Free Qatar Battery Factory Essay Sample
Battery Industry: Case of Qatar and the USA
During the past decade, the global battery industry has seen a good growth, and it holds a growth potential in the future. The witnessed growth has been boosted by the growing demand for battery products from consumer electronics and automotive vehicles. Companies producing batteries produce primary batteries, which are disposable and storage batteries which are rechargeable. There are various battery companies around the globe with major markets being the US and China. The global batteries industry generates an estimate of $80 billion in annual revenue with the trend expected to reach $120 billion by the year 2019. Among the global market drivers of the battery, industry includes advancement in technology, increased disposable income of the consumers, decreased prices of raw materials, and development of new applications for batteries. This paper will discuss the battery industry in the US and Qatar, taking into consideration the battery market structure in both countries and the drivers of the battery industry in both countries.
The US Battery Market Analysis
The battery market in the US is divided into consumers, automotive, portable device, motive power, government, backup power, and industry. The companies in the US produce primary batteries which are disposable by the consumers after use, and secondary battery products which are rechargeable. Among the leading companies producing batteries include; Energizer, Duracell, and Exide Technologies. Battery consumers use these products for various uses i.e. powering smartphones, cameras and in automotive such as cars. The battery products sold in the US include primary batteries and secondary batteries. Primary battery products include alkaline batteries, primary lithium batteries, and zinc-carbon batteries while the secondary battery products include lead-acid batteries used in automotive for starting, lighting and ignition. Other secondary battery products include rechargeable lithium batteries, nickel-metal hydride batteries, etc.
The market for primary battery products in the US has been on the declining trend as the secondary products are increasing in popularity. Many portable devices in the US market utilize advanced batteries such lithium-ion. However for the period up to the year 2017, the demand for primary batteries will be supported by the growth in personal consumption expenditures. Also due to population change, the population of elderly people is projected to be high with an average of people with 65 years and above. This will increase the demand for primary battery products used in medical related devices such as drug pumps, hearing aids, heart monitors, and pacemakers.
The market for secondary battery products is expected to increase in demand to surpass the demand for primary batteries. The increase in the market for secondary battery products is due to the increase in demand for portable products which require high batteries. Devices such as notebook computers and smartphones require charging which can only be made possible by the secondary batteries. However, by the year 2017, the demand for motor vehicles will account for 90% increase in demand for secondary battery products. Also, a major development that will increase the demand for secondary battery products is the rising output of electric cars, the cars rechargeable batteries a key demand for these products.
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US Battery Market Driver
The US demand for battery products is expected to increase by 4.2% per year and is expected to total $17.1 billion by the year 2017. The increase in demand for these products is driven by various factors ranging from the economy of the country to the government regulations regulating the industry. Some of the drivers in the battery industry in the US include:
The US is one the most technologically advanced country, and the technology industry is coming up with different devices that require rechargeable batteries. Companies like Apple, which produces iPhone smartphones, and Microsoft, which produces notebook computers all require rechargeable batteries for their devices. Consumers of these gadgets require batteries which will power their devices for longer times hence the need for secondary batteries. The production of the electric car has also increased the demand for secondary batteries. The increased output of the electric cars is projected to increase the demand for rechargeable batteries by 90% in the year 2017.
Increased Disposable Income of Consumers
The US has some of the strongest labor unions which fight for better wages for workers. This has resulted in the increment of wages to the workers, which in turn has increased their disposable incomes. The consumers of battery products are thus able to purchase products hence increasing the demand for battery products.
New Application for Batteries
Batteries in the US are used for various purposes, i.e., and the primary products are used mostly in medical related devices such as drug pumps, hearing aids, heart monitors, and pacemakers. Secondary batteries are used in devices that need high battery power such as smartphones, cameras and notebook computers. Motor vehicles also require batteries for lighting, ignition, and starting. Also due to the increased output of the electric cars, the demand for rechargeable batteries has increased in the US.
Decreased Prices of Raw Materials
The US battery stopped producing the zinc chloride and alkaline batteries and sort to produce them in China. China has cheap raw materials for the production of batteries and it reduces the cost of production. This has increased the volume of products produced to the market.
Qatar Battery Market Analysis
The Qatar battery market is largely dominated by automotive, portable devices and backup power. Companies in Qatar produce secondary batteries which are used in motor vehicles and rechargeable devices like smartphones and portable computers. Among the leading companies producing batteries include; Cene, dual lite and energizer. Although these are international companies, they have local companies in Qatar which distribute the battery products in the county. Although the companies distribute both primary and secondary battery products, the market for primary battery products in Qatar is declining due to the increased popularity of the rechargeable batteries.
Qatar is one of the fast growing economies in the world, and it is a destination for tourism. Thus, the demand for secondary battery products has been increased by the demand for motor vehicles and devices such as cameras used by tourists. The market for automotive batteries alone has grown over 22% over the last five years. The volume of automotive batteries in Qatar has also increased to over 25% in the last five years. Although there was a decline in imports in 2009, the market for automotive batteries has increased due to the increase in the number of tourists visiting the country as well as an increase in the economy, which has seen the consumers increase their disposable income. The future outlook of the Qatar market is healthy due to increased number of expats in the country making up to 86% of the population while the locals make 14% of the total population.
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Qatar Battery Market Trends
The battery market in Qatar is favorable due to the high population of 2.2 million people. Most of the population is made of expats who make 86% of the total population. The high population has helped in increasing the demand for batteries used for cars and other gadgets such as smartphones and computers. Much of the demand for batteries comes from the motor vehicle users. Since the country is situated in Arab peninsular, the terrain arid desert and Persian Gulf beaches reduce the car battery life which requires the users to replace the batteries every 2years.
In 2012, the number of registered vehicles stood at 1,074,518 with an estimated addition of more than 5,000 vehicles per month. The increase in the number of vehicles has increased the demand for car batteries. In 2014, the amount of batteries replaced in Qatar amounted to QR 800 million which was a 7.5% increase in that year. The market for motor vehicle battery sales is projected to increase to 150,000 units in sales per year. This would be contributed more the increased sale of motor vehicles to the country due to the construction of road infrastructure.
The other important issue to note in the Qatar battery industry is the negligible export of automotive batteries from the country. Thus for a local battery company operating in Qatar, it can take the advantage of the local demand for batteries to increase its output on sales. Also, since 90% of the demand for batteries in Qatar is from motor vehicle batteries, majoring in the sale of automotive batteries will be beneficial than other batteries.
Challenges of the Qatar Battery Market
Since much of the demand for batteries comes from automotive batteries, the ban the drivers licenses for laborers and expats on temporary visas has reduced the demand for car batteries. Also, Qatar does not import cars more than five years old. The ban on second and cars will also affect the car battery market. Lastly, due to the growing population in the country, people will tend to avoid non-essential travel due to traffic congestion.
Qatar Battery Market Drivers
Although battery industry in Qatar is majored on the secondary battery products such as automotive batteries and batteries for other devices such as smartphones, cameras, and computers, the battery market is vibrant and has a promising future. Among the market driver for the positive trends include;
Higher Per-capita Income
Qatars population has an increasing trend with the number of expats averaging 86% and the locals accounting for 14%. The population is supported by a high per capita income due to increased economic growth. Qatar economy grows at a rate of 5-7% annually. The high per capita income has increased the consumer spending on motor vehicles and other gadgets such as smartphones and computers. The increased sales of these products in the country have propelled the need for rechargeable batteries which are used in motor vehicles. 90% of the demand for batteries is accounted by private cars and private vehicles in the country.
Qatar has become a tourist destination due to its investment in infrastructure for leisure and recreational activities. The country has invested in sports events which the country host competitions like athletics, and golf tournaments. These activities have contributed to the increased influx of tourists who use battery products. Most of the tourists use private vehicles which in turn has increased the demand for automobile batteries and the other gadgets that they may poses, i.e. smartphones and cameras.
High Employment Opportunities
The unemployment rate in Qatar is 0.5%, one of the lowest in the world. Expatriates in Qatar dominate the private sector which accounts for 74% of total employment. The locals are majorly employed in the public sector which pays better than the private sector. This has left the average Qatar household with more disposable income which they spend in purchasing automobiles. The number of automobiles exported to Qatar keeps increasing each year which in turn increase the demand for vehicle batteries. The high per capita has increased the sales of luxury vehicles in the country which is estimated to be among the highest in the world.
Government Spending on Infrastructure
The Qatar government is known to spend big on infrastructure, and this has had a positive impact on the automotive industry as well as the tourism industry. For instance, the country is planning on spending over $200 billion on infrastructure in preparation for the 2022 FIFA world cup. These infrastructures will increase the number of vehicles and tourists in the country which will in turn increase the demand for battery products.
The Qatar Battery Recycling Plant
In 2012, Qatar started a battery recycling company in the country. The plant is meant to recycle used batteries as well as manufacture new batteries. Although the company is projected to reduce the amount of battery products exported to the country, the initial service was to serve the domestic batteries which approximate to 4000tones with later developments to include 10000tones by 2030.
The global battery industry has been on the rise due to the increased demand for battery products around the world. There are various battery products i.e. primary products which are not chargeable and the secondary products which are chargeable. The growing trend in the battery industry is increasing with the rechargeable products while the trend for primary battery products seems to be on a downward trend. However, in the US, the demand for primary battery products is high due to people using medical related products. Also, the demand for rechargeable batteries in the US is also high due to the development of technology, a high disposable income of the consumers, and the decrease prices of raw materials. In Qatar, the market for battery products is majorly on the automotive sector and tourism sector. Due to the high number of tourists visiting the country, there is an increase in the use of automobiles which in turn has increased the demand for motor vehicle batteries in the country. Also due to the high rate of economic growth, the households have high disposable incomes which they spend in purchasing luxury motor vehicles hence a high demand for battery products.