Li-ion Batteries: A Speculative Field of Dreams

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 |  Includes: ALTI, AXPW, ENS, ESNC, F, GM, HEV, HMC, TM, XIDEQ
by: John Petersen

My capacity to overlook the obvious never ceases to amaze me. Last weekend Jack Lifton sent me a link to an article he recently published in The Resource Investor that discussed the development and commercialization history of NiMH and Li-ion batteries and focused principally on the availability of critical rare earth metals. While the Lifton article goes a long way toward alleviating my concerns over the availability of lithium metal, at least for the short term, other aspects are far more troubling. In particular, I was horrified by Mr. Lifton’s assertions that:

No attempts were made in the twentieth century to substitute lithium-ion battery technology for either lead-acid or nickel metal hydride uses by any OEM automotive mass marketer.

And,

Toyota’s (NYSE:TM) management has concluded that lithium battery technology is not mature enough now for a full-scale commitment by Toyota to move from nickel-metal hydride battery technology to lithium battery technology in the near future. Toyota has announced that it will construct a few lithium batteries for some short runs of commuter cars to begin testing the concepts, and the markets for short-range battery operated or extended range vehicles.

Honda (NYSE:HMC) and Ford (NYSE:F) seem also to be following the Toyota model.

The main reason that GM has suddenly discovered lithium batteries is that there is no other technology available to them!

It’s taken a couple days for the message to sink in and work its way through my aging neural synapses, but I think Mr. Lifton may be right. I’ve done some searching and I can’t find a single report on how GM, Ford or Chrysler (or anybody else for that matter) has built a fleet of several hundred or several thousand Li-ion powered cars and put them through their paces in rigorous road tests. A number of fleet tests have been announced or started, but none of the pending or proposed tests has come anywhere near completion. In other words,

THE RUSH TO SPEND BILLIONS BUILDING LI-ION BATTERY PLANTS FOR PHEV AND EV POWER TRAINS IS BASED ON SPECULATION – NOT SUCCESSFUL ROAD TESTS.

The guys in the white lab coats believe that Li-ion technology will work and the battery companies are using that opinion and an intense PR campaign to bypass the pesky formality of diligent road testing and jump directly into building factories that will be financed by billions of taxpayer dollars. What if they’re wrong?

Most hype-based scams are discovered after the fact. The Li-ion battery promotion is being perpetrated today and nobody but Jack Lifton (and now me) has had the temerity to ask, “WHERE THE HELL IS YOUR PROOF?”

Li-ion batteries may well offer the performance advantages that their advocates claim; but shouldn’t we at least complete the road tests before spending billions of Federal dollars building plants to manufacture something that may prove to be a colossal technical or economic failure?

I for one am tired of "if you build it they will come" speculation based on laboratory research. If Li-ion technology is so wondrous, let’s build a fleet of test cars, prove both the principle and the economics on America’s roads and then decide whether the technology is worth the billions of dollars that undercapitalized development stage companies like Ener1 (NASDAQ:HEV), Altair Nanotechnologies (NASDAQ:ALTI) and others are demanding from Congress.

Disclosure: Author holds a large long position in Axion Power International (AXPW.OB), a leading U.S. developer of lead-carbon batteries, and small long positions in Exide (XIDE), Enersys (ENS) and ZBB Energy (ZBB).