As hybrid and electric cars continue gaining popularity, demand for their batteries will grow.
Los Angeles, CA (PRWEB) November 16, 2013
Many households do not realize just how much they rely on batteries. From the battery that starts (or sometimes even powers) the family car to the one that keeps the laptop running, batteries are an essential item in today's age. Mobile electronics such as cell phones and tablets are becoming increasingly commonplace, a trend that battery manufacturers have welcomed with open arms. Due in part to the proliferation of these gadgets, but also because of increasing interest in hybrid electric cars, revenue for the Battery Manufacturing industry is estimated to grow at an annualized rate of 2.2% to $11.7 billion over the five years to 2013. Still, manufacturers have faced challenges. According to IBISWorld Industry Analyst Caitlin Newsom, “The prices of nonferrous metals such as zinc and lead have been volatile over the five years to 2013.” Rapid growth in emerging countries has driven up demand for industrial metals and is the root cause of volatility. Manufacturers were able to offset only part of the rise in metal prices by increasing battery prices, causing average profit to contract over the five years to 2013.
Manufacturers that specialize in automotive batteries struggled through a plummet in demand due to a severe downturn in the US automotive sector in 2009. Additionally, the recession prompted households to postpone their nonessential spending, causing demand for battery-operated consumer electronics and new cars to drop, leading to a 7.1% revenue fall in 2009. As the economic recovery gains traction, higher disposable incomes and pent-up demand will lead to an increase in electronics purchases and, by extension, batteries. As a result, revenue is expected to increase 0.9% in 2013.
The next five years will continue to charge the Battery Manufacturing industry. “As interest rates stay low and spending continues to rise, consumer electronics and motor vehicle sales will rise, boosting industry revenue,” says Newsom. Automakers are focusing their research and development efforts on electric vehicles, which are primarily powered by electric batteries. With increasing environmental concerns and skyrocketing gasoline prices, hybrid electric vehicles will also continue to grow in popularity. As a result, industry revenue is forecast to grow over the next five years.
The Battery Manufacturing industry has a high level of market share concentration. The four top companies in the industry are Procter & Gamble, Johnson Controls Inc., East Penn Manufacturing Co. and EnerSys. Even with stiff competition, operators are still entering the market. Over the five years to 2013, new companies have entered the market, attracted by high profit margins and government grants to manufacture batteries for hybrid vehicles.
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IBISWorld industry Report Key Topics
Companies in the Battery Manufacturing industry manufactures two types of batteries: storage and primary batteries. Storage batteries are also known as secondary or rechargeable batteries. Primary batteries are nonrechargeable batteries that have only one life. Industry products have a variety of uses in cell phones, medical equipment, households and the automotive and transport sector.
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