What is the future of Lead Acid and AGM Car Batteries?
Oh no! My truck battery is dead. I am on vacation and have no time to go to the store to pick up a new one. Thankfully, there is a mobile mechanic service called DIFY Battery that can replace my old battery. DIFY Battery is the local distributor of Interstate Batteries. I was excited when I learned that they only carry Interstate Batteries.
I heard many good things about Interstate Batteries products and the company. I came across the company while searching for a Christian company in the United States. I researched the company and was impressed with their company culture, vision and mission. They also participate in the NASCAR Cup Series, which added to my excitement.
Behind Interstate Batteries’ success is Norm Miller who serves as the Chairman of the Board of the company while Scott Miller is the President and CEO and Lain Hancock serves as the COO.
Under Scott’s leadership, the company recorded a revenue of $1.8b, projecting a revenue of $2.5b in the near future.
Now, let’s go back to my original question regarding the future of lead acid and AGM car batteries.
With the ongoing initiatives regarding electric vehicles (EV), people tend to change their views on the way they drive and commute. There is also a discussion of protecting the environment and saving the planet, which is why new car designs are being made to make EV more environmental-friendly and cost-effective. However, the question of whether we are ready for electric vehicles remains.
Different Vehicle Types
The traditional lead acid battery or AGM battery is typically used in an Internal combustion engine (ICE) vehicle. The hybrid electric vehicle (HEV) uses both the standard ICE battery (auxiliary) and the traction battery pack. The plug-in hybrid electric vehicle (PHEV) is almost the same as the hybrid version. Lastly, the standard electric vehicle (EV), also known as a battery-powered electric vehicle (BEV) uses the lithium-ion battery like the Tesla Model S.
Lead Acid Battery Future
According to research, the lead acid battery market valuation is expected to reach US$ 54.3b in 2021. Future Market Insights (FMI) analysis has predicted the lead acid battery sales to increase at 5.2% CAGR between 2021 and 2031. Based on the study, overall market valuation will top US$ 90.5b by 2031. As per FMI, the demand for AGM battery is expected to increase at a high pace, exhibiting 6.2% CAGR by 2031.
Global Car Sales
A forecast from Bloomberg New Energy Finance (BNEF) for the future of electric vehicles (EV), global annual vehicle sales will increase up to 35% by 2040 — about 41 million cars. The increase in sales is projected to pick up after 2025. The report identifies a few factors driving electric vehicle adoption:
· Increasing use of tax breaks and other supportive government policies.
· Rapidly declining costs of batteries (the most expensive component compared with normal internal combustion engine cars)
· The declining lifetime cost of ownership of EVs compared to normal cars.
· Lastly, the cost of fuel comes in; BNEF uses a low-end oil price estimate from the Energy Information Administration that puts oil between $50 — $70 per barrel. According to BNEF, prices much lower than this would slow down, though not totally halt, the growth of EVs.
OPEC and Global Oil Demand
Global demand for energy is forecasted to increase from nearly 286 million barrels of oil equivalent a day (mboe/d) in 2018 to more than 357 mboe/d in 2040, with average growth of about 1% p.a. In 2018, oil accounted for more than 31% of global energy demand, ahead of coal (27%) and gas (23%). Oil is forecasted to remain the largest contributor to the energy mix by 2040, accounting for more than 28%.
The outlook considers existing energy policies, whilst recognizing their transitory nature and potential evolution over time. Recently enacted energy policies focus primarily on measures aimed at emission reduction. Several policies are aimed at limiting oil use, especially in the transportation sector. Examples include tightening standards for Corporate Average Fuel Economy (CAFÉ), carbon dioxide (CO2) emission performance standards for road transportation vehicles, emissions and efficiency regulations in the maritime and aviation sectors, fuel substitution in the rail sector and taxation policies in many countries.
Lead Acid Battery Product Life Cycle
If we compare the product lifecycle chart to the BNEF graph, we can say that the lead acid battery and AGM battery still in its steady growth phase. The primary reason is that there is still demand for the standard Internal Combustion Engine vehicles (ICE). Not to mention that there are also other industries directly connected to it. However, this may change by 2025 onwards in favor of electric vehicles (EV) mainly because of the continuous development to reduce emission and energy policies around the globe.
Conclusion:
We can still see growth for the lead acid battery which is expected to see an increase of 5.2% CAGR while the AGM battery is expected to exhibit an increase of 6.2% CAGR by 2031. However, by 2040 if everything goes well, electric vehicles (EV) may take over 35% of the market of the global car sales which will make an impact on the sales of lead acid and AGM batteries.
The race to innovate in the way we drive is inevitable as everybody will all be affected by it. In the meantime, I will enjoy driving my truck with new Interstate Batteries. You can also visit their website to learn more.
