north american industrial battery market forecast 17-19 · 2018-04-02 · north american industrial...

1 2 9 T H C O N V E N T I O N O F B A T T E R Y C O U N C I L I N T E R N A T I O N A L | A P R I L 3 0 - M A Y 2 , 2 0 1 7

North American Industrial Battery

MARKET FORECAST ’17-’19

Nick StaritaDirector, Global Product Management, Energy and Industrial Systems

▶ Acknowledgements and clarifications

2

▶ Motive Power

▶ Stationary

▶ Summary review

▶ Energy Storage Systems

▶ Alternative technologies

HOUSEKEEPING

Agenda 2 TRADITIONAL MARKETS

1

3 OPPORTUNITIES& THREATS

SEAN BLAYLOCK – Exide

DOUG BOUQUARD – East Penn

BRUCE COLE – East Penn

BILL CUNNINGHAM – GS Yuasa

JAY FRANKHOUSER – C&D Technology

TAYLOR FREDERICKSON – Triathlon

Batteries

ERIC GALLANT – GS Yuasa

JIM GARCIA – Exide

GARY GRAY – Liion

VINCENT HALMA – Kion

JERRY HOFFMAN – Hoffman Capital

MARK JESKO – Exide

SCOTT JOHNSON – Clark

MARK KELLEY – Crown Battery

MANFRED KLEINERT – Exide

FRANCOIS LINCK – SAFT

JEFF LONG – EnerSys

CHUCK MATHIAS – East Penn

SAHWN O’CONNELL – EnerSys

DOUG PIERCE – Yuasa

JIM RUBRIGHT – East Penn

TOM TRAUGOTT – Amazon.com

CHAD UPLINGER – EnerSys

STEVE VECHY – EnerSys

MARK WELS – East Penn

JOHN WOOD - Ecoult

Thank you industry experts

3

▶ Sales data include lead-acid battery sales of reporting BCI members

▶ Imports from non-reporting companies are not included

▶ Stationary products include batteries 25Ah and above

▶ Lead prices assumed to be stable during forecast period

▶ 3-Year industry forecast is an accumulation of the forecast from individual reporting members

Data collection methodology & definitions

4

Macro drivers influence all industrial battery markets

Global Economy

Alternative Technologies

Environmental Awareness

5

MOTIVE POWER MARKET

6

SOURCE: BCI

2015

2016 motive power sales grew 1.0%,Industrial truck is 97% of motive power market

2016

2016Actual

Growth

BCI Members’ PreviousForecast Growth

Mining -46.5% 3.0%

Railroad -13.4% 1.2%

Industrial Truck +2.0% 4.1%

+1.0% +4.0%

$1,021$1,032

2015 2016

SALES IN MILLIONS

7

Mining continues downward trend, though uptick in demand reported since late 2016 – is this uptick sustainable?

8

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

$5.4

Mining

SOURCE: BCI, INDUSTRY EXPERTS

SALES IN MILLIONS

$26.2

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

Rail — A lot of idled locomotives, excess batteries in field.

9

$29.2

SOURCE: BCI, INDUSTRY EXPERTS

RailroadSALES IN MILLIONS

$24.6

SOURCE: BCI

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

NA MOTIVE POWER BATTERY MARKET ’08-’16 SALES IN MILLIONS

Motive power steady sales growth trend continues in 2016

CAGR’08-’16

Mining -17.9%

Railroad +2.2%

Ind. Truck +4.7%

+4.2%

$1,032

$744

10

SOURCE: ITA, INDUSTRY EXPERTS

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

US OEM INDUSTRIAL TRUCK FACTORY SHIPMENTS ’08-’16 THOUSANDS

Strong OEM industrial lift truck shipments continue in 2016,electric lift trucks growing to 65.5% share

208

151

11

’08-’16CAGR

2016 Growth

Internal Combustion +1.8% -6.0%

Electric +5.5% +11.0%

+4.1% +4.5%

▶ Strong economy

▶ Online retail fulfillment models

▶ Environmental awareness

59% 66%

DRIVERS

SOURCE: BCI

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

NA MOTIVE POWER UNIT VOLUME ’08-’16 VOLUME IN THOUSANDS

Motive power units +4.6% in 2016after several years of low volume growth

CAGR’08-’16

2016Growth

MP Units +3.5% +4.6%

251

190

12

Since 2012,electric lift truck factory shipments have been outpacing Motive Power unit volume.

13SOURCE: ITA, BCI, INDUSTRY EXPERTS

+3.5%+3.5%+1.7%

+9.5%

2004–2011 2012–2016

Average annual growth rates for electric lift truck factory shipments and motive power battery units

Batteries Lift Trucks

Batteries

Lift Trucks

Changing user dynamics and improving technology influencing battery sales and ultimately reducing the battery per truck ratio.

▶ Batteries lasting longer– Improved smart chargers

– Fleet management / telematics

– End user awareness

– Increased use of high-performance batteries

14SOURCE: INDUSTRY EXPERTS, FORKLIFT-BATTERY-CHARGER.COM, POWERDESIGNERS.COM, AMAZON.COM

▶ Opportunity charging becoming norm — existing equipment

▶ Growth of internet retail fulfillment models

▶ Alternative technologies taking some growth share

2017 2018 2019

SOURCE: BCI, INDUSTRY EXPERTS

200820092010201120122013201420152016

BCI members’ forecast MP sales growth at 4.9% per year vs. historical 4.2% per year

FORECAST

2019

+4.1%2018

+5.2%2017

+5.3%

’16-’19CAGR

Mining +6.4%

Railroad +0.8%

Industrial Truck +5.0%

+4.9%

15

$744

$1,032

NA MOTIVE POWER SALES FORECAST 2017-2019 IN MILLIONS

$1,191

2008 2016 2017 2018 2019

STATIONARY MARKET

16

SOURCE: BCI

2015

2016 stationary sales down 0.5%

2016

2016Actual

Growth

BCI Members’ Previous Forecast Growth

Misc. Standby* -0.2% 8.2%

UPS +11.7% 5.0%

Control & Switchgear +3.6% 5.1%

Communications -8.8% 5.6%

-0.5% +5.7%

$871 $867

2015 2016

SALES IN MILLIONS

17

*Emergency lighting, security, railroad signaling, photovoltaic, diesel generator starting, etc

SOURCE: BCI

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

NA STATIONARY POWER BATTERY MARKET ’08-’16 SALES IN MILLIONS

Stationary downward trend continues from 2013 peak

CAGR’08-’16

Misc. Standby +13.9%

UPS +0.1%

Ctrl & S/G +1.2%

Comm. -0.6%

+1.1%

$867$795

18

SOURCE: BCI, INDUSTRY EXPERTS

Mix trend toward VRLA blocs continues, depressing average selling price per system.

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

43%

Flooded

2-Volt VRLA

VRLAMonobloc

NA STATIONARY PRODUCT SALES 2008–2016 IN MILLIONS

19

24%

33%

54%

24%

23%

$795$867

SOURCE: BCI, INDUSTRY EXPERTS

Expect flooded downward trend to continue despite 2016 spike attributed to replacement timing.

’08–’16 CAGR

’16 Growth

VRLA Monobloc +3.9% +3.3%

2-Volt VRLA +1.1% -17.3%

Flooded -3.6% +13.9%+1.1% -0.5%

BATTERY PRODUCT GROWTH RATE

20

SOURCE: BCI, INDUSTRY EXPERTS

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

Telecom sales decline continues in 2016

’08-’16CAGR

2016 Growth

VRLA Monobloc -0.4% -5.8%

2-Volt VRLA 0.0% -18.6%

Flooded -2.1% +12.6

-0.6% -8.8%

NA COMMUNICATIONS MARKET GROWTH & TRENDS IN MILLIONS

21

$394 $377

Telecom companies are evolving.

▶ Less landline traffic

▶ Central office to data centers – utilizing central office real estate as edge computing data centers

▶ Spending on content

▶ Cost pressure: reduce cooling cost, reduce back-up time where possible

22SOURCE: INDUSTRY EXPERTS

Telecom companies are evolving.

▶ 5G Future

– Timing 2019-2020

– Small cells becoming edge of network, towers become part of infrastructure

– Gear upgrade at cell towers – opportunistic battery change out

23SOURCE: INDUSTRY EXPERTS

SOURCE: BCI, INDUSTRY EXPERTS

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

Strong UPS growth in 2016 driven by active data center build out

24

$277 $279

’08-’16CAGR

2016 Growth

VRLA Monobloc +5.1% +14.0%

2-Volt VRLA 0.2% -12.2%

Flooded -9.2% +15.4%

+0.1% +11.7%

NA UPS MARKET GROWTH & TRENDS IN MILLIONS

Cloud service giants spending massive amounts of capital to grow profitable data service businesses and establish capacity for future data explosion.

25SOURCE: INDUSTRY EXPERTS, WSJ TECH’S HIGH-STAKES ARMS RACE: COSTLY DATA CENTERS, J. GREENE, 4/7/17

2016 = $31.5B

SOURCE: BCI, INDUSTRY EXPERTS

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

Flooded batteries continue to dominate the risk averse “Utility” segment

’08-’16CAGR

2016 Growth

VRLA Monobloc -0.9% -17.5%

2-Volt VRLA +7.0% -9.6%

Flooded +0.3% +10.5%

+1.2% +3.6%

NA CONTROL & SWITCHGEAR MARKET GROWTH & TRENDS IN MILLIONS

DRIVERS

▶ Like-for-like replacement

▶ Low natural gas prices

▶ Regulatory uncertainty

26

$82$90

SOURCE: BCI, INDUSTRY EXPERTS

’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16

Miscellaneous Standby sales flattening out after years of strong growth

’08-’16CAGR

2016 Growth

VRLA Monobloc +16.5% +2.1%

2-Volt VRLA +7.0% -19.3%

Flooded +13.9% +36.8%

+13.9% -0.2%

NA MISCELLANEOUS STANDBY* MARKET GROWTH & TRENDS IN MILLIONS

27

$43

$121

*Emergency lighting, security, railroad signaling, photovoltaic, diesel generator starting, etc

Residential renewable energy finally starting to see incentives for energy storage and consumption.

Will lead-acid participate?

28SOURCE: INDUSTRY EXPERTS, ENERGYSAGE.COM, CPUC.CA.GOV/SGIP

▶ California Self-Generation Incentive Program (SGIP) budgeting for residential storage

SOURCE: BCI, INDUSTRY EXPERTS

BCI members’ forecast Stationary sales growth at 6.8% per year vs. historical 1.1% per year. Industry experts forecast is flat.

FORECAST

2019

+6.9%2018

+7.6%2017

+6.0%

’16-’19CAGR

Misc. Standby +6.2%

UPS +6.4%

Ctrl & S/G +6.7%

Communications +7.4%

+6.8%

29

$795

$1,057

NA STATIONARY SALES FORECAST 2017-2019 IN MILLIONS

$867

2008 2016 2017 2018 2019

SUMMARY

30

▶ 2016 NA Market $1.9 Billion

– Motive Power $1.0 Billion

– Stationary $0.9 Billion

▶ Market Flat in 2016 vs 2015

– Motive Power +1.0%

– Stationary -0.5%

▶ BCI Members’ Forecasted Growth 5.8% CAGR 2016-2019

– Motive Power 4.1% to $1.2 Billion

– Stationary 6.8% to $1.1 Billion

Motive Power and Stationary market summaries.

31SOURCE: BCI

ENERGY STORAGE SYSTEMS MARKET

32

SOURCE: BCI, INDUSTRY EXPERTS

2012 2013 2014 2015 2016 2017 2018 2019

BCI members continue to forecast exponential growth for energy storage

FORECAST

2019

+59%2018

+43%2017

+79%

’16-’19CAGR

Energy Storage 59%

33

$4

$28

NA ENERGY STORAGE SYSTEMS SALES FORECAST 2017-2019 IN MILLIONS

$7

Lithium industry winning by playing by different rules while lead-acid is losing a seat at the table

How can the lead-acid battery industry reassert itself and become part of the Energy Storage Systems conversation?

34

Lead-Acid Lithium

Conservative industryHuge companies

investing billions $

Want to see a product demonstrated in field

Willing to take product risk

Looking to participate and make near-term profits

Looking to develop the market for long-term profits

SOURCE: INDUSTRY EXPERTS

How can the lead-acid battery industry reassert itself and become part of the Energy Storage Systems conversation?

35SOURCE: INDUSTRY EXPERTS, GTM RESEARCH

What keeps you up at night?

Trump Geopolitical Events

Tesla

Amazon

PricingLoss of Focus

Uncertainty

Macroeconomics

Imports

Trade Policy

Lead Regulations

China

Samsung

Competition

Staying Relevant

New Technologies

Lithium

Renewables

5GCalifornia

Commoditization

36

Google

SOURCE: INDUSTRY EXPERTS

AlternativeTechnologies

Lithium

Fuel Cells

NiCd

NaMCl

Lead-acid industry can compete, but must promote technology and benefits

37

▶ Using lithium to sell lead-acid, “everyone has a show truck”

▶ Some growth will be won by specialized alternative technologies

– Closed lithium-lift-truck systems

– Lithium where real estate is a premium

– Small/light/remote devices or cells

▶ When vs If?

▶ Lithium share:

– Motive Power <1% (EU ~5%)

– Telecom <1%

– UPS >1%?, OEMs marketing lithium

SOURCE: INDUSTRY EXPERTS

Lead-acid industry can compete, but must promote technology and benefits

38SOURCE: INDUSTRY EXPERTS

Lead-AcidAlternativeTechnologies

1 2 9 T H C O N V E N T I O N O F B A T T E R Y C O U N C I L I N T E R N A T I O N A L | A P R I L 3 0 - M A Y 2 , 2 0 1 7

North American Industrial Battery

MARKET FORECAST ’17-’19

Nick StaritaDirector, Global Product Management, Energy and Industrial Systems