Alternative Energy Storage: Cheap Continues to Outperform Cool

The next couple months are shaping up as a time of extraordinary change in the energy storage sector. Events that will drive the change include:

• Press reports indicate that the Department of Energy will be ready to announce it's preliminary decisions on the allocation of $2 billion in ARRA battery manufacturing grants sometime this week;
• We've seen numerous reports on automaker's plans to begin manufacturing PHEVs and EVs in limited volumes for testing and demonstration purposes;
• New tailpipe emission standards in Europe and accelerated CAFE standards in the U.S. will effectively compel the widespread adoption and rapid roll-out of stop-start and mild hybrid technologies by all major automakers;
• Advanced Battery (ABAT) acquired manufacturing facilities for electric two-wheeled (E2W) vehicles and is diversifying its operations with a sharper focus on the Chinese market;
• Beacon Power (BCON) received a conditional commitment for a $43 million DOE loan guarantee that will be used to complete a 20 MW flywheel energy storage project in New York; and
• A123 Systems filed another amendment to its SEC registration statement, which indicates that they're still on track for an IPO sometime in September.

So now seems like a good time to update the relative performance of the individual energy storage stocks I've been writing about for the last year.

The following table provides comparative price data for the short-list of pure play energy storage companies I track. It shows closing prices on November 14, 2008 and July 31, 2009, calculates the percentage of change over the last eight months, and calculates current market capitalizations based on recent SEC reports.

		14-Nov	31-Jul	Percent	Market
Cool Emerging	Symbol	Close	Close	Change	Cap
Ener1	HEV	$6.75	$6.38	-5.48%	$723.96
Valence Technology	VLNC	$1.88	$1.83	-2.66%	$228.58
Altair Nanotechnologies	ALTI	$0.87	$0.97	12.14%	$90.36
Beacon Power	BCON	$0.82	$0.76	-7.32%	$90.62
Cool Sustainable
Maxwell Technologies	MXWL	$6.50	$14.16	117.85%	$328.26
Advanced Battery	ABAT	$2.13	$4.28	100.94%	$247.47
Ultralife	ULBI	$9.08	$6.42	-29.30%	$108.88
China BAK	CBAK	$1.99	$3.31	66.33%	$190.95
Hong Kong Highpower	HPJ	$3.50	$1.41	-59.71%	$19.12
Cheap Emerging
Axion Power International	AXPW.OB	$1.30	$1.25	-3.85%	$44.53
ZBB Energy	ZBB	$0.93	$1.30	39.78%	$13.80
Cheap Sustainable
Enersys	ENS	$6.86	$19.79	188.48%	$951.70
Exide Technologies	XIDE	$3.38	$4.87	44.08%	$367.78
C&D Technologies	CHP	$1.94	$2.00	3.09%	$52.59
Active Power	ACPW	$0.40	$0.74	83.75%	$48.85

Between November 14, 2008 and July 31, 2009, a $1,000 index investment in the Dow Jones Average, the Nasdaq Index and the S&P 500 would have resulted in an average portfolio appreciation of 17.2%. The following table summarizes the portfolio gain or (loss) that would have resulted from an investment of $1,000 per company in each of my four groups.

Tracking	Percentage
Category	Gain (Loss)
Cool Emerging	(0.8%)
Cool Sustainable	39.2%
Cheap Emerging	18.0%
Cheap Sustainable	79.9%

Equity markets are driven by a combination of greed and fear, emotional reactions that are often at odds with fundamental economic realities. Over the past few years, both cool groups have been driven by headlines that highlight opportunities while both cheap groups have been driven by headlines that highlight problems. Since headlines invariably feed the greed and fear cycle, the cool groups were driven to relatively high valuation levels while the cheap groups were driven to relatively low valuation levels. If the last eight months are any indication, the pendulum is moving back toward a more balanced position where cheap group valuations will eventually catch up with cool group valuations. As the following summary valuation metrics show, they still have a long way to go.

		Shares	Price/	Price/	Price/	Book Value
Cool Emerging Group	Symbol	(000s)	Earnings	Book	Sales	Per Share
Ener1	HEV	113,474		8.63	48.38	$0.74
Valence Technology	VLNC	124,905			8.39	-$0.55
Altair Nanotechnologies	ALTI	93,153		2.48	16.39	$0.39
Beacon Power	BCON	119,239		3.67	519.28	$0.20
Group Average				4.93	148.11	$0.20
Cool Sustainable Group
Maxwell Technologies	MXWL	23,182		5.41	3.79	$2.65
Advanced Battery	ABAT	57,821	14.31	2.88	5.04	$1.47
Ultralife Batteries	ULBI	16,959	12.64	1.19	0.41	$4.92
China BAK	CBAK	57,688		1.19	0.82	$2.74
Hong Kong Highpower	HPJ	13,563	10.85	1.14	0.28	$1.23
Group Average			12.60	2.36	2.07	$2.60
Cheap Emerging Group
Axion Power International	AXPW.OB	35,625		7.25	42.09	$0.17
ZBB Energy	ZBB	10,618		1.74	15.24	$0.74
Group Average				4.50	28.67	$0.46
Cheap Sustainable Group
Enersys	ENS	48,090	11.56	1.49	0.49	$13.43
Exide Technologies	XIDE	75,519	7.49	1.09	0.11	$4.37
C&D Technologies	CHP	26,296		1.11	0.15	$1.81
Active Power	ACPW	66,458		2.24	0.91	$0.30
Group Average		54,091	9.53	1.48	0.42	$4.98

I have long argued that every energy storage decision boils down to a cost-benefit analysis and the bulk of the incremental sales revenue will flow to companies that serve the mundane needs of the average user, rather than the extreme needs of "power users." Based on his recent statement that lithium-ion batteries are overhyped, it appears that Vinod Khosla, one of Silicon Valley's most active cleantech investors, agrees with me.

While I believe fundamental market drivers will result in rapid and sustained growth across the entire spectrum of energy storage companies, I’m convinced the superstars will be the manufacturers of objectively cheap products that can serve the needs of average users at a reasonable price. Until cheap group valuations approach parity with cool group valuations, I will continue to believe that investors who want to maximize portfolio performance in the energy storage sector should focus on the cheap groups instead of the cool groups.

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

Comments

[battman:]

Ultimately, the real superstars will be the companies that can actually manufacture and supply products to consumers. This is one of the reasons Axion should be a great investment.

Again, like Ballard (and all the fuel cell companies) all the hype in the world catches up to you when you can't actually make a product that people can buy, or at least afford to buy.

Aug 03 08:44 AM

[Davewmart:]

This analysis assumes that automakers are going to be prepared to put lead-carbon batteries into cars without delay on the grounds that they are in some respects similar to the well-tested lead acid traditional battery.
Since there is no evidence at all that they are looking at the introduction of these batteries, and vast bodies of evidence that everyone and his cat is developing NiMH and lithium batteries, it seems to me unlikely that this will occur.
It also manages to totally ignore all the major battery makers, in favour of start ups largely dependent of Government cash.
For what is actually happening in battery technology, Panasonic, LG, Sanyo, Hitachi and BYD etc are the relevant players.
Multi-billion investments are being made in mostly lithium battery factories.
As for resource concern:
'To put the demand for lithium supplies into perspective, the Alliance’s 250kg AESC batteries contain 3 kg of lithium. According to the mining companies Chemetall and SQM, lithium reserves are currently estimated to be between 14 and 17 million tonnes.'
www.greencarcongress.c...
Since lithium can be obtained from seawater for around $32/kg, and huge quantities are available from this source, concerns regarding it's exhaustion seems misplaced:
gas2.org/2008/10/13/li.../

The bottom line is that most of the companies mentioned here such as Axion are penny stocks who don't have their batteries which rely on technologies which are unproven, being used at any large scale, and the big boys are using other technologies, with cutting edge players such as Mercedes who often licence out their technologies using lithium even for mild hybrids.
Maybe Exide will be able to move lead carbon technology on, but at the moment there is no sign of the projected low costs, and no major car makers appear to be even testing them.
You can buy lithium batteries off the shelf, production is ramping quickly and costs are coming down.
They are in use or are being evaluated by just about every car maker on the planet.

Aug 03 09:20 AM

[D. McHattie:]

I'm very torn right now.

I have some money in this sector, consistent with the theme of this article and I also have some cash on the sidelines.

I like the energy storage sector but feel that the broader market is overbought.

I feel that a correction in the broader market will pull energy storage companies down with it. But, on the other hand, the share price of these energy storage companies should get a significant boost form the ARRA grants and the A123 ipo.

I just feel that a good trader could really cash in here over the next couple months. I wish I was one.

Aug 03 09:22 AM

[manya05:]

Not so clear to me the market is "consumers", it might be for mobile applications and some off-grid power applications. But, at some point, if we are going to deploy GWs and GWs of wind/solar, and we want to integrate them to the grid, we will need gobbles and gobbles of storage capacity. At that point, "cheap" will still be very important, but also will be scalability...and the customer is not the consumer anymore, but the owners of the renewable generating capacity, or the grid operator..at that point all these little start-ups are going to have to partner with the traditional suppliers to the utility industry if they want to get anywhere. You do not get rid of the GEs, Siemens, and ABBs of the world that easily.

Aug 03 09:26 AM

[Juan Carlos...:]

John,
I wonder how the picture you´ve been trying to portray for quite some time now would change if you include in your stock comparison other important players in the advanced battery market, such as A123 Systems in the US and BYD in China.

Aug 03 09:31 AM

[jerrydd:]

Here John keeps bashing Lithium batteries yet he has no evidence in the short term to back up his points and his longer term argument of not enough Lithium is weak. Nor has he put any evidence that Lithium would cost more as Li already has costs down to $.30wthr at 1/2, 1/3 the weight of CL batteries.

Lithium is in a more Advanced stage of development now being produced compared with his favorite of carbon/lead batteries which little is being produced. And his niche for them, start-stop and mild hybrids is not from my studies going to be big or will for the short time it is here, CL will not be ready vs Lithium which is now.

Due to soon higher oil prices and the low cost of mass produced EV's by their natural simplicity, in 5 yrs they will take over the economy transport market.

Since Axion won't release info and their hype has nothing to be based on other than other CL companies have done good lab tests, I'd be very careful.

Warning on Maxwell as their ultracaps are far, far too expensive, complicated systems to use them make them not viable. Price a system out and you'll be amazed at 10x's a Lithium battery system or more. Their power/energy/lb ratio is terrible too.

Valance Li batteries suck!! Every one I've seen used has died rather fast.

Exide is a cut corners, crappy company that has low margins and not likely to go up much.


United Solar Ovonic LLC
UNI-SOLAR, a product innovation of Energy Conversion Devices, Inc. (ECD) (NASDAQ: ENER), is the leader in building integrated rooftop photovoltaics, ...
uni-solar.com/interior... - Cached

Has this company or it's earlier versions going back 30 yrs every produced a profit from a product?? They are another hype company I'd run from, not to.

C+D tech seems to be in almost every cell ph tower in the country and has good products. But it could like any battery company get overtaken by tech advances. I use them in one of my EV's and happy with them.

Zenn and EEstor looks more and more like hype and no substance.

A123 is about the only solid battery play when it goes public I see other than BYD as both have proven products and orders for them.

I want badly to see batteries become better as I see EV's, plug in hybrids as the future being 3x's as eff as gas/diesel and they use US made electricity, not imported oil which next yr will hit $4-5/gal again as soon as the world economy comes back as there is not enough supply. Because of this they will be by far the cheapest transport means, fuel, making EV drive the way to go.

But I've seen way too many battery company hype machines, scams before and there are many in this list. These are just the ones who I know about. The other may or may not be good as I don't have enough info on them.

Aug 03 09:44 AM

[John Petersen:]

Davewmart, this analysis does not assume anything about technology and only looks at core business fundamentals like assets and liabilities, revenues and profits (losses), and relative market capitalizations. Unless one is willing to assume that a particular battery technology is going to eat into the existing sales base for another, which would be a very foolish assumption, the temporary market dislocations from incessant hype will over time correct themselves. At that point the current market darlings will tank and the orphans will rise. It's nothing personal, that's just the way stock markets work.

manya05, the grid-based storage market will be massive beyond belief and the customers will be far more sophisticated; which means that their analysis will always be done by accountants and engineers who will study the specific requirements of a specific installation and determine how those requirements can be satisfied for the lowest possible total cost of ownership. The process will undoubtedly require lots of partnering and other relationships with GE, Siemens, ABB and a host of others who will do the on the ground integration and installation work. But regardless of who does the work, somebody has to make the storage device and cheap will beat cool every time (because accountants and engineers only care about getting the job done at the best price.)

Juan Carlos, as soon as A123 is public I'll include them. I'll probably never write about BYD because 50% of its business is cellphones, 25% is automotive and only 25% is batteries, which means it is no more of a pure play than JCI is. I would be happy to write about SAFT, which is an important pure play battery company, but they not registered in the U.S. and do all their reporting in foreign currency, so dealing with them is not worth the effort.

The big problem I have with diversified companies is that it's way too hard to figure out what part of their performance is attributable to the battery business and what part is attributable to something else. As soon as we move away from the pure play companies, it becomes a matter of comparing apples and oranges.

Aug 03 10:00 AM

[John Petersen:]

jerrydd, do tell me, do you and Davewmart even read the articles before posting irrelevant criticisms? You both want to go off on a favorite tangent no matter what the subject matter is. I get it, you don't agree with me on a number of points that I've written about in other articles. I have no intention of arguing the same points ad nauseum.

We disagree on what the shape of the future is. I know it, you know it and now all the readers know it. So let's get beyond the emotion and stay on topic please.

Aug 03 10:06 AM

[Davewmart:]

John both I, and I assume, jerrydd do indeed read you article before commenting.
It appears sometimes as though you achieve the not-inconsiderable feat of failing to read what you have written.
In this particular article, you argue:
'I have long argued that every energy storage decision boils down to a cost-benefit analysis and the bulk of the incremental sales revenue will flow to companies that serve the mundane needs of the average user, rather than the extreme needs of "power users." Based on his recent statement that lithium-ion batteries are overhyped, it appears that Vinod Khosla, one of Silicon Valley's most active cleantech investors, agrees with me.'

Both of us directly address this argument.
In fact you do repeat the same arguments ad nauseum, in every article seeking to promote lead carbon based companies, and producing the flimsiest evidence to support your contentions.
If you want to buy a penny stock like Axion, good luck to you, but your argument that it is going to come from nowhere to sweep the market is growing thinner by the day, whilst the factories to build alternatives are multiplying rapidly.
Comments would change if you wrote new articles, instead of regurgitating hype on lead carbon technology.

Aug 03 10:28 AM

[battman:]

Davewmart, you seem to ignore tha fact that both Exide and East Penn have a relationship with Axion, and they provide plenty of batteries to the auto industry, so the foot's in the door that is for sure.
Multibillions are being invested in Lithium because they have to. There currently is not a lithium industry, so they need to spend that kind of money to try and create it. Spending a lot of money does not justify the technology, it simply shows how far back they are. Once again, need I remind everyone of Ballard.



On Aug 03 09:20 AM Davewmart wrote:

> This analysis assumes that automakers are going to be prepared to
> put lead-carbon batteries into cars without delay on the grounds
> that they are in some respects similar to the well-tested lead acid
> traditional battery.
> Since there is no evidence at all that they are looking at the introduction
> of these batteries, and vast bodies of evidence that everyone and
> his cat is developing NiMH and lithium batteries, it seems to me
> unlikely that this will occur.

Aug 03 10:40 AM

[John Petersen:]

Davewmart, an old song lyric went "there is none so blind as he who will not see ..." In combination Exide, Enersys and East Penn (an Axion partner that is privately held) sell more batteries every year than all of the lithium ion battery manufacturers combined. If you want to believe that reporters dealing with PR departments give you the complete story please feel free. I will continue to focus on SEC reports and audited financial statements because they are the one and only place that businesses are disinclined to stretch the truth or gild the lily.

Aug 03 10:57 AM

[Davewmart:]

battman,
I have indeed noted that Exide has formed a relationship with Axion, and this may lead to further developments in lead carbon technology, which I have nothing against.
What I am arguing against is the notion that lead carbon batteries are going to be installed very quickly in mild hybrids, as the motor manufacturers will want to do extensive testing in spite of it's similarities to traditional batteries.
There is no evidence that such testing is taking place, or that lead carbon technologies are anywhere near reaching their cost targets.
There is extensive evidence that both NiMH and Lithium are being tested and implemented by almost all major players.
So the idea that lead carbon will come out of nowhere and sweep the field seems to me far fetched.
It's a long shot by small players, and by Exide presumably with the idea of utilising their lead based production capacity.
Good luck to them, but it is a long shot, not something which is going to suddenly appear in most cars.

Aug 03 10:59 AM

[Zenfar:]

Why no BYD?

Aug 03 11:26 AM

[John Petersen:]

Zenfar, 50% of BYD's business is cellphones, 25% is automotive and only 25% is batteries, which means it is no more of a pure play than JCI is. The big problem I have with diversified companies is that it's way too hard to figure out what part of their performance is due to the battery business and what part is attributable to something else. As soon as we move away from the pure play companies, it becomes a matter of comparing apples and oranges.

I do occasionally comment on BYD in response to questions like yours and my general view was that it was a great investment when Buffet bought at $1.12 per share and has nowhere near the upside potential at $6.25 per share. I learned ages ago that stocks are invariably overvalued or undervalued and about the only time they even touch the objective fair value is on the way up or on the way down. I also learned that the only way to make money in the market as a stock picker is to buy stocks when they're undervalued and sell them when they're overvalued.

Aug 03 11:35 AM

[Zenfar:]

If you did include BYD what group would you have put it in?

Long XIDE and BYDDF.

Aug 03 11:51 AM

[John Petersen:]

Zenfar, BYD is a unique company because it's core business is cheap sustainable cellular telephones and it's getting a lot of PR mileage (pun intended) out of work that's focused on batteries and plans to manufacture and sell PHEVs. I'm an inveterate cynic about the commercial potential of PHEVs unless battery prices collapse, which would be simply terrible news for battery manufacturers. When you get to China, I see the need for hundreds of millions of electric bikes and scooters (collectively E2W) which will use enough batteries to keep BYD and ABAT in the pink forever, regardless of whether I'm right about PHEVs.

On balance, I'm glad I can say (a) they're not a pure play company, and (b) they're not registered in the U.S.

Aug 03 12:00 PM

[BatteryUser:]

There are two sides to a business: Manufacturing quality products and sales / marketing acumen. Having hands on experience with Axion, they need some improvement on both account. However, they have a very strong technical team and some very interesting products, but I would still consider them at a pre-production scale except for some specialty batteries they inherited from the manufacturing plant they took over.


On Aug 03 08:44 AM battman wrote:

> Ultimately, the real superstars will be the companies that can actually
> manufacture and supply products to consumers. This is one of the
> reasons Axion should be a great investment.
>
> Again, like Ballard (and all the fuel cell companies) all the hype
> in the world catches up to you when you can't actually make a product
> that people can buy, or at least afford to buy.

Aug 03 12:03 PM

[John Petersen:]

BatteryUser, I suspect you've been buying legacy lead-acid products from their small in-house marketing staff. Hopefully things will be far different with the PbC products which will be marketed through the much larger channel partners, but as you point out the PbC is still in the final pre-production stages of shake down and testing.

Aug 03 12:19 PM

[Davewmart:]

BatteryUser said:
' I would still consider them at a pre-production scale except for some specialty batteries they inherited from the manufacturing plant they took over.'

That sounds like a fair assessment.
As a further comment on the link to Exide, this sounds like a defensive play by Exide to me.
For years the battery business was stable and boring, with little real change in the basic technology.
Now there is rapid change in the battery business, and their major purchasers, the car companies, are forming links and investing in new technology companies to produce mainly lithium batteries.
It is notable that the tie in to Axion was not by a car company, but a battery manufacturer hoping to keep it's lines running.
The question is, are they too late?
Given the choice of an outside contractor, or one with which they have extensive interests, such as Nissan with AESC, are car makers going to support the outside manufacturer?
There is no sign that they are doing so, and the car manufacturers seem to have unanimously gone for developing the technology with the greater long term potential, and to be ignoring lead carbon.
Perhaps Exide will manage to keep it's lines running this way, but it seems awfully late in the day, and stabilisation rather than taking over new fields of conquest seems to be the plan.

Aug 03 12:30 PM

[John Petersen:]

Davewmart, I'm speechless – but thank you for demonstrating your depth of knowledge about the battery industry.

Aug 03 12:44 PM

[Davewmart:]

John, long on rhetoric, short on facts.
Weren't you the guy who was using estimated production figures for cars to support his contention that lithium resources would be insufficient to cope?
Estimated figures from before the car market collapsed, that is.

Aug 03 12:51 PM

[John Petersen:]

Davewmart, I am generally kind to commenters and hate to offend, but in your case I'll make an exception and remind you that It is generally better to say nothing and have people think you a fool than to say too much and prove their point. Please do both of us a favor and stop reading my articles.

Aug 03 12:57 PM

[Davewmart:]

John, if you have no pertinent comments to make which deal in facts please don't bother responding.
Since your articles often grossly misrepresent what is happening and obscure rather than illuminate, it seems appropriate to draw attention to the many ways in which the desirability of making investments which you suggest may be inappropriate.
If you do not want your inaccurate statements challenged, please stop publishing them.

Aug 03 01:33 PM

[Don Harmon:]

One comment from the peanut gallery here. When does a battery become a whole different product? One of the things missing here in comparing the two or three technologies, and it could be the reason we are not seeing the new Carbon batteries being tested widely by Car makers, is the "smart factor".

New Carbon technology is fine but it still has resulted in just a new "dumb battery" product. New Lithium - ion technology has been married with computer technology which is capable of full battery management and on-board diagnostics, and lately is being fully integrated into CAN Bus systems which really appeals to the new EV car makers. Yes folks our new cars will be more like sitting inside a big "server"! The new car is becoming more of a computer as we move away from the ICE of the past!

Unfortunately advanced Carbon batteries remain tied to their past even with performance enhancements and a lower cost - their use is defined by what they are, while Lithium-ion batteries are being equipped &programmed with simple computer code and will "talk" to all the rest of the components going into modern EV's.

I am not sure this has been adequately addressed thus far in any of John's excellent articles - but it should be.

Aug 03 01:50 PM

[John Petersen:]

Don, the lithium battery roadmap says that eliminating the need for smart in batteries will be one of the big ways of driving down costs. Li-ion needs heavy duty electronics to make the cells function with each other. Lead acid and lead carbon are self adjusting and don't need any of the hardware or expense.

You really ought to study the roadmap because it is really an eye opener when it comes to the challenges the DOE foresees in making lithium-ion a mass market technology.

files.me.com/john.pete...

Aug 03 02:34 PM

[Don Harmon:]

John, I do appreciate the roadmap and have studied it thoroughly. I do not deceive myself that this is a viable market at the moment for us -but since we are who we are LiFeBATT has to take the best of the available Lithium-ion technologies and build our Battery Packs to a much higer standard - kind of like the old weiner commercials that Hebrew National used to do. Don't know if they have that brand over in the Alps though?

Aug 03 03:26 PM

[ginchinchili:]

jerrydd, in your brief analysis of the battery industry relying primarily on modifiers such as "suck" and "crappy," I noticed you left out EnerSys, for neither praise nor criticism. In fact, EnerSys doesn't often get discussed one way or the other in public forums, which surprises me.

Of course, John always includes it in his charts and discloses it as one of his battery investments. Last week Tom Conrad wrote an article for Seeking Alpha about clean tech stocks (seekingalpha.com/artic...) in which he mentions that he has several stock lists that he has compiled. I looked at his "Electricity Storage" list and found EnerSys missing. I posted a comment pointing this out to him and he acknowledged it was an oversight and that he had since added it to his list.

I just find it a bit curious because I think EnerSys is probably in the best position of all the battery companies. They are certainly the giant among industrial battery producers and set up for mass production of their primary money makers, lead acid batteries, but also produce nickel and lithium batteries, and has recently been increasing their investments in research, development, and production of lithium products. I'm impressed that they aren't just trying to crank out as many lithium car batteries in, what would be, a questionable quest to corner the auto battery business, but instead seem to be focused on applications where battery weight and size are most relevant. (I suspect this is one of the reasons John is attracted to this company as an investment; it reflects his thinking.) They also have a well-defined global distribution network, which will prove big in coming years.

Yes, this is a plug for EnerSys, but it think it's warranted and deserved. All I can think of is that EnerSys comes across as kind of boring, but I think they will quietly grow to become one of the most successful players in the battery industry. The following is a link to a press release that was issued last week which touches on some of EnerSys's business pursuits that I mention above: phx.corporate-ir.net/p...=

As always, thank you, John, for sharing your research and helping to educate us about the battery industry. I don't care if people agree or disagree, but I don't think people should get upset with you just because they disagree with something you write. Personally, I don't agree 100% with anyone, including myself (?), but if I tried to pick a fight with everyone I disagreed with, well, life would be a real bummer. Thanks John.


On Aug 03 09:44 AM jerrydd wrote:

>
> Here John keeps bashing Lithium batteries yet he has no evidence
> in the short term to back up his points and his longer term argument
> of not enough Lithium is weak. Nor has he put any evidence that Lithium
> would cost more as Li already has costs down to $.30wthr at 1/2,
> 1/3 the weight of CL batteries.
>
> Lithium is in a more Advanced stage of development now being produced
> compared with his favorite of carbon/lead batteries which little
> is being produced. And his niche for them, start-stop and mild hybrids
> is not from my studies going to be big or will for the short time
> it is here, CL will not be ready vs Lithium which is now.
>
> Due to soon higher oil prices and the low cost of mass produced EV's
> by their natural simplicity, in 5 yrs they will take over the economy
> transport market.
>
> Since Axion won't release info and their hype has nothing to be based
> on other than other CL companies have done good lab tests, I'd be
> very careful.
>
> Warning on Maxwell as their ultracaps are far, far too expensive,
> complicated systems to use them make them not viable. Price a system
> out and you'll be amazed at 10x's a Lithium battery system or more.
> Their power/energy/lb ratio is terrible too.
>
> Valance Li batteries suck!! Every one I've seen used has died rather
> fast.
>
> Exide is a cut corners, crappy company that has low margins and not
> likely to go up much.
>
>
> United Solar Ovonic LLC
> UNI-SOLAR, a product innovation of Energy Conversion Devices, Inc.
> (seekingalpha.com/symbo...) (NASDAQ: seekingalpha.com/symbo...),
> is the leader in building integrated rooftop photovoltaics, ...<br/>uni-solar.com/interior...
> - Cached
>
> Has this company or it's earlier versions going back 30 yrs every
> produced a profit from a product?? They are another hype company
> I'd run from, not to.
>
> C+D tech seems to be in almost every cell ph tower in the country
> and has good products. But it could like any battery company get
> overtaken by tech advances. I use them in one of my EV's and happy
> with them.
>
> Zenn and EEstor looks more and more like hype and no substance.<br/>
>
> A123 is about the only solid battery play when it goes public I see
> other than BYD as both have proven products and orders for them.
>
>
> I want badly to see batteries become better as I see EV's, plug in
> hybrids as the future being 3x's as eff as gas/diesel and they use
> US made electricity, not imported oil which next yr will hit $4-5/gal
> again as soon as the world economy comes back as there is not enough
> supply. Because of this they will be by far the cheapest transport
> means, fuel, making EV drive the way to go.
>
> But I've seen way too many battery company hype machines, scams before
> and there are many in this list. These are just the ones who I know
> about. The other may or may not be good as I don't have enough info
> on them.

Aug 03 03:38 PM

[battman:]

Interesting how when John mentioned "Axion inside" you quickly jumped all over him comparing in a very very negative light how Axion would then be like Intel and asking the question "does Axion make anything???". You even compared Axion to EEstor because of this. Yet now you proudly trumpet how new cars will be like computers and how that is a wonderful thing and lithium will be the power source. I guess what you're trying to say is "lithium inside" is good? Clear it up for me, is a computer comparison good or bad Don?

Aug 03 03:46 PM

[BatteryUser:]

John,

I actually bought their new batteries, which were supposed to be equivalent to or better than an Exide battery we were using. Granted it was early in their production life, but it did cost us some warranty change-outs. I have not used them recently and I hope they have gotten their manufacturing under control by now.


On Aug 03 12:19 PM John Petersen wrote:

> BatteryUser, I suspect you've been buying legacy lead-acid products
> from their small in-house marketing staff. Hopefully things will
> be far different with the PbC products which will be marketed through
> the much larger channel partners, but as you point out the PbC is
> still in the final pre-production stages of shake down and testing.

Aug 03 03:49 PM

[John Petersen:]

Don, while we've only met in this forum, I'm confident that your product is all you say it is. I know that you have a far more realistic view of the challenges that have to be overcome to maximize the market potential. But hard working creative guys like you will get there and we'll all be better off for it. Besides, with a tent this big there is no reason for anybody to worry about overcrowding.

Ginchinchilli, Enersys is a fine company and I've had the pleasure of spending a half-day with their European president. One of the most fascinating take-aways from our meeting was that they have lots of customers coming through the door thinking they need the Enersys lithium-ion solutions, but most of them leave with a lead acid solution that costs less and serves their needs better. It's just another example of how most of us think our needs exceptional when in fact they're rather mundane.

Aug 03 03:59 PM

[Don Harmon:]

A computer comparison is not good or bad - it's just a more accurate example to use in discussing the next generation of Pure Electric Vehicles. Without complex internal combustion engines and the need for all the extra sub-systems like radiators, cooling systems, exhaust systems, catalytic converters, etc. The Pure Electric Vehicle is going to be more like driving around in a computer. Since Axion's product is limited to being a simple and effective power source only, it will be very successful and fill the market needs immediately which I agree with John on this.

We have to see how the market develops and realizing it will take ten years to fully develop Pure Electric Vehicles gives the short term players like Axion / Exide the short term advantage. But the ultimate tipping point will inevitably arrive someday where the Battery Pack will have to have other features which means it will have to use standardized communication protocols to run all the electronics in the new cars.

Intelligent Battery Packs will rule eventually while their cousins will still find a use in other markets but nobody can predict the future so all this is just speculation on my part and yours.




On Aug 03 03:46 PM battman wrote:

> Interesting how when John mentioned "Axion inside" you quickly jumped
> all over him comparing in a very very negative light how Axion would
> then be like Intel and asking the question "does Axion make anything???".
> You even compared Axion to EEstor because of this. Yet now you proudly
> trumpet how new cars will be like computers and how that is a wonderful
> thing and lithium will be the power source. I guess what you're trying
> to say is "lithium inside" is good? Clear it up for me, is a computer
> comparison good or bad Don?

Aug 03 04:17 PM

[John Petersen:]

You really are getting better at this commenting stuff Don. Good job and well said.

Aug 03 04:24 PM

[Don Harmon:]

Thanks, and everyone just chill out. Like John says this is a BIG tent and so far there seems to be enough room to accomodate everyone to watch the bands play.

Aug 03 04:34 PM

[Mayascribe:]

John: Haven't had time to peruse the usual banter here John, because tonight I have been studying the next bubble that Goldman Sachs is planning: Cap and Trade.

I won't--okay I will editorialize about my feelings of how GSK has repeatedly raped the world of trillions of dollars, and now is planning to do it again with (knee) Cap and Trade, or how the Obama administration is rife with Goldmanites, or how Sachs gave his campaign nearly a million in contributions, or how GSK is going to dominate the soon-to-be carbon credit commodity bubble, ect., ect., ect....

What I would like to gather are your thoughts of how batteries will be affected by what likely will be approved sometime this fall.

My guess is that Cap and Trade is a positive for batteries, and it better be, because what I've read tonight means the electric bill will go up by anywhere from $1500 to $3000 annually. Just hoping my batt stocks offset that some.

So, what do you think?

####

It seems Axion and Exide are on the move, likely due to the Cash for Clunkers. I sit on the fence on this one, as those two stocks are benefitting from this policy. However, what I don't like, or maybe want to know more about, is how in the hell can Ford be advertising government rebates of $3500 or $4500 for the purchase of a gas guzzling F150?

Aug 03 09:52 PM

[John Petersen:]

Mayascribe, like many in Washington I don't read legislation before it's passed, but my guess would be that the cap and trade will offer another good reason to store as much off peak power as possible because firing up the NG turbine tomorrow afternoon is going to cost. It also wouldn't surprise me to see some sort of incentive worked in for batteries where storage of off peak power from coal fired plants served as a sort of power laundry. As always, the devil's in the details and this scheme will likely have lots of devilish detail.

Aug 03 11:21 PM

[John Petersen:]

The Detroit News is reporting that the first round of ARRA battery grants will be announced at 1 p.m. on Wednesday, which helps explain why yesterday was an active day for many storage stocks. Given the number of applications that have been filed and the number of worthwhile projects to be considered, I'm glad I don't have to make that particular set of decisions.

www.detnews.com/articl...

Aug 04 12:04 AM

[Homer II:]

ABAT has been up over 22% in the last 16 trading days. All the blab aside, I like what moves UP, and makes MONEY

Aug 04 12:28 AM

[Mayascribe:]

All this makes me wonder about how in advance the Goldman boyz know this already. Is there any transparency of this, and how they have traded this ARRA announcement?

Cracks me up when you say: "Like many in Washington I don't read legislation before it has passed."

The more I learn, the more I feel that any investment is off kiltered; that some entity--some analyst--will prescribe advice that I should let go--take profits--of my shares of stocks that are way up.

The amazing part of all of this is that no time ever again in my lifetime will there be a better time to be involved in the stock market. But, there are so many shananigins going on, so much manipulation, that it's frightening in how I can compete.

Investing common sense says join the club. But I'm beginning to believe that nothing makes sense. Yet, sentiment does make sense. This whole market thing right now is more about hype than fundamentals. I will stick to my premise that going long is the best way to improve one's portfolio, for right now, and that now is only weeks away, or months away from aborting, once again. Every major recession model I've read about states that this is another head fake rally. The question is when to yet again get out and go to cash. But, heck, I'm riding with the flow, as false pretense as I see it is.

The good part right now is how things are looking up, temporarily, of course. The crazy part is to figure when the next pull back Part Two is going to occur.

Of course, Goldman Sachs already knows this, has "planned" this, as history has already proven.

Aug 04 01:38 AM

[John Petersen:]

Mayascribe, I have a hard time coming to grips with all the things that will or may impact the broader markets, but it hard for me to imagine a scenario where AE in general and storage in particular will see any big setbacks for a while. The ARRA grants are announced on Wednesday. Rumor has it that some ATVM loans will also grab headline space. Since I figure A123 is a top contender in both categories, it should give a tremendous boost to their planned IPO. Once we have a big IPO on a pure play battery company, the sector should be the golden child for several years and everybody with a marketable product should benefit handsomely. So right now I'm just sitting on my board waiting for the wave.

Aug 04 02:20 AM

[flywheel niche:]

(BCON) Beacon Power has just hooked up its 2nd Megawatt which is great news for this small but fast growing company.
The $43 million from DOE will be a big help and i also expect a large grant sometime soon. I would like to know more about the U.S Navy contract BCON received last year and how that is going.

Keep a keen eye on institutions buying...some of the big boys are starting to take positions, including Goldam Sachs

Aug 04 03:29 AM

[ginchinchili:]

Mayascribe, if there's one thing I've learned about investing it's that the talking heads should be ignored. If they get something right it's usually more coincidence than anything else, because for every pundit whose prediction is correct, there are 20 others who get it wrong. And who's right one day will be wrong the next.

My investing skills decidedly improved when I started focusing on learning as much as I can about a company; a product; an industry; investing techniques; etc., ignoring the pundits, and analyzing your information with a big helping of common sense and a heaping spoonful of caution. I'm not saying don't listen to the pundits, because they have good information, too. Just ignore them when they start pointing you to certain stocks. And don't think this is a backdoor way of taking a swipe at John P. Personally, I don't put him in that talking head catagory, but I do take the same approach as I mention above. John's a wealth of information and I've learned tons about the battery industry from his articles. I know he has particular favorites that he discloses to us, and I even weight that to a certain extent, but I wouldn't encourage you to invest in a company because John Petersen has done so (No offense, John.) He has his reasons for doing so, and they're not your reasons. Plus, he doesn't have a crystal ball, nor do you, nor I, nor even Goldman Sachs. Knowledge, analysis, common sense and instinct. And I agree with your tendency toward long term investing. Just stay up on the company and industry and don't be afraid to make changes if you deem it necessary.

Aug 04 11:02 AM

[jerrydd:]

John, you can say what you want but have not answered the questions on how CL's will cost less than Li will. Unless they can do that CL's are toast, No?

Why do you mention CL's are capacitors? They are not, No?
They are chemical cells, No?.

I do read your sources and not impressed, some even laughable like the capacitor references. Now add production is close to nil and CL's just don't look good.

And Davewmart is right on target. And you refuse to answer his questions too. Of course you can't as it would show your love of CL's for what it is just as it would if you answered mine.

I have no love for any battery, just see what works and what doesn't at what price.

We'll see in 2 yrs whether you or I am right but as a battery user and up on real tech details instead of hype I believe my points will be proven out. But the people here deserve to know the facts about companies, their products before they lose their money investing in them. No?

On the other poster about my descriptions of Exide as crappy, it's shorthand for unethical business practices so bad the officers went to jail and their batteries are poor quality and a low margin one. Please invest in it so you get your just rewards. Same for Valance, their products are way too expensive and fail quickly so yes they suck. Maxwell is hype as is Unisolar/ERNR. Please invest in them for the same reasons.

I don't mention ENERSYS because I don't know about them. I only talk about what I know. The other companies I mention I know well by their products and records.

Aug 04 12:34 PM

[Don Harmon:]

I came across this article on EV World and thought it was well written and covers a lot of the same issues we discuss on this board:

evworld.com/article.cf...

Hope you can open the link?

Aug 04 01:00 PM

[User 464060:]

Despite all the he said she said, I enjoy John's targeted detail analysis of a possible emerging sector. I don't know of any other resource such as John for what could possibly be an explosive growth situation. He's responsible for my discovery of BCON, a local company, that I am now able to follow. So thank you John, keep up the good work.

Aug 04 01:35 PM

[ginchinchili:]

jerrydd, just what are my "just rewards" and why? Seems like a crappy attitude, but I wouldn't immediately assume it's deserving of jail time. Besides, haven't I made it clear that I don't buy stocks on other people's recommendations? But thanks just the same.

On Aug 04 12:34 PM jerrydd wrote:

On the other poster about my descriptions of Exide as crappy, it's
shorthand for unethical business practices so bad the officers went
to jail and their batteries are poor quality and a low margin one.
Please invest in it so you get your just rewards. Same for Valance,
their products are way too expensive and fail quickly so yes they
suck. Maxwell is hype as is Unisolar/ERNR. Please invest in them for the same reasons.

Aug 04 01:46 PM

[John Petersen:]

ginchinchilli, I couldn't have said it better myself. The big problem with being a writer is you can only write from the perspective of the shoes you full. That's the reason I love the debate that goes on in the comment section more than the articles themselves. This is a huge amount of work with no perceptible reward yet, but it's the most fun I've ever had.

jerrydd, I know what commenters like you and davewmart tell me the prices of lithium-ion batteries are in small lots. I also I know what the DOE says they are going to cost in the quality and lot size that OEM automakers will need. Heck, I spent hours with some of the best in the industry at Storage Week and their fondest hope is that they can get prices down to 2x or 3x lead-carbon within 3 to 5 years.

I'm not willing to argue my knowledge of what first quality batteries will cost with you or anybody else. I'm also not going to argue the incontrovertible fact that the first automotive lithium-ion battery factories cannot possibly be completed before 2012 if everything goes right - which almost never happens. You and davewmart seem to have a very narrow world view that begins and ends with the EV, a solution that I think will be limited to the mathematically challenged and emotionally committed for the next decade. I respect that perspective, but stock market investors who read Seeking Alpha want to know which companies have the greatest discounted present value of future profits and the hard fact is that profits that won't start for 10 years have almost no discounted present value. By all means develop battery technology and EV solutions, but don't try to tell me that they're worth a premium price today - it is not rational.

I've just picked up a new reader named MRTTF who works as a lithium-ion battery research scientist but leaves comments like "As I have stated before (and my background is in Li-ion research with a PhD in chemistry before that), Li-ion will ALWAYS win out when size is an issue and cost is no object. Beyond that all bets are off..."

Aug 04 02:26 PM

[Don Harmon:]

John, I would have to agree here. In fact I will give you something that I probably shouldn't but our best projected price per Wh right now would be $1.20. How these other posted estimates are calculated makes me wonder indeed? Notice they are never tied to a specific Lithium-ion battery company - certainly not one here in the U.S., which after all is the whole reason we are all waiting for what Biden announces tomorrow!

NOTE: The price above includes a complete battery system with CAN Bus interface.

Aug 04 02:50 PM

[Mayascribe:]

ginchinchili: Well put! You are free to look at my e-trading long portfolio right here on Seeking Alpha. I believe the fundamentals for each company listed are pretty sound (I've yet to add Huntington Bank, some of which I aquired today). I don't, though, list my day trades, which usaully are a blend of shipping stocks, banks, mining stocks, and of course, ETFs.

As for the talking heads, I've banned myself watching Cramer. In fact, more and more I am tuning out CNBC all together.

My musings above are the results of studying this market--and it's history--60 to 70 hours a week for about a year and a half.

Thanks for the comment!

Aug 04 03:32 PM

[Mayascribe:]

ginchinchili: Well put (and I would give you more than one thumbs up if I could)! You are free to look at my e-trading long portfolio right here on Seeking Alpha (I've yet to add Huntington Bank (HBAN) of which I acquired a few shares today. I believe that list contains fundamentally sound stocks, with exception to the risky, high upside biotech stocks; many are way up from where I bought them. All of them I've studied thoroughly, and I'm on their corporate e-mail lists. I would never post anything about any stock I haven't studied with DD, unless it's a cool technology that I believe this forum should be made aware; part of a team effort.

I don't list, though, my day trades, which usually are a blend of banks, miners, shippers, and of course, ETFs. Today, for instance I'm riding Excelon Shipping (EXM).

As for the talking heads, I have banned myself from watching Cramer--insert expletive, as he has cost me way too much money--and more and more am tuning out CNBC all together. Just too much noise and outrageous opinions that I used to find intriguing, even humorous, but now I find to be a waste of precious time.

I will stand firmly, though, with my rant about Goldman Sachs.

Thanks for the advice and comment!

Aug 04 04:08 PM

[battman:]

Don, I for one can say I appreciate your honesty in your last post. It's refreshing to hear from someone in the industry (just like Jack Lifton, John Petersen and I'll take him for his word MRTTF) who are definitely biased, but at least honest.


On Aug 04 02:50 PM Don Harmon wrote:

> John, I would have to agree here. In fact I will give you something
> that I probably shouldn't but our best projected price per Wh right
> now would be $1.20. How these other posted estimates are calculated
> makes me wonder indeed? Notice they are never tied to a specific
> Lithium-ion battery company - certainly not one here in the U.S.,
> which after all is the whole reason we are all waiting for what Biden
> announces tomorrow!
>
> NOTE: The price above includes a complete battery system with CAN
> Bus interface.

Aug 04 04:09 PM

[Mayascribe:]

See what happens when you're having a new dishwasher installed? Sorry for the duplicative post.

Aug 04 04:10 PM

[Don Harmon:]

A thumbs up to you battman, and that price is for a volume order - not onesy - twosies!

Aug 04 04:28 PM

[John Petersen:]

Don, it's more than just Vice President Biden in Detroit tomorrow. We have Secretary Chu in South Carolina with Celgard, a subsidiary of Polypore that makes separators for lithium-ion batteries, and President Obama in Elkhart Indiana with Navistar. Since this is obviously a full court press effort, it wouldn't surprise me to see them spread the announcements out over a couple of days for maximum impact. But I guess we'll know a lot more tomorrow than we do today.

Battman, that's the strength of this group of readers. We all stand in our own shoes, are honest about what those shoes are and lay out the best position for our respective perspectives. I figure the only way to go is with mutual respect knowing that each of us will have our share of being right and each of us will have our share of being wrong. But crystal balls are, after all, murky things so I won't mind being wrong from time to time.

Thumbs up to everyone for agreeing to disagree and remain civil about it.

Aug 04 04:48 PM

[jerrydd:]

Ginchinchili wrote
jerrydd, just what are my "just rewards" and why? Seems like a crappy attitude, but I wouldn't immediately assume it's deserving of jail time. Besides, haven't I made it clear that I don't buy stocks on other people's recommendations? But thanks just the same.

JD I thought I was very clear, invest in them, Exide and Valance and reap what they will make since you like them so much. Then that will be your just reward. You are the one with an attitude and criticizing my wording. I was just putting up facts.

John P wrote

jerrydd, I know what commenters like you and davewmart tell me the prices of lithium-ion batteries are in small lots.

JD While shipping containers every month might seem small to you they are good size orders any battey company would love to have. But what does size have to do with it. In small lots they should be more than big ones so GM., etc should get better prices, No?

I also I know what the DOE says they are going to cost in the quality and lot size that OEM automakers will need. Heck, I spent hours with some of the best in the industry at Storage Week and their fondest hope is that they can get prices down to 2x or 3x lead-carbon within 3 to 5 years.

JD So do tell what prices are they saying? You keep saying things but never put numbers on them nor do you answer simple questions to prove your points. And you keep talking down to us like we don't know what we are talking about. Yet we give details and you don't Why?.
Nor have you answered the capacitor statements as CL's are chemical cells, No? Are they Capacitors? You have said so several times. What capacitive qualities does Carbon fiber/CL's have? How much/lb does CF cost? More than Lithium?
We are buying EV batteries for $.30/wthr. That's about $340kwhr. Can you beat that with CL's? BTW $.30/wthr is the target for GM, others said they needed, No? And $.30wthr is what GM is paying LG, No? SAE Magazine last month. Why has other than CAT CL batteries never been mentioned in SAE Magazine? I know of no car maker ever mentioning other CL batteries and I keep track. So you are saying CL batts are selling for $100/kwhr?
Please show me just one. In fact ship me some as I can use them at that price. But you can't, can you..

I'm not willing to argue my knowledge of what first quality batteries will cost with you or anybody else. I'm also not going to argue the incontrovertible fact that the first automotive lithium-ion battery factories cannot possibly be completed before 2012 if everything goes right - which almost never happens

JD I'm quoting GM whom I'm assuming is buying first quality batteries, No?
That would be a surprise to Hitachi, Panasonic, Yusa, A123, LG, BYD, Kokam among many others who have factories now. Sure they will build larger ones but the market before 2013 is rather small, easily done with present factories.

JD And did you read Davewmart's references on Li supplies? Some are solid so don't need evaporating. In the US is enough in one place for all the cars in the world to be Li EV's. And what kind of permits, etc would one need to get Li from seawater? While more costly it's still viable as Li batteries need so little of it. There is no shortage of Lithium.

Aug 04 09:40 PM

[MRTTF:]

Since I am not in the business end of things, I can't give a real number like Don has, but I can say that (to currently be profitable) the $0.80-$1.20 range for price/Wh sounds right to me, especially for volume numbers (on the order of several thousand). With smaller runs, the price can escalate quickly (2-5 times normal cost).


On Aug 04 02:50 PM Don Harmon wrote:

> John, I would have to agree here. In fact I will give you something
> that I probably shouldn't but our best projected price per Wh right
> now would be $1.20. How these other posted estimates are calculated
> makes me wonder indeed? Notice they are never tied to a specific
> Lithium-ion battery company - certainly not one here in the U.S.,
> which after all is the whole reason we are all waiting for what Biden
> announces tomorrow!
>
> NOTE: The price above includes a complete battery system with CAN
> Bus interface.

Aug 04 09:56 PM

[MRTTF:]

I am curious as to what size batteries you are buying. Sanyo and Panasonic 18650s (which are produced on the order of millions/day) cost roughly in the $0.25-$0.65 range. Larger cell sizes causes the cost to go up considerably. Additionally, the idea that the same factory can produce a variety of form factors (i.e. cyclindrical vs primsmatic, wound vs stacked), which requires vastly different equipment for each cell type and even sometimes from cell size to cell size, is laughable.

As an aside, while I am not the most knowedgable on the subject, I can be pretty sure that Li salts initially produced from any technique will be a far cry from the "battery grade" material (>99.99% purity & much higher costs) that is needed to produce active materials for cells.

I do think that in the long run Li-ion will be the primary option since it is an all-around performer. Li-ion will always be (until someone in their garage comes up with a better choice) the best option for niche markets (military, aerospace, medical, etc) I also know that (as seems to be my new mantra) Li-ion will win out NO MATTER WHAT when size is a concern and cost isn't.


On Aug 04 09:40 PM jerrydd wrote:

> We are buying EV batteries for $.30/wthr. That's about $340kwhr.
> Can you beat that with CL's? BTW $.30/wthr is the target for GM,
> others said they needed, No? And $.30wthr is what GM is paying LG,

> JD I'm quoting GM whom I'm assuming is buying first quality batteries,
> No?
> That would be a surprise to Hitachi, Panasonic, Yusa, A123, LG, BYD,
> Kokam among many others who have factories now. Sure they will build
> larger ones but the market before 2013 is rather small, easily done
> with present factories.
>

Aug 04 11:57 PM

[Mayascribe:]

As I'm about to lay my head upon the pillow, I feel like it's: Twas the night before Christmas.

I'm putting out some cookies and eggnog before the fireplace.

In the wee morn I going to the stock market casino ready to bet hard on the Energy Storage Sector.

Thanks for the tip, John!

Do you like fruitcake?

Aug 05 12:39 AM

[John Petersen:]

Jerrydd, as a young lawyer I quickly learned that jumping into a debate and rehashing old business was rude. I don't talk down to anyone, but I expect that commenters who want to pick a fight will do their homework first. That's one of the reasons Seeking Alpha maintains archives so that new readers can bring themselves up to speed and add to debate rather than impeding it. My archive is here:

seekingalpha.com/autho...

The document I've been using as the gold standard guide to battery prices is a July 2008 Sandia National Laboratories report on its Solar Energy Grid Integration Systems – Energy Storage (SEGIS-ES) program. You can find it here:

www.sandia.gov/ess/Pub...

Sandia's price estimates for the quantities and volumes required by the major automotive OEMs are $1,333 per kWh for lithium-ion with a $780 per kWh 10-year target; and $500 per kWh for asymmetric lead carbon with a $260 per kWh 10-year target. Your experience with pricing on occasional container loads of batteries of unknown kind and quality from China is interesting, but the Sandia numbers are authoritative. If you think they're wrong, take it up with them.

I've previously discussed the DOE's views on the current suitability of lithium-ion batteries for use in mass market transportation products and the challenges that need to be overcome before lithium-ion batteries are ready for prime time. You can find those articles here:

seekingalpha.com/artic...

seekingalpha.com/artic...

seekingalpha.com/artic...

I've previously discussed the nature of asymmetric lead-carbon capacitors at length. They are a hybrid device that integrates a negative electrode from a supercapacitor into a lead-acid battery and results in a hybrid device with characteristics of both. The cell voltage is a bit lower at about 1.7 volts, the power is considerably higher and the charge rates and cycle-life are an order of magnitude greater. You can find those articles here:

seekingalpha.com/artic...

seekingalpha.com/artic...

The SAE may not be writing about lead-carbon yet but Sandia and others are all over the technology.

While the price GM is paying for the Volt battery pack remains cloaked in secrecy, the best estimates are in the $700 to $1,000 per kWh range. The Volt has been discussed in detail here:

seekingalpha.com/artic...

seekingalpha.com/artic...

Right now everyone who is working with lithium-ion battery packs is using cells manufactured for portable electronics, which is a lot like using 5,000 hamsters to pull a stagecoach. There is enough excess supply from existing factories to make experimental PHEVs and EVs (which is apparently what you do) but the lithium-ion battery industry is not by any stretch of the imagination ready to power the automotive industry and even if it was, an OEM automaker cannot pay the same price per watt-hour that a cellphone manufacturer can pay; which means automotive applications will always be at the bottom of the food chain from a battery manufacturer's perspective.

I haven't argued that global lithium resources are inadequate for quite a while now because the resource availability issue has been answered to my satisfaction. There is, however, an immense difference between saying you can get lithium from sea water and building a plant that can do so economically. Current production methods from brines involve an 18 month evaporation cycle because it's the only cost effective way to do the job. Seawater or oilfield brine extraction would be considerably more expensive because the concentrations are far lower. Jack Lifton has told us that the lithium mining industry will need $100 billion in new capital to develop production facilities to support the auto industry. It would cost far more to develop the plentiful deposits that you keep harping on. So far, that capital has not been forthcoming.

At the end of the day, Seeking Alpha is for individuals who are trying to a reasonably safe place to invest their money and earn a reasonable return on their money. I dig down into the technology a good deal further than most writers because it's impossible to understand energy storage without understanding at least a little about what the various technologies strengths and weaknesses are. Unless a technical aspect has some bearing on potential investment returns, it's irrelevant for purposes of this discussion.

I would love to have you as a regular commenter because I think that all perspectives are necessary, but the focus is how investors can make money in energy storage. If you're not willing to adopt that focus, I'd rather you didn't comment.

Aug 05 12:41 AM

[John Petersen:]

MRTTF, many thanks for jumping in here. Your perspectives and experience are always appreciated.

Mayascribe, I'll have the wassail warmed and ready, although it's beginning to look like this too may be a multi-day affair to maximize political mileage. Have to admit though, the 152% gain on my personal trading portfolio since November feels pretty good, and my guess is the fun's just starting.

Aug 05 12:46 AM

[Mayascribe:]

Well, pull up the mizzenmast, too! Uncle Sam is blowing a pleasant multi-day blow our way.

Aug 05 01:31 AM

[Don Harmon:]

John wrote:

"Right now everyone who is working with lithium-ion battery packs is using cells manufactured for portable electronics, which is a lot like using 5,000 hamsters to pull a stagecoach. There is enough excess supply from existing factories to make experimental PHEVs and EVs (which is apparently what you do) but the lithium-ion battery industry is not by any stretch of the imagination ready to power the automotive industry and even if it was, an OEM automaker cannot pay the same price per watt-hour that a cellphone manufacturer can pay; which means automotive applications will always be at the bottom of the food chain from a battery manufacturer's perspective."

True, John especially as ascribed to the extremely low prices that some are posting here. However, there are companies out there like LiFeBATT who are producing "large format" LiFePO4 Cells which means fewer needed to produce the requirements for advanced EV's. I think those lower price quotes are the commodity 18650 format cells from China and it takes 10 of them to make the equivalent of one of our large format cells. Sure, they are cheap but they are also not safe because they are LiCo2 cells, which unless elaborately protected, can explode or catch fire. People quoting $ 0.30 / wH are likely using these as their source of cost?

Your hamster analogy isn't far off - Tesla uses these 18650 format Lithium- ion cells in their roadster and it takes over 6,000 of them to build their battery pack. The cells are cheap, but the battery management system and the special cooling required - well look at the price of their car!

Aug 05 02:21 AM

[John Petersen:]

Don, it's always good to get confirmation from a domestic lithium-ion battery manufacturer when I get off into areas like this one. Many thanks!

One of the biggest logical fallacies that people who have not studied the history of the battery industry fall into is that cheap suppliers for today will always be cheap suppliers. That appeared to be the case in the 1990s when Asian imports killed off a large segment of the domestic lead-acid battery industry. Fast forward to 2009 and imports are few and far between because home country demand in the former exporting countries has grown to the point where manufacturers are selling their products at home instead of exporting them.

In the case of cheap Asian lithium-ion batteries, I keep going back to the fact that China made 23 million electric bikes and scooters (E2W) last year and those vehicles used the battery power that we would have used for about a million PHEVs. As a matter of industrial policy China will always prefer giving mobility to 23 million of its citizens over giving mobility to 1 million wasteful Americans. As a matter of pure supply and demand 23 Chinese can afford to pay more per watt hour for the small amount of batteries they need than one American can pay for the massive amount of batteries they want for a status symbol.

I know everybody wants EVs to save on precious oil resources that are presently being wasted. However the single minded view that oil is the only precious natural resource on the planet has to be smashed. There are six billion people that want a small piece of the lifestyle that 500,000 million of us enjoy. To complicate the issue, modern communications has put the 6 billion in a position where they know that there is more to life than subsistence farming. Our greatest challenge over the next 50 years will be finding relevant scale solutions to water, food, energy and every commodity we can imagine. The idea that we can fight the waste of oil resources by encouraging the waste of other resources is terribly short-sighted.

Aug 05 05:44 AM

[Don Harmon:]

ARRA BATTERY AWARDS: www1.eere.energy.gov/r...

Aug 05 12:49 PM

[John Petersen:]

I'm a very happy camper.

Aug 05 02:03 PM

[Michael Eis...:]

John -
can you lay out your core thesis on why you are Long ACPW in a post or a comment?

Aug 05 04:19 PM

[DiggerUK:]

On Aug 03 09:20 AM Davewmart wrote:
According to the mining companies Chemetall and SQM, lithium reserves are currently estimated to be between 14 and 17 million tonnes.

I have to challenge these reserve figures.
A quick check on Wikipedia comes up with 11m, and figures from my 2005 link come up with *13.4m.
These include lithium that is unobtainable for extraction with current know how , but does include the Bolivian reserves that are not currently available.

I also have to challenge you with the claims of $32 a kilo for lithium from seawater. It is claimed that it's $95 from present sources. Seems a no brainer at those prices were to get it from.

I accept future technology may open up presently unavailable lithium, it's just that we are in the here and now.

It could be that Meridian International Research are unreliable and there report is wortless, but here it is. I found it an interesting read.
The chart is on page 2.
* tyler.blogware.com/lit...

Aug 09 11:39 PM

[John Petersen:]

Michael, thanks for the suggestion. I've always stayed away from writing specifically about ACPW because it's traded for under a buck for quite a while and general Seeking Alpha policy doesn't want contributors focusing on pennies. But I believe ACPW merits a closer look and would be happy to write more if you don't think the editors would object too strenuously.

Digger, I worried about lithium reserves for quite a while because of the Tahil reports, so was Jack Lifton. Earlier this year, Keith Evans wrote an article on why lithium resources are adequate to cover demand. Since Jack tells me that Evans is the global authority on lithium resources, I'm inclined to accept the idea that there is enough lithium on earth to provide the required supplies.

seekingalpha.com/artic...

While I am no longer worried about resource availability, I am very worried about supply constraints because the world's existing mines do not appear ready to meet short-term demand increases and 30 years experience in natural resource development tells me that it costs 100s of millions and takes up to a decade to turn a known mineral deposit into a producing mineral deposit. While increasing production from an existing mine can be a bit cheaper and a bit less time consuming because changing old permits can be easier than getting new ones, all of the other work is essentially the same. Since mine expansions take years if not decades and there are no large-scale expansions presently underway, there will be a bottleneck of indeterminate duration while new facilities are permitted, designed, built and brought online.

Aug 10 01:04 AM