The Obama Fast Track for Hybrid Electric Vehicles (HEVs)

Today I'm going to begin with an apology because I've done a terrible job of describing the basics of hybrid electric vehicle [HEV] technology for energy storage investors. Many of my earlier articles dove straight into the mind-numbing details of battery technology without first providing an overview of what those batteries will be used for. In other words I'm guilty of putting the cart before the horse. It's time for me to make amends.

While the differences between HEV technologies have always been important to automobile manufacturers, the public's understanding of those differences is limited. That dynamic is about to change because of President Obama's decision to accelerate the effective date of Federal fuel economy standards that were first adopted during the Bush administration. These accelerated standards will require manufacturers to increase fuel efficiency by approximately 40% over the next seven years. They will also eliminate fleet-wide averaging and force each class of vehicles to carry a fair share of the fuel economy burden.

I don't want to oversimplify a very complex topic, but I believe the most cost-effective way to meet the new goals will be the widespread adoption of HEV technology across all classes of cars and light trucks. The new rules are not an HEV mandate, but they have put HEV technologies on a regulatory fast track that will rapidly drive revenue growth across the entire spectrum of battery manufacturers.

There are four primary classes of HEVs including the micro, mild and full hybrids that are available today and the plug-in hybrids (PHEVs) that are scheduled for next year. The following sections provide a simple overview of what the various classes of HEV technology do and what they're expected to cost. More detailed information is available from the Green Car Congress, the National Alternative Fuels Training Consortium and the Electric Drive Transport Association.

Micro Hybrids do not use an electric motor to propel the vehicle. Instead, they rely on hybrid technology to:

• Use a small portion of the energy that is normally lost in braking to recharge their batteries;
• Stop and start the internal combustion engine [ICE] when the vehicle stops and starts; and
• Power accessories like heat and air conditioning while the ICE is off.

The current cost of micro hybrid technology is roughly $500, plus batteries. The main benefit of micro hybrid technology is fuel savings of up to 10% that arise from turning the ICE off when the vehicle isn't moving.

Mild Hybrids

use an electric motor that is integrated into the ICE to boost power during acceleration. They also rely on hybrid technology to:

• Use a larger portion of the energy that is normally lost in braking to recharge their batteries;
• Stop and start the ICE when the vehicle stops and starts; and
• Power accessories like heat and air conditioning while the ICE is off.

The current cost of mild hybrid technology is roughly $1,500, plus batteries. The main benefit of mild hybrid technology is fuel savings of up to 20% that arise from using a smaller ICE and turning it off when the vehicle isn't moving.

Full Hybrids use an electric motor that's separate from the ICE and powerful enough to move the vehicle on its own. Full hybrids typically launch from a stop in electric mode, start the ICE when needed and then use both the electric and ICE systems for acceleration. They also rely on hybrid technology to:

• Use most of the energy that is normally lost in braking to recharge their batteries;
• Stop and start the ICE when the car stops and starts; and
• Power accessories like heat and air conditioning while the ICE is off.

The current cost of full hybrid technology is roughly $2,000, plus batteries. The main benefit of full hybrid technology is fuel savings of up to 40% that arise from using battery power in stop and go traffic, using a smaller ICE and turning it off when the vehicle isn't moving.

Plug-in Hybrids fall into one of two sub-classes. A parallel hybrid is essentially a full hybrid with a larger battery pack that increases the EV range and decreases reliance on the ICE. A series hybrid is essentially an electric vehicle that runs on battery power for the first 10 to 40 miles and then uses a small ICE to generate electricity for the powertrain. Both sub-classes rely on hybrid technology to use most of the energy that is normally lost in braking to recharge their batteries.

The estimated cost of plug-in hybrid technology is roughly $2,500, plus batteries. While fuel economy estimates vary widely depending on assumed driving patterns, most commonly quoted estimates fall in the 60% range.

Cost-Benefit Table The following table summarizes the relative costs and benefits of micro, mild, full and plug-in hybrid technologies using lead-acid batteries for lighting, accessory and related systems, and using NiMH or Li-ion batteries for the electric powertrain. The price of $1,000 per kWh for electric powertrain batteries represents a rough average of the current cost of NiMH and Li-ion batteries published in a July 2008 Sandia National Laboratories report on its Solar Energy Grid Integration Systems – Energy Storage program.

	Lead-acid	Advanced	Mechanical	Incremental	Fuel
	Batteries	Batteries	Components	Cost	Savings
Micro Hybrid	$200		$500	$700	10%
Mild Hybrid (1 kWh powertrain battery)	$100	$1,000	$1,500	$2,600	20%
Full Hybrid (2 kWh powertrain battery)	$100	$2,000	$2,000	$4,100	40%
Plug-in Hybrid (10 kWh powertrain battery)		$10,000	$2,500	$12,500	60%

Cost-Benefit Graph To help remind readers what matters to buyers, I've put together a simple graph that superimposes the purchase price data from the Cost-Benefit Table over a normal bell shaped curve. In this particular graph there is no direct correlation between the background curve and the price points in the foreground. The curve does, however, help put the cost differences and fuel savings into the context of normal forces in a free market.

In combination, the table and the graph clearly show why I believe the vast majority of buyers will choose micro, mild and full hybrid alternatives over their more expensive plug-in cousins. It's a simple matter of economics. Cars with plugs simply do not work for anyone other than the emotionally committed or the mathematically challenged.

The following graph comes from the DOE’s 2009 Annual Energy Outlook and forecasts that sales of full and mild hybrids will grow from 346,000 units in 2007 to 4.8 million units in 2030. Over the same time frame, sales of micro hybrids will grow from 13,000 units to 3.2 million units. Collectively HEVs will account for roughly 63% of unconventional vehicle sales and approximately 40% of all light car and truck sales by 2030.

The companion graph forecasts that less than 7% of the HEVs sold in 2030 will be plug-ins. The other 93% of sales come from full, mild and micro hybrids. Overall, the forecast corresponds well with the distribution I would ordinarily expect under a normal bell shaped curve.

While the sex, glitz, glamour and hype are clearly skewed toward the PHEV tail of the normal bell shaped curve, the bulk of future sales will almost certainly come from the more affordable micro, mild and full hybrid alternatives. Accordingly, I believe the question that investors need to ask themselves is, "which battery technology is best suited to the requirements of these lesser HEV technologies?" The following summary paragraphs may help in that analysis.

Energy and Power The distinction between energy and power is frequently blurred in discussions of HEV technology. In simple terms, energy measured in kilowatt-hours (kWh) limits the distance of travel while power measured in kilowatts (kW) limits acceleration and speed. In PHEV applications that rely on the batteries for an extended travel range, energy is the most important performance metric. For micro, mild and full hybrid applications that use the batteries for short bursts, power is far more important and there are many battery technologies including lead-carbon, NiCd, NaNiCl, NiMH and Li-ion that can easily do the required work. In other words, no technology has a clear performance advantage.

Size and Weight NiMH and Li-ion battery developers emphasize that they enjoy a substantial weight advantage over lead-acid batteries. I'll be the first to concede that weight differences can be critical in the context of a PHEV that needs to carry a 10 to 25 kWh battery pack to provide the desired range. But the weight advantage is almost irrelevant in the context of a micro, mild or full hybrid that only needs to carry a couple kWh of battery capacity.

Cycle Life NiMH and Li-ion battery developers emphasize that they enjoy substantial cycle-life advantages over the lead-acid batteries normally used for starting, lighting and ignition. Those comparisons are inherently unreasonable because they use the best examples of their technology and the worst examples of lead-acid technology. When the best NiMH and Li-ion technologies are compared with the best lead-acid technologies, the cycle-life advantages disappear.

Battery Cost The one metric NiMH and Li-ion battery developers never emphasize is cost, unless it's in the context of a happy-talk prediction that future economies of scale will slash the cost of their products. The simple fact is that the best NiMH and Li-ion batteries cost an average of three times as much as the best lead-acid carbon batteries and there is no reason to believe that the developers will ever be able to close the cost gap.

Revised Cost-Benefit Graph If one assumes that advanced lead-carbon batteries will be the technology of choice for micro, mild and full hybrid applications, and that NiMH and Li-ion batteries will be the technology of choice for PHEVs, the revised cost-benefit graph looks like this:

Over the last couple years the media has fixated on the romantic notion of PHEVs, which has drawn substantial investor attention to small public companies like Ener1 (HEV) and Valence Technology (VLNC) that are generally perceived as leaders in the PHEV battery market. As a result, the stock prices of both companies have risen to levels that include huge premiums for intangible future potential. While the market for PHEV batteries will undoubtedly be large, my sense is that the market has not fully considered the business, technical, operational, competitive, financial and ethical risks these companies are certain to face. That leads me to conclude that both companies have far more downside risk than upside potential under current conditions.

While the media attention has been focused on the right hand tail of the bell shaped curve, established lead-acid battery companies like Exide (XIDE), Enersys (ENS) and C&D Technologies (CHP), along with technology driven newcomers like Axion Power International (AXPW.OB), have been quietly developing next generation technologies that will be affordable for consumers in the middle of the bell shaped curve who need HEV fuel savings but can't afford Li-ion or NiMH batteries. These middle market solutions won't have the high per vehicle value of Li-ion and NiMH solutions, but with far higher market penetration rates, they should easily make up the difference in volume. As I've discussed in earlier articles, the lead-acid sector has been treated like an orphan stepchild of alternative energy for years. That leads me to conclude that these companies have far more upside potential than downside risk under current conditions.

I believe the revised Federal fuel efficiency standards will drive the implementation of micro hybrid, mild hybrid and full hybrid technologies more rapidly than anyone could have predicted and increase overall penetration rates. While the changes are bullish for the energy storage sector in general, the biggest beneficiaries are likely to be the undervalued lead-acid battery manufacturers that will ultimately be the primary source of middle market HEV battery solutions.

In closing I would like each reader to take another look at the last graph and consider a broader ethical issue that we all need deal with. The resources required for micro, mild and full hybrid technologies ramp up gradually as fuel savings climb from 10% to 40%. The incremental resources required for that last 20% in fuel savings one gets by upgrading from a full hybrid to a PHEV are immense. In effect, to save 100 gallons of gas per year by upgrading a single full hybrid to a PHEV, we will have to forego using those batteries to build four additional full hybrids that could have collectively saved 800 gallons of gas per year. This is one of the most appalling examples of selfish and wasteful arrogance I can imagine. It has no place in a resource constrained world where 6 billion people have come to understand how the other 500 million live and the primary challenge for our species is finding relevant scale solutions to persistent shortages of water, food, energy and virtually every commodity you can imagine.

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).

Comments

[battman:]

Wow, right bewteen the eyes with that last paragraph, but you can't deny it makes sense.
I've said it before and I'll say it again, the li-ion guys want to suspend disbelief when it comes to pricing, but not when it comes to Lead-Carbon advances. I think the heads are firmly planted n the sand, but a good shaking will change that soon enough. Just to show another example of suspended disbelief, Ballard power was supposed to change the world.
Good breakdown, thanks again John.

May 24 07:53 AM

[John Petersen:]

Battman, when I started working on this piece I didn't really expect the differences to be as immense as they turned out to be. I just wanted to explain the differences between micro, mild and full hybrids. It kicked up a notch when I started thinking about the new fuel economy standards and how they might be reached. But by the time it all came together and I started looking at incremental costs and incremental benefits, I was horrified by the picture.

My last paragraph on resource utilization in a constrained world was one I went back and forth on for a while because it's a direct challenge to folks who think they're being responsible by advocating PHEVs. In any event the numbers don't lie and I suspect the level of controversy may be enormous. But bring it on, I would love to hear from anybody who thinks there's a rational excuse for a car with a plug that is not a pure EV.

May 24 08:23 AM

[ART005:]

John, your last comment suggesting plugs only belong on pure EV hints at another round of charts being necessary. If you're up for the challenge it would be a great follow-up to this article. Basically HEV are great because stopping is a part of driving and the cost to capture that energy is economical. Your charts say it all. One of the most important parts of an EV is weight reduction. The weight of an ICE to extend range of EV conflicts with its main design constraint. For the limited market that needs a 30 - 50 mile/day commuter an EV is an exciting option. For the bulk of consumers, micro and full HEVs are the answer. Consumers also need to get familiar with light utility trailers for the occasional big load from Home Depot. It's a wonderfull way to extend utility of small vehicles.

May 24 09:08 AM

[D. McHattie:]

You open up a real kettle of worms when you introduce the moral implications of sub-optimal resource allocation.

As you state, it is not as simple as just determining which technology saves the most fuel and then supporting that technology to the exclusion of all others. I fear that our electorate and its government may follow this oversimplified decision-making process.

Only free markets are capable of making the subtle distinctions between alternative uses of scarce resources.

In an era where free markets have been much maligned and much blamed for our economic decline, it is more important than ever that free markets be restored and preserved.

Not to get to Randian, but you have made an excellent case for the moral superiority of free markets.

Anyway, thanks for taking the time to share your thinking with us, John.

May 24 09:59 AM

[battman:]

Regarding the Obama government (and Democrats in general). It was clear Bush was an oil guy, and anything that caused the price of oil to go up was good for him. He faked a lot of TLC for techs that could reduce oil consumption. The Dems might not have as clear cut an alignment to oil, but no one can deny the influence of such a huge industry. What I can't see, is any clear cut ties to batteries. I don't see why any one government would whole heartedly support just one battery type (li-ion as an example) because the influence of that particular technology, can't have much teeth. Lead acid would have more teeth than li-ion since it is an existing technology and has been around for over 100 years. GE has big teeth, and their new plant announcement would carry weight.
My point is, I can't see li-ion getting the automatic nod, because where is the hidden agenda of politicians for that? Other than "sexy", it has no weight when apples are being compared to apples of making a cost effective and practicle hybrid. Ballard got a lot of attention from the government because for fuel cells, they were the king of kings in a "hopefully" developing new industry. Batteries are much different. We've already got an existing industry and we're simply trying to make it more efficient.
Call me naive, but I think the money will be spread out to give many techs a chance, and the horse that wins, will be the horse that deserves it most. On merits, not hype.

May 24 10:38 AM

[John Petersen:]

Art005, EVs are a fascinating subject because they range from economic obscenities like the Tesla roadster to creative concepts like the Segway/GM PUMA. From the time I've spent looking at the raw economics of battery power I like alternatives where the vehicle weight to passenger weight ratio is low (2x to perhaps 5x range) and cringe when I see alternatives where the vehicle weight to passenger weight ratio is high (anything over about 5x). The heavy pieces can be made and engineered, but you have to ask yourself "at what cost?"

Freya, for ultra-light vehicles, EVs may indeed be the way to go. But if you go to the last chart and assume 100% fuel savings on a pure EV you're still talking about not building 5 full hybrids that would save 40% each and I'll never agree that giving up 200 gallons of fuel economy for 100 gallons of fuel savings is a smart choice.

D. McHattie, I try to stay away from discussions of moral issues because regardless of where we might come down individually, the fact remains that the emerging economies are not going to permit us to waste resources in the future like we have in the past. I've spent a good deal of time in Asia and it's an incredible eye opener. The people understand the difference between have and have not. They also understand that they need to work very hard to improve their lot by just a little and are willing to do so. But I have to snicker when people talk about how Asia will gladly sell us 10 kWh battery packs for all our automotive needs. The logical flaw is the suggestion that 20 Asians will happily give up their hybrid scooter so that one American can have a PHEV. It just won't happen and it has nothing to do with right or wrong. It's pure Randian economics where 20 Asians will always have a greater collective buying power than one American.

May 24 10:55 AM

[John Petersen:]

Battman, I hope you're right, but our elected representatives have been known to adopt uneconomic policies (think corn ethanol) without thinking their way through the law of unintended consequences. I've been writing about batteries for almost a year now and taking pot shots at PHEVs on a regular basis. But I didn't get around to doing a side by side cost benefit analysis until last Friday. I'm not entirely sure that anyone else has ever followed the logical path I did in this article and focused on incremental costs vs incremental benefits. It's certainly not something I've seen others write about. Everybody seems to start with an assumption that cars with plugs will be a good thing and if don't question your assumptions, it's easy to overlook critical facts. My hope is that brighter minds than mine on both sides of the issue will recognize this analysis as presenting a real issue that must be dealt with. Otherwise we may end up with billions of dollars invested in new plants that make products nobody wants.

May 24 11:04 AM

[Ferdinand E...:]

John Petersen, I call myself the leading academic energy economist in the world, and as a result I do everything possible to spread the good word in forums such as this, although like all good things this spreading often has a way of coming to a premature end, and my gorgeous contributions are refused. Hmm, but I have excellent reasons for not worrying too much..

I sincerely hope that you don't have this problem. Although I am a democrat, I'm afraid that I cannot understand what President Obama and his foot soldiers are up to on the energy front, and it is essential that he receives the kind of information that is brilliantly presented in e.g. your article (and that of Peter W. Huber). What that means is that people like you and several other knowledgeable persons in this forum must try to move the present administration onto the straight and narrow before the whole ______ circus ends up in the tank.

Incidentally, you don't belong in this forum. You belong in Washington, trying to teach certain people to think.

May 24 11:31 AM

[user8240:]

"Cars with plugs simply do not work for anyone other than the emotionally committed or the mathematically challenged." Only if the 60% fuel savings number is correct. Where did it come from? For a second car used for short trips only, the number would be much higher...closer to 100%.

" The logical flaw is the suggestion that 20 Asians will happily give up their hybrid scooter so that one American can have a PHEV."
Why would they have to give up their scooters? Demand for resources to make the batteries would raise the price of those resources to everyone but Asian buying power is lot more powerful these days. Seems to me the converse is more likely, Americans giving up PHEVs so Asian can have their cars ("scooters", may be both demeaning and archaic).

May 24 11:49 AM

[John Petersen:]

Professor Banks, kind words from a reader with your background mean more to me than you'll ever know. I work hard to keep my analysis tight and logic clear, but at the end of the day I'm never really certain whether the message is getting through. One tip I can share with you on the editorial process at Seeking Alpha is they are looking for analysis that boils down to specific potential investments. The thinking seems to be that there are lots of forums for policy analysis but very few forums that show investors how policy can make them money.

user8240, if you go to the last chart and assume 100% fuel savings on a pure EV you're still talking about using batteries that could have powered five full hybrids that would save 40% each. No matter how you do the math, I'll never agree that giving up 200 gallons of fuel economy for 100 gallons of fuel savings is a smart choice.

May 24 12:05 PM

[John Petersen:]

I just got an e-mail from a reader who asked me to post the following comment on his behalf because he's apparently having some problems accessing the comment function:

"John, Thanks for the excellent article and one that is long overdue for sure. I will take exception however to this particular part of your treatise:

The simple fact is that the best NiMH and Li-ion batteries cost an average of three times as much as the best lead-acid carbon batteries and there is no reason to believe that the developers will ever be able to close the cost gap.

To make a point here is one Cost comparison between existing high end Lead Acid with high end Lithium- Ion:

Exide (Lead Acid)
XCD 12V/50Ah: Price - $ 225.00
Weight - 41 lbs.
Warranty - 18 Months
Onboard Diagnostics - None

LiFeBATT (Lithium Iron Phosphate)
XPS 12V/25Ah: Price - $ 470.00
Weight - 9 lbs.
Warranty - 5 Years
Onboard Diagnostics - GlobeTRAC (GSM Wireless Technology)

I think it already apparent that the average cost difference is more accurately two time as much as the best lead acid right now. Before someone points out the difference in Amps - it is equivalent in Lithium - ion to cut the Ah rating that Lead Acid uses in half when comparing the two chemistries. One also needs to look at the Warranty between the two in making a cost comparison.

Best Regards, Don Harmon"

May 24 12:08 PM

[John Petersen:]

Don, to clarify the calculations for readers that may not know them, the volt, watt, ampere conversion formulas are:

Power = voltage * amperage
Energy= volts * amp-hours

So in terms of rated capacity, the Exide battery is 600 wh and the lithium counterpart is 300 wh. The rationale for cutting the rated capacity of lead-acid in half is that conventional lead-acid batteries have very short cycle lives in very deep discharge applications.

You and I come from different sides of the battery industry but we both seem to share the view that America's future needs both kinds of batteries and application decisions have to be made on the basis of rational cost-benefit-performance analysis.

I'm grateful that you take the time to read, understand where I'm coming from and contribute well considered contrary viewpoints.

May 24 12:20 PM

[isaac the t...:]

You're analysis assumes that over the next 10 yrs, oil will be plentiful and inexpensive (less than 4$/gallon or so).
It is very possible, or even likely, that oil will be increasingly scarse and expensive starting in a couple years. Once gasoline is in the 5-10$gallon range, electricity will be a much more economical way to pull off a 30 mile drive, and the economics of per mile vehicle cost over the life of the vehicle changes big time.
John, it would be interesting to develop a chart that compares the cost of driving 100,000 miles with gasoline and electricity costs as the variables, for both a full HEV and for a plug-in HEV using your cost fiqures.
Either way, batteries and drivetrains with integrated ultracapacitors have a very bright future. Hopefully, debt ridden America will be able to afford these new technologies.

May 24 12:25 PM

[John Petersen:]

Issac, you'll never hear me suggest that oil prices are going any direction but up. Nevertheless, there is always a point in economics where you start to see diminishing marginal returns. Given the four readily identifiable data points we have, the diminishing marginal returns for more batteries seem to kick in as soon as you get past a full hybrid. I still think we get to a future where the bulk of personal transportation is battery powered, but for that time to arrive the buying public needs to think in terms of vehicles that weigh 400 or 500 pounds instead of 3,000 pounds. Moving a person is pretty cost-effective. Moving a person and 10 times as much hardware isn't.

Freya, my portfolio is composed like it is because of my unique personal history. I would never advise anybody to follow my lead or build a portfolio with such a narrow focus. I love this sector because I think that all survivors will do very well. There are two companies in the group of 15 that I track that I would avoid. All of the rest have significant merits and variable levels of risk. Were I coming into the sector as a new investor, I would look for diversity and balance.

May 24 01:30 PM

[John Petersen:]

A follow-up from Don Harmon said:

"Thanks John, it's still not working and I even installed IE Version 8 ? Weird. My answer next was going to be this:

What is the “Peukert exponent” and how can it be used to compare Amp-hour ratings between Lead-Acid (PbA) battery chemistry and Lithium-Iron-Phosphate (LiFePO4) battery chemistry?
Comparing Amp-hour ratings between PbA and LiFePO4 is tough. Peukert’s exponent explains the capacity expected from a PbA cell at given discharge currents. The equation is

I^x * t = Ah

I = current discharged

x = exponent

t = time

Ah = total Ah's

Most PbA cells have a Peukert’s exponent rating between 1.3 and 1.6. Good PbA cells have an exponent the gets closer to 1.15. We can’t assign this exponent to LiFePO4 because of chemistry differences, but an approximation of the Peukert’s exponent for comparison would be 1.05 for LiFePO4. As an example, a 20Ah LiFePO4 cell will produce approximately as much or more power as a 50Ah PbA cell at the same rated voltage.

So, I am not sure your explanation really covered it properly? Maybe I just read it wrong: Your Comment-

So in terms of rated capacity, the Exide battery is 600 wh and the lithium counterpart is 300 wh. The rationale for cutting the rated capacity of lead-acid in half is that conventional lead-acid batteries have very short cycle lives in very deep discharge applications.

Best,

Don Harmon"

May 24 01:33 PM

[John Petersen:]

Don, you've just exceeded the limits of my technical understanding. Maybe somebody who knows more than I do can take over where my understanding falls off the cliff.

May 24 01:35 PM

[wojmax:]

The farm community does not pay a fed gas tax on fuel for tractors used in the field. Not sure about state gas taxes.
I have not seen the addition of road taxes added to any fueling charges for electrics which will decrease the 'savings'.
You can bet they will be added.

May 24 01:43 PM

[Vern Wheatley:]

Electricity from a generating plant and distribution system is about 19% efficient. Very little electricity is generated from hydro, wind, geothermal, and solar. If you can't produce a lot more electricty from these non carbon fuels you just increase pollution and expense with electric automobiles because of the efficency of the energy conversion. Speaking of pollution, start doing the math on the worn out batteries. On the bright side you do however move the pollution produced by transportation to outside of the big cities by using power plants far away, but that still doesn't help the polar bears out or us if thats what you are trying to do. You also increase automobile costs, decrease comfort, safety, and recreational vehicles in a huge world recession.
Non carbon fueled generation increases electricty costs and makes what little we still manufacture more expensive and less competitive in the world market. Osama has got to be loving the way we are handling all of this.
We must focus on EFFICIENCY, using OUR OWN ENERGY, and CUTTING POLLUTION. Natural gas is the only transportation fuel that meets the goals we should have and makes the most sense economically until hydrogen gets figured out. Natural gas and hydrogen are almost twins, so when hydrogen does get figured out, we won't have to waste time, energy, a lot of money, and our whole economy to convert over.
Presidents Bush & Obama neither one have the understanding that we are at war with Osama financially a lot more than militarily which is also killing us financially. Lets please keep that in mind and let's do something smart to get us off this slippery slide. It's getting old.

May 24 05:48 PM

[Dan Powers:]

Making a couple assumptions it's pretty easy to calculate the payback for the costs you've given above. This seems to me the most common sense way for a consumer to look at the value they're getting.

Assuming a base vehicle (ICE) at 20mpg, and 10000 mile per year:

Gas at $2 per gallon, payback is 7, 13, 10 and 20 years for the micro, mild, full and PHEV respectively. Gas doubles, the payback time halves.

Better than I would have guessed. Great points in your last paragraph.

May 24 08:59 PM

[billp37:]

We're concerned that not enought attention has been focused on

First: The laws of thermodynamics

1st Law—Energy can be changed from one form to another, but it cannot be created or destroyed. The total amount of energy in the universe remains constant, merely changing from one form to another.

2nd Law—In all energy exchanges, if no energy enters or leaves the system, the potential energy of the state will always be less than that of the initial state. This is also known as the law of entropy.

www.fromthewilderness....

Second: 1 Kilowatt hour = 3412.14163 BTUs.

to properly evaluate possible contribution of altenergy to solution of possible near-future transportation and electric energy problems.

We are in Spokane, WA returning from my 50th reunion at liberal arts Whitman College.

Got to watch non-engineers writing about and proposing solutions to engineering problems.

home.comcast.net/~bpayne37/whitman59/w...

Especially lawyers.

It may better to listen to engineers?

Chairman, President and CEO Questar Corporation Keith O. Rattie said on April 2, 2009

Why did my generation fail to develop wind and solar? Because our energy choices are ruthlessly ruled, not by political judgments, but by the immutable laws of thermodynamics. In engineer-speak, turning diffused sources of energy such as photons in sunlight or the kinetic energy in wind requires massive investment to concentrate that energy into a form that's usable on any meaningful scale.

home.comcast.net/~bpayne37/pnmelectric...

May 24 09:10 PM

[mjenn:]

John,

Let me say that I've appreciated your comments and insights into options on the battery technology front. I would like to add a few other issues to the discussion.

Why should change happen ?
( what are the contextual assumptions shaping your economic modeling activities)

1. If you're a peak oil fan or an investor without consideration or concern about global warming then your current analysis makes sense, reducing consumption of our oil resources by adopting and investing in oil extending technologies.

2. If you believe that our current approach to resource consumption cannot be sustained long term. That the current and future emission volumes pose a threat to the stability of our environment and economic well being, then the analysis is lacking.

An argument from the second point of view

I think the dialogue should be expanded to consider the rapid, wholesale redesign and redevelopment of our power and transportation systems. Why?

Our power and transportation systems are obsolete and wasteful.

At best our grid delivers 25% of the potential energy in a ton of coal to the end user.

IC Engine Automobile : 15% fuel-to-wheel efficiency.

If you take a 3000 lb. vehicle with a 180 pound driver it gets worse, resulting in less then 1% (0.083) fuel to individual transport efficiency.

We can surely do better then this!

Carbon emission and the cost of remediation.

Since many of your analysis is focused on economic modeling of future technology choices the cost of remediation of greenhouse gas emissions cannot be ignored.
Here is an excerpt from a paper on global warming.

Manmade Global Warming and Climate Change [ 回到前一頁 ]
Huang-hsiung Hsu, Ph.D.
National Taiwan University

"Another characteristic of the above mentioned greenhouse gases is their long staying time (i.e. life span) in the atmosphere. Life span of CO2 is 50~200 years, methane 12~17 years, nitrite 120 years, CFC 102 years. Once entered the atmosphere, they cannot be retrieved and will only disappear slowly by natural processes. Due to their long lifespan, their influences are long-term and global in scale. In its 100 years of lifespan, a CO2 molecule emitted from any corner of the earth will have opportunities to travel the world and affecting weather of many places. Even if human beings stopped all emissions of man-made greenhouse gases immediately, the gases cumulated since industrial revolution would continue to exert their greenhouse effects."

hsu.as.ntu.edu.tw/pepe...

The main issues that this line of thought brings to bear are:

1. What impact does the projected costs of remediation (if possible) do to the assumptions that you have already made. The main thrust of your argument in this most recent piece is that we should stop at the full hybrid level because the economic return of plug-in or fully electric vehicles cannot be supported by the costs of producing them. This assumes that we can continue to produce enormous amount of greenhouse gas emissions with no costs or penalties. The recent article regarding remediation cost per ton projects current price estimates prices at about 30 dollars per ton. It also goes on to say...

"If we cannot be certain that leakage rates are below 1%, “the private sector will find it increasingly difficult to convince regulators that CO2 injected into geological formations should be accorded the same accounting as CO2 that is avoided,” avoided, that is, directly through technologies such as wind power. The authors note that, “there is no solid experimental evidence or theoretical framework,” for determining likely leakage rates from different geological formations."

www.energyandclimate.o...


Our Power Grid

So as far as the grid goes we need to support fully technologies that dramatically reduce emissions or are carbon neutral. This means every one of your hours, minutes, and seconds recommendations for distributed storage, as well as distributed generation (everywhere) and high megawatt centralized sustainable systems. I also believe that clean coal is a myth, and that the insanely bloated cascade of processes outlined in how to get there will lead to many taxpayer financed boondoggles.


Our Vehicles

As for our personal transportation, we need to focus on innovative designs of entirely new classes of vehicles and their support systems that establish at least a 10-20% fuel to individual transport efficiency. This has to be coupled with increased availability and attractiveness of mass transportation systems.

Our world is ours to shape, what limits us is the intellectual inertia of our current thinking (mental models) and our reliance on incremental change, change that will be hampered by the core inefficiencies of the existing, legacy systems.

May 25 12:42 AM

[Dirk McCoy:]

I don't see a major shift in car buying away from ICE cars until boomers determine they can buy something that will save them thousands of dollars a year- and then every couple will want one (a small convertable, for example). This looks to be a few years away, although the current HEVs and Volt will sell to their "green" niche consumers.

Given the major shift is a few years away, the best chance may be something that develops based on the Automotive X-prize. Not sure that will even have batteries.

May 25 12:49 AM

[Dan Plante:]

John, thank you for your analysis. As you say, the issues involved in working these things out are complex. I believe that consumer purchase psychology, social realities (driving patterns, etc), economics (especially the concept of fully-burdened costs), and a much deeper technical/engineering treatment are required to get to the real heart of the matter.

I believe that the Obama administration has it right in that the short and long term goal is an all-inclusive and much more efficient electricity based economy, and the lynch-pin to that is electricity storage technology. The reasons are myriad but include macroeconomic, geo-poltical, infrastructure, environmental, trade-balance, and long-term costs vs sustainability considerations that go far beyond the transportation sector, yet also have a profound effect on that sector in terms of the timing, availability and cost of energy storage solutions and therefore must be included when attempting to analyze or prognosticate it.

I've taken a go at reconciling the dynamic tension between all these disparate factors and for what it's worth, I believe (as you do) that pure electric is the best long term alternative, but I also believe it is the best short term alternative as well. I understand your argument pitting PHEV against other hybrids, and that your rationale is based on the idea that the short term demand for batteries in total kWh will outstrip the supply by a margin significant enough to make it a short term "trade-off" issue vis-a-vis total fuel saved (aggregate efficiency) between PHEV and other hybrids - but I'm just not convinced that will be the case. I think that the limited size of the market for new vehicles in this current economy (especially for non-standard technology) coupled with an unprecedented legislative and budgetary framework designed to ramp up production of batteries as quickly as possible might make this concern moot.

In the short term (say 1-4 years), if there is enough storage production (in total kWh) available even if the total demand is exclusively for PHEV or battery-electric (BEV), then these would be the obvious choice (depending on chemistry) if reducing the total amount of liquid fuel used as quickly as possible was the goal. As a matter of fact, a pure BEV might even be a better choice over PHEV for many potential consumers, depending on their average daily commuting needs. If you dig deep down through all the technical and engineering vs cost factors you might be surprised to find that a pure BEV based on Lead-Carbon technology is the best way to go, all things considered.

Theoretically, if a reasonably efficient, low-cost braking energy recovery system is used, the two main factors limiting mileage for any vehicle is wind resistance (dominant at higher speeds) and rolling resistance (dominant at lower speeds) - not the weight of the vehicle per se. So, while Lead-Carbon battery technology would introduce greater mass/volume to a vehicle than Li-Ion/NiMH would, using a mid-size car design and reducing wind resistance by optimizing drag, and reducing rolling resistance by using thinner/low-profile high-pressure tires (plus other suspension approaches/tweaks) and reduction of drive train components (hub motors would be optimal) can still enable a fully Depth-of-Discharge-lim... highway range of 60-75 miles using 15-20 kWh of storage for a 5 seater BEV at a large reduction in the FBCS (Fully Burdened Cost of Storage): ie, the battery purchase cost divided by ((optimum DoD in kWh x total cycle life) + warranty underwriting) = storage cost per kWh discharged over the battery's lifetime. I'm guesstimating about $330/kWh OEM cost for PbC? Although as you say, hard and fast pricing and performance numbers are jealously guarded at this point. This approach could bring the cost for a medium range, highway capable BEV suitable for 75% of current consumer's requirements for a main or second family vehicle down below $30k, with a much longer estimated vehicle life (longer warranty) than any other option. All the technology I referred to above is either being produced now or is production ready, from various Tier 1/2 suppliers.

I think the free market will find this out in short order, and the unmatched production ramp-up rate potential of PbC electrodes in existing PbA form factors could, with government/VC help, supply estimated new EV demand in the current state of this economy, even if most of the the demand is for pure BEV, so there shouldn't need to be a trade off between different hybrid technologies, even adding BEVs to the mix. I'm not certain of course, but I think it's quite probable. It certainly isn't possible with other chemistry, considering their much longer lead times for sufficiently large production or their dismal fully-burdened costs.

Dan Plante
daniel_r_plante@hotmai...

May 25 12:53 AM

[Dan Plante:]

Of course, if EEStor comes through with an EESU anywhere near their claims, then all bets are off. Wipe the blackboard clean and start over - it would be that disruptive.

May 25 01:10 AM

[John Petersen:]

wojmax, taxes are always used as a policy tool where governments tax behavior they want to discourage and attach tax benefits to behavior they want to encourage. Ultimately policy goals are the only thing that make an incredibly complex tax system seem reasonable. At least for the next couple decades when government will be doing everything in its power to discourage hydrocarbon use and encourage electric alternatives, taxes should not be a big issue.

Vern Wheatley, I've always believed that natural gas is an excellent step in the transition from an oil economy to a cleantech future. A CNG hybrid makes a world of economic sense. I remain staunchly ambivalent when it comes to global warming. But we have passed peak cheap oil and can no longer afford to spend untold billions per year on imports that can be replaced with a readily available domestic substitute.

Dan Powers, I'm a firm believer that we've already seen peak cheap oil and that $80 per bbl is the best we can hope for once the economy recovers. The best graphic I've found to demonstrate why is tonto.eia.doe.gov/dnav...

Since the late 90s the price trend has been moving up at a fairly steady rate. When we reach the next inflection point that trend will most likely get steeper rather than flatter. Micro, mild and full hybrids offer attractive economics at stabilized prices in the $70 to $80 range, which is almost certain over the short term.

billp37, I believe engineers and cost accountants should be guiding policy rather than idealists. But both professions have a tendency, when asked whether the glass is half full or half empty, to respond that the glass is too large for the volume of water. They also seem reluctant to step forward and take a leadership role even when that's exactly what the world needs.

I stay away from offering my opinions on generating technology because I tend to like things like natural gas and nuclear. I also wonder whether the massive amounts of hot rock a few miles down aren't a more attractive heat source than our friendly neighborhood star.

May 25 01:11 AM

[John Petersen:]

mjenn, this article basically goes to the limits of my analytical abilities and anything deeper would be over my head. I'm a firm believer in peak cheap oil. I'm also a firm believer that importing billions of barrels of oil per year is economic suicide. I'm agnostic when it comes to global warming because every green living thing is part of a global CO2 feedback mechanism and the models don't seem to deal well with the power output variability of nearest star. The grid has to get better, but there is a lot of work going on in that area and I think progress is coming. Ultimately, I think consumer expectations about the size and weight of personal transportation need to change. Vehicle weight to driver weight ratios of 15+ will not work in our cleantech future.

Dirk, we should never underestimate the potential of a bright kid working in his garage. I share your view that most of the folks in the middle of the bell curve are simply looking for something that works in the world of down-payments and monthly budgets. The micro, mild and full hybrids are the only current alternatives that even come close.

Don Plante, my biggest concern is the 6 billion who want a bigger piece of the economic pie and making room at the table for them. It's not a problem yet, but it will be and when it becomes a problem it will be a monster problem. People invariably have a hard time distinguishing between needs and wants. They also have a hard time with the idea that things never stay the same for long. We're on the verge of a new era that will require a number of adjustments that will be unpleasant in the making and work out just fine.

I'm tough on li-ion because I think it's a great technology that's been oversold. There are no silver bullet solutions but there are a lot of good solutions that can do a great job in different markets. I believe PbC will be an important part of the picture, but know that it is not a silver bullet either. The same may even be true for EEstor, but their failure to speak directly or forecast costs tells me that it will be a long time before any rational judgments are possible.

May 25 01:47 AM

[one eye:]

Lead by any other name is still lead. It will be the last thing utilized in this EPA/Clean Energy environment.

May 25 02:43 AM

[John Petersen:]

one eye, lead-acid batteries are the most successfully recycled products in the United States and you can bet your bottom dollar that a significant percentage of the lead in your current starter battery has had at least a half-dozen earlier incarnations. To get useful metals out of dead li-ion batteries the first thing you have to do is cool them to minus 230 degrees C and then the fun really starts. Appeals to irrational knee-jerk fears do little or nothing to advance rational discussion of costs and benefits.

May 25 02:54 AM

[harammph:]

Talking to you is senseless. No one will ever change your mind.

Every Article is a Rehash of earlier articles, all of them come to the same conclusion.

Lead, lead and more Lead.

I don't want it on my walls, in my car or in the Crystal my wife likes so much.

May 25 03:03 AM

[John Petersen:]

harammph, I'm sorry that you find lead in all its forms objectionable, but I respect your right to believe that lead is inherently evil. I have followed a dozen intellectually independent paths that lead to the same conclusion when it comes to energy storage. But the fact that multiple independent inquiries all lead to the same destination can only increase a thinking man's confidence that the conclusion is correct. I've seen true human misery in South America, Africa and Asia and think that the problems created by a carefully regulated use of lead pale in comparison to problems created by shortages of food, clean water, energy and other commodities. So I guess you and I will just have to agree to disagree on what really matters.

May 25 04:01 AM

[renim:]

firstly, EVs from China
green.chinacartimes.co.../
note the price of the Zoyte EV 100,000 RMB about $13k US.

secondly
hybrids with plugs, why exclude PbC batteries, historically the partial state of charge PSOC life problems with lead batteries made them unsuitable for EV/PHEV use, but PbC solve that so a plug in with say 10km range is feasible, it could reduce 1/3 of one fortnightly gasoline bill (ie 14 trips x 10km = 140 gasoline free kms per 300-500 kms.
so the gm volt would make an excelllent electric PbC vehicle, without the expensive batteries or battery managemenet system. it might shave 10k of the production price

May 25 05:47 AM

[John Petersen:]

renim, the odd thing about today's charts is the shape doesn't change all that much even if you go to more cost-effective batteries like the PbC for a PHEV. I think the fundamental problem relates to the cost of including both an ICE and EV drivetrain in the same vehicle. I was really shocked when I saw how the side by side comparison worked out and the graphs are no prettier if one assumes a battery cost of $500 per kWh instead of a battery cost of $1,000 per kWh.

May 25 06:57 AM

[Douglas Hvi...:]

There is a lot of discussion as to whether MDI's compressed air energy storage is a scam or just difficult engineering & business. After several years of investigating this, my opinion goes to the latter. If so, it lowers the size required for effective CAES by orders of magnitude. Assuming this, even with the lower energy storage efficiency, it makes better economic sense than a battery powered PHEV. For hybrids using less storage than PHEVs, the battery scenario will likely make the most sense for the reasons you gave. For full storage, the PHAV using multiple compression and expansion may be the best way to go. The first cost is much lower.

I don't know the answer here for sure, but am looking forward to the results of the X-prize competition! Zero Pollution Motors with MDI have entered two different vehicles into it.

May 25 07:03 AM

[renim:]

currently the phev are using automotive technology for the ICE side of PHEV, and that is not the solution. the generator manufacturers do not use automotive ICE for petrol systems and their duty is representative for a range extended EV. (PHEV)

On May 25 06:57 AM John Petersen wrote:

> renim, the odd thing about today's charts is the shape doesn't change
> all that much even if you go to more cost-effective batteries like
> the PbC for a PHEV. I think the fundamental problem relates to the
> cost of including both an ICE and EV drivetrain in the same vehicle.
> I was really shocked when I saw how the side by side comparison worked
> out and the graphs are no prettier if one assumes a battery cost
> of $500 per kWh instead of a battery cost of $1,000 per kWh.

May 25 07:12 AM

[renim:]

take the gm Volt, it has a 1.3 daewoo engine. now if the volt uses about 14kWh per hundred km, look up 14 kVA rated generators (say ebay). I think GM could halve the engine (2 cyclinders) and halve the costs if it gets a second chance at the volt.
Batteries, it appears ultrabattery is sufficient for PbC PSOC capacity, I think the PbC will end up less than the 500/kWh mark.
We have started to look at PHEV as HEV plus a plug and it is expensive. But If we go from the other direction EV- (ie take EV, give it the cheapest battery we can drive with ie PbC 4kWh (25km range, not bad for start of each trip), and add a generator that is not oversized, then our cost curve will change significantly. (make it CNG, and we might even be less than the refining and distribution cost of crude oil)

May 25 07:39 AM

[John Petersen:]

Douglas, I'm watching CAES with more than a passing interest, but it's not something I write on because it's not something people can invest in. There are a lot of clever guys out there working in their respective garages. I'm pretty sure that one of them will prove himself a genius but until that happens, I'll be writing about the things we can invest in today.

renim, Carnegie Mellon University published a study a while back that concluded 7 miles was the optimal PHEV range. If we start talking about a PHEV-10 instead of a PHEV-40, the graphs look a little better and the solution is more economical, but the full hybrid still offers the best bang for the buck. CNG hybrids make a world of sense since they eliminate imported oil completely.

May 25 09:34 AM

[Don Harmon:]

For those who haven't been able to use the Reply function- check it again. Mine just started working afte two days of being locked out of this discussion....grrrrrrrr!

Don Harmon


On May 25 09:34 AM John Petersen wrote:

> Douglas, I'm watching CAES with more than a passing interest, but
> it's not something I write on because it's not something people can
> invest in. There are a lot of clever guys out there working in their
> respective garages. I'm pretty sure that one of them will prove himself
> a genius but until that happens, I'll be writing about the things
> we can invest in today.
>
> renim, Carnegie Mellon University published a study a while back
> that concluded 7 miles was the optimal PHEV range. If we start talking
> about a PHEV-10 instead of a PHEV-40, the graphs look a little better
> and the solution is more economical, but the full hybrid still offers
> the best bang for the buck. CNG hybrids make a world of sense since
> they eliminate imported oil completely.

May 25 12:37 PM

[Michael Fit...:]

wrt your last paragraph, it also makes no sense to make these hybrid vehicles based on gasoline instead of natural gas. a natural gas electric hybrid like this toyota concept vehicle:

www.autoblog.com/2008/...

continues to be the best transportation solution i have seen to address both the foreign oil import issue as well as environmental concerns. if obama would simply invite mr. toyoda to the white house to discuss american support for toyota manufacturing this car in volume, and support the natural gas infrastruture needed to refuel it, he would make more headway on US economic, environmental, and national security challenges than all of his other initiatives ... combined!

May 25 01:30 PM

[Windsun33:]

One thing left out of this discussion is that Lead is much more plentiful - or at least much easier/cheaper to mine - than Lithium. It is also much easier and cheaper to recycle. A 100% spike in Lithium demand would probably result in a more than 200% spike in prices.

And don't base lifespan on what the warranty is - Lead/Acid batteries generally have pretty poor warranties, but in typical service a LA battery with a 1 year warranty will last 4-7 years. Whereas the 5 year warranty on the Li-ion battery is much closer to it's real lifespan.

May 25 01:32 PM

[User 330788:]

Someone can check this out but I believe our submarines use lead-acid batteries for their electric storage. If so that is a pretty good comparison

May 25 01:37 PM

[Neil Energy:]

Another major benefit of the lower-cost hybrids is that you get significant reductions in emissions for a relatively low cost. Mild and micro help a bit by turning off the engine, but the full HEV, with acceleration assist, can really make a difference. Of course a PHEV or pure EV will give you VERY high reductions in emissions, but for the same cost, you could reduce emissions significantly for many "ordinary" vehicles

Hybrid passenger buses, using batteries and Maxwell ultracapitors for regenerative braking and acceleration not only get 40% fuel savings - they also have something like 70% reductions due to the acceleration being handled by the ultracapitors. Great stuff!

Maxwell has been emphasizing on their conference calls lately that European auto manufacturers are pursuing micro hybrids in a big way, mostly because of the regulations regarding carbon emissions. Allowed grams of CO2 per mile in the EU are being racheted down pretty agressively, and the cheapest way to reduce CO2 emissions right now are with a micro hybrid start-stop system. Fuel economy improves as well, but I thought it was interesting that it's the CO2 target that is driving this business.

Neil

May 25 01:37 PM

[Neil Energy:]

Another major benefit of the lower-cost hybrids is that you get significant reductions in emissions for a relatively low cost. Mild and micro help a bit by turning off the engine, but the full HEV, with acceleration assist, can really make a difference. Of course a PHEV or pure EV will give you VERY high reductions in emissions, but for the same cost, you could reduce emissions significantly for many "ordinary" vehicles

Hybrid passenger buses, using batteries and Maxwell ultracapitors for regenerative braking and acceleration not only get 40% fuel savings - they also have something like 70% reductions due to the acceleration being handled by the ultracapitors. Great stuff!

Maxwell has been emphasizing on their conference calls lately that European auto manufacturers are pursuing micro hybrids in a big way, mostly because of the regulations regarding carbon emissions. Allowed grams of CO2 per mile in the EU are being racheted down pretty agressively, and the cheapest way to reduce CO2 emissions right now are with a micro hybrid start-stop system. Fuel economy improves as well, but I thought it was interesting that it's the CO2 target that is driving this business.

Neil

May 25 01:37 PM

[John Petersen:]

Don, I was delighted to see that they resolved the problem.

Fitzman, I think a CNG hybrid would be wonderful because it uses the batteries efficiently and eliminates 100% of the imported oil. It may not be the holy grail, but it's a darned good first start.

Windsun33, the hardest part of writing on the storage sector is the complexity. Like you I think the lead-acid and lead-carbon chemistries have great promise, but this discussion of whether cars with plugs make sense is technology agnostic. In the final analysis I believe we need lead-acid, li-ion, NiMH and a ton of things that have not been developed yet. I'm also convinced that all of the survivors will have more business than they can possibly say grace over. In the final analysis, though, it will be engineers and cost accountants who make decisions and the opinions of technology writers like me will be irrelevant.

May 25 01:44 PM

[John Petersen:]

User330788, during WW-II the entire submarine fleet ran on diesel generators and lead-acid batteries. I don't know how much battery power submarines use these days since nuclear power plants don't need a lot of backup. But if anybody out there has any recent facts, I'd be very interested in the answer.

Neil Energy, I hadn't considered the emissions reduction aspects of mild and full hybrid technology because I was only looking at overall fuel economy, but it makes sense. The European market is different in a couple respects. First our gas prices are 2x to 4x North American prices and the green movement has a longer and stronger history in Europe than the U.S. because population densities are higher and the environmental degradation was more painful at an earlier point in history. Maxwell has been doing a lot of impressive work recently and I'll be very interested to see how the strategy works for them.

May 25 01:57 PM

[Don Harmon:]

Windsun33, sorry I have to correct a big misunderstanding you apparently have here. If I follow your logic that a Lead Acid battery with a 1 year warranty typically lasts 4-7 years then a Lithium Iron Phospate battery with a 5 year warranty would last 20 - 35 years depending on the depth of discharge, i.e. deep or shallow cycles.

Sorry, you have it totally wrong on this! As far as abundance of Lead vs. Lithium in the earth's crust - Lead is #82 while Lithium is #3 according to the table: www.science.co.il/PTel...

Regarding mining, I am not even sure you are right about that, as it is relatively easy to collect Lithium from the vast dry lake beds rather than actually mine the earth right now. See: www.forbes.com/forbes/...

Don Harmon



On May 25 01:32 PM Windsun33 wrote:

> One thing left out of this discussion is that Lead is much more plentiful
> - or at least much easier/cheaper to mine - than Lithium. It is also
> much easier and cheaper to recycle. A 100% spike in Lithium demand
> would probably result in a more than 200% spike in prices.
>
> And don't base lifespan on what the warranty is - Lead/Acid batteries
> generally have pretty poor warranties, but in typical service a LA
> battery with a 1 year warranty will last 4-7 years. Whereas the 5
> year warranty on the Li-ion battery is much closer to it's real lifespan.

May 25 02:18 PM

[Don Harmon:]

www.marinetalk.com/art...

Don Harmon


On May 25 01:37 PM User 330788 wrote:

> Someone can check this out but I believe our submarines use lead-acid
> batteries for their electric storage. If so that is a pretty good
> comparison

May 25 03:31 PM

[Don Harmon:]

www.armedforces-int.co...

Don Harmon


On May 25 03:31 PM Don Harmon wrote:

> www.marinetalk.com/art...
>
>
> Don Harmon

May 25 03:38 PM

[John Petersen:]

Windsun and Don Harmon, I'm trying to stay as technology agnostic as I can with this article, but think the Sandia PSOC chart I used in

seekingalpha.com/artic...

should satisfy everybody that cycle life comparisons will require more data than anyone has right now.

With respect to resource availability, Jack Lifton had the same problem that Don had in posting a comment to Seeking Alpha, but his comment to this article on altenergystocks.com said:

"John,

Your article is, as usual, thorough and superb. I specialize in the market fundamentals and end uses of natural resources, and I want to point out that your conclusions about the choices for our resource constrained world should be a loud and clear warning to those now wasting precious time and money on technologies requiring rare metals that are the wrong choice if our western way of life is to be scaled up so that Asia can enjoy a higher standard of living. The only way for the electrification of motor vehicles to proceed rapidly is through the use of battery technologies principally based on lead. Lead can be recycled indefinitely and its global annual production could be increased fairly quickly. The world's already known resources and reserves of lead are multiples of those of lithium or the rare earths. Finally the yearly production of new lead is today 160 times larger than that of lithium and 40 times larger than that of the rare earths. Who is kidding who about resources and time?"

While I want to stay away from resource availability arguments, I think we can all agree that Jack is an authority and rely on his assessments of the raw materials markets.

May 25 03:48 PM

[Don Harmon:]

I disagree with Jack and have cited many other authors and articles who also disagree with him. I will let the chips fall where they may with the upcoming funding of 2.1 Billion in DOE funds to develop Lithium-ion battery manufacturing plants in the U.S.

Thanks,

Don Harmon

May 25 05:11 PM

[Don Harmon:]

Jonn, per your comment: Windsun and Don Harmon, I'm trying to stay as technology agnostic as I can with this article, but think the Sandia PSOC chart I used in

seekingalpha.com/artic... should satisfy everybody that cycle life comparisons will require more data than anyone has right now.

Note that in this same article Mr. Hund concludes: The new Li-ion (Li-FePO4) battery technology proposed for hybrid electric vehicles is comparable in utility PSOC cycle-life to the new carbon enhanced VRLA batteries.

Thus making my point that Lithium- ion can hold it's own in both markets with tradeoffs in cost and other performanc enhancements.

Proof will defininatey come shortly in the new pudding!

Don Harmon

May 25 06:17 PM

[TinyTim:]

John-
Another thought provoking and fact filled article with excellent links.

I respectfully take exception to your thesis that hybrids are tremendously beneficial to oil consumption. In fact, the greatest benefit of hybrids, including PHEV, are that they are rapidly advancing the energy storage technologies that we are all so interested in. We should be thankful to those consumers that feel compelled to be on the bleeding edge of technology and the entrepreneurs and investors that satisfy that need.

It's interesting that you define the different types of hybrids by the extent they use regenerative braking to recover and store in batteries the energy required to stop. A more common distinction is the relative role of the electric motor versus the IC engine, see: www.chevrolet.com/page...
As you point out, while both series and parallel hybrids can be plug-in (external energy) usually with bigger battery packs, non-plug-in series hybrids make no sense except for specialized applications like locomotives. In fact, I was relieved for the sake of GM to see that the upcoming Chevy Volt is a plug-in series hybrid (although an expensive one).

What's called the equation of motion of a car describes the energy required to move it and consists of four parts: rolling resistance (tires & wheel bearings), wind resistance (aerodynamic drag), change in speed (stopping & acceleration) and change in elevation (uphill-downhill). For the sake of simplicity, this last can be ignored since most terrain is relatively flat.
For a hybrid, the only unique area of efficiency improvement in the equation of motion is speed changes. On acceleration, the roles of the motor/engine are different between say a Prius and an Insight and they try to complement each other in different ways. This should allow for a smaller engine with better MPG.
On deceleration, ALL hybrids try to capture as much energy as possible since it is otherwise wasted as heat in the brakes. This electrical energy directly improves MPG when it is recycled.

My problem with all this is the claims for mileage improvement are vastly inflated to the point of ridiculousness. Not too long ago, after some adverse publicity, Toyota had to revise the MPG on the Prius. In this article, you are making claims for fuel savings for full hybrids of 40%. No way. A 3000 lb car traveling 60MPH requires 1.33 KWh to stop. This same car requires 30KW to overcome rolling and wind resistance. Under ideal conditions on a start-stop course, a full hybrid may get 5% improvement. On the other hand, any hybrid, plug-in or otherwise, but especially a series hybrid on engine power when the batteries run down, will get no better highway mileage than a comparable non-hybrid.

Regarding the different storage technologies used to capture the braking energy, main considerations are the speed of charge and discharge and conversion efficiency. Since the stored energy is typically consumed on the next acceleration, I would be be looking more at capacitor companies. The longer term storage ability of batteries is not really needed in this application and future capacitors should be lighter, faster and more efficient.

Lastly, barring alternative fuel sources, such as CNG, H2 fuel cells, cold fusion or dilithium crystals, as soon as consumers get past "plug anxiety" and figure out that 95% of their driving does not require extended range or boat hauling, pure electric plug-in cars will predominate. Lithium is one of the most energetic elements on the periodic table (as we see from laptop meltdowns) and is near the top so there's little chance of improvement. Prying the IC engine away from car manufacturers dramatically reduces the cost to produce, making this car more affordable than the premium priced hybrids. A 35KWh battery charge to go 100 miles at my off-peak cost of 6 cents is $2.10. To go 100 miles at 30MPG and $3.00 per gallon is $10.00. Full electrics provide transportation fuel flexibilty and point source generation pollution is easier to clean up.

I'm sure we just have a difference in time horizon in our perspectives. I see hybrids as a necessary evil to advance the technology and will hopefully be short-lived.

May 25 07:42 PM

[Dan Plante:]

On May 25 01:37 PM Neil Energy wrote:

> Another major benefit of the lower-cost hybrids is that you get significant
> reductions in emissions for a relatively low cost. Mild and micro
> help a bit by turning off the engine, but the full HEV, with acceleration
> assist, can really make a difference. Of course a PHEV or pure EV
> will give you VERY high reductions in emissions,

Neil, I believe it's quite possible to design a medium range BEV using PbC that would fill the demand for a large segment of the market, at the same price or even cheaper than the non-plugin hybrids. Using what I've been able to research, and adding some assumptions regarding wholesale cost, lifetime, optimum DoD and charge/discharge rate trafe-offs of PbC technologies from Axion/Exide or Firefly, the cost of parts and assembly for a BEV might actually be cheaper than the corresponding hybrid ICE/electric costs if you take into account all the associated systems prices and the manufacturing time/manpower required. I do agree with you that, all engineering approaches being equal, BEV wins over PHEV in terms of emissions.

To fully burden the costs, you also have to consider "fuel" cost per mile (BEV is potentially MUCH cheaper, and gas will not stay at $2.50/gal either), plus maintenance/warranty. If a hybrid and a BEV have an estimated lifetime of 10 years, both with a 5-year warranty, and the hybrid's average maintenance costs during the 5 to 10 year period is 5 times that of the BEV, then the hybrid isn't really cheaper. Note that saying "costs" is just another way of saying "total resources consumed", in materials, manpower, manufacturing capacity, etc (roughly speaking). I'm sure the BEV would come out with a much longer warranty, all things considered. If a hybrid manufacturer tried to "highball" their warranty to make the product more palatable, the warranty underwriter's costs would increase (they're not stupid) and this would simply be passed on to the the consumer through increased purchase price or some other channel. You gotta pay the piper eventually.

>but for the same cost, you could reduce emissions significantly
> for many "ordinary" vehicles.

I'm not sure I understand where this position comes from. It mirrors the sentiment in John's original article, but I don't follow the rationale. The root assumption here seems to be either PHEVs/BEVs are unavoidably more expensive/resource-int... or that non-plugins will fight with PHEVs/BEVs for current/short-term energy storage product availability. I don't think either is necessarily true. It depends on the situation. Market demand driven by various consumer needs and budget, specific battery technology characteristics and how well each of those technologies is engineered into any particular vehicle solution, as well as the current production numbers and probable short-term ramp-up rate for each battery technology all have a bearing on that situation. Vehicle lifetime operational costs are also a significant issue with respect to total resource utilization.

Yes, limited global resources will ensure that, as the have-nots increase their level of income, global demand will increase. The effect for everyone will be shortages and steadily increasing prices for those resources.

If the question is "how can we become more efficient in our consumption of these resources" so that everyone can have a fair slice of the pie at a manageable cost, then I'm afraid we can't afford to be technology agnostic if one particular technology is the only, or even the best answer. Are PbC-based BEVs that answer? I think so (currently anyway), but reliable empirically-derived battery data as well as BEV sub-system performance/availability data would be needed to answer that with any confidence. This data exists, but it's not freely available.

Another critical point you mentioned, which I agree with: whether or not you believe in climate change, significant cost burdening through CO2 legislation looks inescapable, and will be a critical factor in most global jurisdictions of any consequence. Only plugins and pure BEVs can be locally emissions-free. Decreasing oil consumption and trade imbalance is also maximized compared to hybrids, although for those reasons I agree that CNG would be a much better fuel for ICE whatever the platform. Whether the benefits of CNG would outweigh the fully burdened cost of the massive infrastructure build-out required is a complicated issue. Dunno.

> Hybrid passenger buses, using batteries and Maxwell ultracapitors
> for regenerative braking and acceleration not only get 40% fuel savings
> - they also have something like 70% reductions due to the acceleration
> being handled by the ultracapitors. Great stuff!

Yeah, UltraCaps are perfect for power bursts and braking regen. Definitely a "killer app" for Maxwell.

> Maxwell has been emphasizing on their conference calls lately that
> European auto manufacturers are pursuing micro hybrids in a big way,
> mostly because of the regulations regarding carbon emissions. Allowed
> grams of CO2 per mile in the EU are being racheted down pretty agressively,
> and the cheapest way to reduce CO2 emissions right now are with a
> micro hybrid start-stop system. Fuel economy improves as well, but
> I thought it was interesting that it's the CO2 target that is driving
> this business.
>
> Neil

May 25 09:18 PM

[John Petersen:]

Don, disagreeing with statistics on current global production of metals and the amount of work and investment required to expand that production is not something I would want to challenge Jack on.

I would also point out that the specific words of the legislation for battery grants says "Provided further, That $2,000,000,000 shall be available for grants for the manufacturing of advanced batteries and components and the Secretary shall provide facility funding awards under this section to manufacturers of advanced battery systems and vehicle batteries that are produced in the United States, including advanced lithium ion batteries, hybrid electrical systems, component manufacturers, and software designers." While lithium is clearly part of the authorization, it is not the whole game by any stretch of the imagination.

There will be time enough to evaluate the horse race after it's been run.

Tiny Tim, I used the definition conventions for the entire spectrum of hybrids that have prevailed since the early part of the decade. The newspeak terms that people are starting to use presumes that hybrids need plugs, which is precisely what they don't need. Batteries are great at improving the efficiency of fuel utilization in micro, mild and full hybrids. They are terrible at serving as a replacement for a fuel tank. From the reports I've seen, the cars with plugs that have been put into the hands of real people have been immense disappointments so far. But anecdotal reports about how badly cars with plugs actually perform are no better than anecdotal reports about how well they perform. The only way we will ever know is to make a fleet of several thousand, put them into the hands of normal people around the country, run them for several years and then analyze and evaluate real world data. Until that happens, every car with a plug is nothing more than an experiment.

Dan Plante, once you start talking about a BEV it's an entirely different economic equation and they may well work if the base vehicle is light enough. I'd just like to see some more comparative data from rigorous side by side testing.

May 25 11:23 PM

[Windsun33:]

I guess I was not clear on battery life vs battery warranty. For decades deep-cycle (basically EV type) LA batteries have been warranted at about 1/4 to 1/6 their actual lifespan - the warranty has little relationship to their actual life. But Li-ion batteries for some reason are much closer in warranty vs lifespan. Bottom line is you cannot use warranty time as a measure of lifespan in lifetime cost comparisons.

As for Lithium prices, the price pressure has eased due to the recession, but if demand goes up there might be a similar scenario to Silicon, where the problem is production and refining, not mineral availability.

On May 25 02:18 PM Don Harmon wrote:

> Windsun33, sorry I have to correct a big misunderstanding you apparently
> have here. If I follow your logic that a Lead Acid battery with a
> 1 year warranty typically lasts 4-7 years then a Lithium Iron Phospate
> battery with a 5 year warranty would last 20 - 35 years depending
> on the depth of discharge, i.e. deep or shallow cycles.

May 25 11:32 PM

[Windsun33:]

My issue here is - when has the government EVER picked the winning technology?


On May 25 05:11 PM Don Harmon wrote:

>... may with the upcoming funding of 2.1 Billion in DOE funds to develop
> Lithium-ion battery manufacturing plants in the U.S.
>
> Thanks,
>
> Don Harmon

May 25 11:35 PM

[John Petersen:]

Windsun33, one of my pet peeves is that most of the cycle life claims for lithium chemistries come from extrapolation of computer test rack results rather than experience in the hands of humans. In my limited experience, there are usually major differences between the two. I keep suggesting that their ought to be a series of horse races before somebody picks the winner of the triple crown. It's good to hear that others agree.

May 25 11:57 PM

[Don Harmon:]

Same argument applies to the whole extrapolation of scientists regarding greenhouse gas - but I don't want to run the whole race to find out who's right.

Don Harmon

May 26 12:52 AM

[John Petersen:]

As a confirmed GW agnostic, I don't trust their computer models either, but at least with a global climate model you don't need to account for the variability introduced by humans that don't read instruction manuals and rarely follow them to the letter even if they do read them. While a full 10 to 15 year life cycle test on the products would certainly be the best practice, you can generally develop enough hard data after a couple years of broad-based testing to find out whether something works or doesn't work. But none of us would be happy if big pharma said "tests, we don't need no stinking tests."

May 26 01:12 AM

[Mayascribe:]

John: Is there any word yet as to when Uncle Sugar is going to begin the $2 bil in grants/loans to the battery makers of America? My belief is that when this occurs, Exide will pop 10 to 20% short term, as I believe they are the top deserving pure play battery maker in the USA to receive such grants.

Given that I'm reading that finally some TALF is being distributed....

May 26 01:35 AM

[TinyTim:]

Hi Don-
"Batteries are great at improving the efficiency of fuel utilization in micro, mild and full hybrids."
If great is 5% in city traffic OK. For highway cruising, the engine is primary and the MPG is worse until the batteries get charged, then is the same.
This paragraph summarizes the reasons for the limited MPG improvement pretty well:
en.wikipedia.org/wiki/...
You don't want to read the next paragraph on "Environmental impact of hybrid car battery"

Here's a couple of useful articles on hybrid terminology:
en.wikipedia.org/wiki/...
en.wikipedia.org/wiki/...

I agree that real world side-by-side testing is necessary, especially on the issue of battery longevity, which is why these hybrid early adopters are so important. In my mind, they're all experiments, especially when I hear inflated mileage claims.
Vehicle performance is largely subjective. The only major plug-in trial I'm aware of is the EV-1. To say "the cars with plugs that have been put into the hands of real people have been immense disappointments so far" ignores the many EV-1 drivers that wish they had them back.

"Batteries are terrible at serving as a replacement for a fuel tank. "
This is storage technology, not energy generation. Refinement will lead to higher energy densities and lower costs. Volume will lead to lower costs. Eliminating the IC engine lowers the vehicle cost enough to make it practical, rather than just a political statement.

May 26 02:14 AM

[John Petersen:]

Mayascribe, the ARRA battery grant applications were due by the 19th of May. The DOE has said they plan to announce the recipients on July 1st and try to disburse first funds by the end of September.

Tiny Tim, I wish I could be optimistic about future improvements in energy density and costs, but the two PhD chemists in my family are quick to point out that there is no Moore's Law for chemistry and modest improvements in the efficiency of well-established chemical processes are generally the best one can hope for. When it comes to reducing costs, that only happens if the raw materials get cheaper, which is not likely in a resource constrained world.

May 26 02:29 AM

[liveoilfree:]

Well, the problem with this analysis is that there are different kinds of all batteries: the very best NiMH are not available for sale at ANY price, so the price number you quote does not represent a free market price.

Due to Chevron's squatting on the NiMH patent rights, and their lawsuit against Toyota, Toyota no longer makes the EV-95 superior NiMH battery and, while it is still running strong in the existing fleet of Toyota RAV4-EV (last sold the month before Chevron and Toyota agreed on a settlement, Nov. 2002), the cost numbers are not calculable.

To say $1000 per kWh is just plain fantastical and problematic.

In mass production, the Toyota (superior) version of NiMH would be about $333/kWh, according to the CARB 2000 BTA Workshop; more importantly, the supply of NiMH is not resource-constrained, because after they wear out, at perhaps 200,000 miles (or more, if research improved them) they can be melted down and completely recycled into new batteries.

Nickel, as well as other metals such as Iron, can be mined from the vast quantity in current use; the use of iron scrap to replace iron ore revolutionized the smelting industry with the use of small, super-efficient electric furnaces.

Similarly, 75% of our Ni comes from scrap Monel and Stainless Steel; if there were NiMH batteries, there would be a NiMH recycling industry, and, with time, the cost of NiMH might come down to $100/kWh (to melt down and refresh into new batteries) and the life span might extend beyond 300,000 miles.

As it is, NiMH and lead-acid are equivalently inexpensive; the only difference is that current EV-quality lead-acid need to be replaced every 50,000 miles, while NiMH last far over 100,000 miles (we don't know how long they last, yet; we still have the same range now as we had in 2002).

If new lead-acid technologies, such as Axion or Firefly, extend the life of lead-acid, they will be welcomed; but for now, NiMH is the most cost-effective and longest-lasting battery type in existence. There are over 13,000,000 miles of proven EV driving using NiMH batteries; all of these batteries lasted longer than Lithium ever lasted in an EV.

So far, no Lithium EV has gone more than 50,000 miles on the same set of batteries; I keep hoping that some Lithium battery pack will achieve this milestone. If you hear of one, forward the info to [e-mail] or call 562-430-2495. So far, no car.

Lithium has the disadvantage that it doesn't have a junk value; it's "safely discarded into the landfill", meaning that Lithium EVs are resource-constrained. The only Lithium recycling operations charge for processing the batteries, as I just verified last week in an L.A. interview.

Thus, lead and Ni batteries have an inherent superiority from a resource-constraint viewpoint: either of them in fleet usage can be recycled easily and completely, so none of the metal need be lost.

May 26 02:42 AM

[John Petersen:]

liveoilfree, I've tried to stay technology agnostic in this particular analysis but the graphs don't look a whole lot better at $500 per kWh than they do at $1,000 per kWh. It's also my understanding from reading Jack Lifton's articles on the subject that NiMH does have a significant resource constraint because it requires small amounts of Lanthanum and Toyota has apparently come close to cornering the global market for that metal. My fondest hope is that Axion's PbC devices will prove to have superior performance and price, but until there is more hard data available to the public I'd rather be conservative but optimistic.

May 26 03:05 AM

[Windsun33:]

Actually Exide may not be the best, or even in the top 5. But the majority of major battery makers seem to be privately held, such as Trojan, Crown, and a few others. JCI is one exception but their main focus is not batteries.

However, it is possible that Exide might make a jump, but I would take my profits early on.

On May 26 01:35 AM Mayascribe wrote:

> is that when this occurs, Exide will pop 10 to 20% short term, as
> I believe they are the top deserving pure play battery maker in the
> USA to receive such grants.
>
> Given that I'm reading that finally some TALF is being distributed....
>

May 26 05:25 AM

[Obamitall:]

You obviously are not familiar with automobiles and the parts required. The number of parts will not be reduced significantly.
Of the 40,000 parts in a car, the engine is but 800-900 of them, with fuel systems included. Adding electric technology will only reduce the quantity partially.


On May 24 09:44 AM Freya wrote:

> I have always maintained that Pure EVs were the route to go. The
> Obama plan for Solar/Wind electric grid enhancement falls right into
> place for using this Ultimately.
>
> In fact, everything Obama is doing to GM/Chrysler is scaled to EVs.
>
>
> You talk about "Resource Constrained". What will EVs do to the Auto
> Industry? Parts Suppliers, no need for most of the "parts" they
> supply. Dealerships, initially choices will be limited to some form
> of Hybrid and EVs, no need for thousands of them. Assembly Lines,
> without the multitude of parts, no need for as many workers.
>
> In destroying GM and Chrysler, Obama is making sure the Future Transition
> will not be as onerous. The Jobs hit is being spread out as we go
> towards an EV future. Mechanics? Let me fine tune your battery?<br/>
>
> The best time to destroy the current structure is during a deep recession
> when the Economy and other scapegoats can be found.

May 26 06:58 AM

[John Petersen:]

Windsun33, it's my understanding that Exide is one of the top three lead-acid battery manufacturers in the US and focused on a far more diversified market than JCI, which is primarily concerned with OEM sales of batteries for starting, lighting and ignition. With a 12 month high of $19.66 and a current price of $6.20, I see a lot more upside in Exide than I do downside.

May 26 01:08 PM

[adamnb:]

Great article. I think it's time that someone created a battery electronic trading fund (etf).


On May 24 01:30 PM John Petersen wrote:

> Issac, you'll never hear me suggest that oil prices are going any
> direction but up. Nevertheless, there is always a point in economics
> where you start to see diminishing marginal returns. Given the four
> readily identifiable data points we have, the diminishing marginal
> returns for more batteries seem to kick in as soon as you get past
> a full hybrid. I still think we get to a future where the bulk of
> personal transportation is battery powered, but for that time to
> arrive the buying public needs to think in terms of vehicles that
> weigh 400 or 500 pounds instead of 3,000 pounds. Moving a person
> is pretty cost-effective. Moving a person and 10 times as much hardware
> isn't.
>
> Freya, my portfolio is composed like it is because of my unique personal
> history. I would never advise anybody to follow my lead or build
> a portfolio with such a narrow focus. I love this sector because
> I think that all survivors will do very well. There are two companies
> in the group of 15 that I track that I would avoid. All of the rest
> have significant merits and variable levels of risk. Were I coming
> into the sector as a new investor, I would look for diversity and
> balance.

May 26 03:29 PM

[Advill:]

Finally asking alpha told me about the problem with sending comments, there is a problem (not specified) but pushing CTRL+ F5 can be solved.

Hi, John, how is "our" investment in AXPW doing?, any sustancial product or problem solved announcement?, frankly it was an act of faith because numbers, market etc points for a still fragile company only the distribution agmnt finally decides me .
Where the big punch product will be available?

Regards.

May 26 05:16 PM

[Don Harmon:]

I am not an investment kind of guy. Last time i tried to play the stock market I lost a small fortune. Never again will I do that. All I can say is that anybody who reads these posts and thinks that either John or Jack is the oracle will be ultimately disappointed. I know that neither clam to be (acknowleged) but they might sway some of you to support one technology over another which to me needs to be addressed.

I would spread out any investment over a wide range of technologies right now if I were even inclined to invest. The more inclusive you are the better chances of success!

Don Harmon

May 26 10:00 PM

[John Petersen:]

adamnb, I suspect that a universe of 15 companies would make it hard to develop and manage an appropriately diverse energy storage ETF. There are a number of alternative energy ETFs that have some exposure to the sector, but it's generally limited to the lithium-ion companies. Tom Konrad has a new article on alternative energy ETFs that should hit Seeking Alpha today. He has a good handle on the broader sector.

Advill, Axion has spent five years avoiding the "announcement treadmill" and they only talk about mileposts when they can be seen in the rear-view mirror. There was a lot of discussion in last week's conference call about the installation and planned start up of the electrode fabrication line before the end of June. At that point I expect to see a series of modest sales (hundreds of devices) to potential customers that want to put PbC batteries through their paces and see how they perform in the real world. I would also expect to see modest sales of electrodes to Axion's development partners Exide and East Penn who want to make co-branded products for testing by their customers. While some transactions may be big to merit an announcement, I think most will be treated as business as usual. So rather than looking to press releases, I think you'll have to listen to the conference calls and pay attention when management has something to say.

Don, if I've learned anything from writing for Seeking Alpha it's that my words do not move markets and Seeking Alpha readers do not buy or sell stocks because I like or dislike them. As both of us know, the energy storage sector is far more complex than many would have investors believe and no single application or group of applications are going to make or break companies that don't irrevocably hitch their wagon to a single market. My fundamental premise has always been that objectively cheap products will have an advantage in the market for battery users and that objectively cheap stocks will have an advantage in the financial markets. Suggesting otherwise would defy both history and logic. My non-Axion portfolio is up 246.5% since December and that's not a shabby number.

May 27 12:31 AM

[Futurist:]

John,
I imagine you saw this article about Midwest Energy testing batteries for wind storage made by BYD.

seekingalpha.com/artic...

This makes sense because Midwest owns 10% of BYD. However, I am not aware of any information as to why their batteries are better than others. Maybe you have an idea. My excitement is the fact that we now have a major wind player expanding the energy storage market.
My guess is that Midwest will test the batteries but if someone else makes a cheaper and better battery even Midwest will make the right economic decision to purchase the better product. Its the Berkshire way to support their own companies but not an an expense to shareholders.

May 27 09:31 AM

[John Petersen:]

Futurist, I share your excitement that another big player is looking into the economics of large scale energy storage. A123, Altair and Axion have all embarked on large-scale demonstration projects and if the utility market can be penetrated, the demand could easily double or triple the size of the industry. That being said, utilities are notoriously cautious with their testing and slow to adopt new technology they have to justify to regulators. So I wouldn't be setting any target dates.

One of my big questions about BYD has been their risk of patent conflicts with a chemistry that is already drowning in litigation. Since I try to avoid patent issues like the plague, I can't really give you a fair summary of the issues but my guess is that as soon as BYD starts shipping a lithium-iron-phosphate batteries into the U.S. it will become a player in a global fight over patent rights.

Another major unanswered question is the cost of BYD's batteries. There have been press reports that imply a cost in the $500 per kWh range but I've spoken with people in China who seem to think the cost may be closer to $800 or $900 per kWh.

Ultimately I don't think that BYD itself is an attractive investment right now. Earlier this month I calculated the core valuation metrics for Buffet's purchase of a 10% stake in BYD at a post-money valuation of $2.3 billion ($1.12 per share). The numbers were:

Price/Earnings – 12.3
Price/Book – 1.18
Price/Sales –0.6

Since BYD is currently $4.35 bid and $4.60 asked, or roughly 4x the Buffet purchase price, it's not on my list of must have stocks.

May 27 10:37 AM

[realist2:]

You show repeatedly in your tables and charts that you think that direct at vehicle fuel savings completely captures consumer (and social) benefits of performance primary electric drive. Is that credible or might there also be other direct, indirect and induced benefits?

May 27 11:38 AM

[John Petersen:]

realist, there are an emotionally committed few who are ready, willing and able to sacrifice their budgets on the altar of the PHEV gods because it's the right thing to do for the environment and society. There are also people like you who think an ultra-quick electric motorcycle is a fun and cost effective way to handle their daily commute. The vast majority are not willing to surrender their comfort, their families or their budgets for the greater and largely intangible good. I commend those who have enough character to put their principles above their pocketbooks, but think they are an extremely rare and threatened species.

May 27 12:15 PM

[NorthernPiker:]

Don Harmon, lithium and lead are equally prevalent in the earth's crust - about 20 parts per million.

frt.fy.chalmers.se/PDF... (see Figure 2)

Your reference has other flaws. For example, it shows lead (Pb) as being less prevalent than both tellurium (Te), at less than 0.01 ppm, and Indium (In), at less than 0.1 ppm.

www.science.co.il/PTel...

May 27 10:08 PM

[John Petersen:]

NorthernPiker, discussions about the relative abundance of minerals in the earth's crust are interesting but irrelevant. The question is not what is more abundant in the earth's crust but what is more abundant in the earth's mines. If we go to the second table you provided a link for lithium, gold and platinum are all more abundant than lead. But they are extraordinarily hard to find in concentrated deposits that can be profitably developed and exploited with existing technology. Using that metric, global production of lithium is roughly equivalent to global production of gold while global production of lead is several hundred times higher.

May 28 12:33 AM

[NorthernPiker:]

John, the second link was cited by Don Harmon and contains flawed information that indicates that lithium is much more prevalent in the earth's crust than lead. This is not true. They are equally abundant - the point of my comment. This is quite relevant to the long term viability of the use of lead and lithium in energy storage and other applications.

What is also relevant is the amount of lead and lithium required per kWh of energy storage. For lithium, it is about 2.5% of the battery weight, or 0.25 kg per kWh. For lead in a lead-acid battery, it is about 50% of the battery weight, or 15 kg per kWh. John, what is the approximate lead content, in kg per kWh, for Axion's batteries?

(Reference for composition of lead-acid batteries)
practicalaction.org/pr...

Your comment about the present disparity in lead and lithium production is valid but somewhat irrelevant. The relevant issue to be discussed is the ability to scale lithium production while maintaining a reasonable commodity cost.

May 28 10:01 AM

[John Petersen:]

NorthernPiker, explaining the substantial differences between lead ore deposition and lithium ore deposition is beyond the scope of this article. Instead, I'll repeat the comment Jack Lifton posted to this article on altenergystocks.com

"John,

Your article is, as usual, thorough and superb. I specialize in the market fundamentals and end uses of natural resources, and I want to point out that your conclusions about the choices for our resource constrained world should be a loud and clear warning to those now wasting precious time and money on technologies requiring rare metals that are the wrong choice if our western way of life is to be scaled up so that Asia can enjoy a higher standard of living. The only way for the electrification of motor vehicles to proceed rapidly is through the use of battery technologies principally based on lead. Lead can be recycled indefinitely and its global annual production could be increased fairly quickly. The world's already known resources and reserves of lead are multiples of those of lithium or the rare earths. Finally the yearly production of new lead is today 160 times larger than that of lithium and 40 times larger than that of the rare earths. Who is kidding who about resources and time?"

While I want to stay away from resource availability arguments, I think we can all agree that Jack is an authority and rely on his assessments of the raw materials markets.

May 28 11:34 AM

[NorthernPiker:]

Jack Lifton may be an authority but he is not above selective (ab)use of data that does not stand scrutiny. For example, his statement that you cited, < the yearly production of new lead is today 160 times larger than that of lithium >, conveniently ignores that, for a given battery capacity, 60 times more lead (15 kg per kWh) than lithium (1/4 kg per kWh) is needed.

Here's another misdirection from Jack: <Lead can be recycled indefinitely.> Actually,about 99% of the lead is recycled from lead-acid batteries. Since a lead-acid battery has only 1/10 the life of a LiFePO4 battery, then during the life of a LiFePO4 battery only 90% of the lead is recycled from equivalent-capacity lead-acid batteries. Assuming no recycling of lithium, these lead-acid batteries will be responsible for 6 lbs. of lead being released into the environment for every lb. of lithium released due to disposal of equivalent-capacity LiFePO4 batteries.

May 28 01:58 PM

[John Petersen:]

NorthernPiker, trying to equate the complexity and cost of lithium extraction and processing to the cheap simplicity of lead extraction and processing is absurd. It also overlooks the fact that the U.S. has immense commercial lead deposits and no commercial lithium deposits.

You've been reading my work long enough to know that comparing the best examples of Li-ion technology to the worst examples of lead-acid technology are inherently deceptive. If you want to make cycle life comparisons with Li-FePO4, you can at least have the decency to use lead-carbon like Sandia did last year:

seekingalpha.com/artic...

May 28 02:06 PM

[NorthernPiker:]

Well, John, please provide me with the data on lead-carbon:

o Cycle life specs - number of cycles and depth of discharge;
o The amount of lead required per kWh of storage capacity; and,
o Estimated recovery rate of lead from a recycled battery.

A web link would be fine.

May 28 03:43 PM

[Don Harmon:]

TAKE A BATH IN LITHIUM ??

Did you know that you can go soak in Lithium-laced hot springs throughout northern California and Nevada? One of the best is near the Silver Peak lithium mining operation SW of Tonopah Nevada. Suggest a nice dip and then wheel on into town for one of the most laid back meals you'll ever have from the fyne fokes of Silver Peak

Don Harmon





On May 28 02:06 PM John Petersen wrote:

> NorthernPiker, trying to equate the complexity and cost of lithium
> extraction and processing to the cheap simplicity of lead extraction
> and processing is absurd. It also overlooks the fact that the U.S.
> has immense commercial lead deposits and no commercial lithium deposits.
>
>
> You've been reading my work long enough to know that comparing the
> best examples of Li-ion technology to the worst examples of lead-acid
> technology are inherently deceptive. If you want to make cycle life
> comparisons with Li-FePO4, you can at least have the decency to use
> lead-carbon like Sandia did last year:
>
> seekingalpha.com/artic...

May 28 04:02 PM

[John Petersen:]

NorthernPiker, the chart I referenced earlier provides the only publicly available cycle life and DOD data that I'm aware of, but it provides significant evidence that an asymmetric lead-carbon device should have full cycle-life parity with li-phosphate. As more detailed data is published, I'll be sure to share it.

Since the bulk of the battery weight in either lead-acid or lead carbon is lead, you have to assume that energy density is on the order of 50 to 60 Wh per Kg of metallic lead. Recycling basically recovers 100% of the lead. The 99% figure you quoted earlier suggests that 1% of lead-acid batteries are not recycled, but it does not imply that the lead is released into the environment.

Don Harmon, with average lithium concentrations of 160 ppm, it wouldn't be much of a bath.

May 28 04:28 PM

[Don Harmon:]

I think we can put aside resource availablility arguments and call it maybe slightly easier to process lead - so what? The real discussion is moving the technology forward and finding ways to bring down the costs so that any widely substitutable resource can be employed to reduce our dependence on fossil fuel. All this talk of resource availability is just so much rhetoric on both sides.

Anything is doable if we want to do it bad enough and it makes economic sense to do it at all? Resources will come from other places on the globe and will help raise the standard of living in those places - what's wrong with that?

www.usatoday.com/tech/...

Don Harmon

May 28 04:40 PM

[John Petersen:]

Don, lithium supply has been off my list of major concerns since Dr. Evans published "Lithium Supply: Enough to Cover Demands" earlier this month. In fact, my comment on that article said:

"Thank you so much for taking the time to comment on a question that's kept me profoundly confused for a long time. With a variety of conflicting claims circulating, it's difficult to know which to believe. Jack Lifton has told me that you're his go to guy when it comes to lithium questions and if you're good enough for Jack, I have no basis to complain. I now feel comfortable about crossing this issue off my tick list."

seekingalpha.com/artic...

But with multiple millions of lead-acid batteries going in for recycling every year and domestic ore deposits that frequently run in the 20% to 50% range, I'll not sit quietly by and let anyone suggest that there might be future shortages of lead.

May 28 04:48 PM

[Don Harmon:]

Hi John,

Lets have a little fun and maybe instructive at the same time?

Could you provide in one of your famous "tables" the cost per Watt-hour, Specific Energy, that is Watt-hours per kilogram, and the Energy Density, Watt-hours/liter for an example of one of your favorite lead - carbon advanced batteries.

I will then do a similar "table" for the same values for a Lithium Iron Phosphate battery of similar function.

Thanks,

Don Harmon

May 28 05:11 PM

[battman:]

Help raise the standard of living of a foriegn country? We tried that, it's called the middle east. Worked out pretty good hasn't it.


On May 28 04:40 PM Don Harmon wrote:

> I think we can put aside resource availablility arguments and call
> it maybe slightly easier to process lead - so what? The real discussion
> is moving the technology forward and finding ways to bring down the
> costs so that any widely substitutable resource can be employed to
> reduce our dependence on fossil fuel. All this talk of resource availability
> is just so much rhetoric on both sides.
>
> Anything is doable if we want to do it bad enough and it makes economic
> sense to do it at all? Resources will come from other places on the
> globe and will help raise the standard of living in those places
> - what's wrong with that?
>
> www.usatoday.com/tech/...
>
>
> Don Harmon
>
>
>

May 29 06:24 AM

[John Petersen:]

Don, what a great idea. I've done exactly that for my next article and taken care of your part of the work too!

Battman ;-)

May 29 08:36 AM

[Don Harmon:]

Looking forward to seeing it John. I have a little investigation going on myself - so it could be a very interesting ping pong match :-)

Don Harmon

Battman - we don't seem to mind China buying our debt now do we?

May 29 12:54 PM

[John Petersen:]

While doing your homework don't overlook the most recent public data out of the ALABC:

www.batterydemon.co.uk...

May 29 02:04 PM

[John Petersen:]

Make that link:

awbriefing.com/present...

May 29 02:05 PM

[Sharkey:]

I find your articles extremely well written, and very educational (I even bought a few XIDE shares near their low point). But while we’re on the topic of efficient vehicles, I’d like to hear your thoughts on the compressed air vehicles in China I read about a year or so ago. Assuming a “safe” compressed air tank could be designed, do you have thoughts on the efficiency of energy conversion, and the companies involved in developing these vehicles? As I recall, they were reported at a 50-mile range. Also, speaking of “safe”, I’m concerned about 500-pound EV’s safety in crashes with larger vehicles, and the impact this may have on buyer psychology.

May 29 04:13 PM

[John Petersen:]

Sharkey, there's a company out of France named MDI that is planning to introduce compressed air vehicles in the near-term. I don't talk about them because there is no clear investment opportunity, but I try to keep tabs on the technology. Getting to safer ultra-light EVs will require changes in the traffic laws and most likely special reserved corridors or lanes, but most of the issues can be overcome with enough will. The only other choice is 3,000 pound vehicles that still won't win in a collision with a larger vehicle but won't be economic either.

May 29 04:22 PM

[Douglas Hvi...:]

I was able to invest in MDI a few years back when they were still in the development stage. I could only afford one share - a year's investment cash! Speculative, of course. Very occasionally I see something about someone wanting to sell some shares, but the company is not public and has no plans to become so. If you check into one of these sales, make sure they are really stockholders, you don't want to buy a scam.

On plug ins, it would be interesting to see economic calculations on the effect of the vehicle to grid technology. It has been pointed out that a major vehicle changeover to either plug ins or BEVs would supply more storage than the grid is likely to need. If utilities can "rent" their storage rather than buying it, it could be a win-win situation. However, some calculations would be advisable!!!!

May 30 08:49 AM

[gregory fen...:]

Thanks for the great information john. I have been looking for an area of investment in the cleantech that involves hybrid cars and battery use. After researching lithium extraction, compounds and the risks of mining, your article certainly grabbed my attention. Focusing on the mass market, whilst providing a green solution through the effective use of lead based products is a smart idea. Ev's are here to stay, in all forms. I hold positions in exide and bcon, my first american market recovery purchases. Being a new zealander I was happy to see a battery recycling plant for exide here. Great work john. thankyou.

Jun 03 09:20 AM

[John Petersen:]

Douglas, for the next several years the focus will be directed to developing more cost effective batteries for plug-ins. When those solutions become sufficiently prevalent in the 2015 to 2020 time-frame, the experts are saying that the first step will be vehicle to home and finally vehicle to grid.

Gregory, I think Exide's a sure winner over the next couple of years for a variety of reasons and while Beacon's a good deal more speculative, it's hard to criticize at these price levels. I wish you luck in your investing and might suggest a bit more diversification.

Jun 10 01:03 AM