Manufacturers of electric car batteries are building new manufacturing plants and expanding at such a rate that capacity will increase to almost double automakers' demand, according to a new study.

The Bloomberg New Energy Finance (BNEF) report shows that electric car battery manufacturers will produce 35 gigawatt hours of batteries by 2013, but car makers have committed to produce up to 839,000 plug-in electric vehicles, which will require 18 gigawatt hours of storage, BENF said.

The glut of factories may push smaller manufacturers of batteries into energy storage for surplus power generated by electric grids, and also lower battery prices to $350 per kilowatt hour from $800 to $1,000 per kilowatt hour today, BNEF said.

Energy/Economic Analysis: The price decline may actually hinder the development of car battery technology, longterm, if it results in substantially lower revenue to battery manufacturers, which could likely decrease research and development budgets. If that's the case, then battery technology development will be elongated.

The bottom line: Electric car battery manufacturers need massive investment, most likely from the private sector. They also need institutional investors to wait five, seven, even 10 years before seeing a return on those investments -- to take advance batteries to next-generation technology -- one that offers a 150- to 200-mile range per charge despite using car accessories, and that's cost-competitive with gasoline/diesel on an after-tax rebate basis.