Electric Bicycle Battery Market Tightens With Cell Suppliers Under Growing Demand
A version of this article appeared in the September issue of Bicycle Retailer & Industry News.
JIANGSU, China (BRAIN) – The e-bike industry is in an increasingly tight market with many cell suppliers putting manufacturers on hold resulting in longer delivery times and higher price potential .
Pack makers have faced a shortage of lithium-ion battery cells since the start of the year. The reasons include booming electric vehicle and power tool markets, and the COVID-19 effect on workforce productivity.
“In addition, we have to take into account another factor: brands of e-bikes may order more than they need,” said Luc Liu of Phylion Battery Co. in Jiangsu. “For example, you only need 10,000 batteries, but you care about the battery pack supply, so you place orders three times 10,000 or three times 5,000 to three different battery pack suppliers, because you do not know which of them can provide you with timely and sufficient. Such an operation reinforces, more or less, the feeling of scarcity. “
Liu is general manager of the Phylion e-bike battery division, one of the world’s largest suppliers.
He said electric car company Tesla has run out of the battery market, noting that an electric vehicle requires enough cells to make 100 electric bicycle batteries.
He also noted that battery maker Samsung has acquired a new electric vehicle customer, Rivian, “which takes a significant share of Samsung SDI’s production capacity,” Liu said.
TTI – the parent company of the Milwaukee, AEG and Ryobi cordless tool brands – and the Bosch cordless tool division have also increased demand from battery manufacturers.
“In addition, the impact of COVID-19 is another factor,” Liu said. “The Malaysian Samsung SDI cell factory has been (affected) by COVID-19 and production has declined. Meanwhile, the designed production capacity of the Big Three – Samsung SDI, LGC and Panasonic – has not increased in recent years. “
As a result, Liu said, Korean and Japanese cell suppliers have been unable to meet demand for e-bike batteries as Samsung, LG Chem and Panasonic halt production of some cells.
“According to forecasts, the shortage will continue at least until the second half of 2022,” Liu said.
He added that Phylion would rely more on Chinese branded cells. Last year, Chinese brand cells were used for 5% of Phylion’s e-bike batteries. This year, it has risen to over 30%.
“But such a change has a lot of cost and time,” said Liu. … It’s not just a matter of changing the cell into production; we need to test the packs, get certificate before mass production. It takes 10-20 weeks. In case we had many models for such a change, it would require enormous engineering work and money. “
Liu said a cheaper battery doesn’t necessarily mean lower quality, but a brand needs to know why a battery costs less and always deal with a reputable supplier.
The shortages could cause prices to rise, but not until next year, Liu predicted.
“It is difficult to say by how much it will increase due to the uncertainty of many factors,” Liu said. “From the fourth quarter of 2020 to the third quarter of 2021, the price of the battery increased by 10-20% due to the increase in the costs of cells, chips and other materials. I’m a little optimistic that the price of the battery will increase less than 10% (by) 2022. I can’t say that my point of view will be very correct. Let’s see what will happen. “
Bob Margevicius, executive vice president of Specialized Bicycles, said battery manufacturing is very capital intensive, with few cell producers in the world. “Security and integrity concerns drive most users to well-respected brands with a limited – but growing – appetite for local cells made in China,” Margevicius said. “Much like the shortage of microprocessors, this limited supply will be with us for months to come, and until there is more production or alternatives to meet growing global needs.”
Mike Fritz, chief technology officer of Human Powered Solutions, said he had not heard of any impending battery shortages, but three industry experts he contacted reported that demand for lithium cells Cylindrical ion used in electric bicycle batteries had never been higher.
“While shortages are not a problem now, it is conceivable that it could be a problem in the future,” Fritz said.
Having long-term relationships with suppliers has helped e-bike manufacturers Pedego and Vvolt avoid shortages.
“Every day has brought new challenges to the supply chain since last spring when this insidious virus wreaked havoc around the world,” said Don DiConstanzo, CEO of Pedego. “But Pedego has been able to provide our 200 stores now with a constant flow of our products, including batteries.”
In fact, said DiConstanzo, despite the challenges, Pedego recently released its third-generation battery that incorporates several upgrades, including a wrap-around tail light with turn signal and brake light capabilities.
Mike McBreen, chief operating officer of Rad Power Bikes, said demand from electric vehicle and tool makers is straining the capacity of battery makers. He said Rad Power has long-term commitments with major cell and pack vendors. “We had to act quickly; we do not take this concern lightly, ”he said.
The new direct-to-consumer Vvolt has also established a reliable partnership with Taiwanese battery pack supplier Celxpert. Kyle Ranson, owner of Showers Pass and founder of Vvolt, previously worked in the high tech industry with Compac and HP and knew the benefit of establishing the right relationship with the battery supplier.
“They really started supplying lithium-ion to vendors of PCs, laptop batteries, and so on. Ranson said. “I was aware of them because of my previous life, and so when they hit the radar it will be essential that we align with someone who has been on the streets. Their supply chain is mature. We think we’re in a pretty solid position. The whole supply chain is a complete mess right now. At least on the battery side, we’re in pretty good shape. “