1 2 9 T H C O N V E N T I O N O F B A T T E R Y C O U N C I L I N T E R N A T I O N A L | A P R I L 3 0 - M A Y 2 , 2 0 1 7
North American Industrial Battery
MARKET FORECAST ’17-’19
Nick StaritaDirector, Global Product Management, Energy and Industrial Systems
▶ Acknowledgements and clarifications
2
▶ Motive Power
▶ Stationary
▶ Summary review
▶ Energy Storage Systems
▶ Alternative technologies
HOUSEKEEPING
Agenda 2 TRADITIONAL MARKETS
1
3 OPPORTUNITIES& THREATS
SEAN BLAYLOCK – Exide
DOUG BOUQUARD – East Penn
BRUCE COLE – East Penn
BILL CUNNINGHAM – GS Yuasa
JAY FRANKHOUSER – C&D Technology
TAYLOR FREDERICKSON – Triathlon
Batteries
ERIC GALLANT – GS Yuasa
JIM GARCIA – Exide
GARY GRAY – Liion
VINCENT HALMA – Kion
JERRY HOFFMAN – Hoffman Capital
MARK JESKO – Exide
SCOTT JOHNSON – Clark
MARK KELLEY – Crown Battery
MANFRED KLEINERT – Exide
FRANCOIS LINCK – SAFT
JEFF LONG – EnerSys
CHUCK MATHIAS – East Penn
SAHWN O’CONNELL – EnerSys
DOUG PIERCE – Yuasa
JIM RUBRIGHT – East Penn
TOM TRAUGOTT – Amazon.com
CHAD UPLINGER – EnerSys
STEVE VECHY – EnerSys
MARK WELS – East Penn
JOHN WOOD - Ecoult
Thank you industry experts
3
▶ Sales data include lead-acid battery sales of reporting BCI members
▶ Imports from non-reporting companies are not included
▶ Stationary products include batteries 25Ah and above
▶ Lead prices assumed to be stable during forecast period
▶ 3-Year industry forecast is an accumulation of the forecast from individual reporting members
Data collection methodology & definitions
4
Macro drivers influence all industrial battery markets
Global Economy
Alternative Technologies
Environmental Awareness
5
MOTIVE POWER MARKET
6
SOURCE: BCI
2015
2016 motive power sales grew 1.0%,Industrial truck is 97% of motive power market
2016
2016Actual
Growth
BCI Members’ PreviousForecast Growth
Mining -46.5% 3.0%
Railroad -13.4% 1.2%
Industrial Truck +2.0% 4.1%
+1.0% +4.0%
$1,021$1,032
2015 2016
SALES IN MILLIONS
7
Mining continues downward trend, though uptick in demand reported since late 2016 – is this uptick sustainable?
8
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
$5.4
Mining
SOURCE: BCI, INDUSTRY EXPERTS
SALES IN MILLIONS
$26.2
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
Rail — A lot of idled locomotives, excess batteries in field.
9
$29.2
SOURCE: BCI, INDUSTRY EXPERTS
RailroadSALES IN MILLIONS
$24.6
SOURCE: BCI
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
NA MOTIVE POWER BATTERY MARKET ’08-’16 SALES IN MILLIONS
Motive power steady sales growth trend continues in 2016
CAGR’08-’16
Mining -17.9%
Railroad +2.2%
Ind. Truck +4.7%
+4.2%
$1,032
$744
10
SOURCE: ITA, INDUSTRY EXPERTS
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
US OEM INDUSTRIAL TRUCK FACTORY SHIPMENTS ’08-’16 THOUSANDS
Strong OEM industrial lift truck shipments continue in 2016,electric lift trucks growing to 65.5% share
208
151
11
’08-’16CAGR
2016 Growth
Internal Combustion +1.8% -6.0%
Electric +5.5% +11.0%
+4.1% +4.5%
▶ Strong economy
▶ Online retail fulfillment models
▶ Environmental awareness
59% 66%
DRIVERS
SOURCE: BCI
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
NA MOTIVE POWER UNIT VOLUME ’08-’16 VOLUME IN THOUSANDS
Motive power units +4.6% in 2016after several years of low volume growth
CAGR’08-’16
2016Growth
MP Units +3.5% +4.6%
251
190
12
Since 2012,electric lift truck factory shipments have been outpacing Motive Power unit volume.
13SOURCE: ITA, BCI, INDUSTRY EXPERTS
+3.5%+3.5%+1.7%
+9.5%
2004–2011 2012–2016
Average annual growth rates for electric lift truck factory shipments and motive power battery units
Batteries Lift Trucks
Batteries
Lift Trucks
Changing user dynamics and improving technology influencing battery sales and ultimately reducing the battery per truck ratio.
▶ Batteries lasting longer– Improved smart chargers
– Fleet management / telematics
– End user awareness
– Increased use of high-performance batteries
14SOURCE: INDUSTRY EXPERTS, FORKLIFT-BATTERY-CHARGER.COM, POWERDESIGNERS.COM, AMAZON.COM
▶ Opportunity charging becoming norm — existing equipment
▶ Growth of internet retail fulfillment models
▶ Alternative technologies taking some growth share
2017 2018 2019
SOURCE: BCI, INDUSTRY EXPERTS
200820092010201120122013201420152016
BCI members’ forecast MP sales growth at 4.9% per year vs. historical 4.2% per year
FORECAST
2019
+4.1%2018
+5.2%2017
+5.3%
’16-’19CAGR
Mining +6.4%
Railroad +0.8%
Industrial Truck +5.0%
+4.9%
15
$744
$1,032
NA MOTIVE POWER SALES FORECAST 2017-2019 IN MILLIONS
$1,191
2008 2016 2017 2018 2019
STATIONARY MARKET
16
SOURCE: BCI
2015
2016 stationary sales down 0.5%
2016
2016Actual
Growth
BCI Members’ Previous Forecast Growth
Misc. Standby* -0.2% 8.2%
UPS +11.7% 5.0%
Control & Switchgear +3.6% 5.1%
Communications -8.8% 5.6%
-0.5% +5.7%
$871 $867
2015 2016
SALES IN MILLIONS
17
*Emergency lighting, security, railroad signaling, photovoltaic, diesel generator starting, etc
SOURCE: BCI
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
NA STATIONARY POWER BATTERY MARKET ’08-’16 SALES IN MILLIONS
Stationary downward trend continues from 2013 peak
CAGR’08-’16
Misc. Standby +13.9%
UPS +0.1%
Ctrl & S/G +1.2%
Comm. -0.6%
+1.1%
$867$795
18
SOURCE: BCI, INDUSTRY EXPERTS
Mix trend toward VRLA blocs continues, depressing average selling price per system.
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
43%
Flooded
2-Volt VRLA
VRLAMonobloc
NA STATIONARY PRODUCT SALES 2008–2016 IN MILLIONS
19
24%
33%
54%
24%
23%
$795$867
SOURCE: BCI, INDUSTRY EXPERTS
Expect flooded downward trend to continue despite 2016 spike attributed to replacement timing.
’08–’16 CAGR
’16 Growth
VRLA Monobloc +3.9% +3.3%
2-Volt VRLA +1.1% -17.3%
Flooded -3.6% +13.9%+1.1% -0.5%
BATTERY PRODUCT GROWTH RATE
20
SOURCE: BCI, INDUSTRY EXPERTS
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
Telecom sales decline continues in 2016
’08-’16CAGR
2016 Growth
VRLA Monobloc -0.4% -5.8%
2-Volt VRLA 0.0% -18.6%
Flooded -2.1% +12.6
-0.6% -8.8%
NA COMMUNICATIONS MARKET GROWTH & TRENDS IN MILLIONS
21
$394 $377
Telecom companies are evolving.
▶ Less landline traffic
▶ Central office to data centers – utilizing central office real estate as edge computing data centers
▶ Spending on content
▶ Cost pressure: reduce cooling cost, reduce back-up time where possible
22SOURCE: INDUSTRY EXPERTS
Telecom companies are evolving.
▶ 5G Future
– Timing 2019-2020
– Small cells becoming edge of network, towers become part of infrastructure
– Gear upgrade at cell towers – opportunistic battery change out
23SOURCE: INDUSTRY EXPERTS
SOURCE: BCI, INDUSTRY EXPERTS
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
Strong UPS growth in 2016 driven by active data center build out
24
$277 $279
’08-’16CAGR
2016 Growth
VRLA Monobloc +5.1% +14.0%
2-Volt VRLA 0.2% -12.2%
Flooded -9.2% +15.4%
+0.1% +11.7%
NA UPS MARKET GROWTH & TRENDS IN MILLIONS
Cloud service giants spending massive amounts of capital to grow profitable data service businesses and establish capacity for future data explosion.
25SOURCE: INDUSTRY EXPERTS, WSJ TECH’S HIGH-STAKES ARMS RACE: COSTLY DATA CENTERS, J. GREENE, 4/7/17
2016 = $31.5B
SOURCE: BCI, INDUSTRY EXPERTS
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
Flooded batteries continue to dominate the risk averse “Utility” segment
’08-’16CAGR
2016 Growth
VRLA Monobloc -0.9% -17.5%
2-Volt VRLA +7.0% -9.6%
Flooded +0.3% +10.5%
+1.2% +3.6%
NA CONTROL & SWITCHGEAR MARKET GROWTH & TRENDS IN MILLIONS
DRIVERS
▶ Like-for-like replacement
▶ Low natural gas prices
▶ Regulatory uncertainty
26
$82$90
SOURCE: BCI, INDUSTRY EXPERTS
’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 '16
Miscellaneous Standby sales flattening out after years of strong growth
’08-’16CAGR
2016 Growth
VRLA Monobloc +16.5% +2.1%
2-Volt VRLA +7.0% -19.3%
Flooded +13.9% +36.8%
+13.9% -0.2%
NA MISCELLANEOUS STANDBY* MARKET GROWTH & TRENDS IN MILLIONS
27
$43
$121
*Emergency lighting, security, railroad signaling, photovoltaic, diesel generator starting, etc
Residential renewable energy finally starting to see incentives for energy storage and consumption.
Will lead-acid participate?
28SOURCE: INDUSTRY EXPERTS, ENERGYSAGE.COM, CPUC.CA.GOV/SGIP
▶ California Self-Generation Incentive Program (SGIP) budgeting for residential storage
SOURCE: BCI, INDUSTRY EXPERTS
BCI members’ forecast Stationary sales growth at 6.8% per year vs. historical 1.1% per year. Industry experts forecast is flat.
FORECAST
2019
+6.9%2018
+7.6%2017
+6.0%
’16-’19CAGR
Misc. Standby +6.2%
UPS +6.4%
Ctrl & S/G +6.7%
Communications +7.4%
+6.8%
29
$795
$1,057
NA STATIONARY SALES FORECAST 2017-2019 IN MILLIONS
$867
2008 2016 2017 2018 2019
SUMMARY
30
▶ 2016 NA Market $1.9 Billion
– Motive Power $1.0 Billion
– Stationary $0.9 Billion
▶ Market Flat in 2016 vs 2015
– Motive Power +1.0%
– Stationary -0.5%
▶ BCI Members’ Forecasted Growth 5.8% CAGR 2016-2019
– Motive Power 4.1% to $1.2 Billion
– Stationary 6.8% to $1.1 Billion
Motive Power and Stationary market summaries.
31SOURCE: BCI
ENERGY STORAGE SYSTEMS MARKET
32
SOURCE: BCI, INDUSTRY EXPERTS
2012 2013 2014 2015 2016 2017 2018 2019
BCI members continue to forecast exponential growth for energy storage
FORECAST
2019
+59%2018
+43%2017
+79%
’16-’19CAGR
Energy Storage 59%
33
$4
$28
NA ENERGY STORAGE SYSTEMS SALES FORECAST 2017-2019 IN MILLIONS
$7
Lithium industry winning by playing by different rules while lead-acid is losing a seat at the table
How can the lead-acid battery industry reassert itself and become part of the Energy Storage Systems conversation?
34
Lead-Acid Lithium
Conservative industryHuge companies
investing billions $
Want to see a product demonstrated in field
Willing to take product risk
Looking to participate and make near-term profits
Looking to develop the market for long-term profits
SOURCE: INDUSTRY EXPERTS
How can the lead-acid battery industry reassert itself and become part of the Energy Storage Systems conversation?
35SOURCE: INDUSTRY EXPERTS, GTM RESEARCH
What keeps you up at night?
Trump Geopolitical Events
Tesla
Amazon
PricingLoss of Focus
Uncertainty
Macroeconomics
Imports
Trade Policy
Lead Regulations
China
Samsung
Competition
Staying Relevant
New Technologies
Lithium
Renewables
5GCalifornia
Commoditization
36
SOURCE: INDUSTRY EXPERTS
AlternativeTechnologies
Lithium
Fuel Cells
NiCd
NaMCl
Lead-acid industry can compete, but must promote technology and benefits
37
▶ Using lithium to sell lead-acid, “everyone has a show truck”
▶ Some growth will be won by specialized alternative technologies
– Closed lithium-lift-truck systems
– Lithium where real estate is a premium
– Small/light/remote devices or cells
▶ When vs If?
▶ Lithium share:
– Motive Power <1% (EU ~5%)
– Telecom <1%
– UPS >1%?, OEMs marketing lithium
SOURCE: INDUSTRY EXPERTS
Lead-acid industry can compete, but must promote technology and benefits
38SOURCE: INDUSTRY EXPERTS
Lead-AcidAlternativeTechnologies
1 2 9 T H C O N V E N T I O N O F B A T T E R Y C O U N C I L I N T E R N A T I O N A L | A P R I L 3 0 - M A Y 2 , 2 0 1 7
North American Industrial Battery
MARKET FORECAST ’17-’19
Nick StaritaDirector, Global Product Management, Energy and Industrial Systems
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