EV Investors Can Learn From Boeing's Battery

| About: Tesla Motors (TSLA)

Boeing (NYSE:BA) has a problem with lithium batteries on their 787 airplane. They fry. This could be a big deal for electric car investors. Designers are counting on the high energy capacity and low weight of lithium batteries to make electric and hybrid cars practical and competitive. If Boeing's battery problem shows a fundamental flaw in lithium batteries it could blowup electric car startups Tesla (NASDAQ:TSLA), Coda and Fisker, and set back electric vehicle programs at major car companies. But if Boeing's battery flaw isn't a fundamental one but something else this could get very interesting.

Investing is all about picking winners and losers. If Boeing's bungle is one of design rather than technology, we could see both winners and losers in the electric car business depending on who has it right and who doesn't. This is a wake-up call to take a hard look at all electric car makers, including the big auto companies Nissan (OTCPK:NSANY), Toyota (NYSE:TM), Ford (NYSE:F), General Motors (NYSE:GM), Mitsubishi (OTCPK:MMTOF), Daimler (OTCPK:DDAIF), Honda (NYSE:HMC), and VW (OTCPK:VLKAF) to see if they are getting lithium batteries right. Let's see if we can tell who will soar to success, and whose battery will ground them like a smoldering 787.

Back in October I wrote an article comparing Tesla's approach to electric cars with what their competitors are doing. I concluded, "Tesla: right car, right market, right battery. Competitors: wrong car, wrong market, wrong battery." Boeing's problem offers a chance to check what electric car makers are doing about the safety of their batteries and the lithium cells inside. And maybe to see if Tesla does have the right battery.

The battery in Tesla's Roadster used thousands of small cobalt cathode lithium cells - same chemistry used in the Boeing battery. Tesla delivered 2,418 Roadsters beginning in 2008, that contained 16,517,358 of these lithium cells. There are roughly 800 lithium cells total in all the 787s Boeing has delivered. No Tesla customer has ever had a burned up battery. Two customer 787 batteries have fried.

Investors interested in the prospects for electric cars need to understand why Tesla's batteries are safer than Boeing's batteries, and whether Tesla's competitors are building their batteries the Boeing way or the Tesla way.

There are major differences between the battery designs of Boeing, Tesla, and Tesla's competitors. Let's look at three of these differences.

A Few Big Flat Cells vs. Many Little Round Cells

The Boeing battery contains eight GS Yuasa, LVP-65 lithium cells, each weighing 2.75kg (6 lbs). The much larger Tesla Roadster battery uses 6,831 cells similar to the Panasonic CGR18650HG [page 25], each weighing 42g (1.5oz).

The big cells in the Boeing battery are flat, allowing them to be packed tightly against each other. If one of these big cells experiences thermal runaway, a lot of heat is released, and because the cells are touching, adjacent cells will fry, too. Since the eight cells in the Boeing battery are connected in series, there is no practical way to disconnect a faulty cell and still have a working battery. If one cell goes, the whole battery goes - at least it's simple.

Because the cells of the Tesla battery are small, if one cell suffers thermal runaway, relatively little energy is released. And since these cells are round, they are not packed as closely together making it much harder for a failed cell to heat up other cells nearby. With many cells making up the Tesla battery, the battery control system is able to disconnect and isolate a faulty cell and the battery will continue working. Complicated, but it doesn't burn-up.

Tesla's competitors are all going with specially designed 'automotive' lithium cells that are flat, like the ones in Boeing's battery, and stacking them tightly together. GM's Volt uses 288 cells, Nissan's LEAF uses 192 cells. These electric car batteries are bigger and have more cells than the Boeing battery, but they do not have enough cells, or the sophisticated control system needed for redundancy. Cost matters a great deal to mainstream auto makers and these 'automotive' cells may someday be cheap.

Cell Safety Features

The safety of a lithium battery begins at the cell level. Individual lithium cells can occasionally fail, short circuit and overheat. Battery safety depends on the design and safety features built into each cell to prevent failure and contain a failure should one occur.

The Boeing battery cells use cobalt cathodes, an early, volatile lithium cell chemistry. These cells are each sealed in a rigid, flat-sided, metal case that supports the cell contents.

Tesla's Model S (the Roadster is no longer in production) uses cells with NCA cathodes, a more advanced and safer lithium cell chemistry. Each cell is sealed in a small cylindrical aluminum can which supports the cell contents.

Tesla's electric car competitors, both major car companies and startups Fisker and Coda, use 'automotive' lithium cells, roughly as tall and wide as the LVP-65 cells of the Boeing battery but four to five times thinner. To minimize cost, these 'automotive' cells are packaged in flexible plastic pouches instead of rigid metal cases. The battery box is counted on to provide mechanical support for these 'pouch' cells. (Some competitors are using batteries similar to the Boeing battery in their early offerings.)

Several design features are available to make lithium cells safer. The table shows which features designers have chosen to incorporate into the cells used in Boeing, Tesla and Competitor batteries. Notably Boeing batteries and those of Tesla's competitors lack several safety features of the cells Tesla uses. Hopefully design safety decisions made by Tesla's competitors will over time yield better success than Boeing is experiencing.

Safety At The Cell Level

Boeing (LVP65) Tesla Model S (NCR18650A) Competitors (pouch cell)
Vent Yes Yes ?
Rigid Case Yes Yes No
Fusible Separator Unknown Yes Yes
Crush Testing Unknown Yes Yes
Safer Chemistry No Yes [NCA] Yes [various]
Over Pressure Disconnect No Yes No
Mechanical Spacing No [flat] Yes [cylindrical] No [flat]
Current Limiter No Yes No


Heritage, Real World Experience Making and Using the Cells

Tesla continues to use many small, cylindrical lithium '18650' cells, similar to standard commodity cells also used in laptop computers. Boeing, as well as Tesla's electric car competitors use lithium cells specially designed for their aircraft or electric cars, and different from any high volume commodity cells. This matters for three reasons.

  • Tesla doesn't have to go first. Millions of cobalt cathode lithium batteries were shipped in laptop computers, some caught fire and cell makers corrected the design, all before the first Tesla Roadster with this type of cell reached a customer. By choosing a cell designed specifically for your application, whether an aircraft or an electric car, means you get to go first. This is what Boeing did. This is what Tesla's electric car competitors are doing.
  • Specialty cells mean smaller quantities. If the LVP-65 cell used in the Boeing 787's battery were used in every Boeing and Airbus airliner for the next 30 years, that would amount to fewer cells than the laptop cell makers produce in a day. If GM builds 100,000 Volts and Cadillac ELRs, they need 29 million cells. Commodity lithium cells like Tesla uses are made by multiple suppliers, by the billions, and used in a wide range of products. Multiple competing suppliers assure Tesla low cost and assured availability.
  • Lithium technology is advancing rapidly. Old technology cells aren't good enough to make cutting edge electric cars. The lithium cells in Tesla's Model S store twice the energy (W-hr/kg) of old technology LVP-65 cells in the Boeing battery and more than the cells used in the Volt, Fisker, Coda, LEAF, or iMev. Nano-structured manganese cathodes, silicon anodes and better electrolytes will double performance compared to the Model S cells by 2016. After that sulfur cathodes, tin anodes and other new materials are in the pipeline to increase cell performance even further. Having the best cells, is one reason Tesla cars out range and out perform competitors. By choosing commodity lithium cells, Tesla gains earliest access to developed, field tested cells with the latest technology and best performance.

Boeing and Tesla's competitors have valid reasons for their cell and battery design choices. Boeing builds commercial aircraft. Long product cycles and stringent, specialized component qualifications apply to every part of the planes they build. This places extreme priority on designing components and picking suppliers to ensure certified parts will continue to be available over 50-year aircraft lifecycles. This results in serious compromises where technology is rapidly evolving. Unfortunately for Boeing, this is the case for lithium cells.

Tesla's competitors are driven by a different imperative. Automakers minimize cost by eliminating non-essential features and functionality from every part. Plants and processes are optimized to build simplified parts cheaply. This 'value engineering', takes time and results in expensive plants and specialized processes that are hard to modify, and unique parts with few applications. Rapid advancements in lithium cell technology and performance makes automotive 'value engineering' a path to becoming low cost producer of obsolete batteries - which is alright if the competition does the same thing. If the competition is quicker, it might turn a company into road-kill.


For electric car makers, Boeing's Battery Bungle looks to be little more than a bump in the road. Tesla has used the same volatile lithium cell chemistry in their Roadster battery but with safety features proved in laptop batteries they delivered safe electric cars. Tesla continues to employ the cell level safety features that worked for their Roadster batteries and have switched to newer, higher performance, less volatile lithium cells. Tesla's competitors also use newer, less volatile lithium cell technology than used in the Boeing battery, though they have chosen to forgo some of the cell level safety features Tesla uses in the interest of lower cost.

The aircraft industry imposes low volumes, has stringent component qualification requirements and exceptionally long product lifecycles. These industry peculiarities have driven design decisions that leave Boeing with obsolescent cell technology that has never had the wide application and extensive real-world experience that drives improvements to commodity lithium cells. For Boeing, this will continue to be a difficult situation and there is no easy way out.

Tesla's competitors have followed the 'value engineering' ethos of the car industry, choosing specialty automotive lithium cells over commodity cells. This approach may end up exposing these companies to unforeseen safety issues, and perhaps as important may leave them one-step-behind in battery technology and vehicle performance.

Our examination of Boeing's battery problem and the lithium cell technology going into today's electric cars shows again that Tesla does have the right battery.

Disclosure: I am long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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