INTERVIEW-Sanyo calls for lower raw material costs
Reuters Story - September 23, 1998 06:26
By Camila Reed
PRAGUE, Sept 23 (Reuters) - The price of nickel, a vital ingredient in nickel-cadmium batteries, must drop sharply if nickel-cadmium batteries are to break into new markets and take on lead-acid batteries, Joseph Carcone, Vice President sales and marketing at Sanyo Energy (USA) Corporation, told Reuters in an interview.
"We need to be more competitive against lead. We can beat sealed lead-acid batteries but not nickel-metal hydride," Carcone said.
He likened the battery market to a food chain with the cheaper and less technologically-advanced applications dominated by lead-acid batteries.
Further up the chain were nickel-cadmium batteries, then nickel-metal-hydrides, sealed lithium-ion and sealed lithium polymer at the top.
Nickel-cadmium was losing ground in the higher end applications like mobile phones and lap top computers where nickel-metal-hydride and lithium-ion were evolutionary better equipped.
But at the lower end of the chain, where the market was dominated by sealed lead-acid batteries in starter engines for cars or bikes, and home appliances then Ni-Cd had a chance, he added.
"That market is obtainable," he said.
But to do this, "the cost of the metals must come down significantly and be within the range of lead. This is critical if we are to penetrate the lead-acid market."
The cost of Ni-Cd batteries must be no greater than 50 percent more than lead-acid.
At 100 percent more some inroads can still be made into lead's markets but they will be limited, he said.
Lead prices on the London Metal Exchange are currently trading at $525 a tonne, compared to $4,120 a tonne for nickel.
Ni-Cd battery makers use an added-value ingredient nickel powder but one of the problems said Carcone was that this powder was very expensive.
All the nickel powder for their batteries was supplied by Inco , he said.
"We have one commodity supplier and we need a competitor to Inco. They have a monopoly in the U.S.," Carcone said.
Sanyo is the U.S.' largest producer of sealed cell nickel-cadmium batteries used in cordless power tools and other consumer applications.
In North America around 60 percent of Sanyo's output its sealed nickel-cadmium battery cells with the remainder being lithium-ion and nickel-metal-hydride sealed cells.
For lithium-ion Sanyo was also moving more downstream and making electronic products too.
"We are now competing with our customers on some products," Carcone said.
Revenue from the lithium-ion business was greater than that from nickel-cadmium, he added.
Looking at the consumer battery market Carcone said that everyone was suffering price erosion.
In North America Sanyo is the primary supplier to the power tool sector for industrial and consumer tools, he said.
While other nickel-cadmium markets were being squeezed, power tools were growing at around 24 percent a year and Sanyo was cushioned by this.
But in the small household appliance market, like hand held vaccuum cleaners, torches and electronic games, "there will be a blood bath as people compete to survive." In January the company will launch a new generation of power products. The worldwide value of portable power tools in 1997 was $9.4 billion of which cordless was worth $2.7 billion.
By 2000 it is calculated to grow to $12.5 billion and cordless will make up $4.1 billion of this, according to producer Black & Decker estimates.
Nickel-cadmium batteries were seen staving off competition from other battery types in this sector.
Other potential uses for nickel-cadmium batteries were in digital cameras, pedal-assisted bicycles and in hand held devices for barcoding.
"We are expecting nickel-cadmium batteries to reach higher capacitites for niche markets and we aim to get the cost per watt/hour down," Carcone said.
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