Expect a major drop in price of lithium-ion batteries

An oversupply trouble in the lithium-ion battery industry may cause prices to tumble

, with some major players struggling to stay afloat until demand for electric car batteries kicks in later in the decade.

Hideo Takeshita, an psychoanalyst at the Institute of Information Technology Ltd. in Tokyo, predicts prices might plunge by 19 percent this year, the biggest drop in five years. Shiro Mikoshiba, an analyst at Nomura Holdings Inc., said the worsening flood might push prices down as much as 25 percent.

Panasonic Corp. and Samsung SDI Co., the world's two largest makers of rechargeable batteries, may deepen price cuts this year as overrun worsens a glut in the industry, analysts said.

The price drops highlight how battery makers in Japan and South Korea, accounting for 75 percent of global items, may be giving benefit for market share as automobiles with no gas tanks are cast to help triple sales of lithium-ion cells in six years. Cheaper lithium-ion batteries may guide to lower costs at carmakers such as Nissan Motor Co., whose all-electric $32,780 Leaf sedan is regular to go on sale in November.

"Battery makers will probably go through a tough time with falling prices," said Akino Mitsushige at Ichiyoshi Investment Management Co. "The business may become lucrative only for a couple of companies with dominant market share. Others may never be able to make money."

South Korean battery makers including Samsung and LG Chem Ltd. Might better cope with lower prices than Japanese equals because they purchase materials more cheaply from China and have faster production, said Takeshita.Takeshita.

"We anticipate the harsh price competition with South Korean makers will continue," said Akira Kadota, a spokesman at Osaka-based Panasonic. "We are reviewing our production process to strengthen our cost competitiveness so that we can win the battle."

Panasonic, which overleaped atop the rechargeable-battery industry with its leverage of Sanyo Electric Co., has fallen 21 percent in Tokyo trading this year. Samsung SDI, the battery-making unit of South Korea's largest industrial group, has gained 23 percent in Seoul in 2010.

Expect a major drop in price of lithium-ion batteries

By: james leading

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