Battery Investing for Beginners

I've been blogging about the energy storage sector since last July because batteries, single purpose devices that most of us take for granted unless they need to be recharged or replaced, are an essential enabling technology for cleantech, the sixth industrial revolution. With this week's impressive launch of A123 Systems (AONE), the tsunami of investor interest I've been predicting since last fall has finally arrived. Since the A123 Systems IPO has introduced an entirely new class of investors to the energy storage sector, this seems like a particularly good time to go back to square one and explain how energy storage is different from other technology classes. Since I've already written extensively on most of these issues, this article is full of hyperlinks to earlier blogs.

Energy storage is a diverse industrial sector that encompasses a variety of mechanical, electrochemical and electrostatic devices and eighteen pure play public companies that range from well known to unknown. Since some of my earlier blogs came across as fairly harsh, I'd like to make it clear from the outset that I believe there is tremendous long-term potential in every energy storage technology. While I've turned some readers off through my outspoken criticism of wasteful planned uses for extraordinary storage devices and my general disdain for companies that let their stories outrun their business fundamentals, reader comments on my blogs are usually extensive and a well-informed group of regular commenters adds a balance and perspective that I could never achieve on my own. So if you have questions please ask. If I don't know the answer there's a good chance one of my readers will.

Over the last year, I've spent uncounted hours blogging, responding to reader comments and trying to debunk some of the more common misconceptions about energy storage. Those efforts ultimately lead me to a four-sided analytical framework that I believe every energy storage investor needs to understand. The four sides of the framework are:

1. Batteries rely on chemistry, rather than physics, so the rapid rates of change we've come to expect from information technology and electronics will be rare in the battery industry. Moore's Law simply does not apply. It's perfectly reasonable to assume that battery technologies will continue to improve at single digit annual rates, but expecting disruptive changes that result in huge cost reductions or performance gains is unreasonable.
2. The battery business is hard-core manufacturing and revenue growth will be tied to the construction of new factories, a process that requires substantial amounts of time and money. Accordingly, the time lag between a new product announcement and the receipt of substantial revenue from product sales will typically be measured in months or years, rather than weeks. Moreover, revenues will tend to stair-step as new factories come on line instead of following a smooth upward trend.
3. Battery manufacturing requires huge amounts of raw materials that typically account for 70% to 80% of total production costs. So while material constraints have not been major issues in many new industries, they can be important issues for batteries that are based on scarce or expensive raw materials.
4. The cleantech revolution will be unlike anything that's gone before. For the first time in human history we live in a world where six billion people know about the lifestyle that 600 million of us take for granted. Since they know there is more to life than bare subsistence, each of them is working very hard to earn a small piece of the dream. The only way to accommodate six billion new consumers without catastrophic conflict or horrendous environmental damage is to find relevant scale solutions to chronic shortages of food, water, energy and every commodity you can imagine. The first, and perhaps the most important, step down that path is the minimization of waste in all its pernicious forms.

Investors who learn these framework principles and rigorously adhere to sound discipline can prosper in the energy storage sector. Investors who ignore the framework principles and go off chasing rainbows do so at their peril.

Last fall I wrote an article titled "Alternative Energy Storage: Lithium, Lead or Both?" It remains a personal favorite because it explains a number of important energy storage concepts in simple terms, discusses the history of the battery industry, explains the economic and technical drivers that brought the industry to where it is today, and explains why I believe that:

• Commercial and industrial energy storage decisions will always be based on detailed studies that carefully weigh the fully loaded cost of storage against the value of the stored energy;
• Consumer energy storage decisions will be very sensitive to both front-end costs and back-end energy savings;
• There is no silver bullet technical solution to the energy storage problem and our clean energy future will require the use of several different storage technologies; and
• The prize will ultimately be shared by dozens of companies instead of being concentrated in one or two.

Like many commenters, I'm not excited about PHEVs and EVs, but the reasons for my cynicism go beyond the commonly cited issues of high-cost, uncertain reliability and unknown consumer demand. I'm an unrepentant critic of cars with plugs because they waste battery capacity; an expensive resource that I believe will become increasingly precious over the next three to five years. The popular Prius from Toyota (TM) uses 1.5 kWh of battery capacity to slash fuel consumption by roughly 40%. The planned GM Volt will use its much larger battery capacity far less efficiently.

If the goal is to reduce dependence on imported oil, we're far better off using our available battery production to build large numbers of Prius class HEVs that cost $22,000 each than we would be using the same battery production to build a far smaller number of Volt class PHEVs that cost $40,000 each.

If the goal is to reduce C02 emissions, the contrast is even bleaker because most of the electricity that goes into a Volt class PHEVs will come from coal and natural gas fired power plants for the foreseeable future.

According to Frost & Sullivan, the global lithium-ion battery market was roughly $7 billion in 2008, including $5.5 billion for consumer products, $1.5 billion for industrial products and $28 million for transportation. While a number of new lithium-ion battery plants are planned, some of them won't be built and those that are built won't go into production for another couple of years. Since the NiMH batteries that are currently used in most HEVs are severely resource constrained and demand for all classes of HEVs is expected to skyrocket over the next five years in response to aggressive

European CO2 emission standards and accelerated U.S. CAFE standards, I have no doubt that every lithium-ion battery manufacturer with an operating factory and a quality product will have more customer demand than it can possibly satisfy. I also expect the emergence of more robust lithium-ion batteries to create entirely new classes of demand that we don't even recognize today.

On balance my sense is that A123 is probably trading at or near a reasonable value given its financial condition and short- to medium-term revenue prospects. I'm not as sanguine about the market valuations of some of the other domestic lithium-ion battery developers because their financial position is far weaker and they've let their stories and stock prices get ahead of business fundamentals. As a result, I don't see a tremendous amount of short-term upside potential in the lithium-ion subgroup.

Notwithstanding my neutral outlook for the lithium-ion subgroup, I continue to believe that the lead-acid subgroup including Enersys (ENS), Exide Technologies (XIDE), C&D Technologies (CHP) and Axion Power International (AXPW.OB) have significant short-term upside potential because lead-acid batteries have been unfairly criticized by lithium-ion battery developers for years and the companies that make them have been largely ignored by a market that's obsessed with searching for the next big thing. Over the next few years, revenue growth in the lead-acid subgroup should outpace revenue growth in the lithium-ion subgroup by a wide margin. Moreover, the companies in the lead-acid subgroup all trade at substantial discounts to their flashier cousins. When I was much younger, a wise old stockbroker taught me that the secret to successful investing was to buy undervalued stocks, hold fairly valued stocks and sell overvalued stocks. Based on everything I know about the battery industry, I believe that cheap will continue to outperform cool over the next year the same way it has since last November.

Disclosure: Author is a former director of Axion Power International and holds a large long position in its stock. He also holds small long positions in Enersys and Exide Technologies.

Comments

[John Petersen:]

John Mauldin is my all-time favorite big-picture financial writer. His weekly e-letter is something I've read religiously for the last 10 years and I find the clarity of his crystal ball amazing. John recently started posting his weekly e-letter on Seeking Alpha and if you're not already familiar with his work, you should be. John's author page is here:

seekingalpha.com/autho...

Sep 27 06:25 AM

[Obamitall:]

Thanks for repeating this primer. I have followed your articles for some time now, and appreciate any knowledgeable and nonpolitical report on the alternative energy sector.

Sep 27 09:25 AM

[a. palmer jr.:]

Concerning fuel savings: If fuel economy is a serious matter, anyone with a brain can see that it doesn't take a four wheel drive, six thousand pound vehicle with three hundred fifty horsepower to propel a 110 pound female to the supermarket! Until we can get people to thinking conservatively we can't begin to save any fuel or become independent of the middle east. All it would take, in this instance is a very small, 2 person vehicle with adequate room for groceries. An electric vehicle would be perfect for this. You hear the argument that EVs aren't good for long trips. I can't remember the last time I took a trip in a car over 100 miles each way. Many older people like myself don't feel like driving 300 miles a day or have a reason to do so. Besides, a person could own a gasoline or diesel car for long trips. EVs should be great sellers if they can figure out how to keep the price down.

Sep 27 10:04 AM

[Mad Hedge F...:]

trn ) The spectacular debut of the IPO for A123 Systems (AONE), a maker of high powered, quick recharging lithium ion phosphate batteries using advanced nanophoshate technology, put a great shining spotlight on a sector I have been harping about all year (search my data base for “Butch Cassidy” by clicking here at www.madhedgefundtrader... ). The initial price talk was at $8, the IPO came out at $13.50, and the first day of trading took it up to a meteoric 43% to $19.20 on the first day! I had a flashback to the dot.com boom. Where are the gold flecks on the sushi, my free IPO hat, and the vodka luge? The fact is that this is an industry that is going to be huge in the next 20 years. The market for lithium ion batteries, which offer a 4X improvement over ferrous oxide predecessors in energy stored per unit of weight, is expected to grow from $32 million this year, to $74 billion by 2020. That is no typo; I really did leap from millions to billions. Their use is expected to spread from cell phones, to the electric car industry, to endless other applications. We are still in the ground floor elevator of the Empire State building. But outside of a few stocks like Chile’s Sociedad Quimica Y Minera (SQM), there have been few ways in which an investor can get involved in the lithium space (see my call to buy the stock in February before its healthy 60% move up at www.madhedgefundtrader... ). So when a small company like A123 opens a window, the investors dog pile in. Watch this space. Lithium could be the new crude, and companies like A123 could become the next Exxon (if Exxon doesn’t become the next Exxon). Kiss up to your long neglected broker and try to get in on the next allocation. And check out my gratuitous Robert Redford photo below.

Sep 27 11:09 AM

[whisperonth...:]

I like the smaller cars, and currently own one that gets about 35 mpg, city driving, and better than that on the highway. I will get an even smaller car eventually, maybe next year. I most likely will choose not to get a battery operated vehicle - no matter what kind of battery they offer - because although I don't always drive more than 20 or 30 miles in a day, I do drive more than 100 miles in a day at least once a week, and several times during the year I drive more than 800 miles in a day. I like to drive! I would be willing to drive a CNG vehicle or even one the runs on hydrogen, but I am not willing to be grounded to 100 miles per charge. My closest family member lives more than 100 miles away, and my kids live in different states (where there are jobs), several hundred miles away, so to limit myself to a battery would mean plane, bus, or train plus car rental. It would be cheaper to pay for the gasoline for those drives.

When the rest of the real world catches on that they'll be limited to a 100 mile round trip, the battery idea will be relegated to the golf cart/wheelchair crowd. I'm not ready to join that crowd yet.

Sep 27 11:22 AM

[whisperonth...:]

One other comment: Because I live alone, it is not practical to own two vehicles, so whatever vehicle I drive has to be able to work for the local driving as well as the long distance driving.

Sep 27 11:23 AM

[skwestorange:]

We are talking about a culture change and it is a very very long term project. American society in general does not have the attention span required to bring about this kind of a culture change in short time -even ten years-, bar a severe event like to 1930's type depression. That may eventually happen when the food fight begins in earnest for the scarce world resources combined with the currency crisis, but it sure will be a generation or two later.

Sep 27 12:14 PM

[dpaschoal:]

Hi John,

I am 100% with you in the comparison of a well established industry with the new Lithium hype. However also curious to know the results of the "disruptive" Eestor project, which promises to make all batteries obsolete. I would love to have your comment on that.

Roberto DePaschoal
[e-mail]

Sep 27 12:51 PM

[Don Harmon:]

Not so fast there skwestorange - maybe in the past it would take two generations to make a culture change, but times are a changing my friend, and we are being forced into changing with the rest of the world bearing down on our culture in ways never before experienced.

I would go so far as predictiong the next massive culture change is already underway and will be firmly establishes by 2012, which is when the Mayan calendar ends. For those who prefer to not to look at this as the end of the world as we know it like me - it is the beginning of a new paradigm shift where the planet finally realizes the "brotherhood of mankind" as a new imperative over the brutality of nationalism and the governance of tyrants and fanatical religions.

www.whowillsurvive2012...=

This time the next big thing is already upon us and we Americans are not in the driver's seat. The rest of the world has seen how great it can be to own a piece of the American dream, and they now want their slice of the pie. This is not negotiable and we can't close our doors to the world any longer. We now are an irreversible component of a global financial system and totally dependent on foreign countries for our manufacturing and raw material needs.

We may retain our top postition in marketing and movie making, but we have sold off the rights to most of our manufacturing and much of our technology to Asia which has a bottomless supply of cheap labor and we will never be able to compete with them again as far as creating well paying blue collar jobs in this country.

I would say we are well along the path already of a cultural revolution only most of us don't realize it yet.

Sep 27 12:52 PM

[searcher:]

RE: 2012 Please join me and our band of designated survivors at a secret plateau in northern Arizona where we will escape the end of the world by transporting to the mothership. Pay no mind to the blather of dyspeptic doomsters, you have an alternative. Send $2.00 to PO Box 2012, Roswell NM.

Sep 27 01:17 PM

[captainccs:]

>>>The first, and perhaps the most important, step down that path is the minimization of waste in all its pernicious forms.<<<

I think the above misses the central issue of life, specially if six billion people are to enjoy the lifestyle of the current top 600 million. Six billion well-off people will make mountains of "waste." The issue is what to do with it. The secret word is "recycling." I am convinced that making liquid fuel from waste will be one of the big sectors in the developing green energy world.

Just what kind of fuel will your "HEV" use? Gas or Diesel made from waste! Chicken fat, yellow oil, municipal waste, agricultural waste, from anything that contains carbon and can be gasified. And don't just think about cars. Airplanes, ships and long haul trucks will never be fully electric.

Frankly I can't get excited about buying a $20 share in a company that loses money on every battery they sell. Maybe they make it up on volume. hahaha

Disclosure: Long RTK

Sep 27 01:25 PM

[jerrydd:]

While battery technology will be huge in the future, in the short term, not so much. Why is the wanted EV's, PHEV's will come out very slowly as car companies do not like them because they are simple, last a long time and need little service, parts which are the areas they make most of their profits.

The only exception seems to be Nissan with their over 100k EV orders by A Better Place, a battery swap/lease company. Also EV's make the most sense in small size commuter vehicles which car companies hate to build.

The other big market is home/utility/RE energy storage but it too is several yrs off. Both are not going anywhere until oil surges late next yr as the economy recovers making it plain EV's are the way to go. Basically the large battery market is at least 5 yrs away and way too many battery companies out there without customers.

While John may be against wasting battery resources in EV's, PHEV's , people don't care and just want EV's that don't use expensive gas. Every production EV that has been put up for sale, even $100k Tesla's, have been sold before they were even made so there is a big market, especially as the price drops below ICE's as it will in 4-5 yrs. In fact it will probably be new EV makers that bring EV's into mass production in the small sizes where they are best suited.

A great article on batteries and Lithium in todays SA
seekingalpha.com/artic...

There is a lot of talk, other information out there that is not reliable so before investing in batteries research the companies and see if they actually have products, markets as many of them will die.

Speaking of them, wasn't EEStor suppose to start production this month? Or is it another of their long list of deadlines missed?

Sep 27 01:30 PM

[John Petersen:]

a.palmer, the big issue on range is cost. In a normal car the fuel tank is ultra-cheap and you pay for the fuel as you use it. In an EV, the batteries are the functional equivalent of a very expensive fuel tank that holds fairly inexpensive fuel. As a result, the only way to make the numbers work on an EV is to buy no more range than you're going to use every single day. The Germans are fooling around with a towable range extender battery that could be used for longer trips, but the system is still pretty new. At least for the short term, using a little bit of battery capacity to power a strong hybrid works out better than using a lot of battery capacity to power an EV. That may change if battery prices collapse, but I don't know that I'd be a happy investor in a battery company if battery prices collapse.

madhedgefundtrader, you're absolutely right about the potential for exclusive growth in the battery industry. The really funny part is that the growth is going to come no matter what. It makes no difference whether cars with plugs succeed or fail, the industry is going to be hard pressed to keep up with demand in any event.

skwestorange, I'm a big fan of incremental change and believe that storage will be adopted in "Baby Steps" rather than quantum leaps, but the change is coming in any event because at the end of the day there is no choice, we have to minimize waste. Another one of my personal favorite articles was my first Editor's Pick and focused on the need for baby steps:

seekingalpha.com/artic...

dpaschoal, I'm an EEstor skeptic because the promises I've read seem to violate the "too good to be true rule," the claimed performance seems to be at the extreme outer edge of the laws of physics, and all the claims about the wonders of the technology come from a Canadian EV maker that seems to be using EEstor to maintain a stock price that could never be justified without the EEstor promise. The thing that scares me most is that if the black box turns out to be smoke and mirrors, EEstor will claim "we never said that publicly" and Zenn will say "we relied in good faith on EEstor" and both will assert that they're not responsible for investor losses. In 30 years of practice, I've seen more wondrous things in laboratories than you can imagine. The number that have been translated to products that can be manufactured by guys in gimme caps is roughly zero. In the words of an old broker friend, "I've been burned so often by the hot that I blow on the cold." Time will tell with EEstor, but I'll keep my wallet in my pocket until I see something that involves a third party judgement, either in the form of an independent study or a manufacturing partnership with a major industry player.

Don Harmon, careful there son, you're starting to sound like me. I agree that the change will come far faster than many expect, but I still think the road will be traveled one baby step at a time.

Sep 27 01:33 PM

[R0B50:]

Just to point out, the normal investor couldn't purchase the stock until it was at $17. So the 'metoric rise' wasn't all that for an average investor. Maybe the Investment houses got rich and even the people that were lucky enough to get a doled out amount before trading, but not you or I.

I await the price to come back and I look forward to finally getting an opportunity to invest in the Company I've watched and wanted too long for to let it get away, but I will not buy at a higher price than I feel it worth and have to wait and hope growth will make me whole.

Although I will add I missed many an internet stock in the 90's because of this philosophy too...LOL
Sad, but true.

Sep 27 02:18 PM

[grey road:]

I continue to see BYD company (BYDDF, OTC) as the best play in this sector long term. I have recently taken profits but continue to hold some. After it goes down for a bit to about 6 or 7 I will buy more again. Long term I expect to make alot of money trading and holding this thing.

Sep 27 02:22 PM

[John Petersen:]

Rob50, if my belief that all battery manufacturers will have more business than they can handle is right, then some of the unloved old line manufacturers that sell at a fraction of sales should do better than the companies that trade at high multiples of sales. These pendulums always seem to equalize over time, so riding some of the old line firms up while you wait for the new line firms to come down may be a solid strategy.

Grey Road, I'm sure BYD was a deal when Buffett bought at $1.12, or roughly 0.5x sales. Trying to figure out whether BYD is still undervalued at 3x sales takes more analytical skill than I would ever lay claim to.

Sep 27 02:40 PM

[Dave K.:]

Hi John good article on batteries but you missed a number of disruptive technologies arising from the ultra-capacitor research market. I am bringing them to your reader’s attention as they are potentially disruptive to the battery industry and for that reason, have to be closely monitored by investors. The technologies are at the development stage and 1- 3 years from manufacture, of course should they work as intended.
Both are disruptive, but different ultra-capacitor technologies, which are targeting batteries with cost of manufacture in the $50 to $150 per kwh range. The low voltage technology is under development by a Japanese company EAMEX and their web link is www.eamex.co.jp/capa2_... and then there is the company I work for website 1-LTL.com whose technology is a high voltage electrostatic technology with a similar cost of manufacture. EAMAX has serious attention from the automotive companies and I expect a lot of money is being poured into research on their technology. LTL is talking to a number of organizations interested in funding its next stage of development.
The web page www.1-ltl.com/capaciti... has a energy storage table with active links to pages that explains the different technologies. Feel free to e-mail me with any updates to battery technologies or costs, as my goal is to keep the table current. Only public information will be entered.
There are a few other companies working in the electrostatic capacitor area but their work is more disruptive to the existing double layer ultra-capacitor manufacturers such as Maxwell. Yes there is EESTOR but they are so far off of meeting their delivery dates I believe they have been dismissed by most investors. An interesting footnote about EESTOR is that LTL believes it may have a critical controlling piece of IP over them and a free, except for our IP, work-around to their technology. LTL’s IP is for manufacturing process for high voltage ultra-capacitors. This has been the company’s strategy all along to own the manufacturing equipment for high voltage ultra-capacitors.
Summary, all battery makers intending to survive long term have to get their cost of manufacture below $250 per kwh range within 3 to 5 years and ideally to less than $150. The green tech and battery market should be seen as similar to the DOT COM era with a number of big winners and losers emerging within 5 years. The market will be very dynamic and expect a few disruptions. That is why forums such as this will be a valuable source of information for investors over the next few years. Dave

Sep 27 03:44 PM

[skwestorange:]

Don Harmon: I agree some change is underway now in our society's thinking. But history suggests two things: 1) Americans will not have the desired focus for a very long time and 2) when things look better we will forget the need for EV, HEV or energy independence as we have so ably done so many times in the past. The grand culture changes of the type we seek takes a long time or John says "one baby step at a time."

Sep 27 05:04 PM

[TinyTim:]

Jerrydd-
Thanks for the link to the useful SA article.
Very factual.
Here's more on batteries and lithium from the same analyst:
www.byroncapitalmarket...

Sep 27 05:26 PM

[TinyTim:]

Don-
The aircraft carrier going over the beach house was great. Can't wait for 2012.

If green is great, then short the browns:

seekingalpha.com/artic...

Check out the comments following the article.
These are not Prius drivers.

Sep 27 05:41 PM

[dpaschoal:]

John,
I really appreciate your comment about Eestor; let's wait and see what will happen.
Regards,
Roberto

Sep 27 06:01 PM

[Douglas Kor...:]

Lithium and nanotechnology *sounds* good; but it translates in my mind to the world "hogwash".

Lithium batteries have a bright EV future, perhaps, but they are about 4 to 10 times as expensive as NiMH and over 20 times as expensive as lead. Concentrating all EV efforts on Lithium, like concentrating all efforts on fuel cells, simply removes the EV program from a mass-market to a niche-demonstration program, "no threat" to the current oil-auto companies, and no chance for large-scale production of batteries or for the kind of growth that some seem to be expecting..

You are never going to build a mass-market for EVs or plug-in cars using virgin Lithium, it's always going to be a niche or demonstration market, maybe 500 or, gasp, even 5000, or, gurgle, 50,000 cars. The WORST thing is that there are already good batteries that will do the job; but no one is even looking at them.

I have no doubt that a battery technology COULD be developed, if there were anyone who wanted to do so in the existing oil-auto companies!

But so far, there is no interest in developing a battery recycling program, for example, needed for lowering costs. After the (curently 500) Tesla need new batteries, say after 60K miles, what's to be done with the old batteries? No one outside of, maybe, Tesla has a plan, and if they do, it's secret.

If there's to be a fleet of EVs, really, then it must be understood to form an "urban mine" of spent batteries for reuse in making new batteries, using all the same materials and ever-improved methods.

Like the Internal Combustion car business has been for the last 100 years.

EVs should be looked at as a source of "reforming" those batteries when they sunset; every metal is an artifact, except gold, it takes mining and refining. The re-use of old batteries, which have all the alloys and components needed, would be the way industry were headed, IF they were serious about a mass market EV; but of course, they are not serious.

The steel industry dramatically lowered costs when they used scrap steel as the basis for processing, instead of virgin iron ore! Put a lot of legacy companies out of business, with their legacy bessemer furnaces!!

Imagine, after 200K miles, when the NiMH batteries finally give up the ghost, they are brought to a reforming facility, all the rare earth metals, Ni, Ti, V, etc., fractionated and used directly to "refresh" the battery to new, using ever-more-successful techniques to prolong battery life, more robust batteries after each generation.

Or, let's say, when the good lead PSB batteries finally fry, after 50K miles, the high-quality lead is reformed into new batteries. Or, when Tesla's Lithium batteries are finished, they are brought to a reforming facility to make new Lithium batteries, using the same materials in the old batteries. Currently, this is much more expensive with old batteries than with new Lithium ore from brines, dooming the idea of economical production.

BTW, replacement and servicing of batteries ("logistical considerations") is something that NO one has looked at; replacing one battery on the EV1, RangerEV, Rav4-EV, etc., requires an expensive 4- to 8-hour process of "dropping the pack" that can only be done at the dealer and only with a $100K lift. Any competent M.E. would lose his lunch over that one!

Practical considerations and lowering life-cycle cost; that's the way to make a battery EV industry.

But it's not being done, nor looked at, by those Auto Alliance companies supposedly "racing" to "develop" EVs. Lutz, for example, pretends to think that GM can just "order" the batteries, and they will appear; and need have no concern for life-cycle cost.

Obviously, any expectations of a burgeoning, ballooning market for high-quality batteries would require such infrastructure as logistical support and planning as well as sunset or scrap value; the lack of the latter seems to invalidate the former.

Sep 27 06:15 PM

[Don Harmon:]

Douglas, consider for a moment the useable life cycle of a LiFePO4 battery pack in an automobile is 10 years. At this point the same battery pack still has over 75% of it's original power or energy density thus can be re-purposed for other markets like wind or solar giving it another 10 years of life (or more). Thus after 20 years these batteries might be ready to go to the re-cycling companies for reclaiming the original resources used to produce them.

Don't you think that 20 years will suffice to develop the sufficient re-cycling technology that Lithium will require?

It's only common sense when you really think about it!

Sep 27 06:52 PM

[jerrydd:]

Dave, are there any independent tests of your ultracap? As it's over a 100-1000x improvement and other parts of it's website are so far out of present tech I have to wonder. Plus I just don't see how you can do it in a cap.

Until it can be independently confirmed I wouldn't touch this with a 10' pole!!

Plus no mention of the expensive electronics needed to deal with the rate voltage to Zero voltage swings needed to get the power out.


On Sep 27 03:44 PM Dave K. wrote:

> Hi John good article on batteries but you missed a number of disruptive
> technologies arising from the ultra-capacitor research market. I
> am bringing them to your reader’s attention as they are potentially
> disruptive to the battery industry and for that reason, have to be
> closely monitored by investors. The technologies are at the development
> stage and 1- 3 years from manufacture, of course should they work
> as intended.
> Both are disruptive, but different ultra-capacitor technologies,
> which are targeting batteries with cost of manufacture in the $50
> to $150 per kwh range. The low voltage technology is under development
> by a Japanese company EAMEX and their web link is www.eamex.co.jp/capa2_...
> and then there is the company I work for website 1-LTL.com
> whose technology is a high voltage electrostatic technology with
> a similar cost of manufacture. EAMAX has serious attention from the
> automotive companies and I expect a lot of money is being poured
> into research on their technology. LTL is talking to a number of
> organizations interested in funding its next stage of development.
>
> The web page www.1-ltl.com/capaciti... has a energy
> storage table with active links to pages that explains the different
> technologies. Feel free to e-mail me with any updates to battery
> technologies or costs, as my goal is to keep the table current. Only
> public information will be entered.
> There are a few other companies working in the electrostatic capacitor
> area but their work is more disruptive to the existing double layer
> ultra-capacitor manufacturers such as Maxwell. Yes there is EESTOR
> but they are so far off of meeting their delivery dates I believe
> they have been dismissed by most investors. An interesting footnote
> about EESTOR is that LTL believes it may have a critical controlling
> piece of IP over them and a free, except for our IP, work-around
> to their technology. LTL’s IP is for manufacturing process for high
> voltage ultra-capacitors. This has been the company’s strategy all
> along to own the manufacturing equipment for high voltage ultra-capacitors.
>
> Summary, all battery makers intending to survive long term have to
> get their cost of manufacture below $250 per kwh range within 3 to
> 5 years and ideally to less than $150. The green tech and battery
> market should be seen as similar to the DOT COM era with a number
> of big winners and losers emerging within 5 years. The market will
> be very dynamic and expect a few disruptions. That is why forums
> such as this will be a valuable source of information for investors
> over the next few years. Dave

Sep 27 07:07 PM

[Douglas Kor...:]

So far, the maximum Lithium of any sort has powered an EV is 50,000 miles; and there's a shelf life issue. Besides this ominous fact of current Li life, the overall point is that you CANNOT talk seriously about cost until you consider logistics and sunset. Yes, it's common sense, which is sorely lacking in the supposed march to Lihtium.


On Sep 27 06:52 PM Don Harmon wrote:

> Douglas, consider for a moment the useable life cycle of a LiFePO4
> battery pack in an automobile is 10 years. At this point the same
> battery pack still has over 75% of it's original power or energy
> density thus can be re-purposed for other markets like wind or solar
> giving it another 10 years of life (or more). Thus after 20 years
> these batteries might be ready to go to the re-cycling companies
> for reclaiming the original resources used to produce them.
>
> Don't you think that 20 years will suffice to develop the sufficient
> re-cycling technology that Lithium will require?
>
> It's only common sense when you really think about it!

Sep 27 07:08 PM

[Douglas Kor...:]

Don: Also, the idea that spent EV batteries can be used in peak-shaving or solar backup is enticing, but without reality, like EEStor's claims. Most solar is grid-tied, not battery backup, and it's much cheaper to use solar for peak-shaving, with hydro storage even lower cost (at Lake Castaic, and other places, at night water is pumped up to the lake by 6 huge pump-generators powered by cheap off-peak Washington electric at 3 cents/kWh; the next day, during peak, the pumps turn into generators to retrieve the "stored" power at a cost no more than 4 cents). There's no market for spent EV batteries.


On Sep 27 06:52 PM Don Harmon wrote:

> Douglas, consider for a moment the useable life cycle of a LiFePO4
> battery pack in an automobile is 10 years. At this point the same
> battery pack still has over 75% of it's original power or energy
> density thus can be re-purposed for other markets like wind or solar
> giving it another 10 years of life (or more). Thus after 20 years
> these batteries might be ready to go to the re-cycling companies
> for reclaiming the original resources used to produce them.
>
> Don't you think that 20 years will suffice to develop the sufficient
> re-cycling technology that Lithium will require?
>
> It's only common sense when you really think about it!

Sep 27 07:13 PM

[anarchist:]

So yeah, once or twice a year you drive your 100 mile range vehicle to the airport, train station or bus terminal, fork out the doe to go the 800 miles in relative comfort and over the year you have to be ahead of the deal financially.


On Sep 27 11:22 AM whisperonthewind wrote:

> I like the smaller cars, and currently own one that gets about 35
> mpg, city driving, and better than that on the highway. I will get
> an even smaller car eventually, maybe next year. I most likely will
> choose not to get a battery operated vehicle - no matter what kind
> of battery they offer - because although I don't always drive more
> than 20 or 30 miles in a day, I do drive more than 100 miles in a
> day at least once a week, and several times during the year I drive
> more than 800 miles in a day. I like to drive! I would be willing
> to drive a CNG vehicle or even one the runs on hydrogen, but I am
> not willing to be grounded to 100 miles per charge. My closest family
> member lives more than 100 miles away, and my kids live in different
> states (where there are jobs), several hundred miles away, so to
> limit myself to a battery would mean plane, bus, or train plus car
> rental. It would be cheaper to pay for the gasoline for those drives.
>
>
> When the rest of the real world catches on that they'll be limited
> to a 100 mile round trip, the battery idea will be relegated to the
> golf cart/wheelchair crowd. I'm not ready to join that crowd yet.

Sep 27 07:52 PM

[Don Harmon:]

Oh contrare, Douglas. There are many uses for Lithium -ion battery packs which are considered "spent" by EV standards. These include solar, wind, e-bikes, and lots of wheelchairs for example. You just have a block to what this technology is capable of. You might also want to check out this company: www.toxco.com/ who just received a grant from the ARRA/DOE battery funds. They already have developed a real technology for recycling Lithium batteries, so you need to brush up on just how fast this sector is moving my friend!

Sep 27 07:59 PM

[jerrydd:]

Douglas, your posts are very your way or no way. But that is not true. Lithium is not expensive and is not likely to be. You only need less than .5lb of lithium/kwhr. So while recycling it is a good idea, it's not necessary. Look at my and Tom's above posts and follow the links and you'll find lots of .

Nor are your other costs accurate anymore as they are yrs old now. Lithium has dropped a lot recently since they stopped using expensive materials like cobalt, etc.

And used batteries for peak shaving at home is very viable, dropping your electric b50-75%. I use Cell phone tower take out batteries in 1 of my EV's and they work fine at very low costs.

And I guaranty many EVer's will reuse every lithium battery that is usable they can get their hands on. Just like they do now with Prius packs, ganging up 4-8 packs. A companies rebuilds Prius packs too and that can be done with EV packs.

As for how long Lithium batts will last, we don't know as many haven't been around long enough to see. But if after 10 yrs they still have 75% range left, for many that is fine. And you have to use some virgin lithium packs or you won't have any to recycle.

Just because some companies make battery access hard doesn't mean they will in the future. In fact A Better Place will swap them in 90 seconds!!

And more than lithium is going to be used as Sodium batteries are better for trucks, taxi's, vehicles that get used a lot so the heat energy loss isn't as much a problem. They are likely to last 20 yrs too.

So lighten up. Things are not as bad as you think.

On Sep 27 07:13 PM Douglas Korthof wrote:

> Don: Also, the idea that spent EV batteries can be used in peak-shaving
> or solar backup is enticing, but without reality, like EEStor's claims.
> Most solar is grid-tied, not battery backup, and it's much cheaper
> to use solar for peak-shaving, with hydro storage even lower cost
> (at Lake Castaic, and other places, at night water is pumped up to
> the lake by 6 huge pump-generators powered by cheap off-peak Washington
> electric at 3 cents/kWh; the next day, during peak, the pumps turn
> into generators to retrieve the "stored" power at a cost no more
> than 4 cents). There's no market for spent EV batteries.

Sep 27 08:25 PM

[No1:]

Can you comment on the sodium battery? What are the prospects? The pros/cons?

Sep 27 09:59 PM

[John Petersen:]

No1, there are two types of sodium based batteries. NGK Insulators of Japan makes a sodium sulfur battery that's used primarily in long discharge utility based applications. GE has recently announced plans to begin commercial production of sodium-metal-halide batteries that they plan to use first in hybrid locomotives. Both chemistries have their strengths and their weaknesses. The biggest weakness seems to be operating temperatures in the 400 to 700 degree range. A variant on the sodium metal halide chemistry called the Zebra battery has been proposed for use EVs. There's also talk out of Colorado that a company funded by the Coors family has found a way to make a sodium based battery that runs at lower temperatures. I don't generally talk much about the sodium batteries because they're hard to invest in, but the fundamental technologies have a lot of promise.

Sep 28 01:03 AM

[Mayascribe:]

John: Wanna bet which way the over/under is for A123 at the end of October? I have it at less than $17.00/share. I'll give you 3 to 1 odds if you take the over.

Sep 28 02:03 AM

[Douglas Kor...:]

Toxco pays NOTHING for the Lithium; they make money off the additives, Cd for example. The economics of battery production is something that is hidden from those putting their money down on stocks they basically know nothing about.

EV batteries, you need to realize, are high-power-output batteries; it's hidden in engineer-speak gobblydygood, but the EV1, for example, needed to put out up to 100 kW; the Tesla, up to 185 kW; the RAV4-EV, up to 50 kW. EV batteries age when their internal resistence rises; dV=I*r, or voltage drop depends on current times internal resistence. Spent EV batteries don't have this ability, so they are merely energy batteries, which can put out low power draw for a long time; for such batteries, it's always better to use lead-acid, which last longer and are uniform in their ability to put out energy.

So, in practice, for my 13 kWh battery backup for my solar system, I never considered spent EV batteries; I use lead AGM, which are balanced, matched and will last perhaps two decades, maybe more. Yes, I have spent EV batteries; they need to be recycled, but I never considered using them, in their rag-tag glory, for my solar system.

Lead "energy batteries" are so much cheaper than EV batteries, it makes more sense to buy new ones rather than try to match junk EV batteries. For powering a segway or wheelchair, who knows? But the market is not large enough to support an EV battery industry, if one were to develop.


On Sep 27 07:59 PM Don Harmon wrote:

> Oh contrare, Douglas. There are many uses for Lithium -ion battery
> packs which are considered "spent" by EV standards. These include
> solar, wind, e-bikes, and lots of wheelchairs for example. You just
> have a block to what this technology is capable of. You might also
> want to check out this company: www.toxco.com/ who just received
> a grant from the ARRA/DOE battery funds. They already have developed
> a real technology for recycling Lithium batteries, so you need to
> brush up on just how fast this sector is moving my friend!

Sep 28 02:22 AM

[Douglas Kor...:]

From the Aone filing, their losses to date are about twice their total sales. Other Lithium battery companies have this same economics, it means they lose $1 for each $1 in sales.

If you look at the Aone filing, most of their sales are batteries for tools, not for transportation; they've got, so I understand, about 100 plug-in prii running, with a conversion that costs $10,000. But if their cost is $20,000, this business is not sustainable; and, so far, the longest one has lasted less than a year. Perhaps it will do better than the others which have failed; we don't know yet. But that's the point: it's speculation, not fact, you're betting on.

Yes, we DO know how long existing Lithium will last; it's true that we don't know how long newer technologies will last, but then, neither do those who are betting their money that these untried batteries will perform in ways that existing Lithium failed at.

I'm not saying it's impossible that Aone (or one of the others) will succeed; just that propontents of Lithium EVs are, alarmingly, putting all their marbles on unproven ideas, and not using existing proven batteries that are cheaper and last longer.

Some of these, such as GM's Bob Lutz, are ignorant of battery economics in a breathtakingly sweeping manner. Don't be taken in the same way; remember, Lutz presided over the bankruptcy of Exide, before he was involved in the GM bankruptcy.

Peak shaving with EV batteries is bullshit, pure and simple. I've got a battery backup system and a solar system that makes more energy than needed to power two EVs (three, now); having produced $250 more energy last year than I used, why would I want to fall for the "peak shaving" fable??


On Sep 27 08:25 PM jerrydd wrote:

>
> Douglas, your posts are very your way or no way. But that is not
> true. Lithium is not expensive and is not likely to be. You only
> need less than .5lb of lithium/kwhr. So while recycling it is a good
> idea, it's not necessary. Look at my and Tom's above posts and follow
> the links and you'll find lots of .
>
> Nor are your other costs accurate anymore as they are yrs old now.
> Lithium has dropped a lot recently since they stopped using expensive
> materials like cobalt, etc.
>
> And used batteries for peak shaving at home is very viable, dropping
> your electric b50-75%. I use Cell phone tower take out batteries
> in 1 of my EV's and they work fine at very low costs.
>
> And I guaranty many EVer's will reuse every lithium battery that
> is usable they can get their hands on. Just like they do now with
> Prius packs, ganging up 4-8 packs. A companies rebuilds Prius packs
> too and that can be done with EV packs.
>
> As for how long Lithium batts will last, we don't know as many haven't
> been around long enough to see. But if after 10 yrs they still have
> 75% range left, for many that is fine. And you have to use some virgin
> lithium packs or you won't have any to recycle.
>
> Just because some companies make battery access hard doesn't mean
> they will in the future. In fact A Better Place will swap them in
> 90 seconds!!
>
> And more than lithium is going to be used as Sodium batteries are
> better for trucks, taxi's, vehicles that get used a lot so the heat
> energy loss isn't as much a problem. They are likely to last 20 yrs
> too.
>
> So lighten up. Things are not as bad as you think.
>
> On Sep 27 07:13 PM Douglas Korthof wrote:

Sep 28 02:33 AM

[Douglas Kor...:]

John,
The ZEBRA battery was tried, but lasts only one year in EVs; the economics are impossible. Phoenix and others stumbled on that one, while they were flopping around looking for batteries. Sodium sulfur is kind of a joke; while it seems not much more temperature than a diesel engine, the heat density is much greater and it proved illusory in Ford's "EcoStar" boondoggle.


On Sep 28 01:03 AM John Petersen wrote:

> No1, there are two types of sodium based batteries. NGK Insulators
> of Japan makes a sodium sulfur battery that's used primarily in long
> discharge utility based applications. GE has recently announced plans
> to begin commercial production of sodium-metal-halide batteries that
> they plan to use first in hybrid locomotives. Both chemistries have
> their strengths and their weaknesses. The biggest weakness seems
> to be operating temperatures in the 400 to 700 degree range. A variant
> on the sodium metal halide chemistry called the Zebra battery has
> been proposed for use EVs. There's also talk out of Colorado that
> a company funded by the Coors family has found a way to make a sodium
> based battery that runs at lower temperatures. I don't generally
> talk much about the sodium batteries because they're hard to invest
> in, but the fundamental technologies have a lot of promise.

Sep 28 02:36 AM

[Dave K.:]

Your statement is 5 years out of date. Electrostatic capacitors have increased in energy density over the last few years to commercially available working energy densities of 5 to 10 J/cc, from 0.2J/cc. Electrostatic capacitors are aggressively replacing power electrolytic capacitors in inverters and drive electronics in electric/hybrid cars. Expect them in the very near future to go for the current double layer capacitor markets where they are used with batteries in automotive and industrial drives. These capacitors are principally single polymer dielectrics, not the more complex materials currently under development. Universities such as Penn State and Utah are expecting eventually to achieve energy densities of working range for single polymer systems reported as high as 450J/cc. Compound dielectrics with energy density of 300J/cc represents an increase of 30 in energy density. The EAMEX technology represents a similar increase of 30 times in energy density as compared to current commercial double layer ultracapacitor technology. A number of Research labs are expecting to achieve energy densities similar to EAMEX through different methods. The increase in energy density is about the same as the improvement made over the last 5 years for electrostatic capacitors through improvements in material processing of the same dielectrics used over the last 30 years. LTL’s technology is the manufacturing process that uses the new dielectric materials under development. Yes we have our own proprietary dielectric materials but the manufacturing process is compatible with that under development by most labs working on electrostatic dielectrics.
75% of an ultra-capacitor’s energy is delivered in the 50% to 100% voltage range. Cost increase in electronics is essentially nil for electrocstatic capacitors as they do not require, as much cooling and heating as Lithium batteries nor is there a requirement for protective electronic circuits across each device as required by Lithium batteries. This cost savings offsets the 15% expected cost increase of the electronics. But as the ultra-capacitors are expected to be <30% the cost of current Lithium-ion batteries the overall savings for car companies is expected to be substantial.


On Sep 27 07:07 PM jerrydd wrote:

>
>
> Dave, are there any independent tests of your ultracap? As it's over
> a 100-1000x improvement and other parts of it's website are so far
> out of present tech I have to wonder. Plus I just don't see how you
> can do it in a cap.
>
> Until it can be independently confirmed I wouldn't touch this with
> a 10' pole!!
>
> Plus no mention of the expensive electronics needed to deal with
> the rate voltage to Zero voltage swings needed to get the power out.
>

Sep 28 02:39 AM

[John Petersen:]

mayascribe, I have no ability to do short-term handicapping and will leave that to traders like you who have a much better feel for market pulse. I plan on tracking my existing cheap and cool categories through September 30th, then updating for new entrants like A123 and fixing a new start date for future comparisons. You can rest assured that I'll keep my money where my mouth is.

Sep 28 04:14 AM

[MiniE411:]

I greatly appreciate the 4-sided framework you provide and the macro view of the energy storage landscape. From a micro point of view, try driving an all-electric car for while and you will want one! And also google "Green Power Network" to see how it can be a personal choice to combine clean electricity with EV technology. (This year I made my house energy efficient, started driving an all-electric MINI-E, and charge it using green power.)

Sep 28 04:45 AM

[John Petersen:]

MiniE411, I'm grateful that there are people like you who make what they consider an ethical choice and take the other affirmative steps that go along with the choice. One of the biggest is household energy efficiency - a series of simple steps to minimize waste that almost always have a very rapid economic payback. Some of the other choices you've made are beyond the economic reach of many, but if we all do what we reasonably can, the world will be a better place for it.

Sep 28 06:13 AM

[renim:]

I know this is marginally off topic, but less so than most other posts on this thread.
Rare earth metals are pretty common. today i looked at Lynas (i now i'm been very slack recently) and there resource estimate are at grades between 10% - 15% with a 4% cutoff. These are very high figures for an opencut mine, higher than any base metal (copper, zinc, nickel, lead) although you might find a lead/zinc mine at similar grades. From memory Mt Weld (Lynas main deposit) has been known for decades but was never thought to be economic to mine. The value for REE must be very low
www.metal-pages.com/me.../
then again, thats a reasonable price, about 66% that of nickel or twice the price of copper or 5x the price of lead or zinc (thats unusual, normally lead is normally cheaper than zinc, at the moment the values are reversed). aside from processing costs, this should make good money, IF they can get funding.
The REE deposits in China must be very good, if they are basically a byproduct from a Chinese iron ore mine, they will effectively be free...(ie fully funded from the value of the iron in the deposits)

now for Lithium
Galaxy (hard rock mine, recent deposit in Western Australia). They are talking a 1% grade with a 0.4% cutoff (this is about an order of magnitude less than the lynas REE grades) current indications are that world Lithium production is also from mixed deposits where other outputs are more important, (so effectively world lithium Run Of Mine raw material is also effectively free for its producers.)

now Li is a pretty minor component of so called Li Ion batteries, it gets all the focus, whereas the M in NiMH is left unsaid what it stands for (probably Mischmetal &or La)

Sep 28 08:05 AM

[jerrydd:]

I see no independent tests of such tech in your post. Please give where it has been proven?

How big will a 20kwhr unit be?

Please give URL on the University projects?

And what commercial products you say are out there? URL?

Sorry but too much hype has gone on in this field to believe anything that has not been independently tested.

While true 75% of the power is in 50-100% voltage range, that leaves 25% unavailable vs 10% in most batteries. But you waste most of the electronics as they need to be 2x's as large as battery units do even just using down to 50% voltage.

As Lithium, Iron, Phosphate, Magnesium are about as inexpensive as they come, I fail to see how you will get yours cheaper/kwhr. And don't forget Lithium still has far more room to improve in energy density.


On Sep 28 02:39 AM Dave K. wrote:

> Your statement is 5 years out of date. Electrostatic capacitors have
> increased in energy density over the last few years to commercially
> available working energy densities of 5 to 10 J/cc, from 0.2J/cc.
> Electrostatic capacitors are aggressively replacing power electrolytic
> capacitors in inverters and drive electronics in electric/hybrid
> cars. Expect them in the very near future to go for the current double
> layer capacitor markets where they are used with batteries in automotive
> and industrial drives. These capacitors are principally single polymer
> dielectrics, not the more complex materials currently under development.
> Universities such as Penn State and Utah are expecting eventually
> to achieve energy densities of working range for single polymer systems
> reported as high as 450J/cc. Compound dielectrics with energy density
> of 300J/cc represents an increase of 30 in energy density. The EAMEX
> technology represents a similar increase of 30 times in energy density
> as compared to current commercial double layer ultracapacitor technology.
> A number of Research labs are expecting to achieve energy densities
> similar to EAMEX through different methods. The increase in energy
> 75% of an ultra-capacitor’s energy is delivered in the 50% to 100%
> voltage range. Cost increase in electronics is essentially nil for
> electrocstatic capacitors as they do not require, as much cooling
> and heating as Lithium batteries nor is there a requirement for protective
> electronic circuits across each device as required by Lithium batteries.
> This cost savings offsets the 15% expected cost increase of the electronics.

Sep 28 08:37 AM

[jerrydd:]

Douglas I am waiting too to see who works best as I expect many battery companies to fail. But there are many kinds and some will win.
I wouldn't say just because one app failed though it means a battery is bad as over the yrs we have found most batteries are murdered by misuse, not die of natural causes.
Myself I use Lead or Ni-cad batteries until the industry shakes out. By using flooded traction batteries one can get great service at low costs if put in a build as an EV of light weight, low drag as they should.
Some of my Ni-cad batteries are over 30 yrs old and still put out rated power.

On Sep 28 02:33 AM Douglas Korthof wrote:

> From the Aone filing, their losses to date are about twice their
> total sales. Other Lithium battery companies have this same economics,
> it means they lose $1 for each $1 in sales.
>
> If you look at the Aone filing, most of their sales are batteries
> for tools, not for transportation; they've got, so I understand,
> about 100 plug-in prii running, with a conversion that costs $10,000.
> But if their cost is $20,000, this business is not sustainable; and,
> so far, the longest one has lasted less than a year. Perhaps it
> will do better than the others which have failed; we don't know yet.
> But that's the point: it's speculation, not fact, you're betting
> on.
>
> Yes, we DO know how long existing Lithium will last; it's true that
> we don't know how long newer technologies will last, but then, neither
> do those who are betting their money that these untried batteries
> will perform in ways that existing Lithium failed at.
>
> I'm not saying it's impossible that Aone (or one of the others) will
> succeed; just that propontents of Lithium EVs are, alarmingly, putting
> all their marbles on unproven ideas, and not using existing proven
> batteries that are cheaper and last longer.
>
> Some of these, such as GM's Bob Lutz, are ignorant of battery economics
> in a breathtakingly sweeping manner. Don't be taken in the same
> way; remember, Lutz presided over the bankruptcy of Exide, before
> he was involved in the GM bankruptcy.
>
> Peak shaving with EV batteries is bullshit, pure and simple. I've
> got a battery backup system and a solar system that makes more energy
> than needed to power two EVs (three, now); having produced $250 more
> energy last year than I used, why would I want to fall for the "peak
> shaving" fable??

Sep 28 09:02 AM

[John Petersen:]

renim, while Jack Lifton has forgotten more about REMs than I'll ever learn, I do know that the M in NiMH is Lanthanum in the most efficient configurations used by Toyota. It's not entirely clear to me what the reason for China's production limitations, but if in fact the REMs are just a byproduct of a principal ore body and demand for the principal metal is limited, it wouldn't make much sense to mine more just for the REM production. In terms of pre-opening capital outlays, Jack seems to prefer the Canadian producers over Lynas. But beyond that I'm pretty fuzzy on the detail.

From what I've been able to gather, the principal value out of Chile is Potash and the lithium is basically a free ride, which is why the US mines were closed. So far I have not seen a lot of news that lithium producers are increasing production in anticipation of increased demand. In fact the releases typically talk about increasing production in response to increased demand. Since the production cycle is on the order of 18 months, it's not hard to see a situation where supplies are chronically available at levels that run a couple years behind actual demand.

Sep 28 10:07 AM

[secmaven:]

Despite the proven success of the Prius in MPG saving and reliability the number of these cars going on the road after 5 years is still a fraction of the standard gasoline powered vehicles being sold in the US and in the booming auto markets of China and India the hybrid concept is a zero factor in sales. If this has been the hybrid track record how many EV's will actually be sold? This will not even be the foam on a pint of beer.

Sep 28 11:36 AM

[John Petersen:]

secmaven, it will not take a huge number of PHEVs and EVs to use up A123's existing and planned battery manufacturing capacity. Currently they can manufacture 169 million watt hours per year, which equates to 10,500 Volt class PHEVs or roughly a 100,000 Prius class HEVs. In an industry that makes 100 million cars a year, the numbers are insignificant so there's little question that there will be a market for the batteries even if cars with plugs turn out to be dismal failures.

Ten years after their introduction in 1999, global sales of Prius class HEVs are finally starting to hit their stride. A great graph that shows how the HEV market developed can be found after the monthly hybrid sales data on this page:

www.hybridcars.com/hyb...

My best sense is that if a PHEV and EV market develops, it will have roughly the same shape on the sales curve, starting off slow and becoming significant by 2020.

In late May and early June I did a series of articles on regulatory changes that seem certain to force the implementation of stop-start hybrid technology in Europe and the US over the next few years. The winners of that competition will almost certainly be lead-carbon or some other form of advanced lead acid battery because the facilities to make fancier devices won't exist in time. The links are:

seekingalpha.com/artic...
seekingalpha.com/artic...
seekingalpha.com/artic...
seekingalpha.com/artic...
seekingalpha.com/artic...

Sep 28 12:01 PM

[Don Harmon:]

John, please send me an email as I somehow lost yours in transferring my address book after the move to Virginia. My email is [e-mail]

Thanks

Sep 28 12:26 PM

[Moon Kil Woong:]

The author presents a good argument that I very much agree upon. I prefer companies with real sales and previous if not current profitability. I suppose that's why I keep XIDE in my portfolio. Real beats cool unless you are talking about real and cool like Apple has been executing on.

Sep 29 05:40 AM

[John Petersen:]

Moon Kil Woong, it's a pleasure to hear your thoughts on this issue. Part of my conservatism about where the industry is heading is based on my experience as a very long term Apple user. I switched to Macintosh in the late 80's and the 90's were a very scary time because over 95% of the market was going to Windows solely because it was cheaper. In the last few years Apple has been a star at bringing out products that are both cooler and cheaper. But the real reason for its surging competitiveness seems to be price rather than bells & whistles.

Sep 29 10:27 AM

[Dave K.:]

Jerry,
If you are looking for detailed information then contact me directly through the LTL website. The post is about batteries and adding a 5 or 10 page document about ultracapacitors to John’s post would be inappropriate. The amount I have added already is stretching good taste. There is no co-development agreement with any University after a major Canadian Institution breached its NDA agreement and initiated an R&D program of its own, using our technology that was disclosed to them. From that point forward we follow our legal advice and will use such institutions for testing only but will not reveal trade secrets to them. As far as power converters go I wish to mention that the energy density of the first generation of our ultracapacitor is nonlinear such that the lower 50% of the voltage curve will only represent 10% remaining power. Yes the dielectric constant increases with increasing voltage prior to leveling off. An example performance plot is part of a pending patent application still in confidential phase. Sorry you have to wait for public releases. For the LTL products the electric power converter only needs to be 25% larger in size, adding <$1,000 to a 100kw system but saving $22,000 on the cost of 50kw battery pack (assumes Lithium not lead acid batteries). The only competing technology that LTL watches is lead acid batteries as they are the lower cost solution for the automotive industry.

On Sep 28 08:37 AM jerrydd wrote:

>
> I see no independent tests of such tech in your post. Please give
> where it has been proven?
>
> How big will a 20kwhr unit be?
>
> Please give URL on the University projects?
>
> And what commercial products you say are out there? URL?
>
> Sorry but too much hype has gone on in this field to believe anything
> that has not been independently tested.
>
> While true 75% of the power is in 50-100% voltage range, that leaves
> 25% unavailable vs 10% in most batteries. But you waste most of the
> electronics as they need to be 2x's as large as battery units do
> even just using down to 50% voltage.
>
> As Lithium, Iron, Phosphate, Magnesium are about as inexpensive as
> they come, I fail to see how you will get yours cheaper/kwhr. And
> don't forget Lithium still has far more room to improve in energy
> density.

Sep 29 03:49 PM

[adamnb:]

Good analysis. I'm interested in the whole area of battery recycling (reprocessing) and would appreciate any significant references to information that you may be willing to share.


On Sep 27 06:15 PM Douglas Korthof wrote:

> Lithium and nanotechnology *sounds* good; but it translates in my
> mind to the world "hogwash".
>
> Lithium batteries have a bright EV future, perhaps, but they are
> about 4 to 10 times as expensive as NiMH and over 20 times as expensive
> as lead. Concentrating all EV efforts on Lithium, like concentrating
> all efforts on fuel cells, simply removes the EV program from a mass-market
> to a niche-demonstration program, "no threat" to the current oil-auto
> companies, and no chance for large-scale production of batteries
> or for the kind of growth that some seem to be expecting..
>
> You are never going to build a mass-market for EVs or plug-in cars
> using virgin Lithium, it's always going to be a niche or demonstration
> market, maybe 500 or, gasp, even 5000, or, gurgle, 50,000 cars.
> The WORST thing is that there are already good batteries that will
> do the job; but no one is even looking at them.
>
> I have no doubt that a battery technology COULD be developed, if
> there were anyone who wanted to do so in the existing oil-auto companies!
>
>
> But so far, there is no interest in developing a battery recycling
> program, for example, needed for lowering costs. After the (curently
> 500) Tesla need new batteries, say after 60K miles, what's to be
> done with the old batteries? No one outside of, maybe, Tesla has
> a plan, and if they do, it's secret.
>
> If there's to be a fleet of EVs, really, then it must be understood
> to form an "urban mine" of spent batteries for reuse in making new
> batteries, using all the same materials and ever-improved methods.
>
>
> Like the Internal Combustion car business has been for the last 100
> years.
>
> EVs should be looked at as a source of "reforming" those batteries
> when they sunset; every metal is an artifact, except gold, it takes
> mining and refining. The re-use of old batteries, which have all
> the alloys and components needed, would be the way industry were
> headed, IF they were serious about a mass market EV; but of course,
> they are not serious.
>
> The steel industry dramatically lowered costs when they used scrap
> steel as the basis for processing, instead of virgin iron ore! Put
> a lot of legacy companies out of business, with their legacy bessemer
> furnaces!!
>
> Imagine, after 200K miles, when the NiMH batteries finally give up
> the ghost, they are brought to a reforming facility, all the rare
> earth metals, Ni, Ti, V, etc., fractionated and used directly to
> "refresh" the battery to new, using ever-more-successful techniques
> to prolong battery life, more robust batteries after each generation.
>
>
> Or, let's say, when the good lead PSB batteries finally fry, after
> 50K miles, the high-quality lead is reformed into new batteries.
> Or, when Tesla's Lithium batteries are finished, they are brought
> to a reforming facility to make new Lithium batteries, using the
> same materials in the old batteries. Currently, this is much more
> expensive with old batteries than with new Lithium ore from brines,
> dooming the idea of economical production.
>
> BTW, replacement and servicing of batteries ("logistical considerations")
> is something that NO one has looked at; replacing one battery on
> the EV1, RangerEV, Rav4-EV, etc., requires an expensive 4- to 8-hour
> process of "dropping the pack" that can only be done at the dealer
> and only with a $100K lift. Any competent M.E. would lose his lunch
> over that one!
>
> Practical considerations and lowering life-cycle cost; that's the
> way to make a battery EV industry.
>
> But it's not being done, nor looked at, by those Auto Alliance companies
> supposedly "racing" to "develop" EVs. Lutz, for example, pretends
> to think that GM can just "order" the batteries, and they will appear;
> and need have no concern for life-cycle cost.
>
> Obviously, any expectations of a burgeoning, ballooning market for
> high-quality batteries would require such infrastructure as logistical
> support and planning as well as sunset or scrap value; the lack of
> the latter seems to invalidate the former.

Sep 29 05:11 PM

[Don Harmon:]

Dave, your company's tech sounds eerily similar to Eestor? Like them you have not proven your tech publicly yet, so why would we believe your claims on the website?


On Sep 29 03:49 PM Dave K. wrote:

> Jerry,
> If you are looking for detailed information then contact me directly
> through the LTL website. The post is about batteries and adding a
> 5 or 10 page document about ultracapacitors to John’s post would
> be inappropriate. The amount I have added already is stretching good
> taste. There is no co-development agreement with any University after
> a major Canadian Institution breached its NDA agreement and initiated
> an R&amp;D program of its own, using our technology that was disclosed
> to them. From that point forward we follow our legal advice and will
> use such institutions for testing only but will not reveal trade
> secrets to them. As far as power converters go I wish to mention
> that the energy density of the first generation of our ultracapacitor
> is nonlinear such that the lower 50% of the voltage curve will only
> represent 10% remaining power. Yes the dielectric constant increases
> with increasing voltage prior to leveling off. An example performance
> plot is part of a pending patent application still in confidential
> phase. Sorry you have to wait for public releases. For the LTL products
> the electric power converter only needs to be 25% larger in size,
> adding <$1,000 to a 100kw system but saving $22,000 on the cost of
> 50kw battery pack (assumes Lithium not lead acid batteries). The
> only competing technology that LTL watches is lead acid batteries
> as they are the lower cost solution for the automotive industry.
>
>
> On Sep 28 08:37 AM jerrydd wrote:

Sep 29 10:50 PM

[John Petersen:]

adamnb, there really is not a whole lot of information out there on lithium-ion battery recycling. The only company in the space that I know of is Toxco, which claims to have an effective process and won a $9.5 million DOE battery grant to build a new facility in Ohio. I don't know how much I'd read into it, but recycling was the only ARRA battery grant subgroup that didn't have first round winners for all of the available funding.

Sep 30 04:36 AM

[Mehul:]

Dear John,

I couldn't understood the 4th framework principle. Rest of the information is very helpful for me being a well informed investor. Thanks
- Mehul

Sep 30 11:25 AM

[stockgod:]

Wow John, you have quite the following here, would love to speak with you more in detail - wondering if you're on twitter? Do you trade stocks using Twitter ever?

I also have another question regarding CHP. What's wrong with this company? They don't seem to have their ducks in a row - why would they not put out an announcement on the DoD contract they recently received? It's not a small contract by any stretch...

www.defenselink.mil/co...

Oct 02 12:24 PM

[John Petersen:]

stockgod, you can e-mail me at [e-mail].

The big problem with CHP seems to be too much debt.

Oct 02 01:36 PM

[Gold Bug:]

Physical gold or ETF but not mining stocks , Gold is not a Bubble yet Jim Rogers
Watch :
jimrogers1.blogspot.co...

Oct 18 02:11 PM