once a year, while 60% said that they already have implemented measures to address human rights issues. Two-thirds have identified and prioritised Sustainable Development goals that are relevant to their investment segments.

Change in concern and action on climate-related topics over time

While there is increasing concern around key issues, from human rights protections to environmental and biodiversity protection, the study finds there are mismatches between concern and action. For instance, concern among investment vehicles around climate change has increased since 2016.

In terms of risks to the PE firm itself, concern has increased from 46% of respondents in 2016 to 58% in the latest survey. However, the number who have taken action remains far below those concerned, at 9% in 2016 and 20% in 2019. Given the relatively broader scope of investment opportunities, portfolio companies face higher risks – and more concern – from PE professionals, at 83% in the latest survey. However, action is less than half of those concerned, at 31%.

Changing climate

In terms of the climate footprint of the portfolio companies, 77% of respondents state concern in the latest survey. 28% of respondents are taking action through the implementation of measures to mitigate their concerns.

Concern and action taken on ESG issues

In terms of the more pressing issues for emerging responsible investment or ESG issues, governance concern of portfolio companies comes in at number one (92% of respondents), while 60% have taken action on it. Firms have focused on improving awareness – setting up policies and a range of training modules for their professionals around responsible investment decision making. Cybersecurity takes the number two spot, with 89% concerned and 41% implementing strategies to mitigate risks.

Climate risks take the number three spot in terms of concern for portfolio companies (83%), but falls behind in terms of action (31%). Health and safety track records are a key concern at 80% of businesses, with 49% implementing action. Gender imbalance within PE firms themselves ranks at 78%, which is being dealt with by 31%. A recent survey from Oliver Wyman showed that there is gender balance at 13% of GP teams in developed countries.

Biodiversity is also an increasingly pertinent topic, with risks from pollution and chemical use increasingly driving wider systematic risks around environmental outcomes. It featured at number eight on the ranking of most likely global risks for the coming decade, with its impact at number six. As it stands, biodiversity is noted as an issue at 57% of firms, with 15% implementing action.