Axion and Exide: I Love It When a Plan Comes Together 40 comments
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Yesterday Axion Power International (AXWP.OB) announced the signing of a memorandum of understanding with Exide Technologies (XIDE) following fourteen months of negotiation and technical investigation. This alliance could prove to be a sea-change event for the domestic battery industry. Copies of the press release and an archived version of the subsequent investor conference call are available on Axion's website.
As a former chairman of Axion's board of directors and a very substantial Axion stockholder, I've been waiting for an agreement like this for a very long time. I'm delighted to see confirmation from Exide that my faith in Axion's PbC technology, its management and its technical team were justified.
Over the last nine months I've written a series of articles on the energy storage sector in general and the battery industry in particular. My basic premise has been that none of the battery technologies we've relied on in the past are robust enough and cheap enough to satisfy the requirements of cleantech, the sixth industrial revolution. The result has been a race to fill the void as lead-acid battery manufacturers worked to improve performance and Li-ion battery developers worked to reduce costs. The prize to the winners will be major chunks of market share in an industry that expects explosive growth from $30 billion to over $100 billion per year in the next decade. In the words of Merrill Lynch analyst Steve Milunovich:
". . . cleantech markets dwarf IT to the tune of two orders of magnitude. Unlike tech names, cleantech companies often don’t need huge unit growth to succeed – modest improvements mean more. New IT vendors often face a hurdle of a 5-10x improvement over incumbent technology to succeed while in cleantech doing the same amount of work with reduced CO2 emissions might be enough.”
Axion has always been unusual because there was never a question about whether its PbC technology worked. Early technical studies conclusively showed that replacing the lead-based negative electrode in a conventional lead-acid battery with a carbon electrode like you find in most supercapacitors had a tremendous impact on both cycle life and power. Two years ago, when Axion received the prestigious 2006 Technology Innovation Award for North America in the field of lead acid batteries, Frost & Sullivan noted that Axion's PbC technology had:
". . . the potential to revitalize the lead-acid battery industry by breathing new life into an established technology that was not well-suited to the requirements of important new applications like hybrid electric vehicles and renewable power."
The real challenge has always been transitioning the science from a laboratory bench to a factory floor. The commercialization alliance with Exide is clear independent confirmation that Axion has succeeded where the vast majority of R&D companies fail.
Over the last couple of months the battery industry has been headline news as the Federal government adopted massive loan, grant and subsidy regimes for advanced battery technologies. While the mainstream press has focused most of its attention on the potential of plug-in vehicles, the enabling legislation also recognizes the crucial role that cost-effective energy storage will play in the development and implementation of the smart grid and the more widespread use of wind and solar power. The fundamental goals of all the recent legislation are to build a new domestic battery manufacturing infrastructure that will help liberate America from the economic tyranny of imported oil while enabling the more widespread use of alternative energy technologies and cutting carbon-dioxide emissions.
The biggest advantages Axion's PbC technology offers are low cost and rapid deployment. As of today, there are no large-scale Li-ion battery manufacturing facilities in the U.S. and while a number of companies have disclosed plans to build new factories if Federal subsidies are made available to them, there are significant unanswered questions about whether the battery technology solutions these companies are proposing are cheap enough, robust enough and safe enough to warrant a multi-billion dollar implementation effort. Even if the hoped-for subsidies materialize and the proposed factories are built, the process of building the factories, perfecting manufacturing techniques, establishing reliable supply chains for imported raw materials, introducing new products and training an entire country to use those products will be a major undertaking.
In comparison, there are dozens of companies that already operate lead-acid battery factories in the U.S. and Axion's PbC technology has now reached a point in the development process where it can be implemented in the existing factories starting immediately without substantial changes to existing equipment, components or manufacturing processes. So for the first time America has a real a choice between "sometime a few years from now" and today.
I love it when a plan comes together.
I cannot begin to predict the impact the new alliance will have on Axion or Exide. After giving pro-forma effect to the conversion of its outstanding preferred stock, Axion has 34.7 million shares outstanding and a market capitalization of roughly $31.2 million at Monday's closing price of $0.89. Exide, in comparison, has a market capitalization of roughly $364 million and annual sales of approximately $3.7 billion. The combination of Axion's technical expertise in lead-carbon chemistry with Exide's manufacturing, distribution and customer service prowess should be exciting. I certainly expect that the news will have a positive short-term impact on both companies and an even greater long-term impact as the pervasive scope of the alliance becomes clearer.
Disclosure: Author is a former director and executive officer of Axion Power International (AXWP.OB) and holds a large long position in its stock. He also holds a small long position in Exide Technologies (XIDE).
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www.pwtcbattery.com/pr...
I followed this thread already for a long time. As a High-Tech-Li-Ion-fan it took me a couple of articles to become convinced of your argumentation.
It took me another couple of month in this crappy market to buy some Axion shares that I finally did 3 weeks ago :-) !
What I don´t like is that in most discussion the focus goes pretty fast to cars and batteries: This issue has still to be solved in the future.
The biggest argument that I see: Let´s pretend for example solar will become cost competitive in 2,3,4 years and it will reach grid parity for shure!
=> Doesn´t it then make sense to have a battery in your house as well!? Where weight doesn´t matter so much but reasonable cost and reliability do?!
Freya, that could work out well because Subaru understands light. For small and light I think Li-ion will end up winning the race. But I see real problems as the vehicle weight to passenger weight ratio starts climbing about 5.
User 395761, don't give up on Li-ion because it truly is a wonderful technology in appropriate uses and we need every tool in the box to solve our energy storage problems. Just recognize that there's a place for everything and there are no silver bullets. Over the next few months I plan to focus more on specific emerging applications and less on technology differences. It should be fun and informative.
For grid storage batteries have a high carbon footprint and if Beacon Power gets it's act together, (their flywheels seem to work well), the fact that they have virtually no carbon footprint, maintenance problems and apparent long life is going to work in their favor over battery systems.
Hey, who knows? A new tech could knocks us all out of the box tomorrow. There are a lot of smart electrical and chemical engineers around the world working on this stuff.
Meanwhile, have you heard any more about the 6 passenger air car that promises 800 mile range with 8 gallons of gasoline for under $20K? If true, that's a game changer.
it up to be a lucrative theme for big business (the utilities) and another way to extract resource from the many (the consumers)
for technologies that are obsolete and various unbelievable job assurance procedures like "revenue decoupling" for utilities that no longer can compete against entrepreneurship. This article (below) might be useful reflection on how once again the corporacy (utilties) wins with the current version of smart grid provisions written into the US stimulus package..
www.energypulse.net/ce...
www.mdi.lu/english/ind...
I would like to believe this is true, but I have my doubts. "If it seems to good to be true, it usually is". What I dont see is how these cars will pass US safety standards? I think they are cute and the company said they have commitments for 10,000+ vehicles in two months.
www.mdi.lu/gallerie/Ai...
On Apr 16 09:50 AM Dirk McCoy wrote:
> Meanwhile, have you heard any more about the 6 passenger air car
> that promises 800 mile range with 8 gallons of gasoline for under
> $20K? If true, that's a game changer.
Regards.
D. McHattie, I still own the others, but somebody pointed out last week that I shouldn't be disclosing positions in companies I don't discuss because of the risk that irrelevant articles show up as recent blogs.
William Taylor, supercapacitors are great for short duration power surges but offer no substantial energy density. I'd be reluctant to criticize Eestor, but it's pretty clear that they have a development stage technology rather than a market ready product. As far as carbon footprints go, Beacon's flywheels are no better or worse than batteries. My fondest hope is that some genius will come along with something new that makes everything we know about storage obsolete. Until that happens, we need every available tool.
Dirk, I've not heard anything more about the compressed air car, but think it can be a very cool answer to some of our vexing problems. So I'll keep my fingers crossed.
rayrevol23, I understand the concerns that a few utilities might try to hijack the smart grid, but there is a lot of sound thinking that a truly effective smart grid will be highly decentralized and distributed power generation and distribution is much harder to monopolize and control than central facilities. I'm also a firm believer that good things happen in America in spite of big business and government, not because of them. We're a terribly creative crowd and nothing is harder to contain and control than ingenuity.
zapman59, the first fully manufactured devices are starting to roll off the line this quarter. For the next year or so I would expect most of the production to go for large-scale demonstration projects in a wide variety of applications. But once things get to the point where the best target markets are identified, I would expect the core technology to roll out nationwide very rapidly because of Axion's platform technology business model.
I'm not entirely sure yet, but I think speculawyer and I are much closer to seeing eye to eye than we were a couple months ago. We have clearly different technology preferences, but also recognize that every tool in the box is essential to America's energy future and there will be plenty of business to go around.
Axion looks very promising and I own some shares; thanks for the idea. But you hurt your credibility when you refer to Frost & Sullivan as "prestigious". F&S is pay for play and a red flag imo. Consider Exhibit A:
www.frost.com/prod/ser...
Turns out that Europositron was a complete scam and there are others. F&S is a contrary indicator.
Still the "few hundreds and a couple dozens" they mention make me feel that product is not ready yet.... but is clear that Axion solves a credibility and access to market cost in the best way, pity i did not buy more shares......
Regards.
Maybe this will spark more interest in other advanced PbC battery companies as well.
"somebody pointed out last week that I shouldn't be disclosing positions in companies I don't discuss because of the risk that irrelevant articles show up as recent blogs"
I have to agree with that, as anyone who has clicked on the frequent meaningless articles at the Motley Fool knows. You think there is something relevent to a stock you follow, only to find out it's nothing more than an advertisement for the site.
Actually, the Motley Fool was a good site back when it was completely free, maybe 8 years ago.
Well done!
Bob Haeger, one of the Seeking Alpha rules I must follow is disclosure of any planned trading activity. So keep reading and you'll eventually get your answer.
Advill, I think the confusion arises from the fact that Axion's thinks in terms of hundreds or even thousands of devices for a single test. They also think of a grid buffering test as different from a peak shaving test or a wind integration test. Without much work, I could probably rattle off 20 or 30 distinct application tests that may take hundreds or perhaps thousands of devices per test. Mr. Granville was very cautious about putting out numbers because the electrode will be installed during the current quarter and any slippage in the schedule can have a big impact on production and sales volumes. I'm hoping the Q-2 results will have some pleasant surprises, but I would much rather have a happy surprise than a disappointment.
Mayascribe, I helped develop the plan but had nothing to do with implementation. All of that credit belongs to the management team.
Time for an apres (sp?) ski cocktail! Then go quietly outside, look at the snowcapped peaks, and drum your chest like a mating quail!
Again, congratulations!