JCI: Future of battery market isn't EVs

MILWAUKEE -- To anyone who assumes that electric vehicles will dictate the car battery market of the future, Joe Walicki has a message: Not so fast.

Walicki, president of Johnson Controls Inc.'s battery division, is unconcerned by the flood of advanced EV batteries that is supposed to start flowing from Tesla Motors Inc.'s $5 billion "gigafactory" this year.

Walicki believes EVs are a niche product and will remain so for years. Instead, he sees a bright future for advances in lead-acid car batteries -- even to drive the coming generation of vehicle technologies.

Stop-start systems? You bet. Forty-eight-volt electrical systems? Sure. Electrically powered turbochargers? Why not? Regenerative brakes? Bring them on, Walicki says.

All these technologies share one trait: They run on electricity.

But a conventional 12-volt lead-acid battery isn't durable enough for a vehicle with a stop-start system -- let alone all these other features. So JCI is marketing absorbent glass mat, or AGM, batteries, which are durable enough to restart a vehicle's engine dozens of times a day. JCI says its AGM batteries use glass mat separators that deliver up to two times the life of standard lead-acid batteries.

That's where JCI's growth opportunity is, Walicki says.

Mindful of this, JCI is doubling down on its investment in AGM batteries. On June 13, the company announced plans to spend $245 million to expand North American production of the batteries. Through 2020, the company will spend $780 million to increase global production.

"We want to make sure we get our fair share" of AGM battery sales, Walicki says. "We are the clear leaders in the U.S. and Canada, and in Western Europe, we have greater share than all of our competitors combined."

He forecasts that by 2020, 85 percent of new vehicles in Europe and 40 percent in the U.S. and China will have stop-start systems -- but not through EVs.

With the federal fuel economy target of 54.5 mpg by the 2025 model year looming, most automakers have penciled stop-start systems into their product plans.

Since JCI has a 70 percent share of AGM battery sales worldwide, it expects to make some money. While an AGM battery costs twice as much as an ordinary lead-acid battery, stop-start systems can improve fuel economy by 5 percent.

Eventually, automakers will have to spend $1,200 to $1,500 per vehicle to introduce 48-volt electrical systems that will be needed as automakers improve the fuel economy of gasoline-powered cars. 

But that is still less costly than the electric motors, range extenders and batteries needed for hybrid-powered vehicles. 

"You won't need two powertrains" for a 48-volt electrical system, Walicki tells Automotive News. "And you don't have to change the driving experience of your customers. They won't have to worry about plugging in their vehicle at night."

But Walicki's move deeper into AGM batteries will occur as the industry reaches for more lithium ion batteries. 

Late this year, General Motors plans to introduce the Chevrolet Bolt, an EV with a projected range of 200 miles. Tesla CEO Elon Musk claims the Tesla 3 will be ready in 2017, and Mercedes announced plans last week to introduce an electric car with a 310-mile range by the end of the decade. 

Two major producers of lithium ion batteries, LG Chem and Panasonic, appear eager to exploit the growth of EV sales. 

An LG Chem plant in Holland, Mich., is expected to produce batteries for the Chevy Bolt. And Panasonic is partnering with Tesla to build the gigafactory in Nevada. 

Walicki is unfazed by the competition. In fact, JCI has a plant in Michigan that produces a few lithium ion batteries for Jaguar Land Rover. But the company expects no significant expansion of production anytime soon. 

Even if a customer suddenly decides to produce EVs in high volume, JCI could buy battery packs from a rival supplier for less than the cost of production. 

"We know there is a disconnect between the cost of producing these batteries and their pricing in the marketplace," Walicki says. 

"The switch to electric cars is far out there," he says. "Someday it will happen, and it will be interesting to see what the technology is. But it's a long runway" to high-volume EV sales.