Carlos Ghosn and the 'Leased' Battery 32 comments
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On Monday, August 3, 2009, Renault-Nissan's (NSANY) "head," Carlos Ghosn, who until recently was a naysayer to vehicle eletrification made his Japanese unit temporarily the center of the electrified-car-hype world. Ghosn sitting beside a former Japanese prime minister "took the wheel," whatever that means, of a new Nissan model, the "Leaf," at its press introduction in Yokohama.
I doubt whether anyone on Mr. Ghosn's payroll would today point out his 180 degree turnabout on the electrification of cars, but no one could have said it better than he, himself, who was quoted in Yokohama as saying "We don't see the electric car as a niche car," although he did indeed see it that way not so long ago. "We see it as a mass market car," he continued to the memory challenged reporters present who couldn't find it in their saki fueled hearts to ask him why he is now to be considered a prophet instead of the last time when he pooh-poohed the electric car, well the hybrid one anyway, as a niche product.
I will give Mr. Ghosn credit for one thing, though, he has solved a problem that will vex his competitors and, in my opinion, kill their chances of making a profit from battery powered, thus truly electric, cars. Ghosn has decreed that the customers will lease the batteries and buy or lease the chassis and body shells into which they fit.
This means that Nissan hopes to be able to sell the Leaf for less than $15,000.00, net of the battery lease cost. It also means that the risk of owning a $10,000.00 black box (the lithium-ion battery also to be made by Renault-Nissan) that may suddenly stop working is entirely on the seller rather than the buyer (leasee). I call this the BYD (BYDDF.PK) solution after the Chinese battery company that also intends to build electric cars as opposed to a car company, like Nissan, that also intends to build (and lease) batteries. They will both have in common a servicing agenda that completely destroys any hope a company like GM can ever compete in this market segment. If your Nissan or BYD battery fails for any reason just get it to the dealer, and he will swap it for another one. Any inconvenience this may have caused you will probably be assuaged with a free prize of some sort. In the meantime the manufacturer will get to learn from the battery failure hopefully without losing a customer.
One problem with this marketing technique - the "leased" battery - is that the leasing entity must have the money to initially buy the battery (and build its own factory to make them), the technology to learn from operational failure, and the credit and capital to maintain a large leasing and battery service operation that will take some time to break even. This would seem to give the bankrupt poorly managed manufacturers, such as GM and Chrysler, no room at the inn.
Not satisfied with creating such a situation for his competitors Carlos Ghosn rubbed even more salt into their electrodes by announcing that the range of the Leaf on a single charge would be 100 miles. This means that the Leaf will get 2 1/2 times the range of hype-othetical Chevrolet Volt and sell for as little as 1/3 of the Volt's rumored selling price.
The Leaf is to get a full charge, Nissan says, on household voltage and current in 8 hours, and there will be, Nissan says, a fast charger available at "selected" service stations that will give the car the juice it needs in 30, count 'em,' 30 minutes. Of course the fast charge station will need heavy wiring, a step up transformer, and a deal with the local grid operator to prevent local brownouts to do this, but, hey, all problems have a solution.
As if the Leaf weren't thus far a real problem for Bob Lutz, it's going to get worse, says Ghosn. The target production of the Leaf for 2013 is 200,000, yes, 200,000 units. And even worse for the Voltster the car will be made in places like Japan, the UK, Portugal, and Smyrna, Tennessee while the batteries are made in the same places. Lutz, in the meantime, has assured us that the Volt will be made in small numbers at a loss until it is made in large numbers at a profit - whatever that means, if anything. The target production for the Volt is 10,000 units a year for the first 2 to 3 years, but I suspect that if the American car buyer is given the choice between a $15,000.00 Nissan Leaf with a range of 100 miles on a charge and a $45,000.00 Chevrolet Volt with a range of (believe me) less than 40 miles it doesn't take a jet pilot (like Bob Lutz) to see who will take the market.
Of course we don't know if the Leaf will get 100 miles on a charge in a Detroit winter uphill in an ice storm or downhill crossing the Mojave desert in California, but we don't know if the Volt will do its full 40 in those conditions either.
Lost in the hype was a very interesting statement by a man who we have quoted as saying that his electric car is not a niche car. The Financial Times says that "Mr. Ghosn predicted that pure electric vehicles (like the Leaf but not like the 'extended range, gasoline assisted [for charging] Chevrolet Volt') would account for 10% of new car purchases globally by 2020." Let's take a look at that statement.
By the most conservative guesstimate the global production of personal motor vehicles in 2020 will be 150,000,000 units a year. The global fleet by then will top one billion units. To see how conservative I am being note that the global fleet today-in 2009-is already 750,000,000 units. Therefore, most of the cars made in 2020 will be gasoline or diesel powered directly using petroleum hydrocarbon or carbohydrate (e.g., ethanol or methanol) fuel. If everyone kept their cars permanently - and this could be possible with a personal battery that you took from one chassis and body shell to the next chassis and body shell) then at 15,000,000 units prodcution a year (Ghosn's 10 percent) it would take around 60 years to electrify the global fleet at the size it was at in 2020.
I write about natural resource production rate limitations on technology implementation, and I consult and speak about that topic globally. I think Mr. Ghosn is right on with his prediction of the spread of the electrification of personal motor vehicles but may be optimistic.
The production and maintenance of one to two billion battery packs just for personal motor vehicles will take a huge amount of specialized production of natural resources. Assuming a Leaf lithium-ion battery is twice the size of a Chevrolet Volt battery means that each one will require 32 KG of lithium carbonate to construct. One billion of them will thus require 32,000,000,000 kgs of lithium carbonate or 32,000,000 metric tons. Last year's new mine production of lithium measured as carbonate was 167,000 metric tons. At that rate it would take 200 years to produce enough material to electrify the global fleet.
It has been stated by the six or so large miners of lithium that they could provide up to 600,000 metric tons a year of lithium as carbonate by 2020 if they were fully financed to do so right now. Assume that could be done, then we could reduce the time necessary to electrify the global fleet with lithium ion batteries by a factor of 4. This means it would take 50 years if we had such an electrification as a priority and a goal worldwide.
Ladies and gentlemen, it's going to take at least a century to electrify the global fleet if we start with a prioritized plan right now.
This means that realistically we're going to have a mix of power trains indefinitely. Most will be internal combustion engines buring hydrocarbons or carbohydrates, some will be full hybrids using nickel metal hydride batteries, some will be lesser hybrids using lead-acid, nickel metal hydride, or lithium ion batteries, and a growing number will be pure battery powered electrics using lithium-ion batteries.
Congratulations to Renault-Nissan and its chameleon like president, Carlos Ghosn. If the Leaf appears on time you may have given birth to the most common car of the (distant) future. I will buy one now if it has reasonable performance characteristics and cargo capacity and the price is right for a member of the new US former middle class.
Disclosure: I do not own shares in any company mentioned or referenced in this article.
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You are obviously skeptical of the Leaf. I for one am relieved that a major is coming out with a full EV, and one with some creative strategic marketing at that. Nissan has obviously caught you by surprise, and probably a bunch of others as you point out.
Nissan "pooh-poohed the electric car, well the hybrid one anyway, as a niche product." The hybrid car is a technical joke propagated by "car" companies that really are "internal combustion engine" companies. What's so different about car companies that are really battery companies?
Remember the EV1. People are still pissed that GM repoed them from their garages. This is a serious market.
I am curious about performance under temperature extremes. This is probably one reason (of many) for the leased battery. Very clever to use the customer as a battery test bed for failure analysis and R&D.
Unless this car is a pig, 24KWh batteries should be good for 100 miles. If it hits 80 MPH, it exceeds my criteria for a commuter car.
I think your objectivity is showing when you comment that quick charging will need special measures to "prevent local brownouts."
24KWh in 30 minutes is 48KW. A typical residential hot water heater or range is 4.8KW. No problem for a commercial business.
Lastly, regarding the timing of the lithium resources and battery production, I can only think back to 1849 and then the Comstock Lode. If there's money to be made, nobody waits.
The Leaf will hit around 87mph according to the specs:
www.autobloggreen.com/.../
Don't expect a 100mile range at that speed though, although the aerodynamics are said to be pretty good.
The temperature performance graphs are in the links I gave earlier in the thread.
They have been developing the battery since around 1992, so they are not exactly springing it on the public prematurely for testing by them! :-)
I am originally from the midwest, an am all-to-aware of the effects of cold temperature on regular SLI batteries. My work allows me to do some work on the same effects on Li-ion batteries.
Altair's LTO (lithium titanate) anode-based cells are impressive. The charging capabilities are moreso than the discharging. Performance at temperatures <-20degC are improved through the use of LTO, but I still suspect that there is some electrolyte formulation tricks that are involved as well to get such performance at -60degC. Please note that that is pure speculation though.
On Aug 04 12:41 PM Davewmart wrote:
> MRTF,
> It sounds as though you are a good chap to pump for the inside skinny!
>
> Personally, I am magnificently indifferent to low temperature performance,
> as I live in the UK and temperatures rarely drop below zero for long!
> :-)
> Building for the US sounds like a tough option to me for EV's - I
> give some of the rationale here:
> seekingalpha.com/artic...
>
>
> What do you think of the Altairnano titanium lithium battery?
> I did wonder about it for the US, as it is supposed to function down
> to around -60C.
> I believe it is more expensive.
There are unlikely to be any great undiscovered "concentrations" of lithium minerals-these are called, if accessible and close to infrastructure and have known and economical chemical engineering processes to extract the desired minerals, mines. It is silly to talk about extracting minerals from the ocean or from the crust in general until and unless the world has a source of energy that is very very cheap and very very extensive such as fusion. The lower the concentration of a mineral the more energy it takes to concentarte it and recover it.
The high grade lithium deposits both mineral and brine are known. They are worked today to meet the existing demand, and in fact, there is a surplus.
A long term investment is needed right now to expand the production of lithium from the known "high grade" sources such as the Chilean Atacama Desert and the nearby Deserts of Argentina where brines contain up to 0.15% lithium. There are also mineral deposits of spodumene and some clays in Canada and Australia that are vast, but it has been cheaper to produce lithium from brines since 1994 when such production became the principal source for lithium when the demand for chemical forms exceded the demand for mineral forms.
Is there a government or a bank that will address this issue of the security of supply? I don't know. The return on this investment might take decades and the free market doesn't make investments like that. It is now up to governments to recognize the problem and invest for everyone's benefit not just a few bankers or shareholders. This would be a sea-change in our society, and I suspect that it will happen earlier in Asia or Europe, becasue they are not so settled into free market economics politically.
All the money and technology in the world won't make a difference if there is no lithium, or any other startegic material, to build a greener world.
Good luck, everyone.
'It is silly to talk about extracting minerals from the ocean or from the crust in general until and unless the world has a source of energy that is very very cheap and very very extensive such as fusion.'
I've got to admit I am having difficulty following you.
The resource guide you prefer says that there are around 30 million tonnes of lithium around, an amount which is ample for any conceivable use.
The resources are normally calculated at prevailing market price, and since the lithium for a 30kwh car would only cost around $48 at $8kg of lithium and using 0.2kg per kwh, or 1kg of lithium carbonate, for a $10k battery that is a tiny fraction of the cost.
If you can pay more more resources typically enter economic feasibility, as you say often needing to use more energy to extract them.
So a ten fold rise in price would only increase the share of lithium in the battery price to around 5%.
No-one has bothered developing lithium from sea-water as present reserves are ample and it would cost more.
What is hypothesised by talk of shortage though is great success for the lithium battery industry, high prices and keen need.
To rule out every possible method of fulfilling this at those higher prices seems premature at best.
What's the best way to invest in lithium carbonate?
I believe SQM is the best way to invest in mining lithium.
uk.reuters.com/article...
also, the battery leasing concept is not new and as far as i know that idea was pioneered by shai agassi, CEO of project better place. i found the most interesting part of your article on your discussion of lithium carbonate production volumes. again, this is why i think this toyota natural gas/electric hybrid vehicle is a much better solution going forward:
www.autoblog.com/2008/...
this car would require smaller battery packs, give much greater range, drastically reduce CO2 emissions (over gasoline cars) and reduce gas powerd vehicles toxic particulates by 100%. the car would also skirt all the issues associated with recharging large battery packs, the increased electrical power generation capacity needed to charge a significant number of LEAFs, and many degradation and reliability issues of large battery packs (not to mention the material supply problem you so rightly pointed out). wrt the VOLT, fact is GM just doesn't want to build it and it still relies on gasoline even when (if?) they actually do build it. this isnt ground breaking news. GM proved with the EV1many years ago they can build a good electric car if they have to - but they would much rather stick to gasoine guzzling vehicles (which is one of a number or reasons they went into bankruptcy....). all that aside, nice article.
There is a new paradigm in town, which holds that no matter what you offer to pay for a scarce natural resource you will not be able to increase the supply of that resource on the basis of an increased price alone! The key issue for rare metals is accessability to concentrated deposits which we, the human race, now know how to process to extract, concentrate, and refine the natural resource.
Before any of you engage me in a debate about this I urge you to attend the conference in Washington, DC, on Oct. 20-22,which I am co-chairing, entitled "Managing Supply Chain Risks for Critical & Strategic Metals." There will be a panel on "Lithium Supply: Abundant Supply or At Risk?" The men on the panel include Keith Evans, known as Dr. Lithium, the pre-eminent lithium geologist today and Yaron Varona, Executive Director of the International Lithium Alliance. Please direct your questions to the panel and I will make sure that they are answered. If you'd like please email me your questions now and I promise that the best of them will be asked of the panel on stage.
The recovery of any natural resource is first and foremost a technology problem, and I'm afraid that we are now on a plateau in mining engineering process development. Experts are few and far between and take a generation to train. Canada still turns out a fair number of such experts, but the US training in such skills is simply collapsing. If we don't rectify this soon then the answers, when and if they come, will come from Asia. It's as simple as that..
On Aug 04 04:34 PM Davewmart wrote:
> Jack Lifton said:
> 'It is silly to talk about extracting minerals from the ocean or
> from the crust in general until and unless the world has a source
> of energy that is very very cheap and very very extensive such as
> fusion.'
>
> I've got to admit I am having difficulty following you.
> The resource guide you prefer says that there are around 30 million
> tonnes of lithium around, an amount which is ample for any conceivable
> use.
> The resources are normally calculated at prevailing market price,
> and since the lithium for a 30kwh car would only cost around $48
> at $8kg of lithium and using 0.2kg per kwh, or 1kg of lithium carbonate,
> for a $10k battery that is a tiny fraction of the cost.
> If you can pay more more resources typically enter economic feasibility,
> as you say often needing to use more energy to extract them.
> So a ten fold rise in price would only increase the share of lithium
> in the battery price to around 5%.
> No-one has bothered developing lithium from sea-water as present
> reserves are ample and it would cost more.
> What is hypothesised by talk of shortage though is great success
> for the lithium battery industry, high prices and keen need.
> To rule out every possible method of fulfilling this at those higher
> prices seems premature at best.
Thanks for your thoughtful reply.
I won't be making it across the pond to the conference, but my question would simply be that disregarding any additional supplies accessed by using new technology, it would seem that there are ample lithium resources available at present prices for many billions of cars.
Since it is recyclable, once imported, say into the States, it is a permanent asset, like iron, not one which continually needs replenishing like oil.
Admittedly it is rather inconveniently concentrated, but since even to power, for instance, the whole US fleet with 100kwh of power each would only take a fraction of world resources, it is rather difficult to see a problem.
On another note, and not particularly in reference to lithium, I am in full agreement that supplies of many materials rely on access to cheap, plentiful power.
Without it Limits to Growth would come into play.
However, I happen to think that it is in fact rather easy to provide such cheap power, and we don't need to have major breakthroughs to fusion to do it.
I am referring to Liquid Fluoride thorium reactors, which were demoed in the States in the 60s', but killed as they are no good for producing weapons grade materials.
They can burn up waste from current reactors and are nearly 100% efficient, around 100-300 times as good for a given mass of fuel as light water reactors.
More here:
energyfromthorium.com/
Of course, we may not do anything, but we seem to have a good option within current engineering practise.
The nuclear engineering types on the forum are confident that it can be done within around 5 years in a skunk works type of project, and they are quick to construct and cheap as you don't need much of the complicated safety engineering - if the containment is breached they freeze solid and the reaction stops.
@ Davewmart - just yesterday I posted a blog article on the use of permanent magnets in wind turbines [ bit.ly/e1fyv ]. I included the example of a 3.5 MW direct drive permanent magnet generator produced by Finnish company The Switch, which uses around 2,000 kg [4,400 lb] of neodymium-based [Nd-Fe-B] permanent magnet material. This works out to be around 600 kg [1300 lb] of Nd-Fe-B per MW produced.
What do you think is the best investment vehicle in regards to rare earth metals? Lynas Corp or Avalon rare metals?
Do you think it's even worthy to invest in rare earth mining/production?
Thanks Jack for another great article.
You have a great site there - I intend to reference it frequently.
Do drop over to the thorium forum to share your expertise.
Thanks for the support. May I ask you what is the composition of the Nd-Fe-B magnet in the wind turbine? I'd like to know how much neodymium it takes to manufacture the 600 kg magnet necessary for the 1 mW production capacity, and I don't know the empirical formula for the alloy.
Jack
I told my barber yesterday about the new Nissan Leaf and it's 100 mile range and he replied "wouldn't have one, it's 105 miles from my house to the casino." I guess you can't please everyone.
@ Davewmart - glad the info was of some use - will certainly take a look at the forum you mentioned.
Nd-Fe-B magnets generally have a chemical composition that is to the Nd-rich side of the Nd2-Fe14-B stoichiometric composition. A good rule of thumb would be around 30-35 weight percent of Nd in these magnets.
So, a figure of 200-250 kg of elemental Nd per MW of power produced from a permanent magnet generator, would be about right. However, this is for one example of a utility-scale generator. It is entirely possible that with smaller, middle-wind [XX-XXX kW output] generators, the equivalent amount of Nd-Fe-B required per MW produced might be a lot higher, due to different electrical machine configurations. I'll look into that to see if I can get some specific numbers.
What I'm getting at is that this seems to share DNA with Better Place, but no mention of battery swap capacity.
it also means that this is likely to be very close to Better Place vehicles.
so 160-180kg / MW.
> Thanks for the support. May I ask you what is the composition of
the Nd-Fe-B magnet in the wind turbine? I'd like to know how much neodymium it takes to manufacture the 600 kg magnet necessary for the 1 mW production capacity, and I don't know the empirical formula for the alloy.
>
> Jack