Battery Wars 26 comments
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A horse race is in progress that will determine the next generation automotive power plant. In order to break our oil addiction cars must transition to electric power, which means the power plant must be either all electric or plug-in hybrid electric. Either one requires a battery with vastly better cost/benefit ratios than is currently available. The two near term favorites to fill the bill are nickel metal hydride and lithium-ion; a long shot on the outside is ultracapacitors.
Competing battery technologies also include an improved lead-acid battery and a nickel-cadmium battery in addition to the NiMH and Li-on alternatives. According to metals analyst Jack Luftin in an article entitled “The Future Of The Nickel Metal Hydride Battery And Of The Rare Earth Metals From Which It Is Constructed,” “So far the hands down winner among the new battery technologies as of 2009 is the nickel metal hydride battery based on the hydrogen absorption capacity of the rare earth metal lanthanum alloyed with nickel and cobalt.” But the popular press is all about “the immature and untested lithium-ion battery technology alone.”
Luftin details the contest between the NiMH crowd that is headed by Toyota (TM) and the lithium-ion crowd of which GM is the apparent cheerleader. He describes Toyota’s superior long term planning and product development skills that have lead them to chose the NiMH battery which currently powers virtually all hybrid cars. Contrasting with Toyota’s brilliance, according to Luftin, is the mistaken judgement and poor planning skills of General Motors, which has caused them to fall back on what he says is the inferior lithium-ion battery. Luftin believes GM is precluded from using the better performing NiMH because they can’t obtain enough of them, having failed to understand the critical need to secure supplies of the rare earth elements that are used in NiMH batteries.
Luftin’s essay recounts the history of the automotive industry’s experimentation with electric and hybrid- electric power. The NiMH battery was invented by Energy Conversion Devices (ENER) in the 1980’s. ENER still operates that business in a joint venture with Chevron (CVX). Since China became the sole global supplier of rare earth elements, ENER gave China the technology for the NiMH battery in exchange for guaranteed access to lanthanum. Thus China has been making NiMH batteries since the 1980’s.
A critical difference between the Japanese and American approach to battery technology, according to Luftin, is that only the Japanese recognized the vital need for sufficient lanthanum, a rare earth element, if one wanted to produce a large quantity of NiMH batteries. Japan then went on to corner the developed world’s market in lanthanum. Toyota has long monopolized Chinese exports, has stockpiled lanthanum, and has made supply agreement with Australian, American, Canadian, Vietnamese and other suppliers and companies that plan to start up production of rare earth elements. They even bought a trading company that specializes in rare earth elements.
Thus all NiMH automotive batteries are now made in Japan. Toyota focused both on obtaining the raw materials and on refining the technologies needed for NiMH production. They have vastly improved on the original ENER NiMH technology and are now ramping up production to meet an estimated 1 million NiMH-powered hybrid cars per year capacity.
As a result of Toyota’s far-sighted planning efforts, the supply of materials for making NiMH batteries is now unavailable to Ford (F), Chrysler and GM, all of which have announced their commitment to lithium-ion batteries for their hybrids. But until they actually develop a cost-effective li-on battery the American manufacturers must depend on the kindness of Toyota to obtain sufficient NiMH batteries for the relatively few hybrid cars currently in their production schedule.
Unfortunately for GM, the li-on battery they are promising for their Volt, due in showrooms in less than two years is untested, has never been mass produced, and carries an estimated cost that is excessive. The latter point is most critical. If the li-on battery cannot be produced more cheaply then GM is guaranteeing that either each Volt will be sold at a loss (which they have publicly admitted in terms of initial production) or that few people will be able to afford the vehicle.
The above is Mr. Luftin’s view of the battery world. If he is correct, how can investors benefit? One way may be to own companies that produce the rare earth elements needed for NiMH batteries. As Mr. Luftin says, “There will be a growing demand for rare earth metals for nickel-metal hydride batteries and for neodymium-iron-boron permanent magnets, which can only be met by extending the production of REEs outside of China.”
In August, 2008, I posted an analysis of the REE market and the potential investment alternatives. The investment conclusion: the primary opportunity seems to be two Australian producers, Lynas Corp, (LYSCF.PK) which plans to start shipping in Q4 this year, and Arafura Resources, which is about 18 months behind Lynas. Major shares of Lynas are owned by several top-ranked Wall Street firms. I own stock in both companies. Neither stock has been a winner yet and Lynas stock has actually been stopped from trading in Australia over the past week pending an announcement. Another and deeper discussion of rare earth elements by Jack Lifton is here.
The Dark Horse
Meanwhile, as the analysts are busy comparing and contrasting various battery technologies, a dark horse is running in the background and threatening to break open the race altogether. That horse is the ultracapacitor. Various sorts of ultracapacitors have been produced and used in products for many years; a public company, Maxwell Technologies (MXWL), is a prominent supplier but has never made a profit in the business.
Now a secretive company called EEStor, financed by the pre-eminent venture investment firm Kleiner Perkins and located in Texas, claims to have a new technology for making ultracapacitors that have cost, weight, and performance benefits that combine the enormous power of ultracapacitors with their rapid re-charge and great storage capacities at much less weight and cost. In short, the EEStor product would change the game and, indeed, the world.
EEStor has not made its product available for public inspection but it has announced a supply agreement with Lockheed Martin (LMT). And the rumor is the it is talking with General Motors. A couple of sources of information are here and here. I’ve written a few pieces on EEStor that you can access here and I own a few shares of Zenn Motors (ZNNMF.PK), a Canadian electric car maker that is said to own a 2% interest in EEStor and which is the only way I know to play it.
Each time I mention EEStor someone writes to accuse me of hyping vaporware. I try to be clear in saying that I have no idea whether the EEStor product is real or just hype. But I do know that Kleiner Perkins is very real as is Lockheed Martin. And I suspect that if the EEStor claims are even vaguely in the ballpark of reality, the new product could change everyone’s idea of what the energy future will look like. Not only would it potentially push the viability of electric transportation forward. It would impact the viability of all battery technologies along with changing the demand for oil in future years and even shifting the balance of power in the world. If you think I’m kidding, think further.
A breakthrough like the EEStor concept or something comparable would be in the great tradition of new technologies changing the way we live and solving problems that we did not think could be solved. It would be wonderful if such a new technology were to come once again from America.
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This article has 26 comments:
I would not be at all suprised if a number of disruprive technologies lead us out of our current quagmire.
So now we learn that the NIMH battery revolution failed, not because of oil company interference, and a deep, abiding faith in the profit power of planned obsolescence at GM ... but because Toyota cornered the market on lanthanum? The story just keeps getting weirder and weirder.
It would make more sense if oil money paid everyone involved to keep the technology on ice for a decade...just think of the billion$ the lack of an electric alternative has saved Big Oil until now!!
Lockheed Martin also makes most of their money on war in the middle east, providing the funds to keep EESTOR locked up for another decade or two seems like money well spent to me.
It's not that I want to believe in conspiracies, but any detective will tell you to follow the money. So rather than all these back room dealings we suspect, we now must believe that it all comes down to profound stupidity at GM. Well, I guess that's not too hard to believe either.
Recent developments by the Australian government combining advanced lead acid technology with ultracapacitors looks promising and claims to offer lower cost than NiMH batteries.
www.sciencedaily.com/r...
On Feb 09 02:27 PM creativforce wrote:
> Thank you for one of the most interesting articles I have read on
> the subject. Everyone who has followed the plight of the electric
> car since the late nineties has wondered "Who Stole the Electric
> Car?" As an investor in ENER during those heady days of the electric
> revolution with the EV1 in California, I thought I would soon be
> rich as ENER ramped up production of the NIMH battery. When Shell
> (who later sold to Chevron) initially bought into the company, I
> assumed the huge infusion of cash ENER needed would soon be on the
> way. As we know this was the beginning of the end. CA mysteriously
> repealed their zero emissions requirement, and the stock price at
> ENER went to hell for a decade. Cobasys has been a joke and their
> leaky batteries have seemed like intentional screw ups. Last year
> Mercedes had to sue them for failure to deliver and GM who built
> one of the most remarkable cars of the 20th century (EV1) can't get
> access to the batteries they helped test and develop.
>
> So now we learn that the NIMH battery revolution failed, not because
> of oil company interference, and a deep, abiding faith in the profit
> power of planned obsolescence at GM ... but because Toyota cornered
> the market on lanthanum? The story just keeps getting weirder and
> weirder.
>
> It would make more sense if oil money paid everyone involved to keep
> the technology on ice for a decade...just think of the billion$ the
> lack of an electric alternative has saved Big Oil until now!! <br/>
>
> Lockheed Martin also makes most of their money on war in the middle
> east, providing the funds to keep EESTOR locked up for another decade
> or two seems like money well spent to me.
>
> It's not that I want to believe in conspiracies, but any detective
> will tell you to follow the money. So rather than all these back
> room dealings we suspect, we now must believe that it all comes down
> to profound stupidity at GM. Well, I guess that's not too hard to
> believe either.
I continue to marvel at how you write so well on such a wide variety of subjects.
As an aside, it would be fitting if a technology limiting the need for future oil use were invented in Texas.
This is to all those individuals that are in the "Be American, Buy American" bucket. If you want the US to be technologically ignorant for the rest of existance than go ahead and buy American. I am American but I also believe that if we reward GM and any other American company for lacking forsight and investing in new Tech will only hinder the US in the long-run and not help us. Buy purchasing new Tech, wherever it is from, will push those lagging behind to catch up or get out. I'm sorry but we live in a Globalization world where capital and the means of capital move relatively freely. I believe that by purchasing asian "New-Tech" you will only be motivating the US to step up and keep up. It is complete and utter ignorance to say "Be American, Buy American." 90% of the "American" stuff you buy was made outside the US. You'd probably be more "American" by buying foreign products.
Thanks.
My question, which I have not seen addressed, is: What happens in 10 years or so when these batteries start ending up in landfills? I can see a tremendous hazardous material problem coming.
If NiMH is superior to LiFePO4 then why are there companies that will convert a Toyota Prius into a plug-in hybrid, replacing the NiMH battery with a LiFePO4 battery. Here is one example: www.eaa-phev.org/wiki/...
There have been many articles on battery technologies for EV lately.
Personally, I think hybrids are marginal. As someone who buys new vehicles and drives them forever (250K+miles), hybrids have more complexity (moving parts) and all the disadvantages of IC engines (maintenance & fuel). My 88 Honda EF has always gotten 40+ MPG.
Hybrids are for people who want to make a statement.
I would buy a pure EV in a instant that went 80-100 miles between charges and demonstrated good battery life (no overdischarge).
It wouldn't surprise me if the functional EV combined lead acid (non-flooded & recyclable) for base load and an ultracap or hi-rate chemical battery for peaking and regen to prolong the battery life.
I wouldn't even mind hanging a small gas engine generator on a tow hitch if I obviated the need for a second car for road trips.
On Feb 10 11:27 AM ScottyEconomist wrote:
> Great Article
>
> This is to all those individuals that are in the "Be American, Buy
> American" bucket. If you want the US to be technologically ignorant
> for the rest of existance than go ahead and buy American. I am American
> but I also believe that if we reward GM and any other American company
> for lacking forsight and investing in new Tech will only hinder the
> US in the long-run and not help us. Buy purchasing new Tech, wherever
> it is from, will push those lagging behind to catch up or get out.
> I'm sorry but we live in a Globalization world where capital and
> the means of capital move relatively freely. I believe that by purchasing
> asian "New-Tech" you will only be motivating the US to step up and
> keep up. It is complete and utter ignorance to say "Be American,
> Buy American." 90% of the "American" stuff you buy was made outside
> the US. You'd probably be more "American" by buying foreign products.
Sure, GM colluded with Standard Oil of California (Chevron) to suppress Nickel-Metal Hydride (NiMH) batteries; but if GM were FORCED to produce a plug-in car, it would find a way to do so.
GM and the ghost of Chrysler will submit a "survival plan" to the gummint which is supposed to convince somebody.
But GM, and the gummint, is going about it ALL WRONG.
They are not only doomed to failure, they will miss a great opportunity.
Cost-cutting by closing plants and firing line workers has the BAD effect of destroying our manufacturing base. Instead of continuing the process of dismantling itself, GM should be doing a GENUINE restucturing and reorganization, to RETAIN and EXPAND that base, which contains the best workers in the world (contrary to GM's attempt to slander and blame their own workers).
What would that be like?
Well, GM has
too many of the WRONG dealers,
too many of the WRONG white-collar workers,
too many of the WRONG engineers, and
too little accountability.
Because GM has no effective oversight it is running wild (the Board of Directors is dominated by Wagoner, don't care if the stock goes to zero).
GM, and the gummint, must recognize the main problem:
GM IS MAKING THE WRONG CARS.
The solution is obvious, once you recognize the problem: remove the management that committed to making the wrong cars, remove the
engineers who can't build better cars, and start from scratch with new management which has a real interest in making cars that people
can't wait to buy.
Instead of FIRING, GM should be HIRING!!
GM should be retooling for world-class cars, cars that get more than 50 mpg, that are well-engineered, and that last longer than 10 years, cars that have features such as electric motor drivetrain, climate-controlled cabin, a goal of no emissions, and real efforts to PRODUCE such cars.
Instead of what GM's whining, simpering and pouting about all the things that it CAN'T do, it should start doing some of the things that need to be done! Get rid of failures and disgraces like Wagoner, Lutz and the rest of the overpaid, failed execs and bonehead, arrogant managers.
Don't fall into the trap of letting GM continue its "Wagoner-Lutz road to failure".
Require that GM STOP making gas-guzzlers.
STOP paying for for production of the WRONG CARS.
GM must be FORCED to make cars that are in the public interest; they would find out, if they did, that they could make money doing so.
Auto makers should not receive our money unless they make cars that are in the public interest. GM has produced a plug-in car in the
past, but now is stalling and refusing to make plug-in EVs.
Toyota's RAV4-EV is still on the road, last sold in Nov., 2002, and running fine on the same set of batteries for the last 7 years.
GM, and the rest of the Auto Alliance, must be required to make and SELL a plug-in car if they want to do business in America.
R/C model airplanes have used Lithium Polymer the last few years and some of us even use A123 by taking apart Dewalt battery packs!
I believe that I read that Toyota admits they will need to switch to Lithium eventually.
Oh, and don't forget NiMh is nasty for the environment - Lithium is not too bad.
GM has sold more cars than anyone for decades...and yet they've been selling the wrong type of vehicles? That's priceless - you need to stop watching CNN and reading NY Times and their copycats.
SUVs and Trucks enjoyed HUGE margins, so obviously they were the vehicles that people wanted to buy. The big 3 were profitable not very long ago, and then the recession came just as they were becoming profitable again. Too bad Rubin (just before getting hired by Citibank!), Clinton, and Congress (including Republicans) deregulated the banks in 1999.
GM pays their engineers poorly. I met a guy in college (grad school) who was employed at the North Tondawanda (Buffalo) engine plant. He only made about the same as he made as an intern years earlier. How many top engineers would put up with that? Work you butt off for 4+ years in college (and high school), be a top student, have 10's of thousands in student loans, and end up making about the same as an assembly line worker!