Axion Power: Time Is Right for Gas Guzzlers to Dual Mode EV Conversions

Since early 2008, Axion Power International (AXPW.OB) has been quietly developing an experience base and building grass roots support for a gas-guzzler to dual-mode EV conversion initiative that has the short-term potential to transform up to 120 million gas-guzzling pickup trucks, sport utility vehicles and vans into gas sipping EV-50s. If recent articles from sources as diverse as The Daily Green, Edmunds Green Car Advisor and the Environmental Defense Fund are reliable indicators, the initiative is rapidly gaining ground.

The concept is simple – add electric power trains and battery packs to America's least fuel-efficient vehicles and give them 50 miles of plug-in EV range coupled with unlimited internal combustion range. The potential benefits to the economy are enormous because the U.S. could slash gasoline consumption by a billion gallons per year for every 1% of the gas-guzzler fleet that's converted to dual-mode. It's also a solution that could be immediately implemented using domestic products and create untold thousands of new cleantech jobs.


The first public discussion of Axion's gas-guzzler conversion initiative was in Dr. Edward Buiel's testimony before the Senate Committee on Energy and Natural Resources last July. A few months later, Andrew Grove, the former chairman of Intel, published an article in McKinsey Quarterly titled "An Electric Plan for Energy Resilience" that approached the topic from a slightly different perspective. While Dr. Buiel's testimony focused on using lead-acid batteries and Mr. Grove's article focused on using Li-ion batteries, both men reached the same conclusion: that gas-guzzler to dual-mode EV conversions are the most cost effective baby-steps America can take in its drive for energy independence.

The following table summarizes the estimated cost to convert a Chevy S-10 pickup into a dual-mode EV-50 using off-the-shelf drive train kits and lead-acid and Li-ion batteries from domestic suppliers. For both system types, the table assumes a 10-year useful life and a 15 kWh battery pack for a 50-mile electric range. For the lead-acid system, the table assumes a battery life of 40 months, the equivalent of 800 charge-discharge cycles, and two battery replacements. For the Li-ion system, the table assumes battery replacements will not be needed. Since space and weight are not critical constraints in a pickup, SUV or van, I have not made any adjustments for the 300 to 400 pound weight advantage of a Li-ion system. I've also avoided maintenance estimates because they're beyond my capabilities.

Essential Conversion Components Gas-guzzler to Dual-Mode EV 50	Lead-acid System	Li-ion System
15 kWh battery pack	$3,000	$15,000
LAB replacement after 40 months	$3,000
LAB replacement after 80 months	$3,000
Off-the-shelf electric drive conversion kit	4,500	4,500
Miscellaneous conversion materials	900	900
Conversion labor	3,000	3,000
Total up-front cost before subsidies	$11,400	$23,400
Total 10-year cost before subsidies	$17,400	$23,400

The following table drills down another level and calculates how the capital costs would likely work in the case of a typical pickup, SUV or van owner. I've depreciated the electric drive system over a 10-year period and depreciated the batteries over their respective useful lives. I've then added an imputed interest factor of 6% per year on the total up-front cost before subsidies. Finally, I've factored in charging costs at an average price of $0.10 per kWh and calculated a fully loaded breakeven gas price before subsidies assuming a baseline fuel efficiency of 17.5 mpg for the unmodified vehicle.

Estimated Monthly Cost of Ownership	Lead-acid System	Li-ion System
Depreciation of electric drive costs	$70	$ 70
Depreciation of battery costs	75	125
Imputed interest on up-front cost (6% per annum)	57	117
Electricity for daily recharge (20 days @ 15 kWh @ $.10)	30	30
Total monthly cost	$232	$342
Monthly gas savings (20 days @ 50 miles @ 17.5 mpg)	52.7	52.7
Fully loaded breakeven gas price	$4.40	$6.50

It is very important to understand that I have not included any tax incentives or other subsidies in either of these cost tables because of the variety and complexity of existing and proposed Federal and State programs. If new subsidy regimes are implemented to encourage gas-guzzler to dual-mode conversions, the breakeven costs to users are likely to plummet.

While my fully loaded breakeven gas price numbers don't look all that good in comparison to current prices of $2.25 per gallon, I am convinced that current prices are not sustainable. The following graph from the Energy Information Administration tracks the spot price of West Texas Crude from January 1986 through April 2009.



What I find most intriguing is that the long-term trend was basically flat from ’86 until it reached an inflection point in the late '90s, at a time that roughly coincides with recovery from the ‘97 Asian financial crisis. Since then, oil prices have followed a consistent upward trend. I don’t want to join the peak oil debate, but I think the long-term price chart presents compelling evidence that the world passed a “peak cheap oil” inflection point about 10 years ago.

If my analysis is correct, oil prices will revert to their new trend line over the next 12 to 18 months and then resume their relentless upward march until the next inflection point is reached. By the time the global economy emerges from the current recession, I believe $80 to $100 oil is a virtual certainty, as are $3.50 to $4.00 gas prices.

Some of most common comments on my EV articles relate to vehicle range limitations. While most Americans drive less than 50 miles per day, the ability to get in the car and drive without constraint seems to be deeply ingrained in our collective psyche. Therefore, I believe most pickup, SUV and van owners will truly appreciate the flexibility of a dual-mode system that will let them switch back and forth between the internal combustion and electric drive systems depending on the needs of a particular trip.

I'm convinced that a rapid implementation of Axion's gas-guzzler to dual-mode EV conversion initiative could be just what the industry needs. While I believe most consumers will choose the least expensive solution, there will still be large numbers of users who are willing to pay a premium price for the perceived advantages of Li-ion. Since gas-guzzler to dual-mode EV conversions use off-the-shelf technology and nobody can claim a solid intellectual property advantage, every manufacturer would have a level playing field in a multi-billion dollar market where technologies would succeed or fail on their own merits. More importantly, small battery producers would not be forced into the unenviable position of a midget negotiating with a giant.

America's strength has always been the ingenuity and flexibility of its entrepreneurs. In a world where we need to get up in the morning, go to work and solve our problems to the best of our ability, I believe the Axion initiative is a tremendous first step that holds immense short-term promise for the energy storage sector, energy independence, jobs and the domestic economy.

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

Comments

[John Petersen:]

Note to regular readers: As much as I love Axion and their lead-carbon PbC technology, I don't want to be accused of flogging a particular technology to the exclusion of others. So in a break from past practice, I didn't include a lead-carbon hybrid in today's table. Instead, I used simple valve regulated lead-acid at the low end and advanced li-ion at the high end.

Had I included a lead-carbon column, the initial battery pack cost would be closer to $6,000 but no replacements would be needed. After reading your comment I went back to my excel spreadsheet and ran the lead-carbon numbers. The exercise resulted in up-front and life-cycle cost of $14,400 and a breakeven gas price of $4.13.

The beauty of this particular initiative is that it does not give Axion or anybody else a market advantage and every producer will have an equal chance to prove his own value in a free and open market.

Apr 19 04:48 AM

[John Petersen:]

Sometimes I hate my friends who use their own calculators and find spreadsheet errors. The monthly gas savings should be 57.1 gallons, which would result in fully loaded breakeven gas prices of $4.06 for VRLA; $3.89 for PbC and $5.99 for Li-ion. I apologize for the error.

Apr 19 05:09 AM

[battman:]

As strange as this might sound, I would think that the oil producing countries (Saudi Arabia if the reports are true on quantities and costs to support its country and Dubai in particular) would want to see these kinds of developments. This would allow them to continue to gain oil revenues rather than "run out" and have to find other kinds of revenue streams. These countries have artificially propped up economies and to lose that kind of revenue would be catastrophic. Anything that would allow them to continue to have revenues, even reduced revenues, would be a blessing for them. We will always need oil, just hopefully nowhere near as much.
Besides, Asia will probably need enough oil to keep the prices high or even higher than they currently are, regardless of the US market, so while hopefully North American, and European volumes may decrease, Asian volumes will increase, and everybody wins. Except the environmentalists. Imagine them trying to tell the Chinese or Indian governments they have to clean up their act.

Apr 19 08:08 AM

[Jack Lifton:]

To place some of this very cogent arguments in a natural resources availability and future possible availability context, it should be noted that:

1) Lithium is widely distributed in the earth's crust, and so it has joined the group touted as "earth fundamental" by those whose ignorance of mining is profound. In fact accessible deposits of lithium are rare and are mostly in inhospitable places like the alkaline high deserts of the southern Andes. The largest known such deposit, in Bolivia, may well be worthless, because the cost of recovering its low lithium content and then separating that lithium from the very high magnesium content is at present prohibitive to say the least.

2) In general hard rock mining and processing of lithium minerals such as spodumene will be XXX% more expensive than the simple process of separating low magnesium brines; additionally the current discussion of using more common lithium minerals than spodumene ignores the fact that all other minerals are so much more expensive to process and the returns are so much less than for spodumene that such processing is uneconomical at any prices for lithium to be expected in the next generation.

3) Hard rock mining could create an immense environmental impact from the tons of tailings required for 100 kg of useful metal; in any case such concerns will keep any new or expanded lithium production in most countries in the regulatory tribunals for years, and

4) There is today no known way to recycle li-ion batteries into materials that are pure enough for use in new batteries at a price that makes such recycling attractive. Thus, even if politically corrupt countries produce some lithium the rule-of-law countries will regulate the disposal of lithium containing batteries and that fight and that added cost has not even been factored in yet.

Might I also point out that the world's known reserves of lithium, 50% of which are in the "iffy" Bolivian Uyuni desert deposits with their world's highest magnesium to lithium ratio, are just 13,000,000 metric tons, from which last year 2008, 27,000 metric tons of lithium were mined and refined. Compare this to lead, the global reserves of which are 170,000,000 metric tons, of which 3,800,000 metric tons were mined and refined in 2008. Note that no lithium was recycled last year while in the U.S. alone more than 850,000 metric tons were recycled, almost entirely from automotive SLI batteries.More than 50% of US industry's demand for lead is met by recycling right now.

The conclusion is that we know how to make, recycle, and reuse lead and lead carbon batteries right now, and the process is economical. Why then are billions being poured into the black hole of lithium for marginal increases in technology?

Anyone who thinks that lithium production can be ramped up to meet more than a small percentage of what would be needed to electrify even the world's existing fleet (750,000,000 cars and trucks) is wrong unless their perspective is generations not decades.

The US has more capacity in shut down lead mines than in currently producing ones.

What is the problem? It seems to be that politics has eclipsed economics, science, and common sense.

Apr 19 09:25 AM

[John Petersen:]

Battman, thanks for the thoughts. Ultimately I think we need to put the batteries where they'll do the most good. Squeezing a few more miles out of a highly fuel efficient car makes nowhere near as much sense as squeezing a lot of extra miles out of a highly inefficient pickup, SUV or van. Since weight and volume are not issues with any of the gas-guzzlers, it also lets us make battery decisions based on costs and benefits rather than weight.

Jack, thanks so much for confirming that my reservations were not unfounded. My readers would never accept me as an expert in these matters, but I suspect they'll view you differently.

Apr 19 10:08 AM

[William Taylor:]

Quercus Trust. John, am I nuts or is Quercus and Geldbalm just a bunch of pump and dumpers? The ultimate ruin of well intentioned small companies?

I could be completely wrong and hope I am but afraid I am not. Any thoughts?

Apr 19 10:22 AM

[a. palmer jr.:]

You didn't mention anything about capacitors, I think a lot of cars of the future will employ lots of capacitors for electrical storage. Also another opportunity for places like Starbucks to offer battery charging while having a cup of latte' and maybe surfing the web while waiting for your battery to charge. It probably wouldn't take that long, and if the automakers would make their batteries fairly universal we could have battery changing stations so you wouldn't have to wait hardly any. I'm sure these ideas are for a little further down the road but it is coming up soon.

Apr 19 10:25 AM

[battman:]

If they're pump and dumpers, then they do a terrible job. Did you see the price they paid for Axion and what happened to the shares after they bought?
Besides, what kind of "pumping" have you seen on or from Axion?
What kind of "pumping" have you seen from Quercus?
You want to check if it's a pump and dump, look at the insider buys. Lots of them. Correct me if I'm wrong, but insider buying is the exact opposite of pump and dump.


On Apr 19 10:22 AM William Taylor wrote:

> Quercus Trust. John, am I nuts or is Quercus and Geldbalm just a
> bunch of pump and dumpers? The ultimate ruin of well intentioned
> small companies?
>
> I could be completely wrong and hope I am but afraid I am not. Any
> thoughts?

Apr 19 10:38 AM

[Neil Energy:]

As usual, great article John!

If you get a chance to update or addend the article, it would be great to add a final table that uses a "reasonable" estimate for the cost of battery packs in volume, let's say 2 years from now. Or do the battery costs of $3,000 and $15,000 already assume volume pricing? Likewise for the $4,500 electric drive conversion kit. I was shocked one day to learn that an internal combustion engine costs the automaker only $1,000. That's amazing, considering all of the parts involved, not to mention the labor in putting it together.

Finally, where did you get the $3,000 for labor? Do you think there's much potential for improvement there.

What I really get from this is two things: If the vehicle is manufactured with the dual-mode right out of the factory, the break even is SOOOO much earlier. And secondly, your choice of a low-mileage vehicle is key. Perhaps a limited-range plug-in makes sense for a low-mileage vehicle, but HEV (not plug-in) is clearly the way to go for smaller vehicles, where the mileage is already decent and incremental costs are harder to pay off.

Thanks again,
Neil

Apr 19 10:43 AM

[John Petersen:]

William Taylor, Mr. Gelbaum has taken a lot of unfair criticism because he buys heavily into alternative energy companies and is willing to take the good with the bad, but thinks that taking a loss is better than riding a losing stock to zero. Many of the companies that Quercus bought into and then sold out of resulted in tremendous cash losses to him. A great example is the trashing Quercus took when it sold out of Beacon in the sub $1.50 range. The following comes from an analysis I did in late 2007.

"Quercus started buying Beacon prior to May 2007 at around $0.87 per share and had accumulated a total of 8,957,480 shares at prices ranging up to $2.19 per share through October 10, 2007. On October 18, 2007, Quercus bought an additional 6.2 million units from Beacon (each consisting of 1 common share and .95 warrants exercisable at $2.97) for $1.98 per unit ($12,250,000)."

I think it's tragic that Quercus took a loss on its Beacon stock. It's horrid that Quercus has been criticized for losing money. Pumpers buy cheap, sell expensive and don't care if the stock collapses afterwards. Buying for $2 and selling for $1 is not pump and dump.

a palmer, supercapacitors are wonderful for power but terrible for energy. To put it in the simplest of terms, energy is the distance of travel and power is the speed. Charging a supercapacitor at Starbucks would get you out of the parking lot in an instant. But you'd roll to a dead stop in less than a quarter mile.

Neil Energy, one of my most common recurring battles with readers comes from the fact that I think future price declines are likely to be modest at best. So any estimate I found reasonable most would find unreasonable.

The $4,500 conversion kit cost and $3,000 labor cost reflect current pricing. A widespread migration to dual mode conversions would likely drive those numbers down, but there again it gets off into the realm of speculation that I really try to avoid. I hope the potential savings would be large, but don't want to hazard a guess.

With the new fleet mileage standards, I can't imagine a factory equipped dual mode. But given the choice between putting batteries into a new car that would have high mileage anyway or putting those same batteries into an older gas-guzzler, we can save a lot more gasoline by using the batteries for the gas guzzler.

Apr 19 11:06 AM

[geranz:]

When will the policy makers realize the inherent logic as so cogently outlined in Jack Lifton's & battman's comments. I believe the policy makers are not the government but the lobbyists for the rust belt industrialists! We can hope that their days are numbered & someone in the government will listen! Maybe it will take the bankruptcy of GM to bring this debate to the forefront of the American consciousness? I own one of those PUs(used for ranch work) and would happily make an incentivized (sic) conversion.

Apr 19 11:06 AM

[Don Harmon:]

First of all I suggest that Jack Lifton read this report on the abundance of Lithium: lithiumabundance.blogs.../

Second LiFePO4 Lithium Iron Phosphate batteries (properly made) have a life cycle 10X Lead Acid - which means even when they out-live their useful life for an HEV or PHEV application they still have 80% of their energy left over. This allows these batteries to be "re-purposed" as opposed to "re-cycled" which is something that cannot be done with SLA batteries.

Third by the time LiFePO4 batteries need to be recycled the industry will have matured to where recycling processes have naturally developed along with the growth of the Lithium-ion battery manufacturing & development thus solving this issue along the way.

Don Harmon

Apr 19 11:45 AM

[William Taylor:]

Thanks, John. It is good to know the facts! You certainly cannot get them by following the Yahoo boards.


On Apr 19 11:06 AM John Petersen wrote:

> William Taylor, Mr. Gelbaum has taken a lot of unfair criticism because
> he buys heavily into alternative energy companies and is willing
> to take the good with the bad, but thinks that taking a loss is better
> than riding a losing stock to zero. Many of the companies that Quercus
> bought into and then sold out of resulted in tremendous cash losses
> to him. A great example is the trashing Quercus took when it sold
> out of Beacon in the sub $1.50 range. The following comes from an
> analysis I did in late 2007.
>
> "Quercus started buying Beacon prior to May 2007 at around $0.87
> per share and had accumulated a total of 8,957,480 shares at prices
> ranging up to $2.19 per share through October 10, 2007. On October
> 18, 2007, Quercus bought an additional 6.2 million units from Beacon
> (each consisting of 1 common share and .95 warrants exercisable at
> $2.97) for $1.98 per unit ($12,250,000)."
>
> I think it's tragic that Quercus took a loss on its Beacon stock.
> It's horrid that Quercus has been criticized for losing money. Pumpers
> buy cheap, sell expensive and don't care if the stock collapses afterwards.
> Buying for $2 and selling for $1 is not pump and dump.
>
> a palmer, supercapacitors are wonderful for power but terrible for
> energy. To put it in the simplest of terms, energy is the distance
> of travel and power is the speed. Charging a supercapacitor at Starbucks
> would get you out of the parking lot in an instant. But you'd roll
> to a dead stop in less than a quarter mile.
>
> Neil Energy, one of my most common recurring battles with readers
> comes from the fact that I think future price declines are likely
> to be modest at best. So any estimate I found reasonable most would
> find unreasonable.
>
> The $4,500 conversion kit cost and $3,000 labor cost reflect current
> pricing. A widespread migration to dual mode conversions would likely
> drive those numbers down, but there again it gets off into the realm
> of speculation that I really try to avoid. I hope the potential savings
> would be large, but don't want to hazard a guess.
>
> With the new fleet mileage standards, I can't imagine a factory equipped
> dual mode. But given the choice between putting batteries into a
> new car that would have high mileage anyway or putting those same
> batteries into an older gas-guzzler, we can save a lot more gasoline
> by using the batteries for the gas guzzler.

Apr 19 11:57 AM

[searcher:]

"Also another opportunity for places like Starbucks to offer battery charging while having a cup of latte' and maybe surfing the web while waiting for your battery to charge." This is the age beyond satire.

Apr 19 12:02 PM

[Don Harmon:]

That's funny - Most of the Starbucks are located inside of buildings and the ones that aren't have little or no place to park where any kind of charging stations could even be installed.

Another problem in charging Lead Acid is that it takes about 4 hours vs. fast charging Lithium-ion which can be done in 20 minutes if you have 3 phase charging capability?

Not sure about the advanced carbon batts - but I bet they don't take a fast charge like Lithium can.

Don Harmon

Apr 19 12:12 PM

[John Lounsbury:]

John Petersen - - -

You keep on producing great articles and the reader comment stream is outstanding.

Thanks.

Apr 19 12:17 PM

[Futurist:]

John,
Its always easy to talk about saving oil if the consumer does this or does that . Its very hard to get the consumer to make an unwise economic decision no matter the oil consequences. In fact we could save 20% of our oil imports through conservation and it wouldn't cost the consumer a dime. It would save them money. But the convienience factor outweighs the economic cost. The consumer is very fickle.

I'm all for suv conversions but do not see what would cause this to happen until gas prices rise to new all time highs or the conversion can be done cheap. Heres why:
1) Americans trade in their vehicles every 6 years
2) Vehicles lose 50% of their value in 36-40 months.
3) Vehicle purchases or Refitting must be Financed.

I just can't see many consumers flocking to spend the money Even if they will get it back in savings. They didn't exactly flock to buy the Prius when gas was at $4.00 per gallon.

If this is going to work it would have to be something like 0% down + a low payment each month to retrofit. When the car is sold the loan is paid off in full. If it were that easy I think the consumer might go for it.

Apr 19 12:22 PM

[marketquant:]

> "rapid implementation of Axion's gas-guzzler to dual-mode EV conversion initiative"

At a recent meeting of the Calif Air Resources Board, conversion companies were reminded that modifications to existing vehicles (which affect the behavior of emissions systems) violates California State laws covering "tampering" of vehicle emissions systems (due to the potential to cause more "cold starts"). A123 has the only state sanctioned exemption to this law (for 500 vehicles).

My guess is that vehicle manufacturers have enough lawyers to prevent widespread conversion of old vehicles using environmental F.U.D. tactics and other regulatory/legal terror.

CARB doesn't even have a definitive plan for testing the emissions of *new* vehicles that can run sometimes fully in EV mode, and may potentially have multiple "cold starts".

Apr 19 12:27 PM

[Wisdom vs. ...:]

John, I love your articles; in fact, I have learned a tremendous amount. Not this one. Increasing consumption with subsidies is not good for the environment or the economy, and oil becoming magically vastly more expensive is strictly a dream, not a goal; furthermore, with voters supporting anti-mining administrations, we will simply become reliant on foreign minerals instead.

Lithium for EVs has failed. How many more years and billions of consumption are we going to waste developing lithium for EVs? Lithium is overly expensive unrecyclable non-technology for EVs, keep spreading the word.

Apr 19 12:44 PM

[ginchinchili:]

D. Harmon: Couldn't this same argument be made for Starbucks recharging stations:

"Third by the time LiFePO4 batteries need to be recycled the industry will have matured to where recycling processes have naturally developed along with the growth of the Lithium-ion battery manufacturing & development thus solving this issue along the way."

It seems somewhat contradictory to say the market will take care of consumer needs in one case and then state that that same market is supine when it comes to the other case. Consistency of argument is necessary if you want to make that argument effective.


On Apr 19 11:45 AM Don Harmon wrote:

> First of all I suggest that Jack Lifton read this report on the abundance
> of Lithium: lithiumabundance.blogs.../
>
> Second LiFePO4 Lithium Iron Phosphate batteries (properly made) have
> a life cycle 10X Lead Acid - which means even when they out-live
> their useful life for an HEV or PHEV application they still have
> 80% of their energy left over. This allows these batteries to be
> "re-purposed" as opposed to "re-cycled" which is something that cannot
> be done with SLA batteries.
>
> Third by the time LiFePO4 batteries need to be recycled the industry
> will have matured to where recycling processes have naturally developed
> along with the growth of the Lithium-ion battery manufacturing &
> development thus solving this issue along the way.
>
> Don Harmon

Apr 19 12:55 PM

[QUINCE:]

I gave up crunching numbers to see what alternative is economically sound after the realization that what you pay has nothing to do with manufacturing costs anymore; you’ll be charge based on the historical cost of the goods/services regardless of the technology involved. And while I am environment supportive (between other things, I plant hundreds of trees every year), I will not convert my F350 17miles/gallon diesel unless is for hydrogen and I can break even in a year or less. I have a feeling that over 95% of similar truck owners fall in the same category.
I see all the alternative energy industry as a bunch of hyper people trapped in a cave, running in all direction with no leadership. Some will find an exit, but lots will never do. The scientific community should be hired by the government to show this people the way out. Where we stand now, almost any long position is a gamble, but significant profits can be made through short term speculation.
Am I wrong?

Apr 19 01:12 PM

[marketquant:]

LithChem is the lithium battery recycling division of Toxco. Below is a quote from their website. Perhaps Jack Lifton would like to comment on it:

"LithChem International is a wholly owned subsidiary of Toxco, Inc. Toxco was established in 1984 and has now grown to become the world leader in lithium battery recycling. Toxco recycles approaching two million pounds of all types of lithium batteries annually, ranging from small lithium ion phone batteries up to 570-pound lithium primary batteries used by the military. All recycling is accomplished safely, reliably and with the utmost care for the environment."

LithChem apparently sells 99.0% and 99.99% pure lithium carbonate that comes from their recycling activities.

more at:
www.lithchem.com/Corp....
www.toxco.com/

Apr 19 01:49 PM

[fatpitch2:]

John thanks again!

I bought Axion @ about $0.95 and at least at this point... wish I'd bought more... ;-)

Anyway... my comment:

Currently, as I understand it, there is no commercially feasable recycling method available for Li-base batteries, while there is recycling available for lead-based batteries.

I did not see a line item in your estimate for the scrap value of the 2 (3?) sets of spent lead-based battery packs... is there any scrap value, or does the cost of handling pretty much offset any residual value?

Thanks!

Apr 19 01:53 PM

[Old Wizard:]

John, I give you accolades for thinking creatively about the joint issues of energy, jobs and solving our operating cash flow problem as a country. I don't see how this solution fairs better for all three issues collectively or individually relative to a conversion to natural gas fuel for today's gas guzzlers. Conversion costs are much less, natural gas is a commodity the USA has and the cost of natural gas should remain very competitive with gasoline. On top of those factors Co2 emmissions should be dramatically decreased if Natural gas was used for our transportaion fuel. The folks who want the emissions problem to be solved with one fallow swoop, are not facing reality and pushing the all electric solution without regard to urgency of our cash flow, jobs and strategic geopolitical issues seems to be utopian. Their time horizon is 20-30 years. I believe we urgently need to make significant in roads in solving the above problem set in 5-10 years

Apr 19 01:59 PM

[Don Harmon:]

See it's already taking place Wisdom so your argument is moot - besides with the Obama administration already providing $2.8 Billion in developing the Lithium-ion battery initiative you will soon see a verified marketplace develop around Lithium. It's ineveitable, it will happen, and neither you or Ginchinchilli can prevent it from taking hold.

Don Harmon


On Apr 19 01:49 PM marketquant wrote:

> LithChem is the lithium battery recycling division of Toxco. Below
> is a quote from their website. Perhaps Jack Lifton would like to
> comment on it:
>
> "LithChem International is a wholly owned subsidiary of Toxco, Inc.
> Toxco was established in 1984 and has now grown to become the world
> leader in lithium battery recycling. Toxco recycles approaching two
> million pounds of all types of lithium batteries annually, ranging
> from small lithium ion phone batteries up to 570-pound lithium primary
> batteries used by the military. All recycling is accomplished safely,
> reliably and with the utmost care for the environment."
>
> LithChem apparently sells 99.0% and 99.99% pure lithium carbonate
> that comes from their recycling activities.
>
> more at:
> www.lithchem.com/Corp....
> www.toxco.com/

Apr 19 02:20 PM

[John Petersen:]

geranz, I'm not inclined to attribute bad motives to policy makers because I think they all have good intentions. But people with good intentions who want a particular outcome are easily taken in by a "you can have it all without pain" sales pitch; which sometimes leads to suboptimal decisions.

Don Harmon, the first installment of lithium in abundance was enough to make me back down from the concerns I had after reading the Tahil piece on potential lithium shortages. The second part of Lithium in Abundance took way too many gratuitous swipes at Tahil's unrelated views to leave me feeling like it was anything other than a paid hatchet job from the lithium industry. Lifton's qualifications are extraordinary and his article today talks about being in the room while top level folk from GM and SQM discussed supply and recycling issues. Since I know Lifton has no axe to grind one way or the other, I find his current views far more credible than any of the other materials.

LiFePO4 has a great cycle life, but the 10x claim is industry BS based on comparisons of their best products against the OEM battery in your car.

I understand that there may be some ability to repurpose Li-ion batteries after an EV has been junked, just as there are opportunities to repurpose my old computers when I replace them every year. It is unreasonable to assume that anyone will pay a premium price for 10 year old battery technology at some undefined future date unless you are also willing to argue that the technology will not advance over the next 10 years. Moreover, by the time you calculate the time value of money, a potential payment 10 years out is worth little or no cash dollars today.

My in-laws, both of whom are PhD chemists have advised that lithium is one of the most difficult metals in the world to work with. There is no chance that there will ever be a cheap and easy recycling process that gets back to lithium that's pure enough for use in new batteries.

Recharging a 25 kWh battery pack 20 minutes will require a system that can push 75,000 watts into the battery pack at high voltage. Once again, the 20 minutes is industry happy talk of theoretical possibilities that have nothing to do with the real world.

John Lounsbury, I think the comments are generally better than the articles. The only way we'll ever get to a solid understanding of the facts is by active debate. So even people who want to argue are welcome.

Futurist, the economics of EVs are an absolute bitch and I've never pressed them as a wonderful solution. I love HEVs but cars with plugs really don't do it for me. But if we must put batteries in some vehicles then we should put them where they will have the most impact. That place is the existing gas-guzzler fleet rather than the fuel efficient new car fleet.

Marketquant, unfortunately most good things happen in spite of government and big business, not because of them. One of the biggest obstacles will be getting to more rational state regulation. But simply giving up because there is an existing rule that says you can't do that is no solution.

Wisdom, please see my response to Futurist a couple paragraphs up.

User 345093, as an investor rather than an environmental advocate I pay a lot of attention to attitudes like yours. A few weeks ago I wrote about my "family reunion test" for good investments. Basically if the majority of the people at my most recent family reunion wouldn't buy something, then it's not something I want to invest in. That being said we are entering a brave new world where we will all have to change our wasteful ways. So at some point the pain of doing something will be less than the pain of doing nothing, and the change will begin. Thank you for reading and commenting.

Apr 19 02:24 PM

[John Petersen:]

Marketquant, a single facility that can recycle the equivalent of 2,000 to 3,000 cars worth of batteries per year doesn't make my heart beat faster, particularly when there is no data on the relative cost of their end product compared to the cost of newly mined material. Most anything can be done if price is not an issue. But I want to know what things cost before I sign up for the ride.

Fastpitch, I think the salvage value of lead-acid batteries typically disappears into the pockets of the recycler, so I didn't see a whole lot of purpose in trying to guess a future value. It's a bit like trying to guess what a 10-year old Li-ion battery might be in 2019.

Old Wizard, no EV solution can hold a candle to NG conversion, but for reasons I don't understand NG conversion is getting no traction in the halls of power. So if we have to use batteries, let's use them where they do the most good.

Don Harmon, see my response to MarketQuant.

Apr 19 02:43 PM

[Don Harmon:]

John, your continued short-sighted choice of authors you credit highly makes me suspect you have a pre-determined agenda which of course we all know you DO. For every "expert" you cite I can offer an alternate viewpoint which is after all why we have these little debates:

gas2.org/2008/10/13/li.../

Those who rely on a "family reunion test" for good investments are likely to miss other opportunities that exist despite the fact that they could be far superior in the long view!

Nobody has convinced me yet that even improved Lead Carbon technology will trump LiFePO4 technology even now when Lithium is still in it's infancy compared to 50 years of Lead battery development.

Don Harmon

Apr 19 02:54 PM

[marketquant:]

John,
1) I would also *LOVE* to see numbers behind Toxco/LithChem. If Lifton has any inclination to dig into this feel free!

2) Also you state regarding recharging: "20 minutes is industry happy talk of theoretical possibilities".

The old smear against Altairnano was that their "outrageous" claims couldn't possibly be true. Then Aerovironment (a defense contractor, developer of GM's EV-1, and renown experts in battery testing) verified the battery in testimony to the California Air Resources Board -- including specifically it's 10 minute recharge. Now Altair has development partnerships with Aerovironment, BAE Systems (another defense contractor), and then after testing by the U. S. Office of Naval Research Surface Warfare Center - Crane Division (the group that tests batteries for the Navy) came a project with the ONR Surface Warfare Center - Carderock Division that is going to put the batteries onboard Navy Destroyers to replace large generators. There is also a small project putting Alti batteries into 105mm Howitzers by the Army. After all this activity, the "happy talk" has continued -- Proterra has been driving around to city government meetings their transit bus that can be recharged in 10 minutes, and Aerovironment this January presented the 10 minute recharge feature to "Clean Cities Coalition" governments.

Apr 19 03:10 PM

[Don Harmon:]

It's not industry happy talk at all! It's very doable and we are doing it already with several vehicle projects over in the U.K. and Europe using delivery vans and hybrid busses. So, John, once again you just don't have the facts down. Granted, these fast charge stations are very expensive built by AeroVironment or Epyon in Netherlands, but for commercial fleets and government military facilities they are nothing in terms of the efficiencies they offer over Lead Acid battery charging problems.

I just love how any public announcement made by the Lithium-ion industry is automatically considered "hype" or "happy talk" by the Lead Acid crowd. Maybe if you had better inside information on this industry you would change your tune - but I doubt it?

Don Harmon



Don Harmon

Apr 19 03:23 PM

[Don Harmon:]

Only Lithium-ion can acheive a true fast charge profile which is the one thing that the EV, HEV, PHEV, and BEV market will need to push the market. See these links if you are interested?

www.epyon.nl/technolog...

www.avinc.com/fleetcha...

Don Harmon

Apr 19 03:44 PM

[John Petersen:]

Don Harmon, I found out about Jack Lifton when he was writing on rare metal limitations for NiMH chemistry. He believes comparable natural resource problems will impact the lithium world for different, but equally persuasive reasons. Just today, he has his written his own SA article on the topic seekingalpha.com/artic...

In my experience, contempt for somebody you disagree with is never a good idea because he may know something that you don't. So I try to read everybody, synthesize it with my experience and reach a conclusion I'm comfortable with until additional and better facts come along. Ultimately neither one of us is going to convince the other, but the great part of the Axion initiative is that all battery producers will have an equal chance to convince end-users who will cast the only votes that ultimately matter. After all, a company that can't sell their product to real world customers is destined to fail, no matter how cool the science is.

Marketquant, I follow Jack Lifton'ss work but have no influence over what he writes. But you would think that if Toxco/LithChem had a cost effective solution they would be publishing their own data on the cost of conducting recycling and building a national infrastructure to meet anticipated demand.

I have no doubt about the ability of a Li-ion battery to take a very rapid charge because it's been proven time after time. But the fact that you can charge a cell in 5 minutes does not mean you can charge a 25 kWh battery pack in the same amount of time because of the required voltage and amperage required for the job. They may be able to do it at special purpose industrial charging stations, but the potential liability of a commercial operation to charge your car batteries like a shell station fills your tank are incredibly complex. I won't say it can't be done, because anything can be done for a price. But it won't be easy or cheap.

I keep saying that Li-ion is a great technology for appropriate applications including many of the ones you listed. But until the fundamental economics change it cannot be cost effective to move 300 pounds of passengers and 3,000 pounds of vehicle at highway speed. The PUMA is a great concept because it has a vehicle to passenger ratio of about one. The same goes for electric two-wheelers (E2W). Once you get past a vehicle to passenger weight ratio of about five, the numbers go to hell in a handbag.

Apr 19 03:55 PM

[John Petersen:]

Don Harmon, I keep going back to the Sandia graph I first printed in: seekingalpha.com/artic.... They tested both Li-FePO4 the lead-carbon ultrabattery at 2C and 4C rates. So the best you can really say is that Li-ion has the fastest tested charge rates, but the lead-carbon is coming on strong.

Apr 19 03:59 PM

[Don Harmon:]

John, on your charging station problem - it's simple. Let the oil companies solve that problem. They won't have any trouble with infrastructure and will certainly be looking for a new market....LOL!

www.green-energy-news....

Here's your report on the Ultrabattery and the key point in the findings that I find most interesting:

"In field driving tests conducted using Honda Insight HEV, the UltraBattery exhibited performances almost identical to those of the Ni-MH: slightly more fuel was needed (UB: 4.16 l/100 km; Ni-MH: 4.06 l/100 km) and slightly more CO2 was emitted (UB: 98.8 g/km; Ni-MH: 96 g/km)."

www.furukawadenchi.co....

The trouble is just being almost identical to Ni-MH in performance and power doesn't trump LiFePO4 - so besides being a little bit cheaper to make - where is the investment potential? They are still 60% heavier, not as high discharge rates, not as long life cycles, not capable of "speed-charging" and just not as practical as LiFePO4 is for use in vehicles.

Why do you think Ni-MH failed to acheive wide use in the early EV market?

Don Harmon

Apr 19 04:34 PM

[marketquant:]

> if Toxco/LithChem had a cost effective solution they would be publishing their own data on the cost of conducting recycling

Here is Toxco's GSA recycling contract quote:

"This one-of-a-kind contract is unique since it allows any Federal Government facility, regardless of size or location (continental US only), the opportunity to easily recycle any battery direct with Toxco, the recycling facility."

(from their chart it's 32 cents per pound for large volume lithium battery recycling)

link to cost of GSA Toxco recycling:
https://gsaadvantage.gov/ref_t...

Apr 19 04:56 PM

[JulieCJ:]

While I have nothing to offer in terms of technical analysis, pricing scenarios or stock information, I do wish to congratulate everyone who has contributed to this article/comments stream! I have read every word and find the whole topic fascinating.
The underlying theme seems to be that each of us should be responsible for making our own decisions based on information available to us, either from this sort of exchange, or from other sources - but to not blindly accept any one source as the ultimate word.
The exchange of ideas and thoughts here is reasonable and without rancor, which is so refreshing! We can all be different and have differences, yet we can be civilized about it.
I'm glad that I'm part of such a group.
Again, congratulations on a lively, educational, yet entertaining exchange of ideas.
JCJ

Apr 19 04:59 PM

[marketquant:]

> a cell in 5 minutes does not mean you can charge a 25 kWh battery pack in the same amount of time

Aerovironment demonstrated the 10 minute recharge to CARB on a 35 kWh pack. A cell recharge is actually only 6 minutes, and Altair spoke about a new cell version back in December at a lithium battery conference that charges in 30 seconds. So Pb is not gaining! :-)

Apr 19 05:04 PM

[Don Harmon:]

Pb has "gained " - but only to where Ni-MH has stopped! Lithium-ion is several generations ahead of Ni-MH. and still going strong with new developments coming out every few months like the MIT process described below:

www.eweek.com/c/a/IT-I.../

More "happy talk" from the Lithium Princes, John?

Don Harmon

Apr 19 05:36 PM

[Wisdom vs. ...:]

1. Li storage is a failure so far. 2. There is no indication that Li will succeed eventually, regardless of gov't subsidies and Chrysler/GM publicity stunts (remember Molten Metals?). Some storage that is actually efficient per kWh WILL be invented, and it, MOST LIKELY, will not be Li.

I guess Don did not read his own quote, because it strengthens my point. They do not specify the percentage they are recycling, so let me explain what that means: they are 'processing' (ie, treating and burying) most and recycling a little.

Apr 19 06:54 PM

[Mayascribe:]

John: As you know by now I am an active trader who is trying to manuever both my e-trading account and brokerage account into hold long term positions. So much of what has happened the past six or seven months has had nothing to do with a companies underlying fundamentals, but rather; a) hype, i.e., "buy the rumor and sell the news," b) hedge funds gone bananas, c) lack of govermental oversight, which d) led to outright avarice to the point of manipulation and abuse that nearly led to a global systematic and financial collapse.

I've only been studying the market for about 60 to 70 hours per week for about 16 months. Back in November, I wrote that I woud be investing primarily in, "Banks, batteries, and bullion." Since, I've learned that most certainly gold is being manipulated. More recently, I've learned that the financials are being manipulated--not talked about much is how the "too big to fail" banks that recieved TARP money were driving the market up. I've read that one big bank has threatened a "cease and desist or we'll sue" to a blogger who claims the TARP money was not used to promote lending, but rather, the traders of that large financial institution used the money to trade with, which has, in part, led to these monster first quarter profits. If, for instance, your bank recieved 10 billion during this depressed market, would not you, as CEO, take the money and get your veteran traders and super computer "quant" programs to make a quick buck? If the markets are up 30% since the beginning of the year, then simple math says that the $10 billion has now become $13 billion. Rumored out there is that on any given day almost half of all trading contracts made are due to the big banks and their quant platforms and their human traders. To me--and I have seen numerous highly curious "tells" in daily charts--most definitely qualifies as market manipulation.

With the commercial real estate about to blow up, combined with the fact that mortgage extensions are over, leading to a spike in foreclosers, and then add in more credit card defaults, as well as more toxic debt surfacing everywhere, I believe we might just living at the very first days of another significant pullback. Given that we've enjoyed six straight up-weeks the markets are primed for this to happen.

I'm not a big fan of conpiracy theories, but everything I've learned so far keeps pointing to what's written above, and so much more, leads me to think this is going to happen. Now that hedgefunds are mostly through dumping shares (thank you Tontine for my cheap shares of Exide (XIDE) and A-Power Generation Systems (APWR), I believe a good idea, a fundamental idea, an idea that even Joe Six Pack can use, will be rewarded no matter what manipulation is occuring; pehaps the first sign of market stabilization?

As in Axion.

I believe in my theory enough that once again, Monday, I'll begin selling off some postions that have moved up hugely, probably going from all in to about 80% in. I'll gladly take missing the next 5% up move in the markets, to miss out on the next 20% leg down; when (you guessed this already) I believe that the financial and hedgy shorters will be back to work manipulating the markets.

Apr 19 07:24 PM

[Don Harmon:]

Wisdom you have proof that it won't? Comments like you just posted don show wisdom but rather ignorance.

Don Harmon

Apr 19 07:25 PM

[Don Harmon:]

Wisdom - How do you account for Tesla, Fiskar, Volt, Aptera, Segway, BYD, Cherry, BMW, Ford, Chrysler........
and I could go on and on ? Just "hype" - Sorry they are pioneers and are the market of the future.

You should change your avatar name!

Don Harmon

Apr 19 07:34 PM

[battman:]

Spot on Mr. Harmon, no company has ever invested in a technology that hasn't panned out. In fact if I remember correctly, Mercedes and Ford scored HUGE wins with their Ballard power investment. In fact, the dealer told me my fuel cell powered E class Mercedes should be delivered any day now. GM won big time with Hydrogenics too I believe.
I'll make some assumptions here. Car manufacturers are never wrong, and you don't have an alterior motive.


On Apr 19 07:34 PM Don Harmon wrote:

> Wisdom - How do you account for Tesla, Fiskar, Volt, Aptera, Segway,
> BYD, Cherry, BMW, Ford, Chrysler........
> and I could go on and on ? Just "hype" - Sorry they are pioneers
> and are the market of the future.
>
> You should change your avatar name!
>
> Don Harmon

Apr 19 07:52 PM

[Don Harmon:]

battman....there is no wine before it's time!

Many think the way you do. Few will make huge profits though because they have a vision that you lack unfortunately. I can't think of one major brand name in the automotive sector who isn't already heavily invested in HEV or PHEV. Maybe you can furnish us here with one?

Don Harmon

Apr 19 08:10 PM

[Don Harmon:]

Not so Speculawer - it's a reality now in many new ventures including Chrysler, GM, & Ford. Not to mention the Chinese who are positioning themselves to be EV manufacture to the world. India is fast approaching China for that distinction!

Don Harmon

Apr 19 08:29 PM

[Don Harmon:]

Right on all accounts Speculawyer! This is clearly a technology with roots going back 15 years with Dr.Goodenough inventing the original Lithium Cobalt tech and then going on @ UT to invent the Lithium Iron Phosphate tech. All other chemistries are "spin-offs" of this man's prodigous ingenuity, and for which he has earn zero royalties on, except for one settlement with Nippon Battery.

Don Harmon

Apr 19 09:40 PM

[John Petersen:]

Don Harmon, your suggestion that NiMH was somehow a failure brings me back around to the first Lifton article I read which explains that you can't make NiMH batteries without the metal lanthanum and Toyota has cornered the market on the metal and effectively excluded the others from the NiMH option.

seekingalpha.com/artic...

I appreciate the GSA link and think that a recycling charge of $0.32 per pound for Li-ion recycling vs. $0.02 to $0.15 per pound for lead-acid recycling proves my point rather nicely – twice as expensive on both ends.

Speculawyer, you and I have been down the road several times on the rate of change in Li-ion technology. I'm happy to conceded 5% to 10% per year but snicker when people talk about more. Even so, 5% to 10% a year for 10 years is a lot of improvement. Likewise if I buy a zero coupon bond today that will pay me $1,000 in ten years, my likely purchase price will be less than half of the face amount. When you put the two together, the current cash value of the potential revenue from repurposing used Li-ion batteries is not a substantial number and we both know it.

Apr 19 11:35 PM

[Don Harmon:]

Precisely my point! The only successful use of NiMH can be attributed to Toyota. Virtually all others have failed miserably trying to bring this chemistry to market. So Toyota cornered the market just like Chevron did by buying out Ovonics and sitting on the patent rights for 12 years.

But you can't keep Lithium down now can you ? This technology is our future by every OEM Vehicle Brand's own measuring tape, and by the powerful office of the President of the U.S. and the Department of Energy, who will be assigning over $2.8 Billion dollars soon to the development of mfg. facilities here in the U.S. for advanced Lithium-ion battery development.

It's just the "gorilla in the room" that you "Lead Acid Heads" refuse to acknowledge!

Don Harmon


On Apr 19 11:35 PM John Petersen wrote:

> Don Harmon, your suggestion that NiMH was somehow a failure brings
> me back around to the first Lifton article I read which explains
> that you can't make NiMH batteries without the metal lanthanum and
> Toyota has cornered the market on the metal and effectively excluded
> the others from the NiMH option.
>
> seekingalpha.com/artic...
>
>
> I appreciate the GSA link and think that a recycling charge of $0.32
> per pound for Li-ion recycling vs. $0.02 to $0.15 per pound for lead-acid
> recycling proves my point rather nicely – twice as expensive on both
> ends.
>
> Speculawyer, you and I have been down the road several times on the
> rate of change in Li-ion technology. I'm happy to conceded 5% to
> 10% per year but snicker when people talk about more. Even so, 5%
> to 10% a year for 10 years is a lot of improvement. Likewise if I
> buy a zero coupon bond today that will pay me $1,000 in ten years,
> my likely purchase price will be less than half of the face amount.
> When you put the two together, the current cash value of the potential
> revenue from repurposing used Li-ion batteries is not a substantial
> number and we both know it.

Apr 20 12:06 AM

[John Petersen:]

For Li-ion Battery Fans Everywhere.

I have always ceded the far right hand end of the performance curve to Li-ion technology and am not aware of any battery technology that is it's equal in terms of raw performance (assuming of course that the technology will satisfy expectations when we use a rear view mirror instead of a crystal ball).

The fundamental question remains the same, who needs it?

I drove an Acura NSX for several years and loved it. Today I drive an Audi A6 that cost me half as much as the NSX and serves my needs better. Li-ion will always be the battery of choice for the NSX crowd, but the majority do not need that level of performance and cannot afford to pay a 100% or greater premium for the privilege.

As an investor I want companies that sell affordable products to the masses rather than expensive products to the elite. LVMH (Louis Vuitton, Moet, Hennesy) will always have a fine business, but it will never be WalMart. Li-ion batteries may well prove to be a fine business, but they will never be WalMart.

While the jury won't be back for several years, I believe that cars and trucks with plugs will ultimately fail to attract the average consumer. So does the DOE. www.eia.doe.gov/oiaf/a... See slide 9.

A few hundred electric cars, trucks and busses are wonderful PR tools for the companies that make them. They are also what I would classify as demonstration projects - let's try this and see if it works. The decision will not be made in my articles or your comments. It will be made by consumers who care about things like relative costs and benefits.

As an investor, I see far more upside potential in Enersys, Exide and Axion than I do in Altair, Ener1 and Valence. Time will either prove me right or prove me wrong.

Apr 20 12:09 AM

[Mayascribe:]

Speculawer & Harmon: Will you wake up? All this intensity about your dream/arguments that lithium is the "future" of everything battery powered from miner hats lighting, to batts for cameras and laptops and drills, to, well...that already exists. So...let's get onto your dream that regular Joe and Betty cars will be in some form or another lithium powered.

Most certainly a "lithium buisness cycle" is forthcoming.

No doubt that in the short run, maybe ten years, lithium based baterries will be the "switch out" for fleet vehicles. And, no doubt that for a certain amount of people that can afford a lithium battery car (if nothing than more for image reasons, I'll add) will be driving one in the next few years. But, not any form of lithium, from my hundreds of hours of research, will outperform the newest lead acid technology dollar for dollar.

I (kind of) assimilate lithium car battery technology to the kind of fuss going on nowaydays about solar and wind power, which is far outperformed by geothermal when watt/$ is assessed. (Please don't fall prey to the argument that geothermal is "Ring of Fire" only based. My sister has a friend here just outside of Philly that has been powering his house with geothermal electricity for the last twenty years. Think about that.)

Mother Earth has given us lithium, the lightest mineral of all, that is so prevalent and yet rare and confounding in any of its present mining forms that any thinking that it will be the global car battery answer is, to me, like grasping for a "crisp" french fry suspended in the very geothermal steam produced my Mother Earth.

It ain't happening.

I think both of you should look into virus-based batteries. A diaper stage nascent technology that maybe two decades down the line, will make all of your lithium arguments irrelavent. By the way, John's, too.

Apr 20 12:16 AM

[Don Harmon:]

It's just the "gorilla in the room" that you "Lead Acid Heads" refuse to acknowledge!

Don Harmon

Apr 20 12:16 AM

[John Petersen:]

Don Harmon, I don't know how to break this to you but the boys in Washington DC don't always get it right. Barney Frank's push for affordable low income mortgages (e.g subprime) was nowhere near as attractive in the implementation as it was in the proposing. Ethanol from food was another rousing success. This particular litany could go on for days but why bother.

A technology that adequately serves the needs at the center of the bell curve and is priced at the center of the bell curve will always outperform the extremes of performance and price. As a consumer I prefer products from LVMH. As an investor I prefer WalMart.

Apr 20 12:18 AM

[John Petersen:]

Mayascribe, thanks for being a friendly voice in an unfriendly world. Good luck with your trading account. These are difficult times.

Apr 20 12:24 AM

[Juan Carlos...:]

John,

Here are some comments on Jack Lifton´s perspective in relation to lithium:

1) For a more complete and technical view of world lithium reserves, I suggest you to see Keith Evans´presentation at the Lithium Supply & Markets Conference held in Santiago ealier this year. I believe that in the absence of a feasibility study to state the percentage of reserves that can be economically recovered from the Salar of Uyuni, Jack Lifton´s contention that Bolivia´s lithium deposits “may well be worthless” is temerarious and lacks any technical content.

2) This point also belongs to the speculation and is not supported by the facts. It fails to explain why there are so many lithium mining endeavours projected for the following years, some of which were presented at the above mentioned Lithium Supply & Markets Conference in Chile.

3) I wonder what makes lithium (as opposed to other minerals) mining so special about environmental impact.

4) Lthium recycling may still be in its embryonic state. It couldn´t be otherwise since the metal rush has not yet started. As the Toyota experience with NIMH batteries demonstrates, it may take a while until this gets underway. But I think it is too premature to deny this possibility. Besides, since Li-ion batteries (of the Volt type at least) are promising a 10-year warranty, there appears to be plenty of time to plan their recycling. If no lithium was recycled last year, that doesn´t mean that recycling is impossible.

5) Any comparison between world resources (not reserves) and quantities of lithium and lead mined and refined in 2008 is meaningless in the absence of other information on the quantiy of lithium or lead per kwh required in advanced batteries, for instance. That so much lithium or lead was produced last year has no bearing on what will happen in the next years to come. As I have argued in several articles and blogs published on EV World.Com, if the lithium rush starts with, say, the launching of the GM Volt car in 2010, lithium demand will increase substantially. This will have to be matched with a corresponding rise in lithium production, prompted by new (untapped) fields (e.g. Salar of Uyuni) being put into operation and high lithium prices resulting from an ever-increasing demand for the metal. Demand will create supply up to a limit, this limit being lithium world resources. But these resources may also be increased because production operators will become more knowledgeable of the existing reserves and face more incentives to explore new fields.

Apr 20 12:45 AM

[Don Harmon:]

Tell that to the Department of Energy and to Mr. Obama, John. You are wasting your rare abilities on this forum. You should be in Washington instead of Sweden. How come whole Countries have signed on to the EV idea and to the LiThium-ion technology? Israel, Denmark, Australia, California, Hawaii and Canada have committed to deploying the world’s first electric car networks.

www.betterplace.com/ou.../
Quote Shai Agassi:

"How long are the entire life cycles of the batteries? What happens when they no longer hold a charge?

With today's lithium-ion batteries, 10 percent of the cost is in the chemicals and 30 percent of the cost is the energy required to make them. So, in order to prolong the life of the battery we need to conserve the components and the energy used to make them.

Now, remember the battery is no longer bound by the life of the car. We can also extend the battery's original visible range. Usually, when a battery is at 80 percent of its original capability, it's considered dead. We said, "That doesn't make any sense." Instead, when the battery has gone 90 miles or so, we might take it to a different geography where it could have a second life -- for example, Hawaii, where people can't travel long distances.You will see much longer cycles in general, after which the batteries will be used as static storage devices.

So we're trying to extract as many miles as we can and then recycle the resources of each battery.

As batteries become fuel, is lithium the new oil? Will a country like Belize with large deposits see an economic upswing with your plans?

Well there are three things wrong with comparing lithium to oil. The first of these is that you don't burn lithium. The aggregate sum of lithium remains the same. Then, remember that it takes 100 million years and great pressure to get living creatures at the bottom of the ocean to create the correct opportunities to produce oil. And, of course, you can't really reuse carbon once you've burned it.

Lithium can also be found democratically. There are large deposits in places like Belize, but really there are sufficient deposits in a number of places. The cost of extraction is also lower and it is relatively easy to extract.

So, this is why we must be careful with the comparison. Lithium is actually the 35th most common element on Earth, with a much better extraction process than oil.

As someone with a vested interest in finding the most efficient forms of renewable energy, what did you think of Saul Griffith's high-flying kites to harvest wind energy?

I thought the talk was very cool. I have no real idea of how practical it is, but I do hope that Saul's right.

Now, all energy in this world comes from the sun, with the exception of that produced by the moon. So, the first order of magnitude is solar energy. There are eight terawatts of photons hitting the surface of the Earth, not counting the oceans. Saul says there are 1.2 terawatts of wind energy, which is not a small amount but there is a difference.

Wind is the first derivative of the sun -- the effect of molecules moving from hot places to cold places. The next derivative is waves -- those that result from wind on water. Each derivative down results in a reduction of the original amount of solar energy. All forms of energy have their place, but the others are pretty far from mass commercial use.

Solar panels are no longer affected by scientific problems. The problems are in the mechanics and installation -- the cleaning, the positioning. Solar is still bound to become the most prevalent renewable energy source in the years to come.

Are you excited about your TEDTalk going online? And what was your experience of TED?

Well, actually I have a small TED story. When I was making my decision to leave SAP, I quit for the first time in January, 2007. But, I was sent back home to think about it. Basically, my resignation was not accepted. I tried to quit again after that, and I was offered another two-week vacation.

The first week my wife and I went to Costa Rica, and the second week to my first TED. I was awed and inspired by what I saw on stage. I sat back and watched 50-odd people and 1,000 others in the crowd applying themselves to serve humanity. When I came out of that TED, I knew for sure what I had to do. I wanted to be one of those people.

When I came back in 2009, my experience was very different. I was no longer anonymous. Not only was I on stage, but I have one of those last names that puts you at the front of every program, so everybody seemed to know my name. Everybody wanted to talk me about Better Place. Both experiences were fantastic.

You started college at 15, finished at 18, went on to be a hugely successful software entrepreneur and it's said that you raised millions of dollars in record-breaking time to begin Better Place. How do you do all this? Do you sleep?

Well, I sleep -- but not a lot. I've been blessed. I started at a young age. When I was young, my dad was in school, so I was surrounded by students and learning. I was further blessed to go to college at 15 and graduate at 18. My goal then was to make enough money by 30 that I would never have to work again.

When I sold my first company at 30, I could have done whatever I wanted to do. Then everything was different, because I didn't care if things worked or not. SAP was a dream -- the problem came when the Better Place question hit me. There are very few people who get to have their kid dream, stop, and then go serve the world while they still have the stamina to get on and off planes constantly. If I get to solve one problem in the world, then it probably is a better place."

Tags:

entrepreneurship, environment, Shai Agassi, TED2009

Don Harmon

Apr 20 12:46 AM

[John Petersen:]

Juan Carlos, all I can do is refer you to Jack's most recent article here on Seeking Alpha. The link is:

seekingalpha.com/artic...

One of the nice things about being a lawyer and investor is I don't have to decide which position is "right" because the mere fact that so many conflicting opinions exist is enough to make me uneasy. So far, Jack is the only commenter I've seen on the subject who does not appear to have an axe to grind or an industry to promote.

Don Harmon, did you even bother to look at the graph on Slide 9 of the DOE's Annual Energy Outlook 2009 Early Release slide presentation. If not, you really should:

www.eia.doe.gov/oiaf/a...

Slide 9 clearly shows that the DOE believes cars with plugs will represent between 5% and 10% of the market in 2030. Ignoring information you don't like does not make it go away. Neither will lengthy quotes from a Li-ion promoter.

Apr 20 01:00 AM

[User 395761:]

John,

another great article followed by an interesting discussion.

But I would prefer to get rid of gas guzzlers at all and replace them with really efficient cars. Here weight will be an important factor again...

So I do not believe that this is a big opportunity, just a temporary add on for Axion!

Apr 20 03:12 AM

[John Petersen:]

User 395761, thanks for the kind words. I too would love to see the gas guzzler fleet scrapped and replaced by more fuel efficient vehicles, but that process will take many years. In the interim I think using batteries to get big improvements out of the existing gas-guzzler fleet makes far more sense than using those batteries to improve the performance of new vehicles that will have pretty respectable fuel economy to begin with.

In the final analysis, I believe imported oil is a luxury America can no longer afford and in terms of net oil imports, there is a lot more bang for the buck in improving the most wasteful segment of the fleet than improving the most efficient segment.

I agree this is not a great long-term solution, but it is a wonderful and cost effective baby step we can take today.

Apr 20 04:09 AM

[marketquant:]

> "I appreciate the GSA link and think that a recycling charge of $0.32 per pound for Li-ion recycling vs. $0.02 to $0.15 per pound for lead-acid recycling proves my point rather nicely – twice as expensive on both ends."

Now, multiply by the frequency of the recycling and compare the cost. From your chart above, Pb will need recycling 3 times as often, so 6 cents to 45 cents for it. And considering Pb recycling is rather competitive, and Toxco is alone in Li recycling, the margins are probably far higher on the Li side -- so I'd guess the 32 cents may come down, whereas the Pb will not.

Apr 20 07:04 AM

[renim:]

Hi
I'm not a geologist, but i was a mining engineer. The way I see lithium ore is that its not rare, just not enough valuable enough to mine when cheap brines are available. I'ld place it comparably close to lead ore in value...but historically not valued or explored for.
LiFePO4 batteries have a low lithium content, low enough that BYD doesn't even call them lithium batteries but ferrous phosphate batteries.
PbC battery has large potential, for mild hybrid use (honda/toyota) i see it as compelling, (see article on 'ultrabattery' and honda hybrid.

i'ld like to know about about these dual mode kits and thier availability for pickup truck.

i read somewhere that BYD had demonstrated that their electrolyte for EV batteries was available in an edible formulation!

Apr 20 07:17 AM

[marketquant:]

Oops John, I've also need to adjust your invoice for the energy density difference of Pb and Li -- so that's another 2X at least. Now we are talking 12 cents to 90 cents to recycle the Pb, versus 32 cents to recycle the Li.

Also, if we are able "re-purpose" the Li for 50% more useful life, then the difference falls even further.

Lastly, a battery study is coming out soon that finally includes titanate in the mix. Hopefully, it will clear some things up.

Apr 20 08:04 AM

[John Petersen:]

Marketquant, titanate is already well established. The product line is made by Toshiba and branded ScIB. Good luck beating them on price, performance and quality.

Apr 20 09:03 AM

[Mayascribe:]

You're welcome, John.

How do I invest in common sense?

####

Looks like my above down market argument is already happening.

Apr 20 11:03 AM

[John Petersen:]

speculawyer, I have not been an Axion insider for over a year now and do not have access to information on the people who will make the dual mode hardware. But assuming that a gap in my knowledge proves anything other than a gap in my knowledge is beneath you.

The environmental defense fund article I linked spends a good deal of time on the work Axion is doing with the State of Arkansas to establish a dual mode conversion training program for mechanics indicates that both of us have knowledge gaps. Hopefully more data will be provided in the near-term future.

Apr 20 11:29 AM

[marketquant:]

Toshiba SCiB is 51 to 65 Wh/kg for their little 3.0 and 4.2 Ah cells, which are being used in the Schwinn Tailwind bicycle market (chuckle). They intend apparently to get into cars at some point.

Alti's large 11Ah and 50Ah cells range from 70 to 80 Wh/kg (a 3.5Ah is on the way, maybe they're feeling the heat from Toshiba?). Alti uses Kokam to make the cells, and I don't hear anything bad about the quality. Alti's power is a little higher as well.

Alti used to present 90 to 100 Wh/kg at conferences, so either they've become more conservative on specs or manufacturing lowered the average.

Apr 20 12:11 PM

[John Petersen:]

marketquant, the great news is that in my heart of hearts I believe we need every single battery technology out there, together with a bunch that haven't been invented yet. I also believe that every survivor will likely end up with more business than it can say grace over because the needs are so great. But there is still an wide chasm between investor expectations and practical business realities. Those expectations invariably lead to overvaluation of some companies and undervaluation of others. Of the Li-ion group, I like ABAT best because it's already a money maker and they throw nickels around like manhole covers. ALTI is second on my list because they're so much closer to a reasonable valuation than Valence and Ener1.

That being said, I think the probability that Enersys or Exide will double or triple before any of the Li-ion companies do is very high. As every good marketquant knows, last year's top performers are rarely this years top performers.

Apr 20 12:24 PM

[Don Harmon:]

John Petersen - President Obama's goal is to have 1 million plug-in hybrid cars on the road by 2015 - although that's only a fraction of the nation's 250 million vehicles. It's a start and we have to start somewhere now don't we?

Your comment on "titanate" is interesting because you seem to think it is significantly less expensive while the opposite is true. Titanate involves titanium which last time I checked is considerably more expensive than Iron Phosphate?

Don Harmon

Apr 20 12:46 PM

[John Petersen:]

Don, I think there are two questions that we have to deal with.

First, does it make sound economic sense to use batteries to power 300 pounds of passengers and 3,000 pounds of vehicles at highway speeds? There I believe the answer is a resounding NO and the tables I published in this article show why.

Second, is it politically necessary to start the process anyway? There I think the answer is a resounding YES and the issue we need to come to grips with is the best way to start. People who want EVs are almost certain to get an HEV as a second choice. So if we put a big battery pack into a new Chevy Volt, the reduction in domestic oil consumption in comparison to a new HEV will be relatively modest. But for every gas guzzler we can turn into an EV, the reduction in domestic oil consumption is a big deal.

I'm really excited about the potential for iron phosphate. It seems to have good cycle-life and safety and it clearly has a better chance of reaching an affordable price point than chemistries that rely on more exotic metals. It's likely to be the only sensible technology for lightweight vehicles like the PUMA and electric two-wheelers. But in the final analysis I'm all about fundamental economics and products that are affordable for the bulk of consumers rather than the elite. I may personally prefer products from LVMH, but as an investor I want to own WalMart. As of today, all flavors of Li-ion are so far out of the price range of WalMart shoppers that it's enough to make your ears bleed.

Apr 20 01:57 PM

[marketquant:]

Some time ago Alti stopped using ABAT to make their cells and described ABAT's technical capabilities as more limited than they were presented.

Every time I've looked at Ener1 (on technology) I've come away with a less than satisfied picture. On the valuation side, Ener1 has always stunk, and the CEO seems like an infomercial pitchman -- once making the mistake on a conference call when he said that the Prius has a liquid battery cooling system.

Valence, A123, Phostech (Sud Chemie), BYD, and other LiFePO makers will make that chemistry a commodity, so that will perhaps be the price/perf benchmark. There still isn't any clarity on the lawsuits in that space, but they keep on producing anyway.

Keep in mind that a typical Li battery might be 160 Wh/kg but limited to a 30-80 SOC window giving a usable 80Wh/kg, whereas titanate can run 10-90 SOC on 80Wh/kg giving a usable 64Wh/kg, so the difference isn't as much as people perceive -- and the titanate lifetime is much longer, safer, and has a much wider temp range.

Apr 20 02:52 PM

[Don Harmon:]

Marketquant - When you cite Wh/kg are you referring to Gravimetric or Volumetric specs? Also you should know that Phostech (Sud Chemie) doesn't make batteries. LiFeBATT uses their raw materials and makes batteries as does A123 & Valence but they do not use Phostech raw materials.

John - No your example is flawed in terms of the weight loads you cite. For those examples I would simply recommend using Pb tech. For vehicles like the Aptera that weigh 1,500 - 2,000 lbs.
however changes the equation and tips the balance more toward Li-ion.

For conversions of existing vehicles I always recommend Pb due precisely to the weight and cost considerations. If you are starting however with a blank piece of paper and are designing a new vehicle and you ask any designer if he is considering using Li-ion - I think the answer is a resounding YES! That is also the market that we are targeting.

So we basically are in agreement here. Bell curve be damned - we are where we are.

Don Harmon

Apr 20 03:31 PM

[Don Harmon:]

Speculawyer.....check out this link: www.lionev.com/

Don Harmon

Apr 20 03:49 PM

[Don Harmon:]

Speculawyer.....check out this link: www.lionev.com/

Don Harmon

Apr 20 03:49 PM

[John Petersen:]

Don, I've never seen the cost data on Aptera and would hate to criticize it without a solid basis. Light is essential if you are looking at pure EV power. But I think the basic lesson for all of us is for electric transport to work we are going to need to do things differently and probably more slowly (except with respect to E2W) and that will be a long hard education process.

Apr 20 04:33 PM

[Don Harmon:]

Speculawyer - That's Thundersky from China packs. No BMS, chech the warranty? and be careful with this before you just jump in for the low price! I won't comment any further and sorry the link I sent you was for a pure EV conversion.

AFAIK, no company out there exists for a Dual Mode conversion unless you want to consider Propane? Yikes!

Don Harmon

Apr 20 07:01 PM

[Don Harmon:]

E2W? "enhanced early warning". You lost me here?

Don Harmon


On Apr 20 04:33 PM John Petersen wrote:

> Don, I've never seen the cost data on Aptera and would hate to criticize
> it without a solid basis. Light is essential if you are looking at
> pure EV power. But I think the basic lesson for all of us is for
> electric transport to work we are going to need to do things differently
> and probably more slowly (except with respect to E2W) and that will
> be a long hard education process.

Apr 20 07:07 PM

[John Petersen:]

Don Harmon, E2W is the latest acronym from the UC Davis crowd for "electric two-wheelers," including motorcycles, hybrid scooters, E-bikes and presumably the PUMA. A new report on the Chinese market for these beasties which are apparently selling at an 8 million unit per year clip is at:

pubs.its.ucdavis.edu/d...

Apr 21 12:31 AM

[John Petersen:]

A new slideshow from Scientific American on how HEV technology is being adopted in commercial trucks is available online at:

www.sciam.com/slidesho...

Apr 21 01:35 AM

[John Petersen:]

Toshiba has just announced improvements that boost the energy density of its Li-titanate batteries to about 100 Wh/Kg.

techon.nikkeibp.co.jp/.../

Apr 21 09:31 AM

[marketquant:]

I think that some news organizations got it wrong, but some got it right. Most report that the power density was improved (to 3,900 W/kg, 90 second recharge, sampling in fall 2009), rather than improving the energy density. There is no news release (in English) on the Toshiba SCiB site.

Alti has had 4000 W/kg on their spec sheet for a long time. And as I mentioned before, a 30 second recharge version coming soon.

Anyhow, if Toshiba gets close to Alti's specs this may be good for them both -- battery buyers like to have multiple sources. The single sourcing problem could potentially be a drag on Alti sales -- they are so small after all.

Apr 21 04:28 PM

[adamnb:]

Hi M:

Could you provide names (or links) to the best conversion companies. I'd appreciate it greatly.


On Apr 19 12:27 PM marketquant wrote:

> > "rapid implementation of Axion's gas-guzzler to dual-mode EV conversion
> initiative"
>
> At a recent meeting of the Calif Air Resources Board, conversion
> companies were reminded that modifications to existing vehicles (which
> affect the behavior of emissions systems) violates California State
> laws covering "tampering" of vehicle emissions systems (due to the
> potential to cause more "cold starts"). A123 has the only state
> sanctioned exemption to this law (for 500 vehicles).
>
> My guess is that vehicle manufacturers have enough lawyers to prevent
> widespread conversion of old vehicles using environmental F.U.D.
> tactics and other regulatory/legal terror.
>
> CARB doesn't even have a definitive plan for testing the emissions
> of *new* vehicles that can run sometimes fully in EV mode, and may
> potentially have multiple "cold starts".

Apr 21 08:33 PM

[adamnb:]

I'd also like to know more about these conversion kits. Also, I have not seen any info on ev being effective on heavy long distance trucking (18 wheelers). Anyone have any promising leads?


On Apr 20 07:17 AM renim wrote:

> Hi
> I'm not a geologist, but i was a mining engineer. The way I see
> lithium ore is that its not rare, just not enough valuable enough
> to mine when cheap brines are available. I'ld place it comparably
> close to lead ore in value...but historically not valued or explored
> for.
> LiFePO4 batteries have a low lithium content, low enough that BYD
> doesn't even call them lithium batteries but ferrous phosphate batteries.
>
> PbC battery has large potential, for mild hybrid use (honda/toyota)
> i see it as compelling, (see article on 'ultrabattery' and honda
> hybrid.
>
> i'ld like to know about about these dual mode kits and thier availability
> for pickup truck.
>
> i read somewhere that BYD had demonstrated that their electrolyte
> for EV batteries was available in an edible formulation!

Apr 21 11:53 PM

[John Petersen:]

adamnb, I'll try to get some information for you but public companies like Axion are often reluctant to identify their partners until a project is ready to go. So I don't know how successful my inquiries will be.

Straight EV conversion companies that readers recommended are:
www.lionev.com/
www.diyelectriccar.com

I don't think we will ever see electric long-distance trucking because of battery costs and mileage constraints.

Apr 22 01:39 AM

[Juan Carlos...:]

John, for a comprehensive critique of Jack Lifton´s, please see the following link: seekingalpha.com/insta...



On Apr 20 01:00 AM John Petersen wrote:

> Juan Carlos, all I can do is refer you to Jack's most recent article
> here on Seeking Alpha. The link is:
>
> seekingalpha.com/artic...
>
>
> One of the nice things about being a lawyer and investor is I don't
> have to decide which position is "right" because the mere fact that
> so many conflicting opinions exist is enough to make me uneasy. So
> far, Jack is the only commenter I've seen on the subject who does
> not appear to have an axe to grind or an industry to promote.
>
> Don Harmon, did you even bother to look at the graph on Slide 9 of
> the DOE's Annual Energy Outlook 2009 Early Release slide presentation.
> If not, you really should:
>
> www.eia.doe.gov/oiaf/a...
>
> Slide 9 clearly shows that the DOE believes cars with plugs will
> represent between 5% and 10% of the market in 2030. Ignoring information
> you don't like does not make it go away. Neither will lengthy quotes
> from a Li-ion promoter.

Apr 22 08:08 AM