I've found myself thinking a lot lately, about how big the worldwide battery market can become. I've been particularly thinking about it in the context of the North American commercial truck industry and its demand for batteries as it electrifies - my initial napkin math tells me that the current worldwide battery supply is something like 1/3rd or 1/4th of what North America needs for a subset of commercial trucks, and that leads to the idea for this thread.
I bet we could, in effect, crowd source, a pretty good and evolving estimate of how big the worldwide annual consumption of batteries can / will grow to. Anybody and everybody is invited to join in and play along as much or as little as you'd like - I'm going to start by simply identifying the markets that I can think of that will need to electrify eventually. Some are more sci-fi than reality, some are more lab/prototype, and that might be part of what we evaluate (how good do the batteries need to get for electrification of the market).
Markets I can think of (no real order to them):
GROUND
- personal auto
- personal trucks (SUVs, pickups, non-commercial blending towards low-end commercial)
- motorcycles
- trikes (I'm especially thinking of the commercial uses common in Asia and Africa)
- commercial trucking (class 3-8 diesel today)
- long haul buses
- city buses
- RVs
- "heavy machinery". (i.e. front loaders, fork lifts, steamrollers, back hoes, road grinders, graders, etc... Here, I'm thinking generically of a heavy duty frame with a Diesel engine, some sort of attached tool(s), that does commercially valuable work, so there's a financial valuation to the machine and the work that it does, and thus a financial value to converting it to electric that can be made).
- agricultural tractors, combines, and equipment (the whole ag industry). big and small (somewhat analogous to the class 3-8 commercial trucking; there are big tractors and there are little tractors, and they're all used in commercially valuable ways)
WATER
- ferries
- tugs
- pleasure boats
- "medium" commercial. Thinking fishing vessels that are out and back same or next day sort of thing.
- trans oceanic cargo ships (I'm putting this in sci-fi for now, but putting it on the list to acknowledge thinking about it)
(Mostly I don't know this field at all, so I don't even know how the industry is commonly subdivided - I've read a bit about ferries on shorter routes electrifying effectively, so I know this field is starting to investigate the idea, and cheaper batteries at scale from other fields is going to help)
AIR
- planes (also putting in sci-fi; I know this is starting, but I think this isn't a source of GWh of battery pack demand in the next decade, when the rest of this is TWh scale demand)
Each of these has some steady state replacement rate in their developed markets where, if the value proposition is strong enough, I think 100% replacement of the replacement rate is a conservative estimate of what the electrified rate of production can be. I.e. - if commercial truck buyers really can save dimes/mile in fuel cost, there comes a point pretty early in the development of the electric commercial truck industry where the diesel truck industry Osbornes - the buyers only buy a diesel truck because they can't buy electric (no supply), and they can't find a used truck to tide them over until a new electric is available.
My goal with each market is to size up the current market, preferably worldwide, but significant subsets also work (i.e. - what got me started was North American commercial trucking, rather than worldwide commercial trucking). Learn a little bit about the value proposition for electrifying that market to size up how close electrification is, at least from a customer demand point of view, and how complete electrification might / will be. (If electric trucks are really dimes/mile cheaper to operate, the moment they are available at scale, anybody that isn't operating electric trucks is going out of business - nobody in the business of operating trucks commercially can give away dimes/mile to competition and last long, at least as I understand it).
As we size each market, I hope to arrive at an estimate of how much battery cell and pack demand / year each will have. Sum those up across all of the economically viable markets, and you'll have a low end estimate of the battery cell and pack markets.
My first question for folks to consider - what additional markets would you add to the list that you don't see above?
I'm going to start working up my napkin math for North American commercial trucking, mostly because I've worked it up before and because it provides some insight into why Tesla is pushing on the Semi the way they are. At least for me, it also points to what I see today as a chasm between likely demand and supply for that market, and just how much Tesla needs to grow. 50% growth sounds outrageously fast, until you see some of this math. Then you might conclude, as I'm starting to (at least in the context of battery cell and pack GWh / year output), that 100% annual growth is aiming too low.
In time, I hope that we'll get similar estimates established for all of the markets we identify.
I bet we could, in effect, crowd source, a pretty good and evolving estimate of how big the worldwide annual consumption of batteries can / will grow to. Anybody and everybody is invited to join in and play along as much or as little as you'd like - I'm going to start by simply identifying the markets that I can think of that will need to electrify eventually. Some are more sci-fi than reality, some are more lab/prototype, and that might be part of what we evaluate (how good do the batteries need to get for electrification of the market).
Markets I can think of (no real order to them):
GROUND
- personal auto
- personal trucks (SUVs, pickups, non-commercial blending towards low-end commercial)
- motorcycles
- trikes (I'm especially thinking of the commercial uses common in Asia and Africa)
- commercial trucking (class 3-8 diesel today)
- long haul buses
- city buses
- RVs
- "heavy machinery". (i.e. front loaders, fork lifts, steamrollers, back hoes, road grinders, graders, etc... Here, I'm thinking generically of a heavy duty frame with a Diesel engine, some sort of attached tool(s), that does commercially valuable work, so there's a financial valuation to the machine and the work that it does, and thus a financial value to converting it to electric that can be made).
- agricultural tractors, combines, and equipment (the whole ag industry). big and small (somewhat analogous to the class 3-8 commercial trucking; there are big tractors and there are little tractors, and they're all used in commercially valuable ways)
WATER
- ferries
- tugs
- pleasure boats
- "medium" commercial. Thinking fishing vessels that are out and back same or next day sort of thing.
- trans oceanic cargo ships (I'm putting this in sci-fi for now, but putting it on the list to acknowledge thinking about it)
(Mostly I don't know this field at all, so I don't even know how the industry is commonly subdivided - I've read a bit about ferries on shorter routes electrifying effectively, so I know this field is starting to investigate the idea, and cheaper batteries at scale from other fields is going to help)
AIR
- planes (also putting in sci-fi; I know this is starting, but I think this isn't a source of GWh of battery pack demand in the next decade, when the rest of this is TWh scale demand)
Each of these has some steady state replacement rate in their developed markets where, if the value proposition is strong enough, I think 100% replacement of the replacement rate is a conservative estimate of what the electrified rate of production can be. I.e. - if commercial truck buyers really can save dimes/mile in fuel cost, there comes a point pretty early in the development of the electric commercial truck industry where the diesel truck industry Osbornes - the buyers only buy a diesel truck because they can't buy electric (no supply), and they can't find a used truck to tide them over until a new electric is available.
My goal with each market is to size up the current market, preferably worldwide, but significant subsets also work (i.e. - what got me started was North American commercial trucking, rather than worldwide commercial trucking). Learn a little bit about the value proposition for electrifying that market to size up how close electrification is, at least from a customer demand point of view, and how complete electrification might / will be. (If electric trucks are really dimes/mile cheaper to operate, the moment they are available at scale, anybody that isn't operating electric trucks is going out of business - nobody in the business of operating trucks commercially can give away dimes/mile to competition and last long, at least as I understand it).
As we size each market, I hope to arrive at an estimate of how much battery cell and pack demand / year each will have. Sum those up across all of the economically viable markets, and you'll have a low end estimate of the battery cell and pack markets.
My first question for folks to consider - what additional markets would you add to the list that you don't see above?
I'm going to start working up my napkin math for North American commercial trucking, mostly because I've worked it up before and because it provides some insight into why Tesla is pushing on the Semi the way they are. At least for me, it also points to what I see today as a chasm between likely demand and supply for that market, and just how much Tesla needs to grow. 50% growth sounds outrageously fast, until you see some of this math. Then you might conclude, as I'm starting to (at least in the context of battery cell and pack GWh / year output), that 100% annual growth is aiming too low.
In time, I hope that we'll get similar estimates established for all of the markets we identify.