Market Challenges And Opportunities

Global Automotive Lead Acid Battery Market- Drivers:

Advancements in lead acid battery technology:

Lead acid batteries are a type of rechargeable batteries that operate on relatively low energy density. Although lithium-ion batteries have gained popularity in electric vehicles, lead-acid batteries remain essential for conventional vehicles and specific applications due to their cost-effectiveness and reliability. Over the years, improvements in lead-acid battery design and manufacturing have resulted in enhanced performance metrics, such as higher specific energy and power density. Absorbent Glass Mat (AGM) and Gel battery technologies are two notable advancements in lead-acid batteries. AGM batteries use a fiberglass mat to absorb and hold the battery's electrolyte, providing improved vibration resistance and spill-proof characteristics. Gel batteries, on the other hand, use a silica-based gel to immobilize the electrolyte, enhancing the battery's cycle life and deep-cycling capabilities. For instance, on July 28, 2023, Trojan Battery Company, announced the launch of new SLA (sealed lead-acid) battery that delivers consistent, unrivaled high output and up to twice the lifecycle of conventional lead acid batteries. These advancements in the lead acid battery technology would increase their adoption in automotive sector

Increasing demand for automotive:

The increase in demand for automotive vehicles is indeed a significant driving factor in the global automotive lead-acid battery market. As the number of vehicles on the roads continues to grow worldwide, the demand for reliable and cost-effective energy storage solutions, such as lead-acid batteries, remains substantial. With the rise in global population, urbanization, and economic development, the demand for personal and commercial vehicles is increasing. This surge in vehicle sales directly translates into a higher demand for lead-acid batteries to power these vehicles' electrical systems. For instance, according to the report published by PIB (Press Information Bureau), a nodal institute established by Government of India for publishing data related to government policies, the automotive sales in India accounted for 17.5 million units for the year 2021-22. This shows the significant surge in demand for automotive which would lead to the expansion of global automotive lead acid battery market during the forecast period.

Global Automotive Lead Acid Battery Market- Restraint

Increasing adoption of lithium-ion batteries:

The automotive sector is witnessing a revolutionary shift from conventional vehicles to EVs (Electric Vehicles). But, EVs predominantly make use of the lithium-ion batteries. Lithium-ion batteries offer several advantages over lead-acid batteries, including higher energy density, faster charging times, longer lifespan, and lighter weight. These factors make lithium-ion batteries more suitable for electric vehicles, which has resulted in a preference for them in the EV market. As the adoption of EVs increases, the demand for lead-acid batteries, primarily used in conventional internal combustion engine vehicles, is likely to experience slower growth. For instance, on July 27, 2023, Servotech Power Systems, an India based manufacturer of EV charging solutions, announced that the company would invest US$ 3.65 million with a view to develop lithium ion charging components for EV. This increasing demand for lithium ion batteries can decrease the overall demand for lead acid batteries and lead to the contraction of global automotive lead acid battery market during the forecast period.

Counterbalance: Despite the growing popularity of electric vehicles, the conventional vehicle market is still significant, and it heavily relies on lead-acid batteries for starting, lighting, and ignition (SLI) systems. As long as internal combustion engine vehicles remain in use, there will be a steady demand for lead-acid batteries in the automotive industry. Moreover, Lead-acid batteries are relatively inexpensive compared to lithium-ion batteries, making them a cost-effective option for applications where high energy density or fast charging is not critical. As a result, lead-acid batteries are still widely used in budget-friendly vehicles and applications where price sensitivity is a significant concern.

Fluctuation in pricing of lead acid batteries:

The automotive lead acid battery market is very volatile. Price volatility can significantly impact the demand, supply, and overall market dynamics for automotive lead acid batteries. The primary raw materials used in lead-acid batteries, such as lead and sulfuric acid, are subject to price fluctuations based on global supply and demand conditions. Changes in commodity prices can directly impact the production cost of lead-acid batteries, leading to changes in their market pricing. Moreover, the manufacturing process of lead-acid batteries requires substantial energy input. Variations in energy costs, particularly for electricity, can influence the overall production expenses and, in turn, affect the pricing of lead-acid batteries. For instance, on March 31, 2023, Exide Industries, an India based battery manufacturer, reported a loss in the final quarter of the fiscal year 2022-23. This loss was primarily attributed to the increase in cost of the material used for manufacturing lead acid batteries used in the automotive sector. Hence, such price fluctuations and dynamic nature of the market is expected to affect the growth of global automotive lead acid battery market during the forecast period.

Counterbalance: To cater to the frequent price fluctuations, the companies manufacturing automotive lead acid manufacturing need to adopt a strategy where they develop strategic ties with multiple vendors from different regions in the world. This would ensure a continuous and reliable supply of raw material for the manufacturing of lead acid batteries throughout the year. Moreover having multiple vendors spread across different countries would ensure that an unfavorable condition in one market do not affect the supply of essential raw material in other markets.

Global Automotive Lead Acid Battery Market- Opportunity

Emergence of techniques to increase durability and performance of lead acid batteries:

The lead acid battery market is undergoing significant development due to emergence of techniques that lead to improved performance of lead acid batteries. Researchers have been exploring the use of advanced lead alloys with improved chemical and mechanical properties to enhance the battery's performance and lifespan. These alloys can increase the battery's resistance to corrosion and improve charge-discharge cycles. The addition of carbon-based materials, such as graphene or carbon nanotubes, has shown promise in enhancing the electrical conductivity and mechanical strength of the battery's active materials. This can lead to better charge acceptance and overall performance.