Obama Announces List of Grant Recipients, Recognizing Significance of Hybrid Markets

During his address yesterday at Navistar International's (NAV) facilities in Elkhart, Indiana, President Obama announced a total of $2 billion in ARRA battery manufacturing grants and another $400 million in Recovery Act awards for transportation electrification. The complete list of grant recipients, most of whom are private companies, is available here. The recipients of $1.25 billion in the primary class of grants for cell and battery manufacturing facilities are as follows:

Johnson Controls	JCI	$299.2	Production of nickel-cobalt-metal battery cells and packs, as well as production of battery separators (by partner Entek) for hybrid and electric vehicles.
A123 Systems	IPO pending	$249.1	Manufacturing of nano-iron phosphate cathode powder and electrode coatings; fabrication of battery cells and modules; and assembly of complete battery pack systems for hybrid and electric vehicles.
Dow Kokam	DOW	$161.0	Production of manganese oxide cathode / graphite lithium-ion batteries for hybrid and electric vehicles.
Compact Power	Private (Sub. of LG Chem)	$151.4	Production of lithium-ion polymer battery cells for the GM Volt using a manganese-based cathode material and a proprietary separator.
EnerDel	HEV	$118.5	Production of lithium-ion cells and packs for hybrid and electric vehicles. Primary lithium chemistries include: manganese spinel cathode and lithium titanate anode for high power applications, as well as manganese spinel cathode and amorphous carbon for high energy applications.
General Motors	GMGMQ.PK	$105.9	Production of high-volume battery packs for the GM Volt. Cells will be from LG Chem, Ltd. and other cell providers to be named.
Saft America	SGPEF.PK	$95.5	Production of lithium-ion cells, modules, and battery packs for industrial and agricultural vehicles and defense application markets. Primary lithium chemistries include nickel-cobalt-metal and iron phosphate.
Exide Technologies with Axion Power	XIDE AXPW.OB	$34.3	Production of advanced lead-acid batteries, using lead-carbon electrodes for micro and mild hybrid applications.
East Penn Manufacturing	Private	$32.5	Production of the UltraBattery (lead-acid battery with a carbon supercapacitor combination) for micro and mild hybrid applications.

Additional awards to other publicly traded companies include:

Celgard/Polypore	PPO	$49.20	Production of polymer separator material for lithium-ion batteries.
Honeywell	HON	$27.30	Production of electrolyte salt (lithium hexafluorophosphate (LiPF6)) for lithium-ion batteries.
BASF Catalysts	BASFY.PK	$24.60	Production of nickel-cobalt-metal cathode material for lithium-ion batteries.
FutureFuel	FTFL.OB	$12.60	Production of high-temperature graphitized precursor anode material for lithium-ion batteries.
General Motors	GMGMQ.PK	$105	Construction of U.S. manufacturing capabilities to produce the second-generation GM global rear-wheel electric drive system.
Delphi	???	$89.30	Expansion of manufacturing for existing electric drive power electronics components for both passenger and commercial vehicles.
Ford Motors	F	$62.70	Producing a Ford electric drive transaxle with integrated power electronics in an existing Ford transmission facility.
Magna E-Car Systems	MGA	$40	Increasing production capacity of advanced automotive electric drive system component manufacturing plants located in the U.S.
Kemet Corporation	KEM	$15.10	Production of DC bus capacitors including soft wound film and stacked film capacitors necessary for electric drive system power electronics.

On balance, I'd say my predictions from earlier today were not too far off the mark. I was particularly pleased to see that Exide Technologies (XIDE) will receive a $34.3 million grant with Axion Power International (AXPW.OB) for the production of advanced batteries using Axion's proprietary lead-carbon electrode technologies. While sharing of the grant funding will apparently have to be clarified during the contract negotiation phase, the boost to Axion's future revenue and technical credibility will be substantial. I was also happy to see that East Penn will receive an additional $32.5 million for the production of advanced lead-carbon batteries based on the Ultrabattery technology developed by Australia's Commonwealth Scientific and Industrial Research Organisation [CSIRO].

While these grants for advanced lead-carbon batteries pale in comparison to the huge amounts allocated to lithium-ion battery manufacturing, they show a clear recognition that the micro and mild hybrid markets will be very important over the next decade and go a long way toward confirming what I've been telling readers for months, that lead-carbon is a game changer for alternative energy storage.

I look forward to reading the press releases from the award recipients which will undoubtedly provide more detail.

ED NOTE: One more: UQM Technologies (UQM) gets $45M.

DISCLOSURE: Author is a former director Axion Power International (AXPW.OB) and holds a large long position in its stock. He also holds a small long position in Exide (XIDE).

Comments

[ccm226:]

I keep hearing you refer to advanced lead acid technologies like Axion's as "cheap". Have any of the players given an indication of what their pricing will be, say $/kWh or $/kW?

Aug 06 07:11 AM

[battman:]

John, your thoughts. Over the months I've heard a few people comment about how mysterious Axion is with both results and status of product. Does this grant speak well of Axions technology or simply the clout of Exide? If the lithium supporters think that the lithium companies selected are the bees knees, then wouldn't the same apply to Axion? Okay the second question was rhetorical.

Aug 06 07:41 AM

[John Petersen:]

ccm26, in a recent article I included a slide from a presentation by Patrick Moseley, president of the Advanced Lead Acid Battery Consortium that pegged the expected price of lead-carbon batteries in the $260 per kWh range. See:

seekingalpha.com/artic...

The lead carbon grants are very curious because they both specify the manufacturing partners, the technology partners and technologies to be used. Exide with Axion will be using Axion's lead-carbon electrode technology and East Penn will be using the CSIRO split electrode Ultrabattery technology. Axion just put out a press release that it has not heard directly from the DOE yet, so presumably all the details will be worked out over the next couple months. The relationship with Exide is apparently moving forward apace.

Aug 06 08:05 AM

[renim:]

Well its looks good for Pb C and for Li Ions, I expect the Axion and East Penn can achieve alot more with their modest funding than the 'cool' Li players.

A couple of months ago I did a quick calculation for a hypothetical car (being a natural gas/ mild hybrid combo with Pb C ultrabattery (think Honda hybrid / Honda CNG / Honda Ultrabattery test car) and came to conclusion that depending on one's domestic natural gas cost, the running costs were comparable to the distribution and refining costs only costs of a petroleum based car.

I will redo the calc's for Kia Forte lpg/hybrid and publish them (some translation guesswork required as its currently a korea only vehicle)

I notice that ZBB missed out, perhaps due to not offering a vehicular battery. Pity, as I think Zinc is THE most natural material for use in batteries

Aug 06 08:51 AM

[renim:]

About Kia Forte

Available in three trim levels, LPI HEV will be priced at 20.5 million won (AUD$20,395^) for the entry level model and will top out at 23.2 million won (AUD$23,079^) for the top model. Prices include South Korean government consumption tax exemption which has a maximum benefit of 3.1 million won (AUD$3,084^).

This comparable to what we pay in Australia for the equivalent conventional equivalent (Cerato in Australia) (we do have 10% GST and either a 5% or 10% import duty - depending on treaty).

Basically, if they changed over the tank to CNG capable (on their patent it is there anyway) we would have a car whose fuel cost matchs oil at zero dollars per barrel (for Victorians, but not Queenslanders).

If Korea can do it, China can do it in 5 years....

Cut costs and use PbC/Ultrabattery instead of cool lithium battery and the price becomes even more compelling. There will be winning companies/countries to invest in.

Aug 06 09:05 AM

[John Petersen:]

renim, there are a lot of fine companies that didn't get the nod on their grant applications, including some up and comers that are very well known and have received substantial press attention over the last year. But I have to admit that it feels very good to have the DOE agree that lead-carbon is an important technology for micro and mild hybrids.

I'm personally a real big fan of using both NG and diesel in mild hybrid configurations, but there seems to be a mind set that does not push those alternatives to the top of the pile.

Aug 06 09:08 AM

[jerrydd:]

Most of these grants show more than anything else the political clout of the companies. And a willingness to move production to the US in Magna's, Kokam/Dow and SAFT and keeping it here in the rest.

For instance, just what is needed to integrate an E motor and transaxle? These companies have been doing this for decades. It can only be political clout, corporate welfare for car companies, suppliers.

Surprising is JCI getting so much money for NiMh? batteries as they, because of material costs, can barely come down in price and likely to go up so not much future for batteries with lots of those materials, Ni, Cobalt..

Though Chevron's NiMH patents bought from GM, ECD soon will end, making EV size batteries legal after they suppressed them for 10 yrs to keep plug in hybrids and EV's off the market. But they are now being bypassed by Lithium batteries.

With this $250M grant A123 will become the low cost Lithium battery supplier with an excellent specific power tech suitable for hybrids and other high output needs. Their material costs, Lithium, Iron, Phosphate, Carbonate are all low and plentiful. With this free cash advantage over others, they are the one to watch. Their soon IPO should be well received.

Aug 06 09:09 AM

[John Petersen:]

jerrydd, while I'm sure that political power played a role in some of the larger awards, there were a lot of high profile, well regarded and well connected companies that didn't get the nod for their applications. So I suspect the process was much more technology focused than might appear at first blush.

For over a year I've been pounding the table about the A123 IPO being a sea-change event and it will be. To lock down yesterday's grant award they'll have to increase their deal size by $250 million to cover the matching funds; so I have to imagine that the offering total will be well north of $500 million. In other words, A123 is going to be a huge and very important deal.

Now let's set the way back machine to a different era. In August of 1995, there were no public internet companies when Netscape did its IPO. The predicted price was $14, the offering went off at $18 and the stock ran to $75 on the first day. From that day forward the rush was on and every investment banker and venture capitalist in the country was out beating the bushes for the next Netscape. I couldn't even begin to list the number of major companies that made their debuts over the next 18 months. Once the A123 offering goes off, I expect the same thing to happen in the energy storage sector. These things are never isolated events. They always come in waves.

Aug 06 09:20 AM

[123andy:]

John, I have enjoyed your various reports on battery technology. I understand that government funding is perhaps lowers the risk for private money, but now we have a situation where to a degree the government is picking winners and loosers in new technology development. When the government is the customer I can understand that, but when it simply subsidizes some and not others I wonder if this is going to kill innovation in the battery industry. Should I be worried or ..?

Aug 06 09:25 AM

[ccm226:]

Thanks for the link, that is a great data point. However, it looks like its an expected future number for Furukawa's technology. Do you know any information on Axion's or about current/near term pricing for any player?

Thanks for the steady stream of info.


On Aug 06 08:05 AM John Petersen wrote:

> ccm26, in a recent article I included a slide from a presentation
> by Patrick Moseley, president of the Advanced Lead Acid Battery Consortium
> that pegged the expected price of lead-carbon batteries in the $260
> per kWh range. See:
>
> seekingalpha.com/artic...
>
>
> The lead carbon grants are very curious because they both specify
> the manufacturing partners, the technology partners and technologies
> to be used. Exide with Axion will be using Axion's lead-carbon electrode
> technology and East Penn will be using the CSIRO split electrode
> Ultrabattery technology. Axion just put out a press release that
> it has not heard directly from the DOE yet, so presumably all the
> details will be worked out over the next couple months. The relationship
> with Exide is apparently moving forward apace.

Aug 06 09:35 AM

[jerrydd:]

Sorry guys but NG in cars is not likely to work because of size, safety, fueling problems. Plus you can't go through tunnels with them.

Now trucks, Semi's is another story where NG is the way to go.

On why East Penn, Exide got the grants, are they in Congressman Murtha's district? He is the king of home town pork and many companies move there for that reason..

Has anyone priced out carbon fibers for CL batteries? They have stayed around $15-20/lb for decades, well over the cost of Lithium, Nickel and most other battery materials.

Aug 06 09:36 AM

[John Petersen:]

123andy, it looks like the DOE has done its best to set the stage for a horse race. The most money went to lithium-ion, but NiMH and lead carbon both got respectable levels of funding, so it's hard to accuse anybody of picking winners and losers. It would probably be fairer to say that they just gave a large snowball a substantial shove and started it rolling down the mountain.

Even the companies that didn't get the nod did a tremendous amount of work on their grant applications that won't go to waste. If I'm right that A123's IPO will be the first of a coming avalanche of financing projects in the storage sector, then everybody who did the work and prepared a complete grant application is well positioned to step quickly into the private and public capital markets. I can pretty much guarantee that investment bankers and venture capitalists will be scouring the DOE's public records in their search for the next A123.

Aug 06 09:40 AM

[John Petersen:]

ccm226, because of my prior relationship with Axion I try to stay away from commenting on specifics, but I think their target pricing will be competitive.

jerrydd, I've never seen anything that indicates that either the Furukawa Ultrabattery or the Axion PbC use carbon fibers. In fact I've been in several presentations where Dr. Buiel said Axion is basically using a better grade of the granulated activated carbon used in water filters.

Aug 06 09:46 AM

[nakedjaybird:]

John - what really's sad is how this $2 Billion in funding (our tax dollars at work) pales vis the financial bailout and all the billions just plain old people that PRODUCE NOTHING were awarded (legally stole) while engaging in zero sum game playing and causing the taxpayers to lose $13 Trillion in personal wealth - that's really sick!!!

Aug 06 10:51 AM

[Gosh-137:]

John, please don't continue the confusion of "uninformed" investors by stating the symbol for General Motors is GMGMQ.PK. That is the old symbol for the now Motors Liquidation Company (MTLQQ.PK). General Motors Company has no common stock.
PS: Even though it has been in most news media for months, I still get inquiries about "Should I still keep my General Motors stock (or buy MTLQQ) because I think it will recover."

Aug 06 11:09 AM

[Ferdinand E...:]

Where's my money? Don't I deserve something for being prepared to put my arrogant shoulder to the wheel?

Hmm, perhaps not. But anyway these grants are a good start. Now for some brilliant advice to our new president. Declare victory in Iraq and Afghanistan, and clear out of both places. Then use the money saved for grants of the kind mentioned in this article, plus a few more.

Aug 06 11:21 AM

[John Petersen:]

nakedjaybird, I don't disagree at all.

speculawyer, it's good to see you again. It's been a long time since we last snarled at each other. I was wrong in my initial read of the new legislation and my early assessment of the percentage of tier one grants that would go to lithium ion. Nevertheless, an allocation of 2/3 lithium-ion and 1/3 products that can be manufactured today at reasonable prices is still a far sight better than the 100% lithium that some commenters were predicting. So I guess we live and learn. By the way, since it's been a while since you commented, I don't know whether you ever got a chance to read the unpublished "pre-decisional draft" of a DOE report titled National Battery Collaborative (NBC) Roadmap that I received in early June. It certainly seems to be a blueprint for current events in the lithium-ion space and is a must read for anybody who is truly interested in learning about the future development path, timetable and costs. See:

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

In any event, it looks like we have us a horse race, which is all I've ever wanted. I still think that the PHEV and EV development path will take us to cost-effective vehicles over the next decade or so, I just don't expect it to happen overnight.

Gosh-137, thank you for the heads up! I don't actually write about GM very often and the symbol was inserted by an editor because I put question marks in that particular blank. But I'll pass the word.

Aug 06 11:42 AM

[jerrydd:]

Speculawyer,

EV drive consists of 2 bearing, a motor case, simple rotor and stator around 100 lbs of so. This costs OEM's about $300.

. Just how doest this cost more than an ICE/transmission with all it's machining, materials, systems, etc that weighs 300-700lbs?

Controller, charger are not expensive in mass production, less than a fuel injection system, about $400.

And no transmission unless you want over 85-90mph then just a 2 speed gear set. Just the motor mounted on the diff.

This is in fact a big reason big auto doesn't like EV's as they make a lot of money off motor, motor systems replacement parts. As there is little in an EV to wear out, they make little after sale money. They get a 90% mark up on these parts studies have shown.

Aug 06 01:07 PM

[Old Wizard:]

John, I didn't see GE in the list. Did they not get money for their new hi-powered battery initiative? On another subject, The natural gas for fuel bill that is wending its way through congress has been allocated 30m. It would seem to me that a balanced energy plan that really deals both with our critical economic and jobs problem would be more balanced. The investment in battery technology is driving toward an electric vehicle solution that will have a major impact in possibly ten years while that which can impact the country in the near term is hardly addressed. Let's look at the numbers, 3 billion for the CAC program that might save 6 to 9m/gallon on 675k cars whereas converting roughly a million vehicles to natural gas fuel for the same money would save2 to 4 times the amount of oil and have a greater immediate impact on jobs and the country's current account. Further, I believe that this battery money is still a buck shot approach that is not likely to converge as quickly and with the focus of Chinese competitors whose investment in equivalent man hours dwarfs the USA'S . Warren Buffet's alone in the Chinese company shows this to be true.

Aug 06 02:35 PM

[John Petersen:]

Wizard, it came as a surprise to me that GE didn't make the cut, but I have to admit that yesterday was full of surprises both on and off the grant announcements. As a former oil and gas guy, I think NG is an unfairly maligned resource that's looking a good deal more plentiful than it did just a few short years ago. I'm with Fitz and Lounsbury that there should be a broader focus to energy policy than there is. That being said, policies are what they are until they change and it's easiest for me to work with the rules than try to rewrite them.

Aug 06 03:42 PM

[ginchinchili:]

John, I know this is like talking about next year's Christmas on the day after this year's, but do you envision writing more on the energy storage sector for the smart grid? I know you have already, but I hope to see more on this topic.

There are a lot of new and exciting things happening in the automotive battery industry, but energy storage for our grid, and the grids of other nations, is a relatively new employment of energy storage technology, at least on the massive scale that is being discussed, so it seems the possibilities are an even greater mystery than the battery technology that will dominate the auto industry. How big is the potential market, or is that even knowable?

Aug 06 03:45 PM

[John Petersen:]

ginchinchili, I just received a preview copy of a new market research forecast from nanomarkets.net titled, "Batteries and Ultra-Capacitors for the Smart Power Grid: Market Opportunities 2009-2016" and will probably write about some of their key conclusions within a week or two. One of the more striking is a revenue forecast of $7+ billion per year by 2016 for grid connected batteries.

In the interim I have a project I've been working on with Jack Lifton that will take me a step away from storage, but keep me inside the limitations of my knowledge. It should be fun.

Aug 06 04:01 PM

[adamnb:]

Dear John:

Don't you think it would be a good time to start and electric storage etf (they seem to have almost every other kind). I bet that there's plenty of funding out there for it.

Aug 06 05:00 PM

[engstudent:]

I don't see much money there for grid storage. Is that the case?

I saw that nanomarkets summary on their website. They state:

"Current national and international goals for alternative energy deployment will not be met without extensive new storage capability installed in national grids."

From an Irish perspective I've seen research which shows that even if we reached our 40% wind penetration target (6000 MW) - one of the highest targets in the world - , we still would only end up curtailing wind less that 1% of the time. The economics of storage by comparing a system with and without storage did not add up.

The study further showed that the system with storage was more carbon intensive than that without storage because it allowed coal plants to operate through the night.

This is why I'm a little perplexed at the received wisdom that wind, solar = variable therefore storage is required. I'd look forward to an article on that. I might even write one myself.

Aug 06 06:35 PM

[User 434314:]

I am confusing also whether the wind and solar system with energy storage are economic or not.
I am doing the feasibility study of energy storage system for making business plan.
Could anyone help me with making economic analysis for large scale energy storage system?

Aug 06 10:41 PM

[User 434314:]

Dear John :

According to this report flow battery is the most promising technology among the large scale energy storage technology.
Do you have any comments on this result?


On Aug 06 04:01 PM John Petersen wrote:

> ginchinchili, I just received a preview copy of a new market research
> forecast from nanomarkets.net titled, "Batteries and Ultra-Capacitors
> for the Smart Power Grid: Market Opportunities 2009-2016" and will
> probably write about some of their key conclusions within a week
> or two. One of the more striking is a revenue forecast of $7+ billion
> per year by 2016 for grid connected batteries.
>
> In the interim I have a project I've been working on with Jack Lifton
> that will take me a step away from storage, but keep me inside the
> limitations of my knowledge. It should be fun.

Aug 07 12:41 AM

[John Petersen:]

adamnb, I ran that idea past Tom Konrad and Charles Morand and they agreed that the universe of companies was too small to support an ETF and it would be very difficult to sell the concept to a manager.

Engstudent, I'm not entirely sure what studies you're talking about but the nanomarkets white paper teaser for the full report says:

"As the percent of wind and solar on a grid passes above 10–15 percent instabilities can occur if there is no storage capacity. In fact, Ireland put a moratorium on the connection of new wind power to their national grid due to instabilities as the wind generating capacity exceeded 7% of overall grid capacity."

This is far more consistent with the views I heard at Storage Week.

User 434314, the California Energy Storage Alliance gave a presentation at Storage Week that showed using storage to shift the 12 noon output peak for solar by 4 hours using storage could almost double the IRR. They might well be able to help you with your analysis.

You always have to be careful with terms like "most promising" because without a timeframe the term is meaningless. I love flow batteries for appropriate applications where the need is four to six hours of dependable power. They are less attractive when the application goal is to smooth out brief instabilities and protect against power outages. The short and sweet answer is that utility storage is a monster big tent with plenty of room for a variety of technologies to make an important contribution.

Aug 07 02:04 AM

[engstudent:]

John, I can tell you that the moratorium was put in place in 2004 for 6 months and was partly a political decision. Since then we've roughly quintupled the wind on the system from 200MW to approaching1200MW, which will represent 15% wind penetration.

In fact, for a period on May 8th this year, we had 40% of our electricity coming from wind.

The paper I was referring to has yet to be published.

Aug 07 07:28 AM

[John Petersen:]

engstudent, when the study comes out I would appreciate a copy.

I'd also like you to contact me directly so that we can have an off-line conversation on a couple of issues that tie back to your well-written instablog. The contact information is on my profile page.

seekingalpha.com/autho...

Aug 07 10:08 AM

[Old Wizard:]

John, through my own sources, I was reminded that GE has a big investment in A123. As your table reveals, A123 received one of the largest grants from the Government's 2.5b program. Since A123 is probably going to have an IPO soon, it appears that GE will stand to gain a substantial return from its investment. Further, it is also true that the head of American Superconductor was a former principal in A123 and this firm is also a possible recipient of a Gov. grant. I have not verified whether GE has an interest in AM. SUP.. You are right about the political climate, but did not comment on the Buffet point. On the above, a jaundiced observer might conclude that it pays to back the winner politically, especially when the winner has the power to make such large investments in your business' well being.

Aug 07 12:54 PM

[Mayascribe:]

You go, Exide!

Aug 07 02:06 PM

[Advill:]

The grants provides more of political compromise than real possibilities for many of the beneficiaries, Ford, GM (or whatever the name is now) or Chrysler has no knowledge base that justifies the grants.

There are some companies that are not in the list and have more serious possibilities, Ballard (I know is canadian) but Basf is german and got money, GE has a sodium technology that deserves attention, Union Carbide, Valence, Eveready and others.
Some technologies being supported as A123 are highly speculative (given the results of many initiatives in the last decade)

In AXPW case if they are already in pre-production stage what is the case of having I+D funds?, as John said before they are now "in the thousands" samples..

Regards.

Aug 07 04:15 PM

[User 432382:]

John,

It seems that East Penn has had the chance to work with both Axion's PbC and UltraLife battery technology, and they have chosen to go forward with the UltraLife battery (at least for this grant). I was wondering if you have any thoughts on this? Does this mean that East Penn thinks the UltraLife battery is "better", or was it possibly due to Axion already having a dance partner with Exide??

Also, I've read your comments that Axion could eventually produce up to 1 million PbC batteries/year in their own factory. I've also read that projected/target prices for lead-carbon batteries were ~ $260/kWh? So my question is 1 million batteries/year = how many kWh/year? Another question (sorry), but Exide's latest financials show their profit margin ~ 18%. I know you don't want to get into details, but what's a ballpark margin for "higher margin" lead-carbon batteries (I have no clue). thanks.

Aug 07 09:10 PM

[John Petersen:]

Wizard, I didn't comment on the Buffet investment because he bought BYD at $1.12 per share, which was probably a very good price, and the market price is currently ranging in the high $5s and low $6s. Since the attractiveness of a stock is directly related to your entry price, BYD is not as attractive a buy today as it would have been a year ago.

Mayascribe, your $2 Exide has to be looking pretty good right now.

Advill, I had expected GE to get something and was surprised by the outcome, actually there were several surprises. Unfortunately, I find myself in a position where I can't say much more about the grants without alienating somebody. The Exide "with" Axion grant is perhaps the most curious and it will be fascinating to watch and see how it finally comes together. Hopefully we'll all learn more when Axion has its earnings call next Thursday.

User 432382, as far as I know, Axion has solid strategic alliances with both East Penn and Exide. Management has always tried to avoid becoming to closely aligned with any one producer because over the long term it would like to be able to sell electrodes to all producers, a bit like Intel and the computer manufacturers. My sense is that the DOE is driving the process and it wants to see all of the lead-carbon technologies taken to the next level. So I'm not entirely sure what went on behind the scenes.

Axion's permitted capacity is 3,000 batteries per day and the New Castle plant has three production lines. Two are high volume flooded battery lines and the third is a lower volume AGM battery line. The PbC batteries can only be made on the AGM line. I've never seen the capacity figures broken down on a line-by-line basis. So until Axion decides to upgrade the existing lines, I would peg PbC capacity at under 1,000 per day. New Castle has been a great facility to use as a prototyping lab for industrial engineering, but there are a number of companies with AGM plants that have higher capacities and more automation.

A 90 AH -12 Volt lead-acid battery is 960 wh, or close enough to 1 kWh for estimates. As you remove active lead content, you reduce volumetric energy density proportionally. Given the range of lead-reduction numbers I've seen (20% to 40%), I would expect a final number in the 600 to 800 wh per unit range with great power.

The existing New Castle plant can generate respectable revenues and provide a solid revenue base, but the real performance will come if Axion can successfully implement its platform business model and get to a point where it is manufacturing high value electrode assemblies in volumes for use by other manufacturers.

Aug 08 04:15 AM

[Mayascribe:]

John, have you read Jack Lifton's humorous bashing of the Popular Mechanics aticle about how GM is making a kin-like Buick of the Chevy Volt? Great stuff!

Yes, indeed Exide is surely a keeper. But I did sell off all of my Axion, netting just over two grand. When it drifts back down beneath $1.30, I will start reaquire some and then go into full wait mode.

Suffering from the, "If-I-Only-Bought-More" syndrome.

Thanks for being a Guiding Light through this recent bout of battery news.

Aug 08 12:58 PM

[John Petersen:]

Mayascribe, you may want to take another look at the long-term moving average charts.

Aug 08 04:31 PM

[Mayascribe:]

Did that, if you're talking about Axion. But, if memory serves me right, the last time a big spike occurred with Axion was the Exide/Axion joint announcement. The stock spiked, and I remember that speculawyer somehow noticed that even you had sold some off. Then the stock settled back down to just above a buck before last weeks Obama-backed surge.

My belief is that the lightly traded stock will settle again. AXPW has already dropped some from when I sold it @ $1.94. About 30 cents down from where it is now I'll start easing back in. If it takes off, as much as I keep track of "your" sector, I'll jump back on board with an extra two grand to play with.

Surely, we'll compare notes.

Aug 08 05:23 PM

[John Petersen:]

Speculawyer was looking at a Form 4 from a couple years ago that had a bad date. But it is a stock where a WMA shows a very different picture than an SMA.

Aug 09 01:41 AM

[Mayascribe:]

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copanruinas.com

Scroll down from the advertising boxes to read this amazing article. Or, you can go to the Instablog I just put up. Your comments are welcome there, too.

Aug 09 04:04 PM

[DiggerUK:]

All statements that accompany policy announcements associated with energy from US government include the mantra "Future Energy Security" in one form or another.

How does putting such a heavy dependency on foreign supplies of Li help in pursuit of that national strategic aim?
Putting the Li/Pb debate to one side, you are still left with an end result that you swap dependency on foreign oil, to foreign lithium.

The US is not awash with Li, but it is flush in lead.
You couldn't get a goofier policy from a think tank chaired by the Mad Hatter.

Aug 10 10:55 AM

[John Petersen:]

Mayascribe, the detailed report on what happened prior to the recent unrest in Honduras is terribly informative and serves as a model example of just how wrong the press can get the facts. They blithely accept whatever they're fed without question. If Woodward and Bernstein had taken that approach, RMN might well be honored for his statesmanship instead of vilified for his ex-post-facto participation in a panty raid.

DiggerUK - ;-)

Aug 10 11:59 AM

[Mayascribe:]

Thought you'd like that article. All the senators and congressmen, and especially Hillary Clinton, should be forced to read that link on my instapost.

Aug 10 12:52 PM

[MRTTF:]

This is actually an under-reported notion. It's not just the components that make up the active materials though. A wide variety of other materials that go into the cells and batteries are from foreign sources. It's not that there are no domestic sources for some of these materials, but that the foreign sources are often cheaper and/or of high quality than their domestic counterparts. This is a result of the domestic sources not getting into the Li-ion game early.

A telling story of how this happened is here:

www.atp.nist.gov/eao/w...



On Aug 10 10:55 AM DiggerUK wrote:

> All statements that accompany policy announcements associated with
> energy from US government include the mantra "Future Energy Security"
> in one form or another.
>
> How does putting such a heavy dependency on foreign supplies of Li
> help in pursuit of that national strategic aim?
> Putting the Li/Pb debate to one side, you are still left with an
> end result that you swap dependency on foreign oil, to foreign lithium.
>
>
> The US is not awash with Li, but it is flush in lead.
> You couldn't get a goofier policy from a think tank chaired by the
> Mad Hatter.

Aug 10 03:23 PM

[renim:]

DiggerUK
Lithium is a bit like magnesium, processing it is expensive, but the raw material is non-strategic, ie available everywhere, if the price of magnesium were to rise too high, (its low because of chinese production) Dow Chemicals could reopen their texas based magnesium from seawater extraction plant, which was the worlds single largest magnesium plant in the world for a few decades (before it closed down, during a storm and was never reopened).

Currently we focus on brine based Li deposits, only because its cheaper than mining (ie a liquid deposit is an cheaper than a solids deposits) but some hard rock mines are opening up (ie Galaxy resources)

If the price were to go higher, then it could be extracted from seawater, other than magnesium, Li is part of a small handful of materials that can be reasonably extracted from seawater, it just costs more than brine, but sets a a very strong price ceiling on the value of raw Lithium feedstock.

Aug 10 03:59 PM

[Mayascribe:]

Good comment, Digger, with a humorous finale. Let's become dependent upon Bolivia!

Aug 10 04:20 PM

[DiggerUK:]

@ MRTTF and renim,

Lithium is strategic.
If it could be obtained cheaper from seawater, then cheap would have outdone strategic by now.

Truth is, the USA has no strategic reserves, as my link shows.
They check out against Wikis more recently compiled charts as well.
tyler.blogware.com/lit...
en.wikipedia.org/wiki/...

By way of balance I link to an SA article that JP gave in response to my original post on this.
seekingalpha.com/artic...

Aug 10 05:14 PM

[MRTTF:]

Digger--

I completely agree with you. I was just bringing up the notion that not just the lithium and lithium carbonate used are from foreign sources.

Aug 10 06:14 PM

[DiggerUK:]

MRTTF,
Dow.....magnesium........
D'oh.

Can just see General Turgidon now,
"Mr. President, we cannot allow a lithium mine gap to open up."
"We must invade Bolivia now"

Aug 10 06:49 PM

[DiggerUK:]

On Aug 10 06:49 PM DiggerUK wrote:

> MRTTF,
> Dow.....magnesium........
> D'oh.
>
> Can just see General Turgidon now,
> "Mr. President, we cannot allow a lithium mine gap to open up."<br/>"We
> must invade Bolivia now"

It's also time I logged off, my eyes are not what they used to be.

Aug 10 07:12 PM

[renim:]

Digger , MRTTF

I wasn't saying that lithium from seawater is cheaper than brine, I was saying that its sets a long term ceiling to the price of raw lithium feedstock. As to the value of a lithium deposit, Admiralty Resources sold their Lithium deposit (Salar de Rincon) in Argentina last year for about 20-25m dollars. This deposit is bit like the Kuwait of Lithium, (it not Saudi, but its the next best thing)
if the price of lithium gets manipulated upwards too high, then the Japanese or the Koreans will just get theirs from seawater. And while we at at, Galaxy resources is market cap is perhaps US 60m, for a future major non brine lithium resource in Western australia ( near the mothballed Ravensthorpe Nickel Mine)

Aug 11 02:02 AM

[renim:]

for an example of a new lithium resource
www.galaxyresources.co...

Aug 11 02:12 AM

[John Petersen:]

Over the last several months commenters have convinced me that the price of lithium is not a primary driver of the price of lithium ion batteries; it's all the other components and materials. They've also convinced me that global lithium resources are probably adequate for expected future demands. What is not adequate is the existing infrastructure to actually produce sufficient quantities of lithium to meet expected demand.

I'll accept the proposition that Galaxy has a lithium deposit that can be profitably exploited as a hard rock mine. But having the deposit is meaningless unless Galaxy has the financial resources to get the permits, buy the equipment, do the development work and actually turn their deposit into a working mine that produces a useful commodity.

I'll accept the proposition that lithium can be extracted from seawater. But the technical feasibility has no bearing on whether anyone on the planet owns and operates a facility that actually does so.

I've spent 30 years working with natural resource companies that have invariably had amazing resources, but lacked the hundreds of millions of dollars in development capital they needed to turn the in-place resources into proved producing reserves.

In R&D, the science is generally the easy part and the industrial engineering to get to a commercial product the costly part. In natural resources the identification of a resource is the easy part and the engineering, permitting and development costs a small (or large) fortune. Until somebody can show me (a) the existence of a resource, and (b) possession of the required permits and capital to develop that resource, I'll worry about supply constraints.

Aug 11 03:31 AM

[thotdoc:]

Mr. Petersen has spent countless hours teaching us about this area. He comes across as a gentleman and mature in his handling of people.

Speculawyer, you snipe, teach nothing as far as I can tell, and come across as jealous and small. If you wish admiration, which is too clear, please write months of articles educating us instead of nit picking and trying to turn this thread into some typical "he said-she said."

Thanks,

Gordon


On Aug 06 11:05 AM speculawyer wrote:

> >>On balance, I'd say my predictions from earlier today were not
> too far off the mark.<<
>
> LOL! You mean your completely changed predictions. You spent a
> year hopelessly bashing li-ion technology only to see li-ion technology
> get the lion's share of money.
>
> On February 16, 2009, you said:
> --------------------
> In a recent article titled “DOE Reports That Lithium-ion Batteries
> Are Not Ready for Prime Time,” I reviewed the 2008 Annual Progress
> Report for the DOE’s Energy Storage Research and Development Vehicle
> Technologies Program. While DOE concluded that Li-ion technology
> was promising, it also noted that there were numerous technical barriers
> that prevented immediate commercialization of Li-ion batteries for
> use in automotive applications including cost, performance, abuse
> tolerance and life. Based on the conclusions, tone and tenor of the
> DOE report, it’s clear that the DOE views Li-ion as a promising R&amp;D
> stage technology, but believes it is not a prime technology that’s
> ready for immediate commercialization.
>
> The final bill sent to the President requires the DOE to include
> Li-ion battery developers in the class of eligible grant applicants.
> Without that requirement, I think there would have been a reasonable
> argument that Li-ion developers should be excluded from grant eligibility.
> *****While Congress clearly wants some funding for Li-ion battery
> developers, it’s clear that the battery manufacturing grants are
> not directed solely or even principally toward Li-ion technology.
> The Congress wants energy storage solutions that work today, not
> potential solutions that may work in 5 or 10 years. On balance, I
> expect the bulk of the battery manufacturing grants to go to companies
> that are manufacturing and selling existing products into established
> markets.*****
> --------------------
> seekingalpha.com/artic...
>
>
> Yet the funding principally did got to Li-ion technology. D'oh!
>
>
> Ah well, reality bites.
>
> Although I've got to confess this . . . I have become less enthusiastic
> on PHEVs and BEVs . . . NOT because of battery technology but because
> of EV component costs.
>
> I had been assuming that an EV drivetrain without the batteries was
> about equal in price to a gas drivetrain. Apparently it costs quite
> a bit more. The controller, charger, electric motor, and gearbox
> for an EV costs a few thousand more than the fuel systems, gas engine,
> transmission, and exhaust system for a gas car. So that is where
> the problem currently lies . . . not in the batteries.
>
> But at least there is a chance to get those costs down. EV components
> have not been made in large volumes. And large volumes should be
> able to cut the prices down a bit. Especially the charger &amp;
> controller portions that include a lot of software to operate. Since
> software has a near zero marginal cost for each additional item,
> that should help get prices down. But if they can't get an EV drivetrain
> down to about the same cost of a gas drivetrain, then it is going
> to take even higher gas prices before EVs become practical. :-/

Aug 11 10:49 AM

[John Petersen:]

Gordon, thanks for the kind words. Like most writers I can only speak from the perspective of the shoes I stand in and many issues and opportunities in this sector can be the source of virulent disagreement. I do recognize my limitations and that's one of the reasons I love an active comment stream. I believe that exposing issues from all perspectives is important for people who are going to be making financial decisions. At the same time, I do like it when everybody keeps the tone civil and the discussion on point.

Aug 11 12:23 PM

[renim:]

I haven't yet bought into Galaxy resources, I'm still smarting from Admiralty resources 'wealth destruction'. I have watched Galaxy resources triple in the last 3 months though. Although they are mining/processing in Australia, the final processing will occur in China, where the end user is expected to be (and i bet much faster/cheaper as well)
Until I get my head around the grades of the resource etc, i won't buy a mining company

Aug 12 04:26 AM

[DiggerUK:]

MRTTF, renim and JP.
All comments well received. Thanks.

Aug 12 11:21 AM