White House Report: GM Volt Is Not Ready for Prime Time 91 comments
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This extraordinary conclusion has been public for weeks but I've not seen it reported by any mainstream media. I would have missed it entirely if Plug In America, an EV industry trade group, hadn't made a point of issuing a press release that was drawn to my attention by one of my readers. While the White House did not specifically lay the Volt's problems at the feet of the battery industry, Plug in America did. In their refutation of the auto industry task force report, Plug in America said:
California law requires that the Volt and other plug-in hybrids come with a 10-year warranty. To ensure this longer life, automakers are as much as doubling the size of the battery pack, increasing cost to manufacturer and consumer. But not a single production plug-in electric vehicle sold to date, from GM’s early EV1 to today’s Tesla, has had a warranty of more than five years, noted Plug In America advisory board member Chelsea Sexton.
“To support early deployment, California should relax the warranty requirement for cars like the Volt to five years, phasing to 10 years over time,” said Sexton, a former GM employee. “This alone could cut the number of batteries required by as much as half and reduce the cost of each vehicle by thousands of dollars."
The warranty reduction would not impose added liability on GM or consumers, Sexton noted, because President Obama has said the federal government will guarantee the warranties of GM and Chrysler vehicles should they go bankrupt. And dealers can sell extended warranties, providing additional security for consumers who want it as well as revenue when auto companies need it most.
In January 2009 the DOE released its 2008 Annual Progress Report for the Energy Storage Research and Development Vehicle Technologies Program that concluded Li-ion batteries were not ready for prime time in PHEV and EV applications. In March 2009 the President's auto industry task force issued a report that the GM Volt, the first Li-ion powered PHEV proposed by a major manufacturer, was not ready for prime time.
Is anybody out there listening to the facts or are the PR jungle drums from a few undercapitalized Li-ion battery developers simply drowning out the voice of reason and prudence?
Cheap Li-manganese batteries from LG-Chem and $7,500 in Federal Tax Credits are not enough to make the Chevy Volt commercially viable. Comparable batteries from Ener1 (HEV) were not enough to keep Th!nk out of fiscal reorganization in Norway. More expensive Li-phosphate batteries from A123 Systems are unlikely to keep Chrysler out of bankruptcy. While Li-phosphate batteries from Valence Technology (VLNC) and comparably priced Li-titanate batteries from Altair Nanotechnologies (ALTI) are being tested in hybrid transit buses and other commercial vehicles that may put enough stress on the batteries to justify their high cost, none of the companies I criticized last July has demonstrated any ability to meet the challenge and do the heavy work of powering America's transportation future.
I love the Li-ion batteries in my laptop and cell phone and believe Li-ion is an excellent choice for applications like electric two-wheelers (E2W) and other vehicles where there is a rational relationship between vehicle weight and passenger weight. But it is high comedy to suggest that Li-ion batteries will ever be able to power 300 pounds of passengers and 3,000 pounds of steel for 40 or 50 miles at highway speed. It's like using 5,000 golden hamsters to pull a stagecoach when what you really need is a horse.
I've been rational, analytical, courteous and engaging for the last ten months, but it's high time for somebody to stand up and call bullshit on the shameless Li-ion hucksters who have nothing to offer but happy-talk forecasts and hype! It's also high time for taxpayers to stand up and say "Not with my money you don't!"
America's leading Li-ion battery developers including Altair Nanotechnologies, Ener1 and Valence had combined losses of $93 million on $42 million of 2008 sales, yet they sport a combined market capitalization of $1 billion. In comparison, America's leading lead-acid battery manufacturers including Axion Power (AXPW.OB), C&D Technologies (CHP), Enersys (ENS) and Exide (XIDE) carry a comparable combined market capitalization even though they had combined profits of $140 million on $6.2 billion of 2008 sales.
Something is dreadfully wrong with this picture. Summary data for each company follows.
| Price Per Share | Mkt Cap (millions) | Sales (millions) | Income (millions) | ||
| Altair Nanotechnologies Inc. | ALTI | $1.29 | $120 | $6 | ($29) |
| Valence Technology Inc. | VLNC | $2.22 | $273 | $29 | ($21) |
| Ener1 Inc | HEV | $5.40 | $613 | $7 | ($43) |
| $1,005 | $42 | ($93) | |||
| Axion Power | AXPW.OB | $1.40 | $49 | $1 | ($11) |
| C&D Technologies | CHP | $2.10 | $55 | $375 | ($8) |
| Exide Technologies | XIDE | $4.66 | $352 | $3,698 | $58 |
| Enersys | ENS | $13.96 | $670 | $2,162 | $101 |
| $1,126 | $6,236 | $151 |
For months my message to storage sector investors has been simple: the energy storage sector will ride the crest of an investment tsunami as we enter the cleantech revolution, but cleantech is all about price vs. performance and there is no room for irrational expectations. The DOE has said the same thing and now the President's auto industry task force has joined the chorus. Lithium dreams have become an investor's worst nightmare. It's time to wake up and smell the coffee, go to work and solve our problems to the best of our ability with cost-effective technical solutions like compressed natural gas and advanced lead-acid and lead carbon batteries.
The airbrushed Li-ion centerfolds may have serious investment merit in the future, particularly if somebody in the EV world develops a product that is proud to be an EV instead of pretending to offer the functionality of a family car. But that day is not today and investors need to stop deluding themselves. Cool technology that cannot provide a cost effective solution to real world problems has all the nutritional value of rainbow stew. So let's stop wasting time and money on feel-good solutions that cannot work and get to work solving the problems with readily available and cost effective technologies.
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 (XIDE) and Enersys (ENS).
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This article has 91 comments:
They seem to be very close to producing a long range highway speed vehicle that costs under $30,000.
Bought ZNNMF on Wed.
The dumbest thing we could do is not stimulate these firms. Of course they are losing. And that is partially due to poor historical policy to create incentives for better technology, manufacturing, and cost reduction. Subsidized gas instead of subsidized EVs and batteries.
It will be expensive. But stimulating these companies is necessary.
Battery technology and vehicle design must be parallel processes and must be continuous. We may end up driving GM/Segway PUMAs instead of sedans, but it won't happen with US batteries if we sit on the sidelines.
And remember, half of the battle is getting consumers used to the idea of using a different type of vehicle - this needs time, momentum, and marketing. It won't happen unless there are incentives from the consumer and producer sides, and unless alternatives (combustion horses) ado not have their carbon mitigation costs priced in.
$27 billion manufacturer incentives, $7500 consumer subsidy, government purchase of EV fleets, and gas tax for $3.50 gas. This is the formula for change.
Once again you have hit the nail on the head. Li-ion battery technology is not today economical, and no one can say that lithium-ion technology is the final step, or even a good step, at this point, in the devlopment of a practical economcal storage battery. This has nothing to do with either the price of lithium or its availability yet these two factors are repeatedly invoked as market drivers. As you have said and proved above the politicians have conributed mightily to the creation of fantasy battery standards that are on their face suicidal to any hope of the future development of a practical lithium-ion battery.
As I keep saying, myself, accelerated testing as a standard for batteries is nuts. Battery electrochemistry and materials engineering is as much an art form today as a science. The most reliable way to meet a ten year warranty standard for a battery is to test it in real time for ten years! This means that even if the perfect technology were "discovered" today, we would not know it for ten more years! The costs of betting on any one technology to meet this standard for any company are astronomical. You would be betting the company on such a test, and you wouldn't know if you were going to have a failure until the entire 10 years had passed. Batteries are dynamic systems. They change over time. They are being addressed by politicians as if they were static systems, which don't change over time. What doesn't seem to ever change is the use of hype to inflate dreams until they burst.
User 401296, on my author's screen your name comes up as Steven Chu. While I know that many users on sites like Seeking Alpha adopt pseudonyms, I will assume that I'm addressing the DOE Secretary.
SAFT has the strongest Li-ion battery packs I've seen anyone talk about, but even those are based on "Saft’s Intensium Flex modular, rack-mounted Li-ion modules." The individual cells are still 3.6 V and a maximum of 22 Ah (.079 kWh) and we are still talking about thousands of hamsters. While Asian batteries are being sold in massive quantities for portable devices everywhere, I have never heard anyone bragging on the wonderful performance they're getting from their portable devices. The batteries never perform as advertised and die far too soon. Expecting overnight improvements of several hundred percent is not reasonable.
At the end of last month, Moil Corp, the only profitable North American manufacturer of Li-ion batteries was forced to close its doors because of the recession and Asian competition. They had a dedicated factory for power tool batteries and some of the best scientific and manufacturing minds around, but they could not profitably manufacture and sell Li-ion batteries. When I look at the Li-ion centerfolds, I see no manufacturing prowess, no resources to cover any part of plant construction costs and no resources to cover start-up expenses, inventories and accounts receivable. There is not a Li-ion producer in the country that could even consider building a new factory without needing $100s of millions in new financing and nobody in their right mind is going to finance a raw start-up at the current nosebleed market capitalizations these companies carry.
I agree we need to be spending immense amounts of money on research and development because all of the current battery choices are inadequate. But spending billions on factories to make experimental products that people cannot afford is not sensible. Support research for Li-ion, carbon nanotubes and any other bright ideas our scientists may have but manufacture proven and cost effective products - even if they are not as cool.
Vehicle design is critical, EVs need to stand up and be proud for what they are instead of trying to masquerade as cars. The PUMA is a brilliant concept as are many of the other E2W proposals. But using batteries for a 3,000 pound car simply cannot work.
The whole battle will be getting Americans used to the idea that their car is for commuting and alternatives like high speed rail are for distance. A car is a tool, not a love object. It's fundamentally a problem with the American psyche and the lack of reasonable alternatives. I'm tickled to hear that the government is going to support high speed rail, but as my colleague Tom Konrad noted yesterday, the current HSR proposal is a mere drop in the bucket.
I'm firmly in the agnostic camp when it comes to carbon mitigation. I've read the studies on both sides and am not convinced either way. So I'll take a pass on the carbon debate.
I live in a country with very high gas taxes and can't remember the last time I spent less than $5 a gallon for gas. I fully support those taxes to encourage me to use the readily available alternatives like HSR that I have at my disposal. I could never support those taxes if there were no alternatives.
The plan for change Vice President described for the ARRA grants is pure genius. Make government funding available in reasonable amounts to companies that have enough substance to get their own matching funds. Right now the Li-ion centerfolds are trading at obscene prices because investors think Steven Chu the money fairy is going to make them all obscenely rich regardless of merit. Please don't do that.
I dissagree with your lunacy to abandon Li-ion battery tech. Was it not you who said that computers would never be practicle? History repeats.
I have read your pieces on a regular basis - thanks for all the thoughtful content. I have a small position in AXPW, but have enjoyed the recent bounce. I plan to buy more on any pull backs. I also have a position in MKTY which has a core idustrial instrument measuring business, but has sunk a lot of effort and cash into perfecting a methenol fuel cell for off the grid power designed for laptops, cell phones, cameras etc. They plan to market it in several forms: external power source, clip-on attachment, and internal to products made by established electronics manufacturers. They are in the process of finding partners for end-product applications. They have recently developed a cartrige-type refill mechanism that should be more excepted by customers used to regular batteries. If they are successful in bringing this "off the grid" power source from the lab to the market place they could be very successful.
Finally, my question:
I can't help thinking that on a larger scale this technology could be used to potentially power a vehicle, and range problems of electrically charged battery powered vehicles may not be an issue. I have no idea of the power density requried, and if this technology would be feasible, but thought you might be able to share some insight.
User 401208, fuel cells are so much more complicated than batteries because of the need for fuels like hydrogen and methanol. Since I'm truly a neophyte in that area, I don't have much to offer.
We need to have economies of scale in order to reduce the cost of the Li-ion batteries. In order to have economies of scale we need two things: Demand for the product and capacity to make the product. At current time, we have neither. Therefore, the govt. (rightly or wrongly) is going to facilitate both the demand and the capacity. The price will come down. The technology will also advance in the two areas of chemistry and manufacturing as the U.S. (world) push forward this energy manifesto. You do not necessarily have to like it. However, the reality is that price, demand, capacity and technology improvements are inextricably linked. IMHO
On Apr 24 10:06 AM John Petersen wrote:
> Windswept, you are misquoting me. I like Li-ion for appropriate applications
> but believe the current fervor to make 3,000 pound vehicles run on
> Li-ion or any other batteries is foolishness in the extreme. The
> battery options we have suck. We need something better. But we do
> that with research and development and testing, not building factories
> for bad products in the hope that things will get better.
>
> User 401208, fuel cells are so much more complicated than batteries
> because of the need for fuels like hydrogen and methanol. Since I'm
> truly a neophyte in that area, I don't have much to offer.
You haven't commented on the electric hybrid car (BYD F3DM) now being built in China.
There's a lengthy article in the April 27, 2009 edition of Fortune magazine expounding on the virtues of the car and batteries, the total creation being built in house.
The batteries are so green the CEO even drank a glass of the electrolyte fluid... although he said it didn't taste good.
Anyway, Warren Buffett bought 10% of the company so it's good enough for him, it seems. What's you opinion? (Please read the article first ) ...Cheers...
By the same token, we likely have one real shot at this effort to turn our economic base into cleantech industries because it will be a long time, if ever, before our government will be able to invest this kind of money into our industrial complex. We have to make this work.
As far as the energy storage piece of this industrial revolution goes it would be foolish to gamble on focusing on the development of Li-ion batteries for large scale energy storage like cars and alternative energy storage like wind, geothermal, solar, etc. Thus, my analogy; it's a gamble we can't afford to make at this juncture.
If I understand him correctly, John isn't against Li-ion technology. In fact, he praises the technology. Nor is he saying we shouldn't be trying to develop that technology, and that's not a point I'm trying to make either. The onetime tremendous financial push that the government is prepared to implement has to go toward something that we know can work for us now, and then as the technology is helping us move forward in this incredible social/technological sea change we can continue full bore on improving all forms of energy storage, lead-acid, Li-ion, fuel cells, ultracapacitors, and every other potential form of energy storage, even some we haven't thought of yet. But we disparately need what works for us now.
Correctly me if I'm wrong, but it's my understanding that EnerSys, has fairly recently developed a Li-ion battery and yet the engine that continues producing strong profits for them is the lead-acid battery. My point is, they continue to improve energy storage batteries, but in a way that allows them to produce the necessary revenue to fund their R&D. Compare that to, say, Valence Technology, that has a negative cash flow and a very heavy accumulation of debt. I ask, which of these 2 companies are in a better position to fund battery development through their R&D departments? After this initial stimulus funding from our government the rest will have to come from the companies themselves. We can't afford to gamble our country's future on a risky venture, and that's what we would be doing if too much of this stimulus money goes to building plants for small Li-ion companies.
They also have a net stockholders equity of roughly $1.25 billion.
Buffet bought 10% of the company last year at a post-money valuation of $2.3 billion, which is less than 1x sales and roughly 15x earnings.
None of the Li-ion centerfolds are even in the same league.
In my experience, small companies fail at the transition point where they try to move a technology from a laboratory to a factory. None of the Li-ion centerfolds have the necessary experience to do that critical job. In any event, you don't put a brand new corvette into the hands of a 16 year old and you don't put a billion dollar factory into the hands of a company that has never made or sold a product.
I agree that we only have one chance to do this right and we have to rely on our strengths instead of hoping for magic.
Zenn is merely a backdoor way to buy EEstor.
Even if Zenn isn't successful at making a car, they have the right to buy up to 10% of EEstor.
Because EEstor is privately held, and has the best technology in the industry, you might want to open your eyes and take a look.
Your clever, but not entirely correct. It is true the approximately 80% of the COST of the current Li-ion h energy bats is in the materials. 50% of that cost is in the Cathode material. The overal costs charged to the OEM (battery buyer) includes a mark up of approx. 1.55 of material costs (Argone National Labratory Report see attached link) Which includes R & D amortized costs. Scale production will reduce this mark-up per unit costs significantly.
Here is a quote from Christian Science Monitor:
features.csmonitor.com.../
<<Still others say that the cost of new battery power for PHEVs may drop faster and already be lower than what has been widely reported at perhaps $500 per kilowatt-hour or even less, says Suba Arunkumar, analyst for market researcher Frost & Sullivan.
“I do expect the price will come down to perhaps as low as $200 per kilowatt-hour when mass production begins in 2010 and 2011,” she says.>>
We all can drink our own Kool-aid and claim it taste good but it needs to hold up to a taste test. Does yours?
Link to Argone National Labratory report: transportation.anl.gov...
On Apr 24 10:25 AM John Petersen wrote:
> windswept, economies of scale are almost impossible to achieve in
> an industry where 80% of product costs represent the costs of raw
> materials. There is no commodity cost fairy and there are no magical
> economies of scale that could be realized. If significant potential
> for economies of scale existed, the Asians who make millions of cells
> per year would have already optimized them and Li-ion batteries would
> not cost $700 to $1,000 per kWh.
transportation.anl.gov... -
The main competitive advantage of BYD, I think, is that it is always able to switch out a defective battery and study the problem with a view to solving it. BYD can carry out the world's perfect beta test. If there is a battery failure, not caused by the driver, the customer gets a new battery and BYD gets data. BYD is one of if not the world's largest maker of lithium-ion batteries for personal electronics, so its R&D from its vehicles is added value to its research on scale up.
No other car maker has the advantages of BYD in the devlopment of an EV. If there are to be any winners in the li-ion EV race BYD will be one of them almost certainly. Of course they will have to learn about competitive fit and finish, impact protection, airbags, color matching over large surfaces, and so forth, but, they can always hire ex-GM and ex-Chrysler engineers for that.
It's amazing that the lithium promoters do not realize that if they drive up the cost of lithium to the heights they imagine they will kill the goose before it lays an egg.
windswept, did you read the part of my profile about earning my CPA certificate in 1981? I fully understand cost accounting, manufacturing margins, indirect overhead R&D amortization and all of those other complex financial calculations. I also know that there will not be any material economies of scale for decades.
In recent correspondence with the analytical staff at Argonne, they advised that a current battery cost paper would be coming out this summer. I can't wait.
noapplefanboy, the real reason for the 16 kWh capacity and 10 kWh operating range was the ability to downgrade to a cheaper Li-manganese chemistry instead of a safer Li-phosphate or Li-titanate.
Jack, the correct link for the 2000 vintage Argonne Laboratories battery cost report that windswept referred to is:
www.transportation.anl...
Their detailed cost analysis and projections are in Section 6. I've reviewed the numbers and don't see where the cost savings are going to come from unless somebody finds a fairy godmother.
The auto industry is actually a small segment of the overall storage market. I see numbers of $15 to $20 billion for automotive and $75 to $100 billion for the overall number. But if EEstor succeeds, it will obviously take all those other applications too.
I don't want to seem like a heartless cynic, but I've been burned so often by the hot that I blow on the cold until I can conduct a detailed due diligence investigation. Since it is impossible to do due diligence on a stealth company, my only alternative is to sit by, wait and watch for tangible developments.
Regards
On Apr 24 02:13 PM SouthernCEO wrote:
> I believe I'll keep my Corvette. I haven't driven a Volt but I recently
> drove a Prius for the first time. What a joke. Other than being
> uncomfortable and powerless it was great. I don't like small cars
> to begin with but small and powerless is just too much. If the battery
> technolgy is not ready then why mess with this now. When I can buy
> an electric Vette that runs like my gasoline model then give me a
> call. Until there is a product that people don't have to make excuses
> for leave me out of it.
The new Argonne costs analysis due out soon will surely show that the LI-ion batt costs are coming down. Care to comment on the Christian Science Monitor article I formely attached. Is the analyst who states LI-ion costs will come down to $200KWH crazy stupid?
Pre do tell us major investor in alternative battery technology or as you say CPA.
speculawyer, the White House report was issued three weeks ago and were it not for a link at the bottom of an obscure article on the lithium Hummer H3 it's conclusions would never have come to my attention. I can't accuse anybody of suppressing information, but it sure hasn't been headline news. So the more accurate entry would have been:
Even the White House says Li-ion batteries suck, not to mention the DOE and every commenter with a calculator.
You and I have been having this same argument long enough for you to know full well that I don't think any vehicle with a plug other than an ultra-light or an E2W will work. That opinion won't change regardless of whether we are looking at Li-ion, lead-carbon or any other battery chemistry presently known to man. This is basic economics and cost accounting, not technology. You cannot use batteries to move 300 pounds of passengers and 3,000 pounds of vehicle at highway speed. You can give me examples of ideas that will ultimately fail until hell freezes over but the examples do not and cannot trump economics.
I am amazed that you think that just because GM chose to bet on a lithium-ion battery that it must be the right thing to do. What do you think of Toyota's bet on the nickel metal hydride battery hybrid which lost money for years while Toyota made money overall? GM has not made one cent of profit in more than 6 years by contrast. GM's game changing mistake was not to go head to head with Toyota at the beginning. It should have continued to make and refine the EV1, which today would be using Axion battery technology, and GM should have simultaneously begun producing a hybrid using the nickel metal hydride battery technology patented by Energy Conversion Devices, the production plant of which was origianlly about 5 miles from the GM Tech Center.
The reason that none of that happened is the short sighted, share price oriented outlook, of GM's money manager executives. GM has been actually bankrupt for years. The government is just the latest in a series of suckers who bet that GM is too big to fail.
Lithium cobalt oxide batteries have been produced commercially since 1991; they were scaled up to meet the demands of laptop computers successfully. There is no guarantee that cobalt or any other technology can be scaled up successfully.
Only politics has driven the lithium craze, not performance, reliability, durability, cycle life, or safety, and it will end when the money needs to be used somewhere else. The lithium clock is ticking down.
Good advice John.
Altair Nano is one of 14 members of the National Alliance for Advanced Transportation Battery Cell Manufacture which includes Johnson Controls-Saft, and Enersys -- which will use gov't funding to build Li manufacturing in the US.
Altair Nano is also one of 9 members of the Defense Advanced Battery Manufacturing Coalition which includes Delphi and Saft -- which will also focus on domestic production capability.
It appears presently the Chinese require most if not all of there supplies. What would be the best investment vehicle for utilizing these rare earth elements, which appear to be rate limiting step in most battery technologies? Lynas Corp? Arafura Resources? Ivanhoe? Avalon?
Your view of Li-ion technology seems one of a dedicated historian. What is past is prologue. But a close reading of history demonstrates that while young upstart companies lose money that does not guarantee all will continue to lose money. After all, history does has its Microsofts.
Further to my view of your well written articles, it is not really news that the Chevy Volt is not ready for prime time. If it were, the Volt would be in showrooms. And to suggest that somehow the failure of GM or Chrystler is somehow related to the failure of Li-ion technology is, well, blaming Microsoft's next operating system for its failure to increase the profits of this quarter.
No, I believe your love for lead acid is due to your substantial and appropriately well disclosed position in that technology. I'll be interested to read how your postings re Li-ion and your positions re that technology evolve over these next couple of years.
Best regards,
Freya, I could never criticize anyone for speculating on something they think could be a world changer. EEstor may turn out to be everything you hope. I'd just like to see some hard data. Zenn has obviously been good to you so far with a 121% gain. Since I started buying Exide Enersys Active Power and ZBB at the end of last year my non-Axion holdings are up 187% and I think they still have a long run in front of them. They probably won't be 10 or 20 or 30 baggers, but they'll be sound long-term performers that let me sleep nights.
jimp, Jack Lifton is a Seeking Alpha author who has a great deal of expertise in rare earth and other strategic metals. He's the guy I listen to and you could do a lot worse.
I like lead-acid and lead-carbon because the economic equation works. As the fundamental economic facts change, so will my opinions. I think all of this is highly urgent business. As a matter of personal preference I'll buy products from LVMH without blinking an eye but you'll never find me in a WalMart. As an investor, WalMart wins hands down over LVMH because WalMart is where the money is.
I am not sure that the 2008 Annual Progress Report you refer to did indeed conclude that Li-ion batteries were not ready for prime time in PHEV and EV applications. Would you be kind enough to tell me where exactly in the report one can find such conclusion?
In a recent EV World.Com blog I expressed my astonishment at the main conclusion of the Obama Audit Task Force (OATF) regarding the Volt, simply because it failed to understand what advanced “green” car technology really means.
Your argument on lithium batteries is centered in the US battery industry and overlooks all progress being made in particular with lithium iron phosphate (LFP) batteries in China, for example. FYI, in my presentation at the inaugural Lithium Supply & Markets Conference recently held in Chile, I argued that “LFP batteries, which (following The Economist) appear to cost now roughly half as much as rival lithium based designs, are likely to reflect an even more pronounced downward trend in cost in the coming years”.
Lastly, as I presume you didn´t read my reply to your comment on my latest Seeking Alpha article, I hereby duplicate it to make a final point.
"John,
Regarding the reliability of future supplies of lithium I can only tell you that the market will find its way. The lithium era is irreversible regardless of what we do or feel. As I mentioned in my rejoinder to Jack Lifton, it´s just a matter of timing. In this context, two events may delay the inauguration of the sixth techno-economic paradigm with lithium as its main factor. First, a postponement of the Volt launch by GM or what is left of it. Second, a late introduction of Bolivia into the lithium market. In the first case, we will have to wait for a while until the Chinese come to the US or Project Better Place begins to operate in many urban centers of the country as well as in the countries with which it has signed business agreements before it spreads to the rest of the world. In the second case, there is a chance that by the time Bolivia enters into the market it might be too late; until then, the world could take hold of something else with the end result being a shortening (not cancelling) of the lithium era.
When it comes to a change of paradigm, there will always be red flags and risks, as well as winners and losers. Indeed, red flags and risks are inherent to any innovation process. Regarding winners and losers, please take a look at my 2008 EV World.Com paper where I have developed an argument in relation to what I call `resistance to change`. Of course, probable losers of the game will oppose the new emerging technology regardless of what I (or anyone else) can do to convince them."
As reported by The Economist there is at lest one type of Li-ion battery that is today economical: Lithium Iron Phosphate (LFP). Unfortunately, this is not the kind of battery the Volt will use.
It is simply unbelievable that you think we have to wait 10 years to test a Li-ion battery. That is probably a good approach to drug testing, not battery testing. If GM has decided to grant a ten year warranty for its Volt batteries, it´s GM´s problem, not yours. If you buy a Volt car you have to believe its battery will last 10 years. If it doesn´t, then you have the right to ask for a replacement. As simple as that.
On Apr 24 09:09 AM Jack Lifton wrote:
> John,
>
> Once again you have hit the nail on the head. Li-ion battery technology
> is not today economical, and no one can say that lithium-ion technology
> is the final step, or even a good step, at this point, in the devlopment
> of a practical economcal storage battery. This has nothing to do
> with either the price of lithium or its availability yet these two
> factors are repeatedly invoked as market drivers. As you have said
> and proved above the politicians have conributed mightily to the
> creation of fantasy battery standards that are on their face suicidal
> to any hope of the future development of a practical lithium-ion
> battery.
>
> As I keep saying, myself, accelerated testing as a standard for batteries
> is nuts. Battery electrochemistry and materials engineering is as
> much an art form today as a science. The most reliable way to meet
> a ten year warranty standard for a battery is to test it in real
> time for ten years! This means that even if the perfect technology
> were "discovered" today, we would not know it for ten more years!
> The costs of betting on any one technology to meet this standard
> for any company are astronomical. You would be betting the company
> on such a test, and you wouldn't know if you were going to have a
> failure until the entire 10 years had passed. Batteries are dynamic
> systems. They change over time. They are being addressed by politicians
> as if they were static systems, which don't change over time. What
> doesn't seem to ever change is the use of hype to inflate dreams
> until they burst.
>
seekingalpha.com/artic...
The "not ready for prime time" handle is my summary description and you'll not find those particular words in either the DOE or White House reports. But choice of words for a summary description does not change either conclusion. The technology remains too unproven, expensive and unreliable for its planned uses.
I agree that significant progress is being made, particularly in terms of cycle-life, power and safety. But each of those advances comes at the cost of sacrificing energy density, the one specification that everyone considers most critical because it limits EV range. I fully expect progress to continue at a faster rate than it has in the past, but understand that those advances are going to come in 5% to 7% annual increments, not the much larger increments folks anticipate. If you cumulate 5% to 7% advances over a period of several years the progress can be impressive and Li-ion technology may well grow into the shoes people want it to fill today. But the fact is we still have a toddler clomping around in his daddy's size 12 loafers.
With due respect, I've not seen reports in the economist or anywhere that say the Li-phosphate batteries are currently cost effective. Hard price points are devilishly hard to find, but there is enough information in the registration statement A123 filed last year to calculate their cost of goods sold at about $1,200 per kWh. Likewise I've got a regular reader who buys Li-phosphate directly from Valence and pays about $1,000 per kWh. The tragedy is that neither company seems to have any pricing power and they are both reporting gross profit margins close to zero. If you add a reasonable manufacturer's markup to cost of goods sold, you immediately get back to the current DOE estimate of $1,333 per kWh. The one thing I think both of us can agree on is that a company that can't make a gross profit on sales will never make up the difference on volume.
You and I both understand the compound nature of risks but most people don't. You and I both understand that:
1. If Li-ion producers cannot transition science to a factory their businesses will fail;
2. If Li-ion producers cannot slash costs their businesses will fail;
3. If Li-ion producers cannot find adequate raw materials their businesses will fail; and
4. If Li-ion producers cannot meet life-cycle and other operating specifications their businesses will fail.
We also understand, for example, that assigning a relatively low 25% risk to each factor results in 68% overall probability that the business will fail from one of the four causes. So while red flags are always present, when you have a long list of serious risks they need to be carefully studied and evaluated.
You and a lot of other readers assume that I have a visceral hatred of Li-ion or an overwhelming conflict because of my financial interest in lead-carbon. You're wrong. I like the technology and believe it will become far more useful and cost effective when it matures. I wholeheartedly support continued research and development. The things I strenuously object to are:
1. The over-hyped idea that any battery can be cost-effective when the vehicle weight to passenger weight ratio exceeds three or four;
2. The suggestion that any of the free-spending Li-ion battery developers will get to a point where they make money for investors.
Everybody wants to talk about technology. I want to talk about companies and in the Li-ion space the only one that is worth a tinker's dam it ABAT. They sell batteries into the E2W market where the vehicle weight to passenger weight ratio is right. They earn a solid gross margin on sales and even more importantly their annual SG&A compare favorably with the monthly SG&A figures at some of the other bloated pigs.
I've had 30 years of working with companies that had great technology and had no idea how to make money for investors. The developing technologies may prove to be fabulous, but with the exception of ABAT none of the companies has the discipline necessary to be successful, much less justify their current market valuations.
With respect to Jack's comments on testing, an engineering estimate based on rack results usually has little or nothing to do with end-user results because end-users are nowhere near as careful as computer controlled test devices and real world operating environments are far more challenging than computer controlled testing environments. I'm not entirely sure that you have to get 10 years of testing before you can confidently warrant a 10-year life. But it will take a minimum of three or four years in the hands of a large group of normal consumers before anyone has a realistic idea of what the likely answer is.
On Apr 24 10:25 AM Freya wrote:
> John: you have become jaded. I meant the news that the rest of your
> picks may become obsolete shortly in the EV area. The news is from
> Eestor not from Zenn.
>
> But heck, I can live with my 150% gain.
wisdom, I still hold some hope that Li-ion will become cost effective in the future. But for now mild hybrids without plugs are the only things that are even close to a cost-benefit balance. $100 a barrel oil may well change everything, but I don't expect to see that for another year to eighteen months.
William Taylor, EEstor reminds me of the South Sea Company, a company planning to "carry on an undertaking of great advantage" which would reveal that advantage to no one.
I strenuously disagree with Plug-in America's proposal for 5 year battery warranties. Every single Prius bash piece for five years after US launch claimed battery replacement would cost owners thousands every few years. Batteries must last the life of the car or the mainstream will reject the car. It's that simple. Niche marks like Teslacan get away with a 5 year battery but mainstream automakers cannot.
The first half million PHEVs will lose money. Down the road a $5000 pack (10 kWh @ $500/kWh) solves the problem. $5000 amortized over 125k EV miles is 4 cents/mile. Add a couple cents for electricity and you're still well below the 10 cents/mile for gasoline (25 mpg @ $2.50/gal).
I really appreciate you taking the time to point out that there was a distortion in their cost of sales due to an acquisition. Since I'm never happy without double checking, I went back and double checked the numbers. Sure enough, their average cost of goods sold was $1,447 per kWh in 2006 and $1,197 in 2007. So it appears the jump to $1,232 during the first nine months of 2008 may have been an aberration.
My sense is that costs of $400 at the manufacturer level may be a bit on the ambitious side, although BYD is talking about an $8,000 price difference for their PHEV with a 16 kWh battery. Overall, I guess we'll have to wait and see if the cost savings they hope for are attainable.
My biggest issues arise from the fact that most users are of any technology are idiots (including me). I can't remember the last time I read an owners manual cover to cover. I also can't remember the last time a laptop or cell phone battery even came close to the cycle life the manual said I could expect. To complicate matters, everybody is promoting batteries that have gone through enough rack testing to develop engineering estimates of cycle life, but nobody has put a reasonably sized fleet of test vehicles on the road in the hands of normal users to have any experience base for cycle-life claims in a very complex system like a PHEV.
I'm all for making several thousand and testing them under all possible climate and terrain conditions. But it seems preposterous to build billion dollar factories based on little more than computer controlled rack tests and hope.
I actually believe PHEVs will make sense somewhere down the road, particularly if I'm right about where oil prices are headed. But the current frenzy to build something that hasn't been thoroughly tested by guys in gimme caps seems like a real bad idea.
We're talking about productive, effective, efficient transportation; moving cargo, goods, and people both long and short distances. Right Thinking Required!
Hence, more electrified steel-wheeled rails takes care of cargo and goods and gets that off the interstates and off of diesel (less imported oil - do I still have to say that?? Well yes, even if it's biodiesel/biofuels). And no, I have not given up on electrified interstate FERRIES for goods and people (and their hybrids).
Electrified high speed rail will handle the busy people between major cities and get them out of commuter planes and also off the interstates (ahem! - less oil).
Inside beltways, electified rails takes care of the willing (yet, selfish) commuter, softened maybe by some rubber tired diesel/hybrid buses to take care of the last mile, doorstep issues, both ends.
As for the willing flex-route commuter, it's going to be a small-battery biofuel-hybrid with waste heat recovery thermionics powering a ChorusMotor (same as the busses, only smaller).
All these are possible maybe without the gas tax if we stop subsidizing oil, gas, coal. And by the way John, don't push the compressed gas rigs; push the biofueled diesel which you like, as a small-batteried hybrid.
Are you listening Steven Chu??
SouthernCEO - as for your ilk, the selfish thrillseeker - you will always be around just as the maucho off-road bigwheeler - some of that is in us all; that's why whores exist and we have what's called Adultery - but what's your normal everyday ride; sans Shakespears "no sooner had than wished not"?
Thanks again, John and Jack, for the best one two punch in battery information.
On Apr 24 09:49 AM John Petersen wrote:
> Freya, I'm up to speed on Zenn and its ownership interest in EEstor.
> But until EEstor starts talking and Zenn stops, I'll continue to
> assume that it's PR vaporware instead of real technology.
>
> User 401296, on my author's screen your name comes up as Steven Chu.
> While I know that many users on sites like Seeking Alpha adopt pseudonyms,
> I will assume that I'm addressing the DOE Secretary.
>
> SAFT has the strongest Li-ion battery packs I've seen anyone talk
> about, but even those are based on "Saft’s Intensium Flex modular,
> rack-mounted Li-ion modules." The individual cells are still 3.6
> V and a maximum of 22 Ah (.079 kWh) and we are still talking about
> thousands of hamsters. While Asian batteries are being sold in massive
> quantities for portable devices everywhere, I have never heard anyone
> bragging on the wonderful performance they're getting from their
> portable devices. The batteries never perform as advertised and die
> far too soon. Expecting overnight improvements of several hundred
> percent is not reasonable.
>
> At the end of last month, Moil Corp, the only profitable North American
> manufacturer of Li-ion batteries was forced to close its doors because
> of the recession and Asian competition. They had a dedicated factory
> for power tool batteries and some of the best scientific and manufacturing
> minds around, but they could not profitably manufacture and sell
> Li-ion batteries. When I look at the Li-ion centerfolds, I see no
> manufacturing prowess, no resources to cover any part of plant construction
> costs and no resources to cover start-up expenses, inventories and
> accounts receivable. There is not a Li-ion producer in the country
> that could even consider building a new factory without needing $100s
> of millions in new financing and nobody in their right mind is going
> to finance a raw start-up at the current nosebleed market capitalizations
> these companies carry.
>
> I agree we need to be spending immense amounts of money on research
> and development because all of the current battery choices are inadequate.
> But spending billions on factories to make experimental products
> that people cannot afford is not sensible. Support research for Li-ion,
> carbon nanotubes and any other bright ideas our scientists may have
> but manufacture proven and cost effective products - even if they
> are not as cool.
>
> Vehicle design is critical, EVs need to stand up and be proud for
> what they are instead of trying to masquerade as cars. The PUMA is
> a brilliant concept as are many of the other E2W proposals. But using
> batteries for a 3,000 pound car simply cannot work.
>
> The whole battle will be getting Americans used to the idea that
> their car is for commuting and alternatives like high speed rail
> are for distance. A car is a tool, not a love object. It's fundamentally
> a problem with the American psyche and the lack of reasonable alternatives.
> I'm tickled to hear that the government is going to support high
> speed rail, but as my colleague Tom Konrad noted yesterday, the current
> HSR proposal is a mere drop in the bucket.
>
> I'm firmly in the agnostic camp when it comes to carbon mitigation.
> I've read the studies on both sides and am not convinced either way.
> So I'll take a pass on the carbon debate.
>
> I live in a country with very high gas taxes and can't remember the
> last time I spent less than $5 a gallon for gas. I fully support
> those taxes to encourage me to use the readily available alternatives
> like HSR that I have at my disposal. I could never support those
> taxes if there were no alternatives.
>
> The plan for change Vice President described for the ARRA grants
> is pure genius. Make government funding available in reasonable amounts
> to companies that have enough substance to get their own matching
> funds. Right now the Li-ion centerfolds are trading at obscene prices
> because investors think Steven Chu the money fairy is going to make
> them all obscenely rich regardless of merit. Please don't do that.
>
>
>
price is raised via taxation then I say that the new solution is
a very poor one.
That is what I would expect from an agenda driven government,
not from a practical, thinking government.
New ways to do things should offer benefits unavailable
with the old way in such quantity as to command a higher price,
not because of a government distortion of the pricing system.
On Apr 24 08:57 AM Steven Chu wrote:
> The US only has the production capacity for hamsters - but Asia has
> horses. And they are Li-ion horses being sold in massive quantities.
>
>
> The dumbest thing we could do is not stimulate these firms. Of course
> they are losing. And that is partially due to poor historical policy
> to create incentives for better technology, manufacturing, and cost
> reduction. Subsidized gas instead of subsidized EVs and batteries.
>
>
> It will be expensive. But stimulating these companies is necessary.
>
>
> Battery technology and vehicle design must be parallel processes
> and must be continuous. We may end up driving GM/Segway PUMAs instead
> of sedans, but it won't happen with US batteries if we sit on the
> sidelines.
>
> And remember, half of the battle is getting consumers used to the
> idea of using a different type of vehicle - this needs time, momentum,
> and marketing. It won't happen unless there are incentives from the
> consumer and producer sides, and unless alternatives (combustion
> horses) ado not have their carbon mitigation costs priced in.
>
> $27 billion manufacturer incentives, $7500 consumer subsidy, government
> purchase of EV fleets, and gas tax for $3.50 gas. This is the formula
> for change.
>
Postings like your recent missives may be great fodder for Yahoo message boards where readers rarely actually take the time to check the links, but they won't cut it in a forum like this one that's populated by careful readers who actually try to understand the issues instead of looking for loopholes.
I frequently disagree with your positions because I believe them naive and credulous, but I would never try to restate your views or play the game of selecting tidbits and pieces of things you have written and tying to build a cogent argument from them.
Tax credits may change the economic equation for a purchaser, but they do not impact the fundamental economic value of a technology. You can tie a pork chop around an ugly baby's neck and the dog will play with it every time. But that doesn't make the baby cute.
Some months back I suggested that perhaps you should contribute your own articles to Seeking Alpha and stop commenting on mine. I still think that's a real good idea because we will never see eye to eye and I'm growing weary of repeatedly saying the same things.
I can explain it to you but I can't understand it for you.
The ultimate answer is going to be better mass transit, high speed rail and a lot of other options that Americans currently find unpalatable. But we cannot escape the fact that about 6 billion people have learned how 500 million of us live and we are either going to have to get more efficient, or die defending our god-given right to be wasteful.
While "perusing" Barnes and Noble bookstore for the latest books on the ancient Maya civilization, I noticed in the magazine section that the latest copy of Fortune has several articles on car batteries, including a good one on Warren Buffett's attempt to purchase 10% of BYD.
Recommended is for you to go down to your nearest Swiss newstand and purchase a copy.
By the way, an entire endcap at Barnes and Noble is now dedicated to the 2012 Mayan calendar "ending." Seeing some 20 books on the subject about such nonsense irked me to the point where I am right now printing out the near 800 pages of my manuscript. Next week, I will begin the long and arduous yet welcomed task of finishing it. The markets may do what they will, but I have a goal to author the benchmark historical epic on the ancient Mayan civilization.
I am going long with principally with banks, batteries, minerals, oil, and corporate bonds, with a little solar and geothermal. But most important, I'm going long with my novel, to be titled Maya: Spirits Of The Jaguar.
I'll be around from time to time, but I want to say thanks for all your sage advice and help in this little corner of the investment universe.
Time to rekindle a passion....
Continue your bullishness!
Bill Traster
(I hope my NYC agent remembers the above name!)
I appreciate that people can be passionate about certain technologies but I don't think passion is particularly conducive to rational analysis. Breathless commentary is also counterproductive as it leaves readers such as myself questioning the veracity and motivation of the analyst.
There also seems to be a 'fierce urgency of now', if you will, to some of the commentary in the EV space. I'd suggest it's slightly misguided. I'll try to offer some perspective.
Two main justifications are cited by EV proponents for the urgency of action: energy security and climate change (I won't bother with the peak oil debate since every second person will give you a different answer).
Energy security:
The depth of analysis here is fairly one dimensional: oil = bad. When this argument is used as grounds for switching to EVs, the implicit assumption that EVs enhance energy security is not analysed - it is taken for granted.
You have to look at the entire supply chain for EVs. All EVs need powerful motors to replace internal combustion engines. At present all EVs use brushless dc motors which contain permanent magnets. They all use Neodymium-Iron-Boron(NIB) magnets which have resource constraints. An AC motor (with no obvious resource constraints) alternative seems possible but I can't unearth information on the cost of AC motors (@Jack Lifton: you never mention this possibility in your articles, if you could analyse it and/or debunk it that would be helpful). The technical tradeoffs are described here:
www.teslamotors.com/bl...
Information on resource constraints associated with NIB magnets are detailed here:
www.magnetweb.com/Col0...
pubs.usgs.gov/fs/2002/.../
www.energyinvestmentst.../
And here by the good Jack Lifton:
evworld.com/news.cfm?n...
Suffice to say that they contain rare earth elements (which are very rare in mineable concentrations) and 95% were produced in China last year, which doesn't say much for supply chain diversification or for energy security.
Next there's lithium, the production of which will rely on Argentina and Bolivia if lithium EVs take off (cost differentials in extraction notwithstanding, @$17 lithium content/kWh, would you concede, Jack, that lithium prices could double or treble with little impact on the cost/kWh?). The production of new lithium will not happen overnight. Jack Lifton's articles elucidate on this fact and there's also a very good presentation here:
trugroup.com/Lithium-M...
Pick your poison: kiss King Abdullah's ring or grovel at Evo's door.
Both these facts do much, in my mind, to discredit the energy security rationale for the fierce urgency of now.
The second argument is climate change:
I'll throw some stats out there. Roughly 5% of global GHGs are attributable to the 625 million or so cars in the world:
vivekmohta.com/blog/wp...
50 million cars are sold per year. India & China have, respectivvely, 14 and 24 cars per capita with the EU having 300 and America 765. Supposing an ambitious 10% of America's 13m or so cars sold per year were EVs. EVs still pollute, depending on the electrical grid, over half the emissions/km of petrol vehicles.
First it would take roughly 10 years @ 10% EVs sold per year to achieve 10% penetration as older vehicles are traded in. For the purpose of agument, let's assume 10% American penetration by 2025 and static analysis. That's 13 million or so EVs. (13/625)*(0.5)*(0.05)=... reduction in global GHGs.
The numbers aren't exact but they provide perspective. It's quite clear to me that EVs will only tinker at the GHG margin for years to come.There are many other causes of global warming like deforestation (about 17%) which perhaps would warrant more urgency. Maybe because cars are the most visible and tangible they are most associated with global warming.
I'm not an expert and not in a position to judge but perhaps there is better bang for the CO2 reduction buck in other quarters? Perhaps we might act in other areas first and pause for breath when it comes to EVs.
In short, the fierce urgency of now may be unjustified. Perhaps trying to jump-start the EV industry is misguided? Allowing a couple of years to separate the wheat from the chaff is what might be called for. That's my 2 cents anyway.
Batteries were invented 100 years before the internal combustion engine. They will never catch up.
A tiny notebook computer can barely run 2 hours without a recharge
Tax payers will bail out GM with billions of dollars and then pay over $30,000 for a "green" ( over size golf cart ) vehilcle.
How "green" will these vehicles be when tens of millions of batteries end up in land fills ?
National security will be enhanced by producing more domestic energy. We can produce more oil today rather than wait 10 years to hope for a potential solution.
High Speed Rail will serve bureacrats, laywers, lobbyists, and school teachers on their 3 month vacations while being subsidized by small town America.
just get GM to sell the car without a battery, let someone put Axion inside or A123 inside etc. the volt has a 1litre generator/engine, its not like it wouldn't work really well with Pb C battery or with a Li Ion battery of some description.
but I suppose that is not how GM/Toyota/Ford/VW think, at least Nissan/Renault is doing a deal with Better Place.
oh yeah, there is also the Osborne problem here, the next model just around the corner is cheaper and better, (so don't don't buy the current one.)
just because Toyota and others are useless Brushless DC does not mean it will rule over AC, the difference between the two basically the Brushless DC has a couple of magnets attached, which assists in simplifying the controller and in cooling. But the controller is still an expensive controller. Industry uses AC motors, the momentum behind AC is massive and sets a cost limit to what Brushless DC can cost, because to switch from AC to Brushless DC or vis versa is not that hard.
To demonstrate the point that long range EVs can never be cost effective I assumed that a $500 per kWh battery would last for 10 years in a PHEV application and then laid out what happens to break even costs as EV range increases.
To demonstrate the point that expectations of future battery cost savings were unreasonable, I assumed that generally available estimates were accurate and showed that there had been no major change nine years.
In your analytical brilliance, you took a set of hypothetical numbers from column A and combined them with another set of hypothetical numbers from column B and suggested that they somehow proved your point.
I do not believe for a minute that Li-ion or for that matter any battery chemistry has a snowballs chance in hell of lasting for 10 years in a PHEV driven by guys in gimme caps. Computer controlled studies of battery performance are interesting first steps but they prove nothing. In a system as complex as a PHEV the only way to accurately estimate performance is to build several thousand prototypes and put them on the road for several years in the hands of normal people.
I do not believe for a minute that Ener1 can actually manufacture and sell Li-ion batteries for $660 per kWh. They hired a Korean company to build a couple of prototype battery packs for Th!nk and built a brand new battery plant in Indiana. While Ener1 consolidated in two months of revenue from cellphone battery sales generated by the Korean subsidiary that they bought last October, the core U.S. company has never manufactured or sold battery products for PHEV's or anything else. Their brand new factory in Indiana is a ghost town.
I do not believe for a minute that a typical user will think in terms of a 10-year vehicle life when calculating his potential savings. Most of us change cars every few years and all of us know that values collapse when the car leaves the lot. Most of us also think about things like resale value when we make a buying decision.
You insist on assuming away cost issues. You insist on assuming away cycle life issues. You insist on assuming away performance and safety issues. You insist on assuming economic metrics that an average purchaser will not consider reasonable. When all your assumptions line up perfectly, you can force the numbers to make sense. I'm proud of you. I still think you're naive and credulous.
Engstudent, I appreciate your support and your logical reliance on facts.
TCK, in a world where 6 billion people have learned how good 500 million of us have it, I think most green transportation proposals are mere salves for a guilty conscience; an excuse to increase waste while pretending to care. Producing more domestic oil will be tough as long as environmental interests keep the promising frontiers closed to exploration. Natural gas is another story and needs to be encouraged. The only place I disagree with you is high speed and commuter rail. These are both solutions that are long overdue.
renim, the fundamental problem is that the idea of cars with plugs is fatally flawed. It doesn't matter what battery you use, the economics don't work and until somebody comes up with something much stronger and much cheaper than current technology, they won't work. Straight HEVs without plugs can provide marginal benefits. EV's with a vehicle weight to passenger weight ratio of less than five may also work. Putting batteries into a four passenger sedan is doomed to the trash-heap of bad ideas.
Freya, I like ABAT a lot. They sell Li-ion batteries for the E2W market and throw nickels around like manhole covers. I can't speak as favorably about the others.
You seem to know something about AC motors, can you expand on your analysis? The head of engineering at Tesla thinks DC motors will be used for regular cars with AC reserved for high end applications.
Do you have any information on the volume and weight comparisons of DC vs AC? I think AC might be heavier and take up more volume with the need for that cooling system. It also seems the Volt will use permanent magnets:
www.sciam.com/article....
Is it just the expensive controller startup costs that puts companies off or are there other factors that make them decide on DC? Thanks
On Apr 26 01:14 AM renim wrote:
> engstudent
> just because Toyota and others are useless Brushless DC does not
> mean it will rule over AC, the difference between the two basically
> the Brushless DC has a couple of magnets attached, which assists
> in simplifying the controller and in cooling. But the controller
> is still an expensive controller. Industry uses AC motors, the momentum
> behind AC is massive and sets a cost limit to what Brushless DC can
> cost, because to switch from AC to Brushless DC or vis versa is not
> that hard.
Great Wall Kulla
Chery S18
BYD f3e
BYD e6
Zoyte (Dihatsu rip-off)
PHEV
BYD f3 dm
Haima 3 Electric Vehicle (mazda 323 like)
Brilliance BS-4 Hybid (not the mild bybrid version hybrid) rumor
i would say 90% of the above will be on the market in China within 2 years or less. and they are all Li Ion of some type tending to be LiFePO4. Although Wonder Auto Tech is setting up a factory for a cheap Pb based electric car.
On Apr 24 02:43 PM speculawyer wrote:
> Your driven hatred toward Lithium-Ion batteries is quite apparent.
> And in its stead, you propose the lead-carbon batteries that you
> have a large financial stake
>
On Apr 25 08:11 PM engstudent wrote:
[blah, I don't know thereof I write...]
Again thanks for your very in depth analysis of the energy storage area. You have said repeatedly that the big bang for the buck will be in large energy storage systems. Not Autos. Yet time and again your sceptics turn the argument over to Plug in Autos. We need to save oil in this world. No question. Hybrid vehicles save fuel now. Not years from now. An inexpensive battery system along with gas engines work. The cars and SUV's can have power, room, and help this country become self sufficient.
Please lets get off this insane argument over lion vs. lead . If anyone has read your articles and does not understand the arguments you won't be able to change their mind. As a comic says " You can't fix Stupid".
Your time is more valuable to investors with the information you make available.
So an investment question. Why has ZBB been such a hot stock lately. I looked into their technology and see it as a "dry cell" type storage device. It seems expensive ( $1,000 per k/w) but why are you a believer in the company?
Thanks again.
A couple months back I spent some time with ZBB's management and discussed the benefits of their flow batteries and the direction they saw the company heading. They have a great technology for end of grid and off grid installations that rely on wind, solar or diesel but could easily top off the batteries during the day and use the stored electricity for reduced night-time demand. With a market capitalization of only $16 million, solid financial statements and a partner like Eaton working marketing and distribution I expect great things out of ZBB, which is why I bought a little last year. As I recall, the price point I discussed with ZBB's management was closer to $500 per kWh, a number that ties back nicely to the cost table in the DOEs' July 2008 SEGIS-ES report:
www.sandia.gov/ess/Pub...
I still don´t understand why you - based on the DOE or White House reports - can conclude that “The technology remains too unproven, expensive and unreliable for its planned uses” given that: (i) the DOE report did not in fact conclude anything; and (ii) the White House report fails to distinguish between conventional hybrid technology (e.g. Prius) with range extended electric vehicles (e.g. Volt) thus invalidating any conclusion regarding the Volt. For an elaboration on the latter argument see my EV World.Com blog (evworld.com/blogs/inde...).
I presume the 5% to 7% annual increments you mention are extracted from your previous analysis about the progress Li-ion batteries made in the last 9 years. If so, your argument is misleading because, as I argued in my January 2009 Industrial Minerals article (www.indmin.com/Magazin...), real interest in Li-ion batteries for electric cars started only after GM´s announcement in January 2007 that by 2010 it will introduce the first mass-produced Li-ion powered plug-in hybrid electric vehicle (PHEV) into the market. Thus, to be correct, you may have to relook at the data during the last two years only.
Here is link to the The Economist´s article: www.economist.com/busi....
Finally, I am afraid you didn´t really respond to my argument that your analysis is centered in the US while the Li-ion battery business is elsewhere, particularly in China.
As far as progress trends go, we both know that the more data points one uses the more reliable the line is. Finding hard data is difficult to impossible because everyone plays their cards so close to the vest. In any event, trying to extrapolate from two years of data is a fools game and I'll not play it.
The economist article vaguely alleges that BYD has found a way to cut costs in half, and follows it up immediately with a skeptical view from a competitor. While you may have access to far better data than I, the only hard data I have from BYD is the price difference between their ICE and PHEV versions of the same car. That difference tells me nothing about manufacturing cost differences and nothing about management's willingness to take a loss on a low volume product to create demand for a higher volume product.
In an earlier response to earwig who asked about BYD I wrote:
"I read the Forbes article last week and thought "what a wonderful company." They have 120,000 low paid workers, roughly $3 billion in annual sales, roughly $625 million in annual gross margin and roughly $150 million in annual profit. Which means they make about the same amount of money as Exide and Enersys combined.
They also have a net stockholders equity of roughly $1.25 billion.
Buffet bought 10% of the company last year at a post-money valuation of $2.3 billion, which is less than 1x sales and roughly 15x earnings.
None of the Li-ion centerfolds are even in the same league."
BYD is a fine company and you'll never hear me criticize Buffett's investing acumen. ABAT is also a fine company. But extrapolating from two points to say the others are fine by transitivity is a fools game.
China has enough urgent problems with overcrowding, air pollution and a population that wants a better life to give a tinker's dam about what Americans want. Until China's population has mobility, the probability that they will take a little battery power away from 20 of their citizens who only want an E2W so that one American can have a lot of battery power for a PHEV-40 approaches zero.
It's been several days since I posted a question to Jack Lifton re: rare earth metals and their impact on this discussion and their investment possibilities, but he has not responded. What are your thoughts on it?
Thanks again
"Thank you. I will draft a response to these questions, and I will post it on my Instablog on SeekingAlpha. I have been jammed lately with (fee paying) consulting work, and you know how priorities are set."
Jack's instablog is at:
seekingalpha.com/autho...
The business failures, and they were far more common than the successes, typically occurred when the companies tried to move established science from the laboratory to a factory.
> the idea of cars with plugs is fatally flawed
John,
1) Since you're living in Europe you may have missed the news on the recent spot gasoline shortages during the hurricane season -- apparently Atlanta was particularly problematic with shortages and long lines.
Madison Avenue marketing sharps will have no problem getting folks to pay-up for, say, a 20+mile all-electric range PHEV by using "gas line" footage blended in the advertisements. Need to get to the grocery or pharmacy and back? No problem. Go on some other errand or visitation (without denting your commute fuel)? No problem. GM/Ford/Xyz PHEV is your answer!!! End with a picture of your "gas-only" neighbor watching you drive by. (Personally, I think that last picture is why four-wheel-drive vehicles scurry about after snow storms -- the "superiority" factor sells).
2) Anyhow, transit bus companies are building plug-in buses right now. Obviously they already feel comfortable with the price/performance of these batteries because they have been pitching them to municipal transit operators for months. Several heavy duty vehicle makers are moving to lithium from other battery types, and some are building all-electric lithium buses and trucks.
A couple of old bromides here--humor sometimes helps. As far as Speculawyer is concerned- "convince a fool against his will, he remains convinced, a fool yet still." On investment strategies " the race is not always to the swift, nor the battle to the strong--but that's the way to bet." Finally, this from over fifty years ago entitled "Hambone's Meditations"--"if yo' outgo 'xceed yo' income, yo' upkeep will be yo' downfall." Not politically correct, but absolutely true in every sense of the word.
Funny you should say that because I just drove an EV 60 miles carrying 500 pounds of passenger at highway speed (actually we were speeding by ~10 mph) and still had 38% SOC when we got back. You can keep saying that Lithium will never be viable but it already is and will only get better. What we did today screams so loud that I cannot hear what your saying John.
I put transit buses and commercial vehicles in a different class than passenger cars. Commercial vehicles operate 8 to 16 hours a day, fully utilize the batteries and are bought by users that don't change vehicles on a three to five year trade-in cycle. Passenger cars operate for two hours and are parked for 22, which cannot even come close to efficiently using the batteries. When you add in the propensity of consumers to trade-up to a new car every few years, the economics collapse.
Tireman ;-)
One Guy Two Cups, I apologize. Li-ion batteries can in fact power 300 pounds of passengers and 3,000 pounds of steel for 40 or 50 miles at highway speed. But once you get past the technical feasibility and consider the cost of accomplishing that task, Li-ion batteries make as much sense as a solid gold toilet seat.
I would respectfully suggest that your chances of getting $35,000 for a used battery based on 10-year old technology at some distant future date are between slim and none. They tried that trick with computer mainframes when I was young and it simply didn't work because technology moves on, even in the battery industry.
I would also point out that the risk weighted discounted present value of any reasonably estimated salvage value is insignificant in comparison to the front end cost of $50,000.
"70% of the value associated with a pack would still be remaining after its energy density degrades to the point its no longer useful in vehicles. Not taking into account other factors, that would change the cost estimate per vehicle to around $5k which leaves plenty of room for error. "
How do you gather I meant 50k? I meant the total cost for the entire lifetime would be 15000 USD. After the energy density of a lithium ion battery pack degrades to the point which its no longer worthwhile to keep in a car, 70% of its value would still remain strictly speaking from a mathematical point of view. Keep in mind the energy density degrades with respect to date from manufacture and not the charge/discharge cycles run on the pack. This is a fundamentally unique characteristic of Lithium ion batteries that you just don't get with any other chemistry as is the case with Lead acid, lead carbon, NiMH, or NiCD. This can be either a benefit or problem with Lithium ion. For example, it makes much more sense to use a Lithium ion pack for taxi or hybrid bus applications than it would for grandma to drive 100 miles per week.
Furthermore, you're estimates of a 10 year old technology are untrue, the chemistries of today are not at all the same as the chemistries of ten years ago. I'll agree with you it would be a terrible idea to develop lithium polymer or lithium graphite chemistries for automotive applications since heat generation leads to density degradation however chemistries such as lithium hard carbon generate very little heat during a typical drive cycle and even cool the pack during charging. The main challenge lead carbon is going to face is getting heat out of a massively large and massively heavy battery while at the same time maintaining cycle life. It may work in applications where volume and weight are not as big of an issue but forget trying to get a mechanical engineer who designs a vehicle chassis to put a one ton mass of lead in the center of a car and try to make it pass crash testing. Even a far lighter lithium pack will have and has already had problems doing that.
In summary, I'd say my biggest problems with your argument are twofold. First, you completely ignore the technical feasibility of building a vehicle using lead carbon. If it can't be done, it can't be done no matter how cheap it is. The heat and mechanical limitations of putting a lead battery in a vehicle are nearly insurmountable. I suggest you do more research into the quick charge capabilities of lead carbon and lead acid. You'll be lucky to get 100 miles out of a lead carbon driven vehicle, then what? Charge it at 100kW and wait 24 hours for it to cool down. There is simply no way to get the heat out even if you used liquid cooling. Secondly, you completely neglect to mention that lithium chemistries from ten years ago that you keep knocking (which you are right are not appropriate for vehicles) are only 33% more expensive per kW/hr yet providing 200% more energy density. I don't understand your logic of Lithium ion making sense at a portable level, ie electronics, and not at a portable level, ie vehicles, at the same time.
Obviously we're speaking from two different opposing views, you see it from the economics side and I see it from the scientific side. Lithium ion certainly will not be the end all be all. I say hard carbon isn't feasible for technical reasons. You say Lithium ion isn't for economical reasons. We both may be right. Neither is the right answer for the long term, only time will tell what is in the short term. To compete with gasoline we're going to need ten times the energy density that the best batteries give us today. Its certainly a pleasure hearing both sides of the story though John so thanks for the insight you provide just be careful not to overlook the technical point of view too.
Our big point of disagreement is whether cars with plugs and ICE will ever be economic. I don't think they will because the batteries cost too much and that's true for all types of batteries, lead and lithium alike. Current DOE forecasts have HEVs and MHEVs without plugs dominating the market for the next 20 years. When a car is only packing one or two kWh of storage, the size and weight equation is significantly different than it would be for 25 kWh. I agree that we won't see lead solutions in a 25 kWh application for anything smaller than a pickup, van or SUV. But I'm expecting a real horse race between lead and lithium for the one and two kWh systems if the manufactured lead-carbon devices perform like the prototypes have. That is, by the way a very big IF because we won't know which system is better until they're built and tested side by side.
I think we may be talking past each other on the re-tasking or salvage issue. I'm not suggesting that today's batteries are based on 10-year old technology. But if you buy a battery today and use it for 10 years, it will be a 10-year old battery when you try to recover your salvage value. Even if rates of progress in battery technology don't accelerate at the rate I believe they will, the salvage value of a used product based on technology that will be 10-years old on the salvage date is not a number that I would expect to be substantial.
Wired has just published a review of a year long study in Seattle about the performance of their fleet of Prius plug in retrofits that only averaged 51 MPG. The title of the article is "Plug-In Hybrids: More Hype Than Hope?"
www.wired.com/cars/coo.../
Here, Funding is a Committee decision and political as well.
ALTI is a play on Large storage batteries, ABAT is/was a play on China. Zenn is quite recent, this year.
This release relates to the patents. I'm a glutton for new tech, frankly, old tech doesn't interest me at all.
The innovations are the 10-20-30 baggers of the future.
Otherwise, I'm income oriented and now have decisions to make. What were Fixed Dividend payers in the 20% range are going to pay 10% based on current prices. Do I hold on or do I convert to other as yet undiscovered 20% payers.
The problem is that they are so hard to find.
If, and I agree with your assessment regarding waiting, the Tech. meets their expectations then all of the rest of the companies you mention can live with vehicles above 3,080 lbs. in weight for a while.
Therefore, If you remove the auto industry, what applications do the rest have?
But heck, I can live with my 150% gain.
If this tech proves to be real, it will do a number on all of the above as far as EV's are concerned.