Lithium-ion Batteries: 9 Years of Price Stagnation

This May will mark the nine-year anniversary of "Costs of Lithium-Ion Batteries for Vehicles," a seminal study from the DOE and Argonne National Laboratory that sent America lurching down a path toward an HEV, PHEV and EV future based on Li-ion batteries.

Since nine years is a respectable length of time in most industries, I thought it might be interesting to review the prevailing expectations in May of 2000, consider the cost reductions achieved over the last nine years and question whether the market frenzy over Li-ion battery companies is even close to rational. Regular readers know that I'm an unrepentant critic of both Li-ion batteries and the companies that make them. So if you're a true believer in Li-ion technology, I would implore you to stop reading now.

To keep it simple, I'll dispense with the foreplay and get straight to the vulgar financial issues. In its May 2000 report "Costs of Lithium-Ion Batteries for Vehicles," the DOE published its estimate of the prices Li-ion battery packs would need to achieve before HEVs, PHEVs and EVs could be cost-competitive. For complete details see Section 6 beginning on page 37.

Battery Type	Baseline	Optimistic	Industry Goal
High-Energy (35 kWh Battery Pack)	$706 per kWh ($24,723)	$250 per kWh ($8,767)	>$150 per kWh (USABC)
High-Power (100 cells, 10 A-h each)	$2,486	$1,095	$300 (PHGV)

These figures were not a forecast of what the Li-ion battery companies were likely to achieve. They were a simple statement of the fundamental economic barriers to entry that had to be overcome before a market could develop.

After nine years of work and incalculable spending on Li-ion battery research and development, the following table shows exactly how far the Li-ion battery industry has come.

Manufacturer	Chemistry	Current Price	Target Price
Ener1 (HEV)	Li-polymer	$660 per kWh	N/A
Valence Technologies (VLNC)	Li-phosphate	$1,000 per kWh	$500 per kWh
Altair Nanotechnologies (ALTI)	Li-titanate	$1,000 per kWh	N/A
A123 Systems (power tool packs)	Li-phosphate	$1,228 per kWh	N/A
2008 DOE SEGIS-ES Estimates (PV Solar battery packs)	Various	$1,333 per kWh	$780 per kWh
2009 NEDO Survey Results (Average of Japanese Producers)	Various	$2,018 per kWh	$1,000 per kWh (next year)

Price stagnation is the kindest term I can use for nine years of research that has failed to reduce costs.

In the 2008 Annual Progress Report for its Vehicle Technologies Program, the DOE reported that the cost of high-energy Li-ion batteries for PHEV and EV applications "is approximately a factor of three-five too high on a kWh basis." Likewise, with respect to high-power Li-ion batteries for HEV applications, the DOE reported that the cost "is approximately a factor of two too high on a kW basis." Is it any wonder that a recent report on the electric two-wheeled vehicle (E2W) market in China says that roughly 85% of new E2Ws are powered by heavy lead-acid batteries instead of their lighter Li-ion cousins? Could it have something to do with a 400% price differential and a population that knows the value of a dollar?

I have seen all the glowing reports about immense progress in the Li-ion battery sector. One of my personal favorites is on Slide 14 from a Summer 2008 presentation by David Anderson of the Rocky Mountain Institute that shows a highly favorable "industry consensus" regarding future Li-ion battery manufacturing costs (Click here for image PDF).



In what alternative universe is that kind of industry consensus reasonable? Over the last nine years Li-ion battery companies have had a hard time maintaining Y2K price levels much less reducing them. While their products are safer, I've seen nothing to indicate that the industry consensus is based on anything other than hope and the certain knowledge that unless prices collapse Li-ion batteries will never be cost effective in HEVs, PHEVs and EVs.

To put it bluntly, the progress the DOE hoped for in Costs of Lithium-Ion Batteries for Vehicles never materialized. We live in a resource constrained world where demand for water, food, energy and every conceivable commodity is increasing rather than decreasing. Since the DOE said in the introduction to Section 6 that materials costs account for 80% or more of finished product costs, it is patently unreasonable to believe that further cost reductions are possible, much less likely.

I am an incurable optimist and believe that cost-effective solutions to our energy storage problems will be found. But in the case of Li-ion batteries what started as cautious skepticism in a DOE report has gradually morphed into a baseless urban legend of immense proportion, a lie so colossal that nobody would expect a responsible industry sector to distort the facts so blatantly or allow the politicians and press to do the dirty work for them. I think it's time for the investing public to rely on their own experience instead of the deafening drumbeat of PR and hype that says, "your experience is meaningless – listen to our promises instead."

Stock market investors are currently placing big bets on Li-ion battery companies in the hope that massive Federal grants and loans will increase the intrinsic value of their investments to a level that roughly approximates current market values. While that plan may have short-term appeal for day traders and other speculators, the fact remains that you can tie a pork roast around an ugly baby's neck and the dog will play will play with it for a while, but bad economics are ugly to the bone.

If you want a long-term investment that will grow over time and derive immense benefit from the coming cleantech revolution, then the low-profile lead-acid battery manufacturers including Exide (XIDE) Enersys (ENS) are probably the best choices. If you want a low-cost speculation on advanced acid or lead-carbon technologies in the final development stages, then C&D Technologies (CHP) and Axion Power International (AXPW.OB) may be good choices.

In life, the plain and reliable girl next door usually makes for a better wife than an airbrushed centerfold. In batteries, the plain and reliable lead-acid variety that we've used for decades have far more potential to serve our needs than the famously expensive and finicky batteries we use to power our cell phones and laptops.

Disclosure: Author is a former director and executive officer of Axion Power International (AXPW.OB) and holds a substantial long position in its stock. He also holds small long positions in Active Power (ACPW), Exide (XIDE), Enersys (ENS) and ZBB Energy (ZBB).

Comments

[John Petersen:]

The following comments were posted on altenergystocks.com before the article was picked up by Seeking Alpha:

Reread our report; the goals were set by DOE/USABC, not Argonne. We did not make any price forecasts. Our optimistic numbers were lower bounds on where we thought prices could go, and did not meet DOE goals. Note also that you need to be careful that you are comparing similar batteries. Today's batteries should be somewhere in between our high energy and high power cases.

Posted by: Linda Gaines | April 5, 2009 06:35 PM

Linda, I apologize for my lack of precision about the parties responsible for the goal setting and cost analysis functions. It's also important to note that today's batteries are better than the ones that existed in 2000, particularly in terms of cycle life and power. It does seem, however, that the performance gains over the last nine years fall well short of the performance targets in the original report. I think it would be wonderful if ANL, the DOE or some other authoritative source could create a follow-on report that shows where we were, what changed and where we are now.

Posted by: John Petersen | April 6, 2009 12:57 AM

And from the "You can't make this crazy stuff up" department my horoscope for today says:

Monday, Apr 6th, 2009 -- You take the long-term approach in nearly everything you do now. While others are working in the moment so they can get through the day, you are looking way down the road. Unfortunately, it can be discouraging when no one else sees what is so obvious to you. Your attempts to enlighten everyone will probably only annoy them and make you more frustrated in the process. Focus on what you know to be true; everyone else will eventually catch up with you, wondering how you knew it all along.

Posted by: John Petersen | April 6, 2009 01:19 AM

Apr 06 02:14 AM

[Conan the B...:]

Good Morning, did you read the "H.R. 1835" article?

Any thoughts on AXPW as it would travel through a CNG vehicle environment?

Apr 06 02:19 AM

[John Petersen:]

Conan, thanks for the heads up. The H.R. 1835 article strikes me as a breath of fresh air and good news for proponents of a more comprehensive energy policy.

seekingalpha.com/artic...

While I spend all my time writing about storage, I'm a firm believer that we need to use every available tool in the box and focus first on slowing the export of cash in exchange for oil. As that battle progresses, we can devote more attention to building out new power generating facilities and the smart grid and developing EV solutions that work. The biggest problem I see with trying to force longer term solutions into the short term is that you don't give the key technologies enough time to really mature. In my mind, this is one of those journeys of a thousand miles and I don't think any of us can do more than vaguely describe some of the mile-markers we are likely to pass en-route to the finish line. I'll guarantee that none of us can accurately describe 2060.

Apr 06 02:38 AM

[John Petersen:]

Conan, with respect to AXPW - CNG and future vehicles, I honestly don't know what the most cost effective solution will be. The nice thing about the PbC is that it's a general purpose device with a broad range of potential stationary and traction applications, but until manufactured devices are rolling off the line and fully tested, it will be impossible to say what the highest and best uses are. No one device is best in class for every potential application. It's true for Li-ion and it's true for PbC. The only way we'll ever find out is build them, test them thoroughly under real world conditions and then let the engineers and accountants figure out what works best.

Apr 06 02:45 AM

[Douglas Kor...:]

Why not draw the obvious conclusion, that the (assumed) need for Lithium is FALSE?

NiMH and lead have proven successful in Electric cars and hybrids; NiMH is the lowest-cost battery that lasts more than 100,000 miles (perhaps 200,000 miles, we don't know yet).

NiMH batteries have carried EVs over 200 miles in range; 400 lbs. of NiMH, the same weight as would be used in the so-called VOLT, would yield 12 kWh of accessible energy, enough to go 60 miles in an EV or EREV.

The Toyota RAV4-EV has proven over 17,000,000 miles of all-electric travel on NiMH batteries. Why fool with Lithium, when NiMH is recyclable for CASH, long-lasting, and 25% the cost of Lithium? NO cost decrease for Lithium, despite the economies of scale in lap top batteries; and no increase in life (no Lithium EV has so far gone more than 50,000 miles without significant battery degradation).

GM's insistence on using Lithium just shows they don't want to make an EV, and are lying about their intentions.

Lead-acid PSB 1260 batteries carried the EV1 more than100 miles on a charge, more than needed for the so-called VOLT.

Apr 06 02:58 AM

[John Petersen:]

Doug, the only good explanation I've ever heard for preferring Li-ion over NiMH came from Jack Lifton who explained that NiMH batteries require tantalum and Toyota has done a good job of effectively cornering the market on that strategic metal. Since Toyota is talking about using Li-ion in the future despite their dominance of NiMH, I get the sense that tantalum supplies may be more constrained than Toyota would like, but NiMH is far superior to Li-ion on a raw price-performance basis.

Apr 06 04:32 AM

[John Petersen:]

Speculawyer, as always I would like to thank you for your respectful, collegial and carefully documented comments. I understand that DIY enthusiasts can buy cheap LiFePO4 batteries of unknown quality from Internet websites managed by China, Inc. Unfortunately that option is not open to manufacturers who need to worry about things like 5-year warranties and products liability insurance.

Notwithstanding the existence of cheap quotes from companies that I can't invest in, I continue to believe the best way to measure a manufacturer's costs is to rely on recent statements from its CEO. I've never said that Li-ion costs won't decline over time, but the notion that prices will drop like a stone and leave huge profits for the manufacturers is insanity.

Apr 06 05:49 AM

[Douglas Hvi...:]

Keep one eye on MDI and the Flow-aire technology. No one else has a small compressed air storage so close to mass production. It will either flunk or be a rule-breaker.

BTW, a backup flywheel MFG company, ACPW, has a CleanSource (tm) design that uses flywheels for the first short bit of a power down, and backs it up with CAES using micro turbines. Not practical for transportation, but the cool air coming out of it replaces the air conditioning when a data center is being powered from this storage source. This gives 2/1 results.

Apr 06 07:35 AM

[aquaculture:]

The price stagnation is easy to understand. Before 2k real wages had increased and historically energy storage per dollar had been doubling every ten years -for the past 150 years or so.
But there is every reason to believe that there may not be any improvement in this for the next 20 years:
-U.S gov. debt causing inflation.
-globalisation and overpopulation -devaluing people.
-technological acceleration, keeping wages further down.

Therefore Americans -except for select elite- will simply not be able to afford Li-ion powered cars, even if mass production of lithiumcarbonate would be possible/desirable, which it is not:

-not environmentally sound. It would cause futher irreparible ecological damage to ecosystem.
-world demand from portable electr, light ev (bikes) will absorp much of planned production increases.
-realistic achievable production will be sufficient for only a small fraction of transportation needs.
-most lithiumcarbonate reserves in geographical areas hostile to U.S. politics, possibility of new conflicts of interest.

I think gov. loans to A123 etc. are very elitist. How does that help the American people?

Apr 06 07:39 AM

[John Petersen:]

Douglas, I'm very interested in compressed air and its potential and even own a few shares of ACPW that have performed very well.

Aquaculture, I hope your view of the future is unduly pessimistic. I personally think Americans do their best and most creative work under challenging conditions and unless we're willing to assume that innovation has somehow ended, the things that are yet to be invented and developed should amaze us all. One of my fondest hopes is that something will come out of some nanotech lab and make everything we currently view as state of the art obsolete. I don't think the government loans to A123, HEV and VLNC will be justified or justifiable unless they can conclusively demonstrate how the new factories will make products that are about 2/3 cheaper than the products they make in their existing factories. But those decisions are not mine to make. I believe more would be accomplished if the government supported research and testing and the market supported commercialization, but talking political policy is almost as emotional as talking battery chemistry.

Apr 06 08:17 AM

[Mad Hedge F...:]

The price should improve with the next recovery. If we do move from a carbon to a lithium based economy, what are the implications? Will we all become mellow? Politicians, industrialists, and environmentalists who see battery powered vehicles as the wave of the future are overlooking the fact that 50% of the world reserves of lithium are found in impoverished, landlocked Bolivia. This is a country that until now was best known for killing off famous foreigners (Che Guevara, Butch Cassidy and the Sundance Kid), and being the source of a new form a venereal disease. Lithium ion batteries are four times more efficient than the current generation of nickel cadmium batteries, and are essential for electric cars to finally become economically viable. But now that the country finally has something the world wants, nationalism is rearing its ugly head. Local politicians see their country as the Saudi Arabia of the highly corrosive, toxic, reactive metal, and are already discussing ways to restrict access. Will La Paz become the headquarters of OLEC, the Organization of Lithium Exporting Countries? The only other supplies are to be found in Chile, Argentina, Australia, China, and Nevada. Will American oil company executives be programming their cell phones with the 591 country code? Should the US invade to insure supplies? Iraq worked didn’t it? The best way for opportunistic investors to play this is to buy Sociedad Quimica Y Minera (SQM), Peru’s largest producer of lithium.

Apr 06 09:32 AM

[sonrisa777:]

Thank you for this very interesting perspective. I agree that Chinese people know the value of a dollar, probably more than we do! I'm all for recycling and improving what we have instead of looking for something that could be better (maybe) but that costs an arm and a leg to produce. It's a pretty reductionist view of the issue, but that's what I understand so far of what I've read regarding the 2 different types of batteries.

Apr 06 09:43 AM

[Paul Killinger:]

On the subject of legislation, it is worthwhile to note there are bills NOW coming up for votes on both sides of Congress that would deeply subsidize consumer purchases of new high mileage vehicles (similar to the current mortgage subsidies for homebuyers) built in the U.S. Since there are few true EV's for sale yet, their passage could result in millions of more ICE's plying our roads for the next decade or longer. It appears the necessity of saving our nation's existing auto industry today is pre-empting our President's desire to wean us off foreign owned energy resources at some point in the future.

Apr 06 10:01 AM

[Paul Killinger:]

As regards investing, this may give a bump to Ford and the remaining viable automotive suppliers.

Apr 06 10:06 AM

[John Petersen:]

Paul, wouldn't it be wonderful if the subsidies were tied to the differential between the mileage your trade-in gets and the mileage the new vehicle gets? Trade the Hummer for a Malibu and get a whopping big check!

I also don't know if you noticed it but Michael Fitzsimmons has a new article on NGV's that should warm the cockles of your heart:

seekingalpha.com/artic...

Apr 06 10:25 AM

[tiananman:]

I sincerely hope that EV technology does not become another political football, like corn ethanol. The government's foray into subsidizing that particular technology was a disaster.

The best we can hope for is that they leave it alone. Will EV and ZEV technology EVER be an affordable, realistic option for the majority of Americans if the Gov't intervenes with subsidies, laws, and restrictions?

No. Like a scientist fudging his own experiment, the very act of government intervention guarantees the deal will get queered.

And the only problem li-ion has is a matter of scale. As the lightest metal in existence (and therefore the greatest energy/weight ratio), the usage of lithium in batteries is an inevitability.

Apr 06 10:30 AM

[Road Runner:]

I agree with speculawyer. The LiFePO4 technology is way to new to conclude that its price will never drop. It only came into production in 2006. Let's have this discussion again in 5 years when we actually know enough about the cost of a high volume manufacturing operation using establish chemistry and processes. This technology is so new that everything is state-of-the art meaning that there is still a huge amount of trial-and-error going on in battery chemistry and manufacturing processes. But, one thing is sure - the raw material costs of this battery are very cheap. If you still think there is going to be a Lithium shortage, see my previous posts.

I am not arguing that the Pb-C technology will not be successful. Both Pb-C and LiFePO4 technologies could be very successful side-by-side. The new alternate energy economy demands robust cheap energy storage at a very large scale. In fact, energy storage is a key element that is currently holding back forward movement with alternative energy. (I’ve talked about the details before so I won’t cover them again here).

Axion has a very interesting and promising technology, if it can pull a fully-specified production-ready Pb-C battery of its … lab. I know LiFePO4 is a winner because its been proven. I’m unsure about Pb-C because I haven’t seen a real working production battery.

Apr 06 10:44 AM

[creativforce:]

It is not surprising to anyone to see no progress in lithium battery technology during the last 8 years of battery antagonistic, pro-oil corrupt Texas leadership. That doesn't mean the next 4 (8?) years won't be better for these batteries.

A better question is why there hasn't been more progress in NIMH battery technology. Ever since Chevron sat its big bottom down on ECD (Cobasys) there has been zero progress out of Detroit.

However, Toyota, the only company that owned a NIMH manufacturing license before Chevron arrived at ECD has done amazing things with it. The new Prius at better than 50 mpg is a great example.

But Ford is encountering shortages from Sanyo and every battery coming from Cobasys is apparently flawed...Mercedes has sued them and GM received an order that had mysterious leaks according to industry news reports: "General Motors is also unable to take advantage of the hot hybrid market. GM recently said that its domestic supplier, Michigan-based Cobasys, shipped as many as 9,000 hybrid battery packs that leaked and had to be replaced. Anderman said that the Cobasys problem “did not surprise him." In an interview with HybridCars.com, a Cobasys executive claimed that media reports about its battery problems were "not entirely true."

Producing nickel-metal hybrid batteries to last the lifetime of the vehicle—as much as 150,000 miles—is “not a trivial task,” said Anderman. The next generation of hybrid batteries, using lithium ion, are expected to be even more challenging from a technical and planning perspective."

Can somebody tell me why an oil company is in charge of battery manufacturing and can't the government investigate these guys?

A decade ago, Cobasys made great batteries for the EV1, but they forgot how to do it? While Toyota hasn't reported a single problem with their Prius battery. In fact many Taxi companies that have been running Prius cars report better than 300,000 miles on the batteries with no problems.

Is CHP or AXPW working on a hybrid prototype to undercut the $25,000 + price of the Prius, Insight, and Fusion? If so, I'll be happy to invest. Where's the product? And where's the market?

Apr 06 11:04 AM

[Road Runner:]

Please, please, please people stop viewing non-phosphate Li-ion batteries (like what is in your cell phone and laptop) to phosphate based Li-ion batteries (the new LiFePO4 technology) as having similar characteristics. They are totally different chemistries and have totally different characteristics! The phosphate (the PO4 part) tightly holds the oxygen molecules vastly improving the characteristics. It has much longer life. It will not catch fire. Etc.

Plus, LiFePO4 based batteries use plentiful, non-toxic Iron (Fe) instead of expensive heavy metals like Cobalt. This hugely improves the expected future costs of the battery because Cobalt is expensive and Iron is obviously very cheap. But, the cost will not be lower in the next 5 years (my guess) because demand will far outstrip supply. But, at least in 5 years, we will know enough to get a meaningful estimation of future costs.

Apr 06 11:25 AM

[John Petersen:]

Tiananman, unfortunately it's already a political football and people are demanding government intervention based on hopes and PR rather than documented proof. I'm all for research, development and testing of all possible alternatives, but crowning a winner before the horse race strikes me as less than optimal.

Road Runner, I've not suggested that Li-FePO4 is destined to fail, but it's certainly not guaranteed to succeed. When you cut through all the happy talk, different types of Li-ion batteries are a lot like ice-cream. They all use the same basic materials and fabrication methods and the only real differences are the flavors you put into the mixture. Some flavors have higher power and others last longer, but you don't have an entirely new technology each time somebody comes along with a new additive. Those are extensions of the same basic technology - and that basic technology has not fared well to date when it comes to cost.

creativeforce, the political agenda in DC had very little to do with the work battery developers were undertaking. I firmly believe that there will be big advances over the next 8 years. The raspberries are reserved for people who promise huge advances next year. There's no question that ECD dropped the ball when it licensed NiMH to Toyota and they then went out and cornered the tantalum market. There is probably plenty of blame to go around for the errors of the past, but blame doesn't change the fact that we are where we are and our only choice is to move forward from here in a rational manner. CHP is starting to build the Firefly battery as we speak. Axion will be testing its PbC in a modified Honda over the next several months. Over the short term, the best low risk approach would be to stick with the big boys and focus on the new technologies when the companies start announcing results.

Apr 06 11:36 AM

[John Petersen:]

Road Runner, the Argonne report includes a full bill of materials and manufacturing processes. Li-FePO4 will reduce the cathode cost, but all other materials and manufacturing costs will remain the same or potentially increase. When you put all the costs through the sausage grinder and add a typical manufacturer's markup, the savings can't exceed about 30% if the new cathodes are free. The more likely number is in the 15% to 20% range. There may well be some savings, but they won't live up to the current urban legend and they won't be immediate.

Apr 06 11:51 AM

[Mayascribe:]

Good Morning, John. Missed you last week!

An interesting and intriguing presentation that you may be able to pull up by Googling is:

"Fresh Possibilities from a Classic Energy Storage Technology: Flywheel Systems for Electric Vehicles"

This was presented by: Richard F. Post and Annemarie Meike of Lawrence Livermore National Laboratory.

(As pedicted last Thursday, geothermal is moving up quickly, even within todays down market. I think something is brewing in this sector. For instance, I bought Calpine (CPN) @ $7.02 on April Fools Day, and now it's @ $8.15. No fool'n!)

Apr 06 11:53 AM

[nakedjaybird:]

John - I agree that for a mature battery operation the materials costs will represent 80-90% of direct product cost which as you know is not the same as total cost. The question really is, which cost are we really looking at here? And we may also have to be clear about cost v/s price, especially when price is not cost-based but market-priced as every Madison Avenue Harvard graduate has learned.

Apr 06 12:10 PM

[windswept:]

Hey everyone. Go out and buy shares of AXION because the author of this article holds a boat load of it and needs to unload! That's why he bashes Li-ion battery technology. A123 just signed a deal to supply Chrysler today. I am sure AXION will be the next company to sign a contract. I here the antique car road show may sign a contract with a battery company. AXION should get it.

This is the same article he writes every week just a different title. In addition, you want to see how biased Peterson is, he will delete this post shortly. He thinks he can hide the truth. LOL>>>

Apr 06 12:17 PM

[Mayascribe:]

Windswept: I used to argue vehemently here on SA with John last July and August. I've spent hundreds of hours researching battery technology since. His adamant beliefs and due diligence have changed my opinion.

If you want to see what the real world believes, just look at what Exide (XIDE) has done since hedgefund Tontine did a forced liquidation of said shares. The stock is only up well over 100%!

So what if John has a big stake in Axion. Frankly, I wish I could get hold of a few shares myself. But, the stock does not budge because so few shares are traded every day. What this tells me is that insiders, like John used to be, are equally adamant about selling their shares. To me, that shows strength.

Apr 06 12:55 PM

[John Petersen:]

Mayascribe, I was here last week, just a little late. The link is:

seekingalpha.com/artic...

nakedjaybird, the Argone labs report spoke of materials as 80% of direct costs and labor as the balance. By the time you layer on a 25% to 30% gross profit, the numbers get bigger. They also get more subjective. The one thing that's certain is that no producer can sell for less than his cost of production without eating into stockholder value, which is the one thing every investor prays never happens.

windswept, I've never suggested that anyone buy Axion and anybody who has been reading my work for any length of time knows that the themes may rhyme but the reasons, the detail and the documentation always differ. It's true that I have a large position in Axion, but after five years of waiting for the technology to mature, the last thing I'm interested in doing is leaving the theatre before the show starts. Seeking Alpha contributors are like TV channels, if you don't like them you are free to ignore them. But don't expect your abusive rants to change my actions.

I have no power to delete posts and never complain about posts from people who I find disagreeable until they start making pests of themselves. I would suggest, however, that if you want to be welcome in this forum you should focus on relevant facts rather than personal attacks.

Apr 06 12:55 PM

[Mayascribe:]

Also, Windswept, above I mentioned the northern California geothermal utility Calpine (CPN). It's up 8 more cents on this way down day. Do you think I had anything to do with this stock's rise. No way! John does not move battery stocks anymore than my above comment. What John does, though, is allow both short and long term investors to make better, more informed decisions about at which battery stocks to throw their hard earned money.

I actually like and welcome John's bias, as well as his passion for this sector. To sum up all of John's articles is this: Lithium Ion technology is just too darn expensive for Joe Sixpack. Advanced lead acid is here, improving, inexpensive, comparitively, and much more versatile industry wide; it's the smart bet.

I would never invest in any company, like Ener1 (HEV) who is hoping, praying to land more Uncle Sam dole outs than their entire market cap is presently worth. By the way...I did own Ener1 back during my July-August banter(s) with John. Sure am glad I sold all of it for $8.38, took the profits, and in part opened up this e-trading account, where since July I'm up around 60%, only buying stocks that go up; no options, because, I believe this whole market right now is one big huge option.

Informed decisions through hard work is the only reason why....

Update...CPN is now up 12 more cents.

Apr 06 01:15 PM

[Mayascribe:]

Thanks for the link, John. I'll read it later. Have to concentrate on my mining stocks; like adding to my Denison Mines (DNN) position (a Canadian-based uranium miner). With 40 some nukes going up world wide, and the current uranium stockpile at 1980's low, I believe I have found another long term keeper.

The only downside risk I can find, is if Obama can get the Russians to further disarm.

Apr 06 01:26 PM

[Mayascribe:]

Oops! I almost forgot. The founder of Green Peace is now pro-nuclear. What a flip!

Apr 06 01:27 PM

[Juan Carlos...:]

Mad Hedge Fund Trader,

FYI, SQM is Chile´s (not Peru´s) largest lithium producer.


On Apr 06 09:32 AM Mad Hedge Fund Trader wrote:

> The price should improve with the next recovery. If we do move from
> a carbon to a lithium based economy, what are the implications? Will
> we all become mellow? Politicians, industrialists, and environmentalists
> who see battery powered vehicles as the wave of the future are overlooking
> the fact that 50% of the world reserves of lithium are found in impoverished,
> landlocked Bolivia. This is a country that until now was best known
> for killing off famous foreigners (Che Guevara, Butch Cassidy and
> the Sundance Kid), and being the source of a new form a venereal
> disease. Lithium ion batteries are four times more efficient than
> the current generation of nickel cadmium batteries, and are essential
> for electric cars to finally become economically viable. But now
> that the country finally has something the world wants, nationalism
> is rearing its ugly head. Local politicians see their country as
> the Saudi Arabia of the highly corrosive, toxic, reactive metal,
> and are already discussing ways to restrict access. Will La Paz become
> the headquarters of OLEC, the Organization of Lithium Exporting Countries?
> The only other supplies are to be found in Chile, Argentina, Australia,
> China, and Nevada. Will American oil company executives be programming
> their cell phones with the 591 country code? Should the US invade
> to insure supplies? Iraq worked didn’t it? The best way for opportunistic
> investors to play this is to buy Sociedad Quimica Y Minera (seekingalpha.com/symbo...),
> Peru’s largest producer of lithium.

Apr 06 01:29 PM

[John Petersen:]

Mayascribe, but wouldn't you gladly take a beating on your uranium miners if it meant that all the warheads would used for power plants?

Apr 06 02:04 PM

[Advill:]

Hi John: A solid data article as usual, i your comments you mention , about the "cornering of tantalum market by Toshiba"

Googling around the term it seems that Canada and some other coutries are solid producers of the metal which is used in a wide range of products.
minerals.usgs.gov/mine.../

My question is around the NiMH batteries.it seems that no improve can be expected here, it looks like Toshiba new batteries generation based in this chemistry is not important, next 5 years HEV of the most important car producer of the world are based in this technology, a more in deep analysis of this matter could be appreciated.

Regards.

Apr 06 02:33 PM

[Mayascribe:]

John: Deal! With the caveat that I make sure no warhead uranium gets into terrorists' hands. Heck, I need a earned income job anyway! I can see the headline: Retired Man Retires Nukes

Apr 06 03:04 PM

[John Petersen:]

Advill, everything I've read about tantalum and its importance in NiMH was written by Jack Lifton. This one on Seeking Alpha seems to have a lot of interesting information.

seekingalpha.com/artic...

another Lifton article is at:

www.resourceinvestor.c...

On balance, I'm not all that sure that additional improvement is needed because NiMH has a pretty solid reliability record. It's biggest issue is cold temperatures, but cold does bad things to most chemistries.

Apr 06 03:10 PM

[earljr:]

John, sorry if this is a double post. I know little about batteries. It doesn't appear that anything lithium will take over the world soon. But I haven't seen much talk about how the expected performance of Pbc will compare with NiMH. If you have written about this, do you have a link? Thanks.

Apr 06 03:55 PM

[aquaculture:]

Speaking of temperatures, (in)external heat is an inherent problem for for Li-ion packs. The cooling system alone adds ~$500 cost to a car. Then it drains about 100-200 kwh annual depending on what climate you live in.
If it fails on a hot parking lot: you come back to a car with a battery that is lost. An insurance company would cover the risk, but at a cost.......

Apr 06 03:58 PM

[John Petersen:]

earljr, my Author's Page is at seekingalpha.com/autho... and you can access the entire archive from there. While most of my articles at least touch on lead-acid and lead-carbon, the ones you'll probably be most interested in are:

seekingalpha.com/artic...
seekingalpha.com/artic...
seekingalpha.com/artic...

Apr 06 04:16 PM

[Matt_the_Batt:]

performed very well??? what do you mean with that?


On Apr 06 08:17 AM John Petersen wrote:

> Douglas, I'm very interested in compressed air and its potential
> and even own a few shares of ACPW that have performed very well.

Apr 06 05:09 PM

[DuffBeer:]

John , Once again you get the masses thinking. I enjoy your posts about batteries and really enjoy the comments. It is an area that really will see change over the next 5 to 8 yrs. Your statement that Americans work best under the pressure of a challenge in so true. the solvoing of this problem could come out of a university, corporation r&d or more likely someones laboratory set in up in the living room of some ones home. Innovation just turn those capitalist loose. They will find it .
John which batteries will keep our beer cooler at a lower cost ?
Cheers DuffBeer

Apr 06 07:36 PM

[Jack Lifton:]

John,

It is not tantalum it is the rare earth "name" metal, lanthanum, that is critical for NiMH batteries. Toyota has been tracking down and buying lanthanum for the last several years. It was not uncommon in China up until just a couple of years ago to see Toyota spot buyers at "artisanal" mining gathering places in Inner Mongolia paying cash for even small lots. When Toyota announced last year that it was going to triple the production of NiMH batteries at its in-house battery facilities in Japan it had originally planned to simultaneously annouce that it would scale up production of Prius type power trains from 1,000,000 per annum in 2011 to as many as 4,000,000 per annum in 2014. However a combination of Chinese domestic supply recapture programs for domestic use and the failure of large mining operations in Australia and the US to look like they would be meeting announced time tables caused Toyota to change its planned announcement. The 1,000,000 per annum by 2011 is still said to be on target but beyond that all is now silence.

The future of batteries is lead/carbon-acid for general, but restricted range, vehicle electrification, NiMH for longer range in hybrid power trains, ICEs for long distance on-road freight and performance-necessary (military), and (hand built) lithium-ion for high performance, price no-object, status vehicles.

Best regards,

Jack

Apr 06 11:08 PM

[sticktoitiv...:]

"and a population that knows the value of a dollar"

Don't you mean yuan?

Apr 07 12:08 AM

[sticktoitiv...:]

You said on a previous comment stream that AXPW.OB will probably have to raise capital by the end of the year. How much time do you think the new grants will add before AXPW.OB has to raise capital? How will the shares likely be issued? Something dilutative or would they issue convertible rights or turn to shareholders in some other way?

Apr 07 12:21 AM

[Mayascribe:]

John: Did you see what Denison Minerals (DNN) did yesterday? I bought it @ 79 cents at about 9:45 AM. It rose all day and after hours closed at $1.05. Now, that's one mighty "explosive" pop!

Maybe~~~I'll make enough on this stock to buy all those Russian nukes.

By the way, if you have a moment, go into my comment stream and scroll down to my response to this idiotic sentiment that "Buy and Hold" is dead.

There are so many stocks I held back in November and December, and as recently as March 6th, that, if I would have held onto, would be up 100%, or more. I'm beyond angry at those CNBC chatterheads who proclaim, "Sell! It's way up! Take some off the top!"

(But...I'm going to get some weapons grade uranium, soon!)

Apr 07 12:28 AM

[John Petersen:]

Jack, I'm sorry for the error. At least I got the reference to the writer correct! Thanks for the catch.

sticktoitiveness, I meant dollar. I've never met an Asian merchant who didn't have both local currency and dollar prices on the tip of his tongue and if you offer to pay in either currency, the dollars are often preferred. Trying to speculate on what Axion's next round of financing might look like is a tough one. Current resources should carry them through the roll-out of commercial PbC devices from the new electrode lines. If they're selling anywhere near 250,000 PbC devices on an annualized basis, the stock price should respond favorably and expansion capital should be readily available on attractive terms. If the manufactured PbC devices do not perform up to expectations, it could be a different picture.

You touched on one of my pet peeves when you mentioned dilution, a concept that very few investors understand. To calculate dilution, you're supposed to compare net tangible book value per share with the planned pricing of a stock offering. If the offering price is greater than book value, the purchaser in the offering suffers dilution. If the offering price is less than book value (which rarely happens) the existing stockholders suffer dilution. Think about it in terms of adding a shot of whiskey to a beer. The whiskey is diluted but the beer is fortified. In any event, it boils down to the battery. If that's a success, dilution is the last thing I'll worry about.

Mayascribe, I've never really understood the trading mentality because I figure that guys who trade for a living are always going to be smarter than me. I can buy stocks that strike me as badly undervalued, but once I have them I have a hard time selling unless there is another stock that I think is badly undervalued in the current market. I'm currently up 153% on my non-core holdings and would have a hard time selling any of them because I think they have more upside than the overall market.

Apr 07 01:21 AM

[John Petersen:]

Matt_the_Batt, I picked up my ACPW late last year at $0.26, so I'm delighted with performance to date.

Aquaculture, you touched on one of my favorite points - manufacturing is very hard to do and most companies that know how to develop a technology know nothing about making a product. Lab work is often successful. The transition to a factory staffed by guys in gimme caps is much tougher.

DuffBeer, I've bet the bulk of my family fortune that lead-carbon is going to win the price competition, but it won't necessarily be easy.

Apr 07 01:29 AM

[John Petersen:]

speculawyer, I share your impatience to see both Firefly and Axion get their production levels up and their devices in the hands of third parties. Firefly will apparently concentrate primarily on truck fleets to begin, but hopefully they'll be generating lots of data points to work with. While some of Axion's projects will involve hundreds of batteries in a single grid-connected installation, I have the sense that most of them will involve smaller projects that result in more data points. In any event the next 6 to 12 months should be fascinating as the devices go out and the data starts returning.

The great thing about storage is there is such a diversity of needs and economic constraints. With a market that big, one does not need very many successes to build a hell of a company – and that statement applies to every battery company out there, even the ones I'm rough on from time to time.

Apr 07 01:55 AM

[Advill:]

".......DuffBeer, I've bet the bulk of my family fortune that lead-carbon is going to win the price competition, but it won't necessarily be easy..."

Is that so John?, you are betting most of your resources to ACPW which after all is a company with no market share at the moment? .

By the way a in depth comment actual actual status of them in particular could be interesting because the web is telling not much about where they are now.

Apr 07 03:01 AM

[John Petersen:]

Advill, it's AXPW, not ACPW. I own them both but my ACPW share count has three fewer zeros than my AXPW share count.

In their last earnings call, Axion's CEO explained that the automated electrode fabrication equipment they ordered last spring has been built and is presently in the final shake-down testing mode at the fabricator's facility in California. Axion apparently has staff in California making electrode assemblies that are then being shipped to Pennsylvania for incorporation into PbC devices. Mr. Granville also explained that Axion plans to move the electrode fabrication equipment to New Castle this quarter and the entire system into production.

Over the last five years, Axion's big focus has been refining its manufacturing techniques and developing automated fabrication methods for electrode assemblies. The goal has been to develop an electrode assembly that will work in any existing lead-acid battery manufacturing plant. The business model has been for Axion to prove the process in a single plant and then rapidly expand by offering electrode assemblies to other manufacturers. It's basically a platform technology business plan like the one used by Intel - their chips in everybody's computers.

As near as I can tell, Axion is on the cusp right now. The electrode assemblies are being made in California and used in New Castle. Once the electrode fabrication lines are moved to New Castle, in house production of PbC devices will increase from a dozen units per day to hundreds of units per shift. This should give Axion the ability to provide testing devices to all comers and generate some meaningful revenue from early product sales. Then it's simply a matter of waiting for the test results. If the fully manufactured device offers performance that is roughly comparable to the hand built prototypes, it should be economic for a wide range of uses. Once utility is proven through testing, adding electrode fabrication capacity will be much cheaper and faster than building new battery manufacturing plants.

So it all comes down to the battery and the electrode fabrication system. If the boys can match the prototype performance in a manufactured product I'll be a very happy camper very soon. If they encounter delays or other problems, I'll be less happy.

Apr 07 03:31 AM

[hillbillyharry:]

John:

I find the storage a fascinating sector. You lead me, and, perhaps, thousands of others, to an understanding of a sector which extends far beyond flashlight batteries, into developments concerning artillery, shipboard, tanks, and laptops.

You are as fair as a person can be in evaluating competing companies. But again, since, like many sectors, companies
within a nitch, so, in effect, they do not entirely, compete. So, that means that an investor can invest in multiple niches without competing with his own interests.

If I am correct in my assumptions, one should be able to invest in the lead acid sub-sector and the lithium-titanate sub-sector ,e.g,
ALTI and AVPW,etc.

Both sub-sectors are hooked up with power companies. for a place in the "smart grid" developments.

Soon the testing stage will proceed into the decision phases via Department of Energy and the Appropriation Committees.

Hillybillyharry

Apr 07 08:54 AM

[MichaelH:]

I'd be more worried by the governments participation rather than using it to make an argument about the future of battery technology. The path to new vehicle technology will be dictated by the economy and people making good choices, not by "leaders" in Washington. It is fantasy to think otherwise. The technology is coming along nicely, but the market is yet to be proven. By the way, my Honda Hybrid gets 44 MPG with technology that cost ~$2400. The government did everything in its power to kill hybrids... Oh, yeah, 44 MPG is TWICE the national average. A few more gasoline price bumps and many more people will be buying them, whether they are "on track" or not.

Apr 07 09:45 AM

[John Petersen:]

hillbillyharry, I'm inclined to think that the only rational way to invest in the sector is to spread your risk among a variety of companies that focus on different things. Picking a single technology or niche is always riskier than diversification.

MichaelH, I've always believed that the government can do more harm than good if it gets involved too quickly or too deeply. As far as I can tell we need a government supported technology development horse race where everybody puts his best foot forward and the consumer market ultimately picks the winner. When the government starts picking winners before the horse race begins, something is messed up.

Apr 07 10:04 AM

[aquaculture:]

From a pure technological standpoint, when you evaluate all the various gov. stimulus packages, loans and perks, one can clearly see the footprints of opponents to renewable energy at work. They are very clever in disguising this!
But the underlying strategy is as simple as it is effective: divide et impera....

Apr 07 10:41 AM

[John Petersen:]

aquaculture, I fear that pressing too hard for an immediate solution may lead to untold waste and really appreciate the link you provided for the Lux Research analyst blog that basically echos my slow down, develop and test everything and then let the market pick a winner approach. For those who missed it the direct link is:

www.luxresearchinc.com.../

Even so, I'm not entirely convinced that we're seeing the dark hand of an enemy. Instead I think we're seeing the hand of inexperienced idealists who do not understand how intransigent technological problems can be.

Apr 07 11:06 AM

[sticktoitiv...:]

"Current resources should carry them through the roll-out of commercial PbC devices from the new electrode lines".....thanks.

I agree with your idea of book value, but I was trying to use how they usually raise money as a gauge of shareholder friendliness. They don't have dividends and buybacks as a guide. Speculating on a new technology is one thing knowing whether to leave something on the table if you happen to be right is another.

Apr 07 01:00 PM

[John Petersen:]

For a complete history of Axion's financing history over the last five years, see the footnotes to the financial statements included in its Form 10-K. One thing's for sure, the average cash price paid by the insiders is significantly higher than the current market price.

Apr 07 01:55 PM

[frflyer:]

MichaelH
You say the government did everything in it's power to kill hybrids. I think you are referring to the Bush administration, which had a different agenda than the current one.

Apr 07 02:02 PM

[sticktoitiv...:]

I was looking to avoid that.

I like that you respond to your readers most don't.

Apr 07 02:06 PM

[sticktoitiv...:]

"One thing's for sure, the average cash price paid by the insiders is significantly higher than the current market price."

That is unfortunate for them.

Apr 07 02:26 PM

[sticktoitiv...:]

I know how it feels to loose money.

Apr 07 03:10 PM

[John Petersen:]

sticktoitiveness, after the '87 crash somebody asked Sam Walton what it felt like to lose over a billion dollars in an afternoon. His response was "I haven't lost anything because I still own every share I owned this morning." If you've ever wondered why Axion only trades 15,000 shares a day it's because the vast majority of us haven't lost anything because we still own our stock and will continue to do so until the technology either succeeds or fails.

Apr 07 04:01 PM

[POLINUT:]

So, after all the bashing you've done of HEV, where's the positive article about how it's beating the costs of all other competitors? Do you hate HEV so much that you do anything to ignore/avoid giving them their "props"?

Apr 07 04:21 PM

[John Petersen:]

Polinut, when I started tracking HEV the primary reason for their existence was a Li-titanate chemistry like the devices being developed by Toshiba and Altair Nano. Over the last year or so, the Li-titanate has all but disappeared from HEV's radar and they've shifted over to a me too Li-polymer chemistry that they bought out with the Korean subsidiary Enertech. Cutting costs by abandoning your development goal and quietly shifting to a different and cheaper chemistry does not earn anybody gold stars in my book.

Apr 07 06:35 PM

[Doug Korthof:]

John, It's a pleasure to hear from someone who is willing to argue this rationally. I don't think Tantalum is the problem so much as Chevron owning control of the NiMH patents (purchased Oct. 10, 2000) and their subsequent lawsuit against Toyota, winning $30 million and, in Dec., 2002, Toyota announcing that it would only use NiMH for hybrids that can't plug in. Rare earth supply constraints would seem to apply more to Lithium, which, as you point out, has a much higher life-cycle cost (and no recycle value, as Nickel and lead).


On Apr 06 04:32 AM John Petersen wrote:

> Doug, the only good explanation I've ever heard for preferring Li-ion
> over NiMH came from Jack Lifton who explained that NiMH batteries
> require tantalum and Toyota has done a good job of effectively cornering
> the market on that strategic metal. Since Toyota is talking about
> using Li-ion in the future despite their dominance of NiMH, I get
> the sense that tantalum supplies may be more constrained than Toyota
> would like, but NiMH is far superior to Li-ion on a raw price-performance
> basis.

Apr 07 08:52 PM

[John Petersen:]

Doug, Jack Lifton commented earlier that I got my metals mixed up and should have been talking about lanthanum. (see above) His comment also adds some color on why lanthanum is critical and problematic.

Apr 08 12:05 AM

[sticktoitiv...:]

Let us agree to disagree. I believe an unrealized loss is a loss that may turn around.


On Apr 07 04:01 PM John Petersen wrote:

> sticktoitiveness, after the '87 crash somebody asked Sam Walton what
> it felt like to lose over a billion dollars in an afternoon. His
> response was "I haven't lost anything because I still own every share
> I owned this morning." If you've ever wondered why Axion only trades
> 15,000 shares a day it's because the vast majority of us haven't
> lost anything because we still own our stock and will continue to
> do so until the technology either succeeds or fails.

Apr 08 12:31 PM

[sticktoitiv...:]

" will continue to do so until the technology either succeeds or fails."

It is good to be around real investors, not traders, isn't it?

Apr 08 12:34 PM

[John Petersen:]

In many cases I would disagree with you, but Axion is an odd little stock because the cumulative trading volume over the last 5 years has only been about 15% of the outstanding stock, and some of that's changed hands a couple of times. Market prices are always set by the weakest holder and in times like these a lot of folks feel pretty weak. But the core here is iron and when the company gets to the point that it has something definitive to say, the response should be interesting. It is absolutely wonderful to be dealing with investors rather than traders.

Apr 08 12:42 PM

[Mory:]

Mr. Peterson, I follow your comment but have a real problem in your interests in lead batteries and a possible bias . The lithium comments may be spot on, but I remember how memory cards in computers were costly for decades before we saw a big drop. I believe that any chemical that show promise for energy storage should be pursued until we have some agreements on costs versus results. The Federal Government (Energy Department) should be following the R & D and testing all possible chemical proposals. This may be the problem when I see labs all over the U.S. touting their particular brand of chemical solution to chemical storage of energy.

Apr 08 01:15 PM

[John Petersen:]

User 391437, I'm a firm believer that we need to investigate every possible chemistry to find the one that works best at the lowest cost. The one thing that a lot of people don't understand, though, is that the advances we saw in IT involved physics and miniaturization. Unfortunately chemistry does not work that way. Every atom has a maximum electrical potential and once you get efficiency close to maximum, the only way to get more electricity is to add more atoms. That's the reason I'm as hard as I am on raw materials issues. I don't want you or anybody else relying solely on the things I say or believe. I provide links to the source documents that I rely on for the specific purpose of allowing you to read them yourself and draw your own conclusions. Successful investing in this sector takes a lot of diligence and thought. My only hope is that I can add another perspective and perhaps quell a bit of the optimism.

Apr 08 01:35 PM

[Rock Johny:]

Are we meant to have cheap energy? Tesla came up with a really cheap way to broadcast energy but JP Morgan shut him down after realizing it wasn't profitable. I happen to believe the conspiracy theory that any real leap in technology is immediately pounced on by the establish corporations that depend on the current pricing model for energy. Even some researchers bury advancements because there is more money in having a problem than not having a problem. They don't want to cut their own throat by cutting off the need for research dollars. Just like the banking sector, greed rules the day!

Not until we have Armageddon and all the greedy are swept away together will we be able to enjoy the real fruits of human technology.

Apr 08 01:39 PM

[sticktoitiv...:]

Tesla wanted to transmit electricity through the ground, but the number of valence electrons in the material is not consistent.

Apr 08 03:00 PM

[POLINUT:]

Obviously, results-based objectivity is not high on your agenda unless it concerns one of the stocks you hold. A review of your posts shows bias towards those stocks is quite rampant. Readers need to keep in mind that this is an opinion blog, and not journalism. That is your prerogative, and it is disclosed. In fairness to your readers, the disclosure really should be moved to the top of the article, but again, it is your opinion blog and that is also your prerogative.


On Apr 07 06:35 PM John Petersen wrote:

> Polinut, when I started tracking HEV the primary reason for their
> existence was a Li-titanate chemistry like the devices being developed
> by Toshiba and Altair Nano. Over the last year or so, the Li-titanate
> has all but disappeared from HEV's radar and they've shifted over
> to a me too Li-polymer chemistry that they bought out with the Korean
> subsidiary Enertech. Cutting costs by abandoning your development
> goal and quietly shifting to a different and cheaper chemistry does
> not earn anybody gold stars in my book.

Apr 08 07:44 PM

[POLINUT:]

Oh, and to the extent that you present fact not not wrapped in a biased context, I do enjoy consuming the industry information you provide.

Apr 08 07:49 PM

[John Petersen:]

Polinut, many of the Li-ion developers are like medieval princelings flitting about gossiping over the king's impending illness and how wonderful life will be when they ascend to the throne. Sadly there are many foolish people in the kingdom who give the gossip credence and attach unreasonably high values to the words of the princes who have not yet demonstrated the ability to lead much less rule. The result is an insane situation where a development stage company with no meaningful revenue (HEV) frequently carries a larger market capitalization than the king with $4 billion in annual sales and more in profit than the prince has in assets (ENS). I too have a favorite princeling, but remain modest enough to insist that the company accomplish something before talking.

I guess it all boils down to perspective. I think the media hype surrounding Li-ion is incredibly biased because it invariably gives Li-ion technology credit for technological and economic milestones it has not yet reached. If pointing out that the media claims outstrip reality is biased, then I'll wear the badge with pride. I think the term contrarian is probably more appropriate. Besides, if nobody ever questions your financial assumptions don't you end up with a bubble?

Apr 09 12:49 AM