Prepared for Purdue Entrepreneurship
Certificate Program
Team Analysis & Discussion
Spring
2007 © Hank Feeser
Batteries Plus Franchises Indiana
The word "battery" may
conjure up images of dirty, greasy car batteries, but visit a Batteries Plus
franchise, and it's clear that they energize a lot more than just cars. After all,
batteries make watches tick, alarms ring and cell phones jingle. "It's
amazing all the things that are battery-related," says Susan Manwaring.
"You take [batteries] for granted until you're in this business."
In 1992, Susan, 46, and her husband,
Dan, 55, opened the very first Batteries Plus franchise. Dan first heard about
the company through a friend and was intrigued by the concept of a store
devoted primarily to selling, installing and even customizing batteries. As
soon as Batteries Plus received its license to franchise in the Manwarings'
home state of Indiana, the couple was charged and ready to go. They opened
their first store in Fort Wayne in 1992, and opened another store in Mishawaka
and four in Indianapolis in the next two years. "We believed in the
concept," says Susan. "We believed if we worked hard, we could make a
success of it."
The couple did work hard; while
Susan juggled operating the franchises with raising four children, Dan worked a
separate job for the first four years to bring in extra money. Now, 12 years
later, they're still going strong with two of their sons are involved in the
business, and they estimate 2004 sales for the six stores to reach nearly $5
million.
The Manwarings stay busy day in and
day out. Susan deals with commercial selling and works hands-on in the
business, while Dan focuses on goal setting and strategic planning. Through it
all, their interest in batteries just keeps going and going. "You learn
something new every day," says Susan. "It's never stagnant. It's
never the same widget day after day that you're putting out."
|
Batteries Plus Corporate Background |
|
Year began:
1988 Franchising since: 1992 |
|
The first Batteries Plus store opened
in Green Bay, Wisconsin, in 1988. Batteries Plus now has stores throughout
the country selling batteries for everything from cell phones to aircraft
with on-site Tech Centers that design, assemble and test battery systems.
Customers include individual consumers and commercial clients such as
manufacturers, service businesses and government agencies. |
|
925 Walnut Ridge Dr. |
Franchisor is a privately-held
company with 80 employee(s); 2 employee(s) in franchise department |
|
Franchise Growth |
||||
|
Year |
U.S.
Franchises |
Canadian
Franchises |
Foreign
Franchises |
Company
Owned |
|
2006 |
246 |
0 |
0 |
14 |
|
2005 |
231 |
0 |
0 |
14 |
|
2004 |
218 |
0 |
0 |
14 |
|
2003 |
218 |
0 |
0 |
14 |
|
2002 |
196 |
0 |
0 |
15 |
Battery Industry Background
The battery industry (SIC 3691) is broken up into two
main segments, storage batteries, and lithium-ion batteries. Analysis of these
two segments follows:
Storage
Battery Industry Snapshot
The storage battery industry is driven by industry needs for
small, long-lasting, cost-effective storage, or rechargeable, batteries.
Batteries have been named as the limiting factor in the design of products
ranging from laptop computers to electric automobiles. They are important in
supplying starting and lighting power for conventionally fueled vehicles;
supplying emergency power for various applications; for load-leveling or
supplying additional power during peak demand as part of electrical utility
systems; and as a supplement to solar, wave, or wind power. By the mid-2000s
they also were being widely used for handheld electronic products such as
digital cameras. Uninterruptible power supply systems, usually designed to
combat drops in power for personal computers (PCs), have created a new market
for storage batteries.
In all of these applications, the main feature of the storage battery is that
it can retain energy supplied from an external electrical charge, whereas the
electrochemical reaction within primary batteries cannot be reversed. The total
value of storage battery industry shipments was $3.24 billion in 2003. The
market was being driven by the need for batteries to power high-drain
electronic devices, such as digital cameras.
Organization
and Structure
Approximately 130 major U.S. establishments competed in the
storage battery industry in the mid-2000s. Of those, the 35 percent of
establishments that employed more than 250 employees accounted for 70 percent
of the industry's revenues. The overall market was dominated by large
manufacturers such as Duracell International and Rayovac Corp., and by
companies specializing in SLI (starting, lighting, and ignition) and industrial
storage batteries, such as Exide Corp. and Gates Energy Products. These latter
companies gained market share through acquisitions of related manufacturers
since the earliest days of the industry.
Background
and Development
Credit for the invention of the first true storage battery
has been given to Gaston Plant, for a lead-acid battery he developed in 1859.
It was made of two coiled lead strips separated by a cloth. However, his
storage battery required charging by primary cells, a process taking months to
years. The introduction of the French "Faure Electric Accumulator"
two decades later generated excitement in Europe, Great Britain, and the United
States. It was conceived that the devices would be delivered to homes and
businesses daily, like milk deliveries. Demand for electric, rather than gas,
streetlights was strong from the beginning, and electrical lighting in the home
gradually became a status symbol. However, similar designs of batteries
patented by Faure, a Frenchman, and American Charles Brush resulted in patent
litigation, which paralyzed American storage battery manufacturers for four
years.
Electricity was not readily available on a large scale until the 1880s. This
gave impetus to the development of storage batteries, used for over 35 years
while alternating current systems were being developed and perfected. The
batteries used were large enough to power more than 2 million homes for an
hour. Although AC power began to carry more of the load, storage batteries
continued to be used in the operation of electrical switches in power networks.
The appearance of "horseless carriages" in the 1890s also fueled
demand for storage batteries.
In the early days of the automobile, storage batteries were seriously
considered as an alternative to horses and internal combustion engines. Storage
batteries powered racing horseless carriages and electric cabs. However, the
batteries could not compete in long distance travel and use declined with an
increase in better roads. However, they continued to be well suited for town
travel; gasoline vehicles of the day had to be hand-cranked, a risky prospect.
Storage batteries helped to provide a solution for this difficulty, thereby
relegating the electric passenger car to obsolescence. The first automobile to
use an electric starter as standard equipment was the 1912 Cadillac.
The use of electric street trucks continued into the 1930s. By this time,
storage batteries powered household appliances, boats, and the first
submarines. In World War II they also powered torpedoes, aircraft radios, and
commercial broadcast stations. In addition, they were used to power local
telephone exchanges and intercontinental repeater stations. Storage batteries
excelled in other industrial uses, such as powering electric shuttles in mines
and battery-powered trains, which became quite popular in Germany. Golf carts
provided an important market for the batteries as well.
The market for automotive, commercial, and industrial storage batteries had
long been considered mature and highly competitive by the 1990s. This
competition drove many smaller manufacturers out of business as prices fell
because of excess capacity. Successful producers of these types of batteries
sought to maximize economies of scale; new technologies were often quite
expensive to introduce. Replacement batteries made up more than 80 percent of
the automotive battery market. An emphasis on technological improvement was
most evident with suppliers for military and space programs, electric vehicles,
laptop computers and cellular phones, and power management accessories.
Environmental legislation has driven carmakers to develop electric vehicles.
Laws were introduced in various states requiring carmakers to sell a certain
number of emissionless vehicles. The limiting factor in efforts to create such
vehicles was the creation of storage batteries that were light and powerful,
yet cost effective. Recycling efforts were another important theme in the
storage battery industry, as many metals (e.g., cadmium) used posed health and
environmental risks. The recycled metals also form an important part of
commodity supplies, particularly recovered lead.
A key indicator of the competitive nature of the storage battery industry in
the late 1990s was the Ralston Purina Co.'s decision to spin off its Eveready
Battery Co. (now Energizer Holdings) in June 1999. The battery division had
been experiencing hard times: Duracell International Inc., which claimed a 50
percent share of the U.S. battery market, sued Eveready, which claimed a 19
percent market share, over the latter's advertising of superiority for its
Energizer batteries. Moreover, Eveready backed out of the rechargeable battery
business in the face of stiff competition from Asian battery manufacturers. In
November 1999 Ralston Purina finalized the sale of its Energizer Power Systems
Original Equipment Manufacturer rechargeable battery business to Tucson-based
Moltech Corporation.
Industry shipments grew from $4.25 billion in 1998 to $4.95 billion in 2000.
Over the same time period, the cost of materials increased from $2.22 billion
to $2.58 billion, and employment rose from 21,900 workers to 23,346 workers.
Production workers in 2000 numbered 18,807; they earned, on average, $15.15 per
hour. In
Current
Conditions
During 2003 the overall economy showed signs of recovery,
but the battery industry remained in the doldrums, with total shipment values
falling slightly to $3.2 billion. Revenues were down across all battery types,
except for a small increase in the batteries used in hearing aids. However, by
2004 activity and revenues increased, and the Consumer Electronics Association
predicted that the industry would grow by approximately 9 percent during 2005.
By the mid-2000s batteries had a market penetration of nearly 90 percent
(compared to toilet paper at 95 percent), and the average American household
owned 25 to 30 devices that depended on batteries for full or partial power.
Because of the high-drain, advanced technology of many of these devices,
especially digital cameras, the industry trend was toward high performance and
rechargeable batteries. Rechargeable batteries held a 10 percent market share,
which was expected to grow. Standard alkaline batteries dominate the market
with a 68 percent market share. The automotive battery sector remained flat
during the mid-2000s due to sluggish auto sales and industry overcapacity.
Industry
Leaders
Exide Corporation of Bloomfield Hills, Michigan, maker of lead
acid automotive and industrial batteries, generated $2.5 billion in sales for
the fiscal year ending March 31, 2004; Exide employed 15,300 workers. Duracell
(bought in 1996 by Gillette Co. for more than $7.0 billion), reported sales of
$2.0 billion for the fiscal year ending June 30, 2003. Energizer Holdings
(previously Eveready), had sales of $2.8 billion for the fiscal year ending
September 30, 2004, with approximately 13,000 employees, and held 30 percent of
the U.S. market share. Rayovac Corp. of Madison, Wisconsin, which chased the
big brands of Duracell and Energizer, has grown from $432 million in sales and
2,300 employees in fiscal 1997 to revenues of $1.4 billion and 6,500 employees
in fiscal
Workforce
Employment dropped from more than
America
and the World
According to the International Trade Administration, the value of battery
exports in 2002 equaled $662 million and the value of imports equaled $1.6
billion. In 2003 the trade imbalance was $745 million.
Research
and Technology
Most SLI batteries have been of the lead-acid variety
developed in the late nineteenth century. They are an excellent potential power
supply for other applications because of their low cost and availability. They
also are easy to recycle. Specialized military and aviation-related
applications have called for nickel-cadmium cells, which were popularized
through portable radios and other consumer devices. Their cost remained
prohibitive for automotive use, however, due to the high cost of cadmium. As
used in vehicles, they offer somewhat higher performance than lead-acid
batteries but are equally as heavy and much more difficult to recycle.
A similar type of battery to the nickel-cadmium, the iron-nickel oxide alkaline
battery was invented by Thomas Edison and patented in the United States in
1901--the same year as Jungner's nickel-cadmium battery. Due to poor
performance, the iron-nickel oxide batteries did not meet with the same success
as the nicads.
Nickel hydrogen batteries have been introduced as an alternative to nicads.
They possess a greater capacity and boast environmental benefits since they do
not contain cadmium. Sanyo Electric was the leader in developing and producing
these cells, used in portable telephones, laptop computers, and camcorders,
during the early 1990s. Other types of secondary cells invented at the end of
the nineteenth century included those utilizing zinc as an electrode. These
have been used in satellites, military aircraft, submarines, and assorted
military equipment. On satellites, they generally have been used in conjunction
with solar power.
Sony introduced a lithium ion secondary storage battery for use in portable
telephones and camcorders. It featured twice the capacity of a hydrogen storage
cell and one-third the weight. An innovation among consumer battery
manufacturers was announced by Rayovac in 1993: reusable alkaline batteries, a
concept traditionally thought unworkable. The company claimed its batteries
could hold a charge for up to five years, compared to three months for nicads.
In 1993, toy manufacturer SLM International introduced a controversial
recharger for ordinary alkaline batteries. In 1994 Duracell Inc. announced its
Advanced Battery-Pack Interconnect for nickel-metal-hydride connections, which
featured an automatic battery contact cleaner and other refinements. The number
of competing designs among manufacturers, in addition to the higher initial
cost for rechargeables, seemed to slow this segment's growth.
Nickel-metal-hydride (NiMH) batteries showed great promise in the 1990s for
applications involving laptop computers. However, both nickel-cadmium and
nickel-metal-hydride (NiMH) batteries deteriorate if they are overcharged. A
strategy to combat this has been to install integrated circuits capable of
monitoring battery voltage, charge/discharge current, and cell case
temperature. The goal in the mid-1990s was to recharge atypical laptop battery
in 15 minutes. Several automobile manufacturers, including General Motors,
Honda, and Toyota, gambled that NiMH would become the next generation fuel
source for electric vehicles. Other research tested nicad, sodium sulfur,
zinc-air, and lithium technologies as possible alternatives to lead-acid
batteries.
Consumer demand, environmental legislation, and other factors made electric car
research a high priority in the last quarter of the twentieth century. Electric
utility companies supported research in electric cars, partially to encourage
the more consistent electricity use that would occur from the vehicles being
charged at night, during off-peak hours. Vehicle traction batteries, the kind
used to drive vehicles, have been produced in various configurations. Lead-acid
batteries were not powerful enough or light enough for the task.
Other more complex electric vehicle options included hybrid systems involving a
battery in addition to an internal combustion engine. The hope was that a
practical vehicle of this type would also allow increased efficiency by means
such as regenerative braking. Hybrid battery types, including a lead-acid
battery for acceleration and a zinc-oxide battery for cruising, were also
considered.
Other technological innovations included gauges to indicate the remaining life
on individual alkaline batteries. Both Duracell and Energizer used these to
market their batteries in the mid-1990s. In addition, at least one company was
investigating insulation as a means of maintaining the performance of lead-acid
batteries in cold weather.
During the mid-2000s the industry continued to push battery technology to keep
pace with the needs of the small, high-drain electronics that were popular
among consumers, including digital cameras, portable stereos, laptop computers,
and mobile phones. To that end, the industry has both improved the performance
of high-end disposable and rechargeable batteries. For example, Energizer's e2
Photo lithium battery lasts up to seven times longer in a digital camera than a
regular alkaline battery. The added power means that the camera can take
approximately 600 pictures before replacement, compared to about 80 with normal
alkalines. In 2004 Rayovac introduced a new rechargeable NiMH battery and
charging system that allows the battery to be recharged 1,000 times and lasts
four times longer than alkaline AA batteries. Overcoming another barrier,
Rayovac's recharging system provided full recharge in just 15 minutes.
Methanol-filled fuel cell systems were being eyed as the next possible
break-through that could challenge lithium ion batteries for performance.
Further
Readings
The Lithium-Ion Battery Industry:
Industry
Snapshot
Introduced by Sony Corp. in 1990, the lithium-ion battery (also
known as the LI or Li-ion battery) has been hailed as one of the most
significant developments in battery technology of the late twentieth century.
LI batteries represent a rapidly growing segment of the non-lead-acid secondary
battery market, which encompasses rechargeable power sources capable of running
portable electronic equipment such as cellular telephones, laptop computers,
and video camcorders. (Primary batteries, on the other hand, are those intended
to be discarded or recycled after being used.) In contrast to their nickel
cadmium predecessors, LI batteries are smaller, lighter, more powerful, and
longer lasting, features that enhance the convenience and functionality of
portable electronic devices.
As the popularity of such devices has grown throughout the decade, so, too, has
the demand for batteries to power them. J. D. Powers and Associates, a
U.S.-based consulting firm, reported domestic LI battery sales of about $1
billion in 1996 and predicted that LI battery output would quintuple by the
year 2000. As the price of LI batteries drops, analysts expect that they will
better compete with nickel metal hydrides, the sales of which rose to 607
million cells in 1997. Although nickel-based cells are expected to account for
roughly 80 percent of U.S. rechargeable battery-cell unit shipments through
2002, LI technology will continue to make strong advances, with some analysts
estimating the market at more than $4 billion by 2003. Arthur D. Little, Inc.
predicts that LI batteries will capture more than 50 percent of the market for
high-performance rechargeable batteries by 2003, while the share for nickel
cadmium batteries will shrink to 10 percent.
Organization
and Structure
The non-lead-acid secondary battery market in the United
States is dominated by imports from Japan, mostly because Japanese
manufacturers of cell phones, laptops, and other portable electronic devices
were the first to respond to consumer demands for a better power source for
such products. Leading the way in the development and marketing of the LI
battery are firms such as Matsushita Electric Industrial (better known to
consumers under the trade name Panasonic), Sanyo Electric, Sony, and Toshiba.
U.S. manufacturers did not enter the market until the mid-1990s, and as a
result, they lag far behind their Japanese counterparts in sales. Several of
the biggest firms have even withdrawn from the market in the wake of financial
losses and low consumer demand for their products.
Background
and Development
The development of the LI battery came about as a direct
result of the portable electronics industry's need for a lightweight yet
long-lasting power source for its products. Battery developers turned to
lithium because it has the greatest energy density of any metal element and
therefore can store more energy than any other kind of battery element. During
the mid-1990s, researchers worked with three different kinds of lithium-based
batteries: lithium-metal, LI with liquid electrolyte, and LI with solid-state
electrolyte. Gregory Smith reported in Appliance Manufacturer that of
these battery technologies, LI with solid-state electrolyte received the most
attention because it is safer, lighter, more flexible, and easier to work with
than the others.
Batteries contain both a positive electrode and a negative electrode. In LI
batteries, cobalt functions as the positive electrode and carbon acts as the
negative electrode. Electrically-charged lithium ions vacillate between these
electrodes when charging and discharging. Because lithium is such a highly
reactive element, early efforts to make rechargeable lithium-based batteries
failed when the carbon proved unable to hold the lithium ions. The batteries
would then start to smoke or even catch fire while being recharged. Finally, in
1995 researchers discovered that carbon from starches and cellulose held the
most active lithium ions during charging and discharging, thereby preventing
the batteries from catching fire.
LI batteries are more powerful than nickel-cadmium batteries, which for many years
were the most advanced batteries available. LI batteries also weigh
significantly less, which is another distinct advantage over the competition.
Moreover, LI batteries are an environmentally friendly alternative to
rechargeable and disposable nickel-cadmium batteries. Such concerns took on
added significance with the passage of the Mercury-Containing and Recharging
Battery Management Act of 1996. Faced with the need to replace nickel-cadmium
batteries with an equally powerful yet environmentally safer battery,
manufacturers turned to LI technology. Since they last longer (and thus are
disposed of less frequently) and contain no harmful substances, LI batteries
seem to provide an ideal solution. However, they also carry a much higher price
tag than their predecessors.
Current
Conditions
According to an article in PC Week, by the late 1990s
it appeared that LI batteries were becoming the industry's standard power
source for portable electronic devices, especially for notebook computers and
communications equipment. Packing twice as much power as nickel-cadmium
batteries, LI batteries also retain their energy even when idle for long
periods and can be used with a host of different electronic products.
For users concerned about value, however, LI batteries may not offer the best
solution for powering portable electronics. They cost considerably more than
nickel-cadmium batteries and nickel-metal-hydride batteries, leading to some
speculation that they cannot successfully compete in the lower-end electronics market.
But analysts predict that by the year 2000 the cost of an LI battery will be
only about 10 percent greater per watt than nickel-cadmium and
nickel-metal-hydride batteries.
In 1997, worldwide sales of LI batteries totaled an estimated $1 billion, one-fifth
of total lightweight rechargeable battery sales. Demand for and production of
LI batteries steadily rose throughout the 1990s. For example, in 1996 alone,
Japan produced 115 million units, a 286 percent increase over 1995.
In
Because portable electronics are generally designed around the dimensions of
their rigid components, the flexibility of solid-polymer lithium-ion batteries
could make it possible for manufacturers to produce even smaller devices. The
new batteries will most likely be used in high-end cellular phones, portable
computers, and personal digital assistants, while lithium-ion and
nickel-metal-hydride will continue to be favored in less expensive equipment.
Kline & Co. estimates that global demand for lithium-polymer technology
could reach $1 billion annually by 2007.
In 1998 Thomas & Betts became the first major manufacturer to mass produce
lithium-ion polymer batteries. That same year, Ultralife Batteries of Newark,
New Jersey was in full production of solid-polymer lithium-ion batteries, while
Tucson, Arizona-based Moltech aimed for a mid-year launch of its AA cylindrical
lithium-polymer cells. Matsushita Battery began volume production of
lithium-polymer batteries in early 1999 and estimated that the market for
solid-polymer products could be 15 million units that year. Hitachi Maxwell and
Sony also unveiled plans to enter the solid-polymer lithium-ion market in 1999.
Laptop Computers
In 1997, computer manufacturers introduced a new line of portable computers
designed for frequent business travelers: ultralight laptops weighing less than
five pounds. While the absence of features such as CD-ROM and floppy disk
drives helped contribute to the weight reduction, the use of LI batteries was a
significant factor as well. While LI batteries offer the portable computer
industry many advantages, they have also led to a rather unusual and
potentially dangerous problem. Some batteries have been known to cause laptop
computers to overheat and ignite, especially when they are used in the more
powerful, feature-loaded computers. In particular, a few of the older Apple
PowerBooks experienced battery-caused fires.
Cellular Phones and Communications Handsets
Much of the growth in the LI market has been driven by the worldwide demand for
mobile telephones. LI batteries allow cellular phone customers to use their
devices for extended periods of time without having to recharge them.
Manufacturers can therefore sell more phones, and battery retailers can
capitalize on the popularity of LI batteries as cellular phone accessories. In
1998, for instance, 98 percent of wireless handsets in Japan used LI batteries.
The demand was considerably lower in the United States, however, with only 18
percent of sets relying on LI batteries, and even lower in Europe, where 14
percent of wireless phones were equipped with LI batteries. In 1999, Sony
announced plans to begin producing LI phone packs for the growing Chinese
market, which posted sales of 10 million mobile phones in 1998. Retailers expect
LI batteries to be the best-selling cellular phone accessory by 2000.
Industry
Leaders
The burgeoning demand for LI batteries during the 1990s took
U.S. manufacturers by surprise. Major producers lacked the technology to
fabricate LI batteries and had to scramble to try to catch up to their Japanese
competitors. U.S. battery makers such as Duracell and Eveready finally brought
their products to the marketplace in late 1996 and early 1997.
As the international leader of alkaline battery sales, Duracell, a subsidiary
of Gillette, fought to retain its dominant market position by forming an
alliance with TDK Corp. of Japan. TDK had already developed the technology and
procedures for creating LI batteries, so with its help, Duracell intended to
make a rapid entrance into the market. The battery segment of the company
recorded revenues of $2.2 billion in
The number two battery maker in the United States, Eveready, is a subsidiary of
pet food manufacturer Ralston Purina. More than 80 percent of its sales stem
from its primary battery business. In 1996, Eveready entered the LI battery
market with the construction of a new $70 million production plant. In 1999,
however, citing significantly declining sales, the company declared that it was
getting out of the business of making and assembling rechargeable battery packs
for electronics manufacturers to include with their battery-operated devices.
Instead, Eveready decided to focus on its primary battery business while
continuing to market and sell rechargeable batteries to consumers under the
Energizer brand name.
In 1997, NEC Electronics, a company best known for designing, manufacturing,
and marketing electronic products such as microprocessors, memories, and
components, announced its intention to enter the LI battery market by 1999. Its
plan involved distributing batteries made by Moli Energy, a Canadian company.
In 1998, Sony, Sanyo, and Matsushita Battery together accounted for more than
80 percent of the world LI battery market. By far the most dominant
manufacturer has been Sony, which introduced the first commercial LI batteries
in 1990 and holds 70 percent of the market share, according to Nikkei
Weekly. Despite some setbacks, including a plant fire in November 1995 that
resulted in LI battery shortages throughout the laptop computer industry, Sony produced
48 million batteries in 1995 and expected to increase its output the following
year to 72 million batteries.
In 1996, Sony announced an alliance with Sumitomo Metal Mining Company aimed at
developing the technology to recycle used batteries. Together they came up with
a process by which LI batteries are heated and pulverized. Iron, copper, and
cobalt are then extracted from the remnants, which the companies can reuse.
Matsushita Battery and PT Matsushita Gobel Battery Industries, divisions of Matsushita
Electric Industrial Co. Ltd., were also among the leaders in worldwide sales of
LI batteries in 1996. Matsushita announced plans that same year to establish PT
Panasonic Battery of Indonesia, a new division that would exclusively
manufacture LI batteries to meet the growing worldwide demand. In 1998,
Matsushita said it expected to increase its production capacity by 50 percent
to two billion batteries per year by 2000 and open new manufacturing operations
in Asia and Latin America.
Yet another major Japanese manufacturer of LI batteries anticipated a huge
increase in its production capacity over 1998 figures. By late 1999, Hitachi
Maxwell planned to double its monthly production to six million units.
Despite their success, Japanese manufacturers face stiff competition from other
Asian manufacturers for their own domestic markets. South Korea's LG Chemical
developed its own lithium-ion battery to compete with Sony, Sanyo, and Toshiba
in 1998, and SKC created its own product for use in notebook computers. To
counter these efforts, a government-sponsored initiative has led to the
formation of joint ventures between Japanese and British partners that will
begin production of lithium-ion cells in the United Kingdom in 1999.
Research
and Technology
In addition to their use in portable electronic devices,
lithium-ion batteries have emerged as the preferred power supply for electric
vehicles. The enactment of stricter emissions policies in states such as
California, Massachusetts, and New York has prompted automakers to look into
alternative fuels for the vehicles they manufacture to make sure they will
comply with the new regulations. Previously, auto producers experimented with
solar energy and rechargeable batteries. In October 1996, the United States Advanced
Battery Consortium (USABC) signed a $106 million agreement to continue research
into this technology.
While some companies have focused on nickel-metal-hydride batteries, others,
such as Nissan and Mitsubishi, have tested LI batteries. Mitsubishi's vehicle
was not planned as a pure electric one, but rather as a hybrid, combining
battery power with a small internal combustion engine. Nissan and Sony have
also jointly developed a prototype electric vehicle using LI batteries. In
addition to Nissan, Toyota and Honda have announced plans to launch hybrid
cars.
Supported by the U.S. Department of Energy and the USABC, Saft America, Inc.
and PolyStor Corp. have also been conducting research on full-size and 50-volt
LI cells for use as a high-power storage device for hybrid electric vehicles.
PolyStor is also working to develop LI batteries for use in satellites.
Producers of all new battery technologies, including LI batteries, have
attempted to develop standard battery sizes to limit their own production challenges
as well as make it easier for hardware manufacturers and consumers to choose
among the various kinds of batteries available. According to Mindy Blodgett in Computerworld,
battery makers also plan to improve the ability of their products to communicate
certain vital pieces of information. Relying on microcontrollers and special
integrated circuits, these so-called "smart" batteries would let
users know how much more power remained to run their equipment before a
recharge was necessary. In addition, the smart batteries could efficiently
allocate power to whatever function needed it the most. As James Carbone noted
in Purchasing, such advances would help existing LI batteries last up to
20 percent longer. Smart batteries would prove especially useful for military,
medical, and aerospace applications that require accurate and instant tracking
of available power.
Many companies are actively investigating new applications and materials for LI
technology. Nippon Telegraph & Telephone has developed a high-density LI
battery with 100 hours of operation per charge for use in a prototype
wristwatch phone that weighs less than
Lithium-metal, abandoned during the 1980s due to questions about its safety,
became popular again in the late 1990s. Tadiran Electronic Industries in Port
Washington, New York, is using it in cell phones as well as in a wireless
portable modem, according to Rik Fairlie in Computer Shopper.
Research is also under way at Sandia National Laboratory to find better
combinations of cathode materials. According to chemist Tim Boyle, scientists
may be close to finding the right combinations of metals and lithium that would
enable LI batteries to run long enough to replace traditional lead-acid car
batteries and make long-range electric vehicles a practical possibility.
Further
Readings
Questions to consider:
1.
What technical and societal changes
were taking place in the early 1990s that provided the “disruptive influence”
that provided a window of opportunity for the Battery Plus concept?
2.
How does Battery Plus compete in
this industry?
3.
What barriers to entry are there in
the battery industry for new entrants such as Battery Plus?
4.
Battery Plus appears to be a
successful entrepreneurial effort. To what do you attribute their success?
5.
Would you consider investing in a
Battery Plus franchise?
6.
Given the set of circumstances that
lead to the success of Battery Plus, can you see any similar disruptive
technical or societal changes taking place now that entrepreneurs can take
advantage of?