By Mike Millar, Vice-President of Marketing & Business Development at EnPower, Inc. 

The battery market used to be a mature, stable industry. But the arrival of the first EVs a decade ago, with their seemingly bottomless hunger for batteries, has created a massive gravitational distortion in the battery world that changed the business forever. The industry now needs to find a way to escape that distortion. 

The demand for EV batteries has reshuffled the list of leading battery manufacturers and driven a government-subsidized search for new EV battery technologies. Less publicized, but no less important, is that this boom also has left hundreds of smaller but more developed battery markets high and dry. They have very different power needs and battery form factors. And satisfying those needs by retooling batteries designed for EVs is not an option. 

A lot of these more “conventional” battery markets – from power tools to gardening equipment, boats, and small commercial vehicles – were once the heart of the battery world. Those product needs to set the marching orders for battery manufacturers. Now, those same needs have fallen to the back of the line, forced to accept the crumbs left by automakers. 

Some of this was inevitable: Hot new industries have sucked all the oxygen out of the marketplace as battery manufacturers rushed in to meet EV makers’ needs. And battery makers have struggled to meet even that demand – forcing conversion of existing production lines in some cases until new factories can be built. The result: Lesser markets are starved for those components in high demand. 

The good news is that such booms always lead to the injection of massive amounts of new capital – and thus new entrepreneurial start-ups – to revitalize what had become a mature industry. The bad news is the resulting expansion usually benefits the hottest sectors of that market at the expense of the smaller, niche-oriented sectors. Hence, huge multi billion-dollar gigawatt battery manufacturing plants are under construction across the nation to feed the automotive industry, while much of the rest of the battery-using world grows increasingly underserved. 

For EV battery makers, this explosive demand translates to a potential boom in orders, revenues and profit. But the hyper-focus on meeting the EV battery market’s needs also exposes a growing vulnerability: If electric vehicle sales encounter any sort of speed-bump – overpressure on the power grid, falling demand, limitations on “fast charge,” or unforeseen technical glitches – those same factories, idled, become money sinks for battery makers. And transitioning them to serve other markets may prove to be financially unfeasible.

Moreover, if the current demand for EV batteries continues, it may take as long as ten years for battery production levels to reach a point where those “other” markets finally get the volume of batteries they need. 

Keep in mind that a typical EV car battery can range in size from 80 to 100 kilowatt hours. By comparison, the average home uses 30 kWh of power per day. Now, multiply that higher number by the 100 million EV cars the automotive industry expects to build each year. The upshot: Not only will the world’s power grid have to carry an unprecedented load – one very big speed bump – but all those billions of batteries eventually will wear out and need replacement, delivering another giant speed bump. Widespread shortages, consequently, seem inevitable.

To get a glimpse of that outcome, one need look only at today’s underserved battery customers. Many equipment makers, even those with long-time contracts with battery makers, are hearing that they can expect to receive only partial deliveries – if they are lucky – or none at all. Those needs, they say, have fallen well below the demands of the hungry EV car makers. 

Looking forward to buying the latest electric hedge trimmer? Drone? Electric motorcycle or boat engine? How about that fleet of small delivery trucks or forklifts? Don’t hold your breath. Without the prospect of new batteries, many of these companies will need to cut back not just on their product manufacturing but, more concerning, on new product development. And the big crunch is still ahead. 

Some of the largest of these equipment manufacturers are racing to buy up existing small battery makers. Or they are trying to nail down long-term contracts. Others are considering creating from scratch (greenfielding) their own battery factories – an obviously risky move and a measure of their desperation. The existing demand to outfit factories already under construction is, in turn, creating a nationwide shortage of equipment to run those factories.

Is there a viable path to avoid this crack-up that is racing toward industries hungry for non-EV batteries? 

That remains to be seen. There are potential solutions. One is the strategy that EnPower, my company, has taken. Even as we developed new battery technologies and adopted form factors most used by equipment makers, we also purchased (from its former user) a fully equipped factory in Indianapolis, Indiana – an unusual move for a Phoenix company with a Silicon Valley CEO.

What else is needed? It would help if the current Administration broadened its vision for an electrified America, expanding beyond electric vehicles to include the millions of other products that will become more efficient and practical through battery technology. Man doesn’t live by cars alone. Real improvements in the quality of life come also from advances in how the nation powers its tools, toys and much more. 

The lesson: We must not forget the companies that make these non-EV battery products. Their impacts are destined to become powerful factors in helping achieve America’s long-term competitiveness. 

The electric automobile industry has proven to be one of the fastest growing and most competitive industries of our time. But this explosive growth has not come without distortions in the market, in its core technologies, and even in the use of its products. Some of these challenges must be met soon to avoid impeding industry growth in the near term.