There Likely Will Be Stranded Assets

There Likely Will Be Stranded Assets

If battery-powered vehicle (BEV) sales are not mandated by the government, and the market for BEVs is much smaller than now predicted, will the battery factories being built become stranded assets?

The earlier article resulted in comments questioning whether other applications would allow these factories to remain operational and profitable.

BEVs, the benchmark for Lithium-ion battery usage, permit rapid acceleration and quiet operation. However, each vehicle uses 1,000 or more pounds of batteries.

What are the other applications? And why would they grow?

Here are a few alternative applications, some of which were identified at the consumer electronics show (CES) in Las Vegas.

Portable Hand Tools

Portable hand tools, such as leaf blowers, powered by an internal combustion engine (ICE) are noisy, while those powered by batteries are quiet.

Hand tools, using an electric motor, such as saws, use wires to connect them to an electric outlet. Hand tools create noise, but a battery-powered hand tool is more convenient since it eliminates having to drag around an electric cord. 

Batteries for hand tools weigh around one pound.

Small mobile equipment, e.g., lawn mowers and snow blowers

Battery powered lawn mowers cost more than gasoline powered mowers, and have a payback, according to Consumers Reports, of around ten years.

Snowblower’s cost, relative to gasoline powered blowers, are only slightly higher.

On average, batteries for lawnmowers and snowblowers weigh around 25 pounds depending on Ah (amp-hour) rating.

Large mobile equipment, e.g., construction excavators

Bucket trucks that use batteries to power the bucket arm can turn off the diesel engine, allowing work to be done quietly, without noise and exhaust fumes. This is especially beneficial in residential areas.

Excavators powered by batteries, as exhibited by John Deere at CES, can operate more quietly, allowing them to work at night in residential areas.

However, construction equipment, back hoes, etc., require charging stations at the construction site. John Deere also exhibited charging stations for construction sites, but having to connect charging stations to a power source at each construction site adds complexity and cost.

Batteries for construction equipment will weigh a few hundred pounds.

Boats and Yachts

Watercraft larger than a few feet in length, especially yachts, require considerable horsepower for propulsion. While the propulsion may use fossil fuels, the electrical system for on-board and housekeeping activities, such as radar and refrigeration, can be battery powered. 

This reduces the noise level in the boat, especially when anchored or docked overnight.  

Powering a large watercraft with batteries, rather than diesel engines, makes little sense since the size of the battery would approximate that of a BEV’s, increase weight unnecessarily, while raising concerns about fires. Gasoline and gasoline fumes are the major cause of boat fires and explosions, and a fire burns a boat to the waterline forcing the crew and passengers into the water waiting to be rescued. A battery fire would do the same.

Battery powered outboard motors for canoes and similar small craft have been available for years, and battery-powered outboards, rated around 3.5 HP, are available.

Brunswick exhibited yachts and electric outboard motors at CES.

Miscellaneous Applications

Golf Cart batteries probably weigh around 75 pounds, but the number of golf carts sold in the US is only around 80,000, so market is limited in size.

Bicycles

Bicycles powered by Lithium-ion batteries are becoming very popular. More e-bikes (880,000) than BEVs (608,000) were sold in the US in 2021. It’s forecast that over 1 million e-bikes will be sold in the US during 2023. Some are predicting that e-bike sales in Europe will outstrip the sale of automobiles in general.

An e-bike battery weighs approximately 10 pounds.

Typical e-Bike

Summary

What are the attributes mentioned above that are attributable to Lithium-ion batteries?

  • Quiet operation
  • Convenience

Products with limited growth potential:

  • If BEVs are no longer mandated, it’s unlikely that battery-powered construction equipment will become popular. 
  • Yachts and boating appear to be a limited market.
  • Golf carts seem to have a limited market.
  • Lawn mowers are used routinely for a few months of the year while snowblowers are used intermittently in northern states.

Products with substantial growth potential:

  • E-bikes have rapid growth and are used almost daily in many countries. 
  • Hand tools are a very large market with US sales of $21 million in 2021, or 140,000 tools at an average price of $150. With a battery weight of 1 pound for hand tools, the annual sales volume would have to be extremely large to match BEV battery usage.  
  • It would appear as though e-bikes have the greatest potential for volume usage of Lithium-ion batteries. With the weight of an e-bike battery of 10 pounds, 100 e-bikes must be sold to equal the sale of one BEV.

Putting this information in perspective: 

  • If 1,000,000 hand tools are sold in 2023, it would be the same as selling only 1,000 BEVs.
  • If 1,000,000 e-bikes are sold in 2023, it would be the same as selling only 10,000 BEVs. 

Conclusion

While new uses for Lithium-ion batteries may emerge, it would appear as though alternative battery applications won’t keep battery factories in the United States from becoming stranded assets if the BEV market is substantially smaller than forecast.

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2 Replies to “There Likely Will Be Stranded Assets”

  1. Great analysis. Long range planning, however, in this area will not be done logically because those in power are emotionally driven with their fantasy belief that we can control the climate.