Battery Investing for Beginners, Part 2

Last Friday I published "Battery Investing for Beginners" as an introductory piece for investors who don't know much about the energy storage sector but are interested in learning more because of the hugely successful initial public offering by A123 Systems (AONE). Since the article was well received and there seems to be a good deal of reader interest, I've decided to continue the theme with a series of articles where I'll try to build a contextual framework for the industry and show where various types of energy storage devices and their manufacturers fit into that framework. Since I don't want to spend too much time replowing old ground, I'll rely on hyperlinks to my earlier blogs and third party source documents.

I'm a lawyer, not a journalist. My undergraduate degree was in accounting with a solid base of hard science. I've spent the last 30 years working in securities law where most of my work involved small natural resource or technology development companies. I'm not an engineer or scientist, but my chosen field of practice requires me to understand the science well enough to explain it. My foundation in the energy storage sector dates to 2003 when I took on a client named Axion Power International (AXPW.OB) that was organized to develop a novel energy storage device that's half lead-acid battery and half supercapacitor.

I spent the next five years working as Axion's general counsel and served as a member of its board for four of those years. I stepped down from my position as Axion's board chairman in January 2007 and brought in successor legal counsel in early 2008. I still own a substantial long position in its stock. In short, I know the energy storage sector well and understand what the principal players are trying to accomplish, but I come from the lead-acid side of the business and because of my long history with high-tech innovation I'm not as excited by gee-whiz technology as many commenters. I like to think of myself as a cautious optimist who sees the opportunities but never overlooks the challenges.

Everybody understands the basic problem. We passed an inflection point for peak cheap oil in the late '90s and fuels that are expensive today can only become more costly in the future. We've also passed the inflection point for peak cheap electricity. When you factor in concerns over CO2 emissions as a possible cause of climate change, we have a real mess on our hands. The good news is that fundamental economics are finally kicking in and forcing us to attack the issue of energy waste while we search for new ways to generate electricity from non-traditional sources. Merrill Lynch strategist Steven Millunovich believes we are at the dawn a new industrial revolution, the age of cleantech. I believe he's right.

When I started writing this blog, I decided to limit its scope to "pure-play" energy storage device manufacturers that file regular reports with the SEC. The decision resulted in three noteworthy exclusions: Johnson Controls (JCI), which is the largest battery manufacturer in the world but only gets 15% of its revenue from battery sales; SAFT Groupe (SGPEF.PK), a profitable French battery manufacturer that does not file reports with the SEC; and BYD (BYDDY.PK), a Chinese manufacturer of cell phones and automobiles that gets 23% of its revenue from battery sales and does not file reports with the SEC. The decision also left me with a small but reasonably comparable short list of companies that only differ in the nature of their products and the development stage of their businesses. For investors who would rather track an index that includes JCI and BYD, I recommend the Energy Storage and Battery Technology Stocks Index (*BTTRY) published by Tickerspy.

There are two basic classes of energy storage devices: cool devices like lithium-ion batteries, supercapacitors and high-speed flywheels that promise extraordinary performance and are relatively expensive in terms of cost per unit of storage capacity; and cheap devices like lead-acid batteries, flow batteries and low-speed flywheels that offer lower levels of performance but are relatively inexpensive. My favorite source of cost data on energy storage technologies is a July 2008 Sandia National Laboratories report on its Solar Energy Grid Integration Systems – Energy Storage (SEGIS-ES) program. The following table separates the raw Sandia data into short duration power technologies, short duration energy technologies and long duration energy technologies; orders the technological contenders based on the average of current and 10-year projected cost data reported by Sandia; and identifies the American companies I follow that are focused on each storage technology.

	Current Cost	10-year Projected
Short Duration Power	($/kWh)	Cost ($/kWh)
High-speed Flywheels (composite)	$1,000	$800
Beacon Power (BCON)
Lithium-ion Batteries	$1,333	$780
Altair Nanotechnologies (ALTI)
A123 Systems (AONE)
Electrochemical Capacitors	$356/kW	$250/kW
Maxwell Technologies (MXWL)
	Current Cost	10-year Projected
Short Duration Energy	($/kWh)	Cost ($/kWh)
Flooded Lead-acid Batteries	$150	$150
Exide (XIDE)
Enersys (ENS)
C&D Technologies (CHP)
Valve Regulated Lead-acid Batteries	$200	$200
Exide (XIDE)
Enersys (ENS)
C&D Technologies (CHP)
Low-speed Flywheels (steel)	$380	$300
Active Power (ACPW)
Lead-carbon Asymmetric Capacitors	$500	<$250
Axion Power (AXPW.OB)
Lithium-ion Batteries	$1,333	$780
A123 Systems (AONE)
Ener1 (HEV)
Valence Technologies (VLNC)
Altair Nanotechnologies (ALTI)
	Current Cost	10-year Projected
Long Duration Energy	($/kWh)	Cost ($/kWh)
Zn/Br Batteries
ZBB Energy (ZBB)	$500	$250/kWh

There are also two basic classes of pure-play energy storage companies: emerging entrepreneurial companies that are developing new technologies; and established manufacturing companies that have solid customer bases and sustainable business models. A fifth and final class is a rapidly expanding group of Chinese battery manufacturers that have listed their shares in the U.S. but are not expected to be major players in the growth of America's domestic battery industry.

To allow for fundamental differences among their technologies and business models, I've segregated my universe of pure play energy storage companies into five classes that I'll briefly describe below and summarize in a series of tables that identify the individual companies and provide summary data on their share prices, market capitalizations and key financial ratios.

Cool Emerging -

My cool emerging class consists of thinly-capitalized developers of relatively expensive energy storage technologies. Their annual operating losses are typically large in relation to their total assets and they'll be dependent on additional financing for an indeterminate period of time. Cool emerging companies are typically valued on the basis of the perceived potential of their technology and their expected time to market.

Name	Symbol	Price	Mkt. Cap.	P/E	P/B	P/S
Ener1 Inc	HEV	$7.07	$826.0		9.8	37.5
Valence Technology	VLNC	$1.81	$229.7		N/A	11.6
Altair Nanotechnologies	ALTI	$1.17	$123.5		2.7	33.8
Beacon Power	BCON	$0.73	$88.1		4.2	213.7

Cool Sustainable -

My cool sustainable class consists of well-capitalized developers of relatively expensive energy storage technologies that have a substantial customer base. Their annual operating losses are typically smaller in relation to their total assets and their need for additional financing is generally less pressing. Cool sustainable companies are typically valued on the basis of their earnings potential and business development plans.

Name	Symbol	Price	Mkt. Cap.	P/E	P/B	P/S
A123 Systems	AONE	$18.73	$1,838.9		3.6	20.5
Maxwell Technologies	MXWL	$19.27	$500.5		6.2	5.4
Ultralife Corporation	ULBI	$5.90	$99.8		1.3	0.5

Cheap Emerging -

My cheap emerging class consists of thinly-capitalized developers of relatively cheap energy storage technologies. Their annual operating losses are typically large in relation to their total assets and they'll be dependent on additional financing for an indeterminate period of time. Like their cool counterparts, cheap emerging companies are typically valued on the basis of the perceived potential of their technology and their expected time to market.

Name	Symbol	Price	Mkt. Cap.	P/E	P/B	P/S
Axion Power	AXPW.OB	$2.12	$75.9		18.3	62.8
ZBB Energy	ZBB	$1.24	$15.4		1.9	8.7

Cheap Sustainable -

My cheap sustainable class consists of well-capitalized manufacturers of relatively cheap energy storage technologies that have a substantial customer base. Like their cool counterparts, cheap sustainable companies are typically valued on the basis of their earnings potential and business development plans.

Name	Symbol	Price	Mkt. Cap.	P/E	P/B	P/S
Enersys	ENS	$21.71	$1,040.0	15.7	1.4	0.6
Exide Technologies	XIDE	$8.01	$604.9		2.0	0.2
C&D Technologies	CHP	$2.14	$56.3		1.3	0.2
Active Power	ACPW	$0.88	$58.2		3.1	1.3

Chinese Companies -

My last class consists of Chinese companies that have listed their shares in the U.S., but operate solely in Asia. They're generally profitable and may export products to the U.S., but they're not expected to be key players in America's drive to develop a thriving domestic battery manufacturing industry.

Name	Symbol	Price	Mkt. Cap.	P/E	P/B	P/S
Advanced Battery Technologies	ABAT	$4.09	$253.1	11.8	2.1	5.3
China BAK Battery	CBAK	$4.19	$241.7		1.5	1.1
China Ritar Power	CRTP	$5.47	$105.3	20.0	2.8	1.0
Hong Kong Highpower	HPJ	$3.34	$45.3	23.2	2.5	0.7

My fundamental premise is that current conditions in the energy storage sector are a lot like they were in high-school.

There are four publicly held lithium-ion battery developers vying for supremacy in the high profile contest to become the technology superstar for PHEVs and EVs. They're competing against each other, a number of foreign companies and a host of privately held companies for a market that will be a long time coming. While they all trade at prices that would give value investors a nosebleed, the odds that a particular company will make it to the NFL draft are remote at best.

At the other end of the spectrum there are a small number of emerging and sustainable companies that are manufacturing and developing technologies for the more mundane energy storage needs of the average consumer who would be hard-pressed to buy a $22,000 Prius class hybrid, much less a $40,000 Volt class PHEV.

As the newly born excitement over the energy storage sector wanes and fundamental investment analysis gains supremacy, I expect the relative valuations of the cool technology companies to either remain flat or fall while the relative valuations of the cheap technology companies rise to more reasonable levels. On Thursday I'll put together an analysis of how that investment thesis has held up since last November and establish a new set of foundation metrics for future tracking comparisons. I continue to believe cheap will outperform cool for the foreseeable future. Only time will tell whether I'm right or wrong.

DISCLOSURE: Author has a large long position in Axion Power and small long positions in Enersys, Exide, ZBB Energy and Active Power.

Comments

[John Petersen:]

Jack, in Don's defense the fact that Great Western had bought the Ovonics facility in Troy slipped by me too. I bought a few Great Western shares a while back because you spoke so highly of the company. I thought I was simply buying into a mining and reserve play and did not understand that the processing capacity was part of the package. Now you have me dying of curiosity. I don't know whether you have the numbers at hand or not, but I'd love to know what Energy Conversion Devices invested in Troy originally and what Great Western bought the facility for.

Oct 01 10:28 AM

[Don Harmon:]

Jack, thanks for illuminating this as I was not aware of the Great Western connection to Ovonics. Regarding your comments on the availablility of raw materials I also happen to agree with you on that. It looks like a roller coaster ride for lithium for the next decade for sure:
evworld.com/currents.c...

Oct 01 10:59 AM

[Don Harmon:]

And more on the supply chain for rare earth metals and EV's with a nifty chart too: evworld.com/currents.c...


On Oct 01 10:59 AM Don Harmon wrote:

> Jack, thanks for illuminating this as I was not aware of the Great
> Western connection to Ovonics. Regarding your comments on the availablility
> of raw materials I also happen to agree with you on that. It looks
> like a roller coaster ride for lithium for the next decade for sure:
>
> evworld.com/currents.c...

Oct 01 11:04 AM

[John Petersen:]

Readers who want to better understand the supply chain constraints that we face in a number of critical raw materials should check out the links provided by Don. They may also want to read my blog on resource constraints at the following link.

seekingalpha.com/artic...

We've all grown up with the idea that shortage means we'll have to pay more. For a lot of these critical raw materials we're about to learn that the word shortage means not available at any price.

Jack Lifton is absolutely right when he argues that encouraging the domestic production of batteries without encouraging the domestic production of raw materials to make the batteries is a fool's errand that simply exchanges one form of dependence for another.

Oct 01 12:45 PM

[Don Harmon:]

John & Jack, I have been re-thinking LiFeBATT's approach since we were unsuccessful in being able to win a grant from the ARRA, and have come to the following conclusions regarding the direction we will now be taking:

1) The Grant winners including A123 and JCI/Saft have promised to build factories in Michigan and in Florida respectively for U.S. based Lithium-ion battery cells.

2) While I applaud them for getting this money in order to bring jobs to the U.S. in a terrible economic situation, I also have to think that these "factories" will not be on-line until 2012 if all goes smoothly, and all the environmental issues can be resolved?

3) Given the points that Jack makes and the fact that new mining operations here, and in other parts of the world, cannot be ramped up to meet demand for at least 5 years (if we start today) the prospect of raw material shortages are going to impact these ventures in a way that nobody has really though through yet.

4) The Chinese are already making noises and submitting white papers to the government that indicate they will probably restrict the export of their rare earth metals which means any factories built here will be impacted in ways that are now unforseen.

My conclusion is that the best course for LiFeBATT moving forward is to keep the production of our battery cells off-shore, either in China or Taiwan, and to focus on engineering complete plug & play systems with a dual mode of execution of our business plan. We will continue to import both complete battery packs from our Taiwan assembly plant and also individual cells and components to assemble complete packs here in the U.S. @ our facility in Virginia. This will enable us to best service our customer base without venturing into manufacturing of cells domestically. The more I have been thinking about this the more I am almost glad we didn't get one of these government grants and have to build a manufacturing plant from scratch. I will watch A123 and JCI/SAFT with great interest to see how they accomplish this task and how much support they get from investors?

My gut feeling is that these new "factories" will not be able to compete in price or quality that we can get now from our Asian suppliers given that they have a big headstart and we can ramp up their QC and their cell making technolgy much quicker than these new ventures can build plants from ground zero.

Oct 01 01:16 PM

[joeLovesLit...:]

After reading a comment regarding lithium and how it was mentioned that batteries are like investing in plastics in the 1960's. Forgive me I forget where I read it, but it was a quote from a movie talking about investing in plastics and the author of the quote said batteries is the next plastic. So I've been looking into the lithium market for the past month pretty extensively although there are a lot of players in this market right now. So lets just throw it out there and get down to the nitty-gritty...What are everyone's thoughts as to how to narrow down this list of companies to invest in, let's say pick 3 that you think will gain the most market share for lithium-ion batteries in the next 5-10 years and be the best 3 to invest in.

Oct 01 02:15 PM

[John Petersen:]

joe, the movie quote about plastics was from Mr. Robinson in The Graduate. Currently the lithium-ion battery market is in the $7 billion range. Most of the proposed factories won't be operational until 2012 or 2013. So if you're really interested in likely market leaders, the race won't even start for another 3 years. I'm sure there are any number of readers who are willing to express an opinion on "who's likely to be the lithium winner," but I'll abstain from that debate.

Oct 01 02:24 PM

[MRTTF:]

John, if you think that things are murky now with the bigger ventures, just wait and see if the merger talks started earlier this year between Matsushita/Panasonic and Sanyo get anywhere...


On Oct 01 12:16 AM John Petersen wrote:

> Don, when manufacturing for NiMH and lithium-ion was first established
> in Asia the rationale was simple - they were portable device batteries
> and those devices were all being made in Asia. Until Toyota came
> out with the Prius in 1999, there was no serious thought that these
> lightweight and powerful batteries might be used for much larger
> applications. Under the conditions that existed at the time, the
> production decisions for small cells were rational. Under new conditions,
> the decisions to produce large format cells domestically are also
> rational. I have a high level of confidence that America will return
> to prominence as a manufacturer, but I don't foresee a return to
> the "high-touch" manufacturing of the 1950s. Instead it will be highly
> automated and very capital intensive.
>
> MRTTF, thanks for clarifying the LG-GM connection. I stopped after
> explaining why I didn't talk about the bigger joint ventures. For
> the record I also ignore LG, Panasonic, Sanyo, Samsung and Sony because
> they're all too diversified.

Oct 01 03:57 PM

[John Petersen:]

MRTTF, there are so many big and talented companies trying to be Mr. Touchdown in lithium-ion that I'd find it almost impossible to handicap the contenders. Given your in-depth understanding of exactly what the contenders are working on and exactly how those enhancements will impact performance, you'd be in a far better position than I to make the technical judgments. On balance, I feel a lot more comfortable about the relative risk/reward ratio of the cheap groups.

Oct 01 04:34 PM

[Jack Lifton:]

John,

For production at Ovonic Materials there were two 1000 lb capacity continuous operation vacuum induction furnaces, a powder metal production facility (very fine powder in the micron and submicron range), and a Raney nickel reactor for charging nickel-metal hydride alloy powders with hydrogen. The entire operation is in a building designed to safely process with hydrogen, and the powder metal production equipment is in a separated room capable of automated operation under inert atmosphere.

I have known Stan Ovshinsky for 61 years, and I never once knew him to stint on costs by buying second rate equipment.

I am going to guess that duplicating the facility would cost between 10 and 20 million dollars and the skill of the remaining workforce is priceless.

I believe that GWMG picked up the facility (in a leased building) for at most $2 million-it was a steal if it goes back into operation.

Jack

On Oct 01 10:28 AM John Petersen wrote:

> Jack, in Don's defense the fact that Great Western had bought the
> Ovonics facility in Troy slipped by me too. I bought a few Great
> Western shares a while back because you spoke so highly of the company.
> I thought I was simply buying into a mining and reserve play and
> did not understand that the processing capacity was part of the package.
> Now you have me dying of curiosity. I don't know whether you have
> the numbers at hand or not, but I'd love to know what Energy Conversion
> Devices invested in Troy originally and what Great Western bought
> the facility for.

Oct 01 05:35 PM

[Old Wizard:]

John, The subsequent comments stenghten my assertion, I think, that China and Asia will lead in the lithium battrery race. The subsequent comments raise the environmental and raw material issues to a more formidable level than what I asserted and indirectly bring in the cost of labor as well. This is part of the reason I believe that our Government is ignoring the reality of their push to phev's, and that their investment strategy is muddled at best. It would be just another Government blunder if the deficit spending was not so great, but at worst it can be disasterous for the future well-being of our country.

Oct 01 05:47 PM

[ripskii:]

John:

Thanks again for inciting this excellent forum for discussion on various battery (storage) solutions. Your many contributors bring a useful and diverse experiences to the discussion along with many good insights. Having used a number of various battery technologies over many years for small capacity but demanding applications, I appreciate the auto vehicle problems where real costs are a big part of the equation (unlike many research applications). A relevant question is how much will these developments (or lack thereof) affect our economy and future? The question of natural resources is very interesting, but perhaps less than critical because we have often overcome the difficulty of providing for external resource needs. The cold war mentality promoted the concept that we must become self sufficient in everything, but it isn't always necessary for successful production of a product in demand worldwide.

Oct 01 11:16 PM

[John Petersen:]

Old Wizard, I'd never let it be said that I'm a gung ho advocate of PHEVs because we both know that I think using batteries to power a car at highway speeds is just about the dumbest idea in the world. That being said, my criticism is reserved for the senseless waste of batteries rather than an inherent flaw in the batteries themselves. Asian manufacturing prowess is renowned, but the draft lithium-ion battery roadmap I've spoken about at length talks about the need to leapfrog Asia by taking the chemistry through three generations and the manufacturing process through two generations in the next six to eight years. When it comes to inventing new technologies and inventing new ways to make technology products, the U.S. has it all over Asia because it's people are not as fearful about being wrong, or about trying an idea, failing and trying another idea. If it was simply a question of preserving the technological status quo, I'd give the Asians a big advantage. Since I know the ultimate goal is something far better than we currently have, I think the US has the advantage. The effort may fail, but you can't win a game you don't play.

Oct 01 11:18 PM

[John Petersen:]

ripskil, the only thing that frees me to be as opinionated as I am is the knowledge that there will always be an informed reader to present the other side of an argument. Folks who read the articles and skip the comments are really missing something. I continually point out that battery cost per watt hour is irrelevant when you're talking about a Macbook Air that uses 37 watt hours of batteries. It's an entirely different dynamic when you're looking to put 16,000 watt hours of batteries in a GM Volt. In the former variations in battery cost are easily overlooked because they're not a meaningful percentage of the total product price. In the latter where battery cost is upwards of 50% of total product price, even nickels and dimes per watt hour make a big difference. Natural resources don't need to be produced domestically if there are multiple sources and no one country has a dominant position, but situations where a single country like China produces 95% of the global rare earth metals or a couple countries in South America have a stranglehold on lithium production makes domestic production capacity far more important from a national security perspective. I've been around long enough to know that countries that are currently friendly, or for that matter currently hostile, may not always be so in the long term. If battery manufacturing is viewed as a national security issue, so should the raw materials.

Oct 01 11:33 PM

[Don Harmon:]

I will give you the benefit of historical perspective on this comment John, but if you haven't been to Asia lately, I would have to contest your statement that the U.S. roadmap can even try to leapfrog the chemistry by 3 generations? If you think about it. the technology as it is right now comes out of Asia to begin with, and their scientists and engineers have far more experience working with Lithium-ion than any American company has. The original design for the A123 cells that launched their power tool sales to Black & Decker were developed in Taiwan by a government sponsered research facility and manufactured in China.

Now that A123 has launched their successful IPO they are trying to bury the lawsuit against them by U.T. and Phostech and I expect they will want to do this very soon. See Bloomberg link below:

www.bloomberg.com/apps...


On Oct 01 11:18 PM John Petersen wrote:

> Old Wizard, I'd never let it be said that I'm a gung ho advocate
> of PHEVs because we both know that I think using batteries to power
> a car at highway speeds is just about the dumbest idea in the world.
> That being said, my criticism is reserved for the senseless waste
> of batteries rather than an inherent flaw in the batteries themselves.
> Asian manufacturing prowess is renowned, but the draft lithium-ion
> battery roadmap I've spoken about at length talks about the need
> to leapfrog Asia by taking the chemistry through three generations
> and the manufacturing process through two generations in the next
> six to eight years. When it comes to inventing new technologies and
> inventing new ways to make technology products, the U.S. has it all
> over Asia because it's people are not as fearful about being wrong,
> or about trying an idea, failing and trying another idea. If it was
> simply a question of preserving the technological status quo, I'd
> give the Asians a big advantage. Since I know the ultimate goal is
> something far better than we currently have, I think the US has the
> advantage. The effort may fail, but you can't win a game you don't
> play.

Oct 02 02:21 AM

[NorthernPiker:]

John,

Your incessant rants against the usage of batteries in PHEVs rather than in HEVs are unnecessary. The market should be able to deal with the allocation of battery production between PHEVs and HEVs because, at least in the US, the current economics of an unsubsidized PHEV purchase is terrible and that of an unsubsidized HEV purchase is marginal. As a side note, these rants are not in your self interest since you should be encouraging the demand for large format batteries, the area where Axion competes. Digression over, let’s put some numbers to HEV vs. ICV and PHEV vs. HEV economics for the US.

First let’s compare the economics of a 50-mpg HEV with a 30-mpg ICV. Assume 12,000 miles per year of driving, $3 per gallon gasoline and a $4,000 price premium for the HEV compared to the ICV. The HEV would consume 240 gallons per year, which is 160 gallons less than the 400 gallons annually consumed by the ICV, for an annual fuel saving of $480. Over a 10-year period (of stagnant gasoline and electricity prices), the savings total $4,800, for an ROI of 3.5% on $4,000 – an ROI well below loan interest rates. However, the ROI is fairly sensitive to the annual mileage that one assumes. For example, at 20,000 miles per year, the fuel savings are $800 annually and $8,000 over ten years for an ROI of 15.1 % on the $4,000 price premium. For less than 10,000 miles of annual driving for 10 years, the ROI is negative.

As mentioned, the current economics of a PHEV are terrible compared to an HEV. The energy savings arise because the 1 kWh of electrical energy required to move a PHEV 5 miles costs 5¢ (assumed off-peak charging rate) and the 1/10 of a gallon of gasoline required to move a HEV the same distance costs 30¢. Therefore, every kWh of battery charge used to propel the PHEV will save 25¢. However, the cost of 1 kWh of battery capacity is about $1,000, with promises of a much lower price, and it would provide about 2,500 charge-discharge cycles – enough for 250 commutes annually or 2,500 commutes over 10 years. Over this ten-year period, the net energy savings per kWh would be $62.50 annually and $625 for ten years, for an ROI on $1,000 of – 7.74 % (yes, minus 7.74 %). At a $500 per kWh battery cost, the ROI on the $500 would still be a less than sterling 4.3 %.

For Europe, the economics are more favorable. Assuming energy costs of 10¢ per kWh and $7 per gallon, and 9,000 miles of annual driving or 250 annual commutes, I get ROIs of 16.4 % for HEV vs. ICV and 8.1 % for PHEV vs. HEV. Throw in the diesel factor (10 % less fuel consumption), and these ROIs become 13.0 % and 5.3 %, respectively.
In summary, there is nothing in these numbers that suggest PHEVs should fly off the showroom floors in the US or Europe, unless heavily subsidized.

Oct 02 09:38 AM

[John Petersen:]

NorthernPiker, my "constant rants" are little more than one small voice in the crowd that's shouting the praises of the Emperor's new wardrobe. I'm terribly bullish about the prospects for large format batteries of all kinds, including lithium-ion batteries. But the economics you so ably summarized are being lost in an unending drumbeat of governmental hype and automakers who given no choice are getting out in front of the crowd to make it look like a parade. This is not a healthy environment for investors who don't understand the intricacies of the economics or the false promise of PHEVs and EVs. A debacle like we saw in the ethanol markets a couple years back would be a disaster for the energy storage sector and somebody has to stand up and say "THIS IS STUPID." I know that regular readers like you are tired of the same old themes, but at least I'm continually coming up with new source documents.

Oct 02 10:53 AM

[Mayascribe:]

From an investing standpoint, John, I don't understand why/how your debaters continuously ignore how the cheap stocks are outperforming the cool stocks, almost by orders of magnitude. May the distant future be replete with battery operated cars powered with green electricity pumped into lithium or other cool-type batteries. But for now, and the near term future, and this is a wild guess, some 200,000,000 to maybe in the next few years, 1,000,000, maybe 2,000,000--because of new potential fleet development--cars will still be running on gasoline, powered by lead acid batteries, as compared to alternative battery powered cars. Again, this is a guess, because there is a surge in NiMH powered cars. Still, the numbers anyway you calculate them, there are and will continue to far more cars currently on the road and being produced that are being powered through conventional batteries.

What I'm gathering is that more than a few commentators in your columns I've been reading since July '08 are writhing and screaming about how you ignore all the potentials of the future (I was one of them back then). Yet, it is apparent to me, other than the very kind Don Harmon, that no one is putting serious money behind their beefs. If they have, you have more than proven to this investor, that their money is languishing.

Our government, through it's recent generous awarding of billions to the battery sector underscores how important batteries are for national security reasons. But what goes into the batteries (REEs) is far more important. That China controls 97% of all the world's REEs scares the bejesus out of me.

For your pro-lithium readers I suggest they check (AMLM). Possibly, a within-the-USA answer to where lithium will come from. But that mine is still three years out from "possibly" producing lithium for batteries.

(That's the way I'm playing lithium, and (ALML) was one of the very few stocks up in yesterday's market evisceration; up another nickle today)

Oct 02 11:44 AM

[Fredrik88:]

Great Western paid U$1.3 million for the Troy plant.

Great Western Minerals Group Ltd.: Specialty Metals Asset Purchase Complete
Wednesday, 14 December 2005, 12:00 CST

Great Western Minerals Group Ltd. (TSX VENTURE:GWG) (OTCBB:GWMGF) ("GWMG") is very pleased to announce that it has signed, through its wholly-owned subsidiary Great Western Technologies Inc. ("GWTI"), a formal Purchase Agreement with Energy Conversion Devices Inc. ("ECD"), (NASDAQ:ENER) and an affiliate, whereby GWTI is purchasing certain specialty metal production assets located in Troy, Michigan. The production equipment, located in two adjacent plants, is capable of producing nickel metal hydride (NiMH) powder, used in hydrogen storage materials and NiMH rechargeable batteries, and a range of other specialty metals, powders and super alloys. The plants are currently in operation.

The purchase price is US$1.3 million, of which ECD will receive $906,000.00, payable in installments over two years, with ECD and its affiliate each having the option of converting half the purchase price into common shares of GWMG...

Oct 02 10:56 PM

[John Petersen:]

Mayascribe, I think most readers' reactions are a bit like yours was at first. Many things that I see as sensible others see as contrarian if not outright luddite. Since many people get involved emotionally with the stocks in their portfolios and repeatedly saying critical things about a favorite is a lot like criticizing a pet or even family member, it takes most folks a while to decide I'm not crazy.

Fredrick88, thanks for the reference. I don't have a lot of Great Western but it's done well for me so far.

Oct 02 11:40 PM