A123 vs. BYD and Other Irrational Battery Investments 100 comments
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Mother always taught me that if you can't say something nice, it's usually better to say nothing. While regular readers might question my ability to follow Mom's advice, this is an article I had really hoped somebody else would write. The quick summary is that while the shares of A123 Systems (AONE) may be a reasonable investment at current prices, the shares of BYD Co. Ltd. (BYDDF.PK) are an irrational value proposition, the shares of Ener1 (HEV) are even worse, and the shares of Valence Technologies (VLNC) are beyond understanding. Since many readers find detailed tables more confusing than enlightening, I'll use words instead of numbers to explain my reasoning. I'll also assume that every company I mention has a great technology. Accordingly, this article will focus exclusively on the hard-core financial data and be far shorter than most.
To create a baseline for comparisons, I'll start with Exide Technologies (XIDE) and Enersys (ENS), the two largest pure-play battery manufacturers in the world. During the twelve calendar months ended June 30, 2009, Exide was restructuring its operations and lost $113.1 million on sales of $2.9 billion. During the same period Enersys earned $67.5 million on sales of $1.7 billion. Exide's current market capitalization of $552 million represents roughly 176% of book value and 19% of annual sales. Enersys' current market capitalization of $1.14 billion represents roughly 157% of book value and 66% of annual sales. For the sake of simplicity, I believe a baseline market price standard of 2x book value and 1x sales is probably reasonable for established manufacturers of traditional battery products.
Until recently, it was almost impossible to establish a baseline for emerging manufacturers of advanced battery products. That all changed when A123 Systems (AONE) completed its IPO last month. After adjusting A123's June 30, 2009 financial statements for roughly $400 million in IPO proceeds and $250 million in ARRA battery manufacturing grants, A123 had a pro forma stockholders equity of $823 million and potential annual revenue from existing facilities of roughly $233 million. Its actual revenue for the twelve months ended June 30, 2009 was roughly $72.1 million. Based on yesterday's closing price, A123's market capitalization of $2.35 billion represents roughly 3x book value, 10x potential sales and 33x trailing sales. As A123 uses its available resources to build new manufacturing capacity, its market capitalization to potential sales ratio should fall to roughly 2x potential sales. While I'm convinced that PHEVs and EVs are suboptimal uses for advanced batteries, I have no doubt that A123 will have more demand than it will be able to satisfy. Accordingly, I believe a baseline of 3x book value and 2x potential sales is probably reasonable for emerging manufacturers of advanced battery products.
BYD Co. Ltd. (BYDDF.PK) is a classic example of why it is never a good idea to make investment decisions based on simple questions like "What did Warren do?" Everybody knows that MidAmerican Energy, a subsidiary of Berkshire Hathaway (BRK.A), agreed to buy a 10% stake in BYD for $230 million in September 2008. At the time, BYD was generating roughly $4 billion in annual sales that included $1.6 billion in cell phone components (43%), $1.3 billion in automobiles (31%) and $1.1 billion in batteries (26%). For the first six months of 2009, auto sales more than doubled to $1.3 billion (55%), cell phone components remained flat at $780 million (33%), and batteries fell by a third to $281 million (12%). While it started out as a battery manufacturer, BYD is currently an automaker first, a cell phone manufacturer second and a battery manufacturer by default because it needs the batteries for its core product lines. With first half sales of roughly $2.4 billion, it would be hard to classify BYD as anything other than an established manufacturer of traditional products. BYD's financial statements are available here. According to Yahoo! currency. the conversion factor between the U.S. Dollar and the Chinese Yuan is 6.8336.
So far, the one critical fact that seems to evade most commenters and investors is that MidAmerican's (MDPWK.PK) purchase price worked out to $1.02 per share, or 1.2x book value and 0.5x sales. Overall, the MidAmerican purchase is exactly what one would expect from Messrs. Buffett and Munger, a solid value with good growth potential. Since the Berkshire announcement (the purchase didn't actually close till July of this year), the share price of BYD has rocketed to $10.82 per share, which works out to 10x book value and 5x sales. At present, BYD has 2.275 billion outstanding shares and a market capitalization of $24.6 billion. These valuation metrics are out of line with the auto industry, out of line with the cell phone industry and out of line with the battery industry; proving once again that the value of an investment depends on your entry price. BYD was a great deal at $1.02, but it's terrible for investors at $10.82.
Following Ener1 (HEV) over the last year has been a lot like watching a slow-motion train-wreck. Its final private financing round brought in $42 million of offering proceeds in 2007 and $31 million of warrant exercise proceeds in 2008. In the second quarter of 2009, Ener1 entered into a $40 million open market sale agreement that generated $5.8 million in proceeds during the second quarter and has presumably generated another $33 million since the end of June. When these fundraising activities are offset against operating losses, Ener1 has been treading water for a long time.
On June 30, 2009, Ener1 had a $1 million working capital deficit and $26.3 million in long-term debt, including $9.7 million in related party debt. After giving effect to $33 million in new financing, an $18 million investment to rescue a potential customer from bankruptcy and estimated third quarter losses of roughly $10 million, I expect Ener1 to report approximately $129 million in stockholders equity and about $4 million of working capital at September 30, 2009. Its current market capitalization of $758 million is roughly 6x estimated book value and 34x trailing sales. If you adjust Ener1's book value to eliminate $14 million of intangible assets and another $48 million of goodwill, the ratio of market capitalization to estimated net tangible book value soars to 11x. On balance, I think Ener1's report for the quarter ended September 30th will paint a very bleak picture.
While Ener1 was awarded a $150 million ARRA battery manufacturing grant in August, that award is wholly contingent on its ability to provide a like amount of matching funds. With no meaningful working capital, a major investment in a fledgling EV manufacturer that's just emerging from bankruptcy and a large related party debt balance, I can't see where the matching funds will come from. It's certainly not a business picture I would encourage a client to take to market for a secondary offering.
Valence Technology (VLNC) carries a market valuation that never ceases to amaze me. For the last several years, Valence has relied on loans from its principal stockholder to support average losses of roughly $20 million per year. At June 30, 2009, Valence had $27 million in assets and $95 million in debt, resulting in a negative stockholders equity of $69 million. While Valence has recently inked a deal that will throw off up to $2 million per month in proceeds from dribble-out sales of its common stock, the expected proceeds will do little more than keep the company afloat until the next bi-weekly closing. Since Valence's market capitalization of $190 million represents 9.5x trailing sales and the common stockholders are under water to the tune of $0.55 per share, all I can do is scratch my head.
DISCLOSURE: Author has small long positions in Enersys (ENS) and Exide Technologies (XIDE).
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This article has 100 comments:
The Wall Street casino plays musical chairs. Individuals bet against each other to see who has the greatest staying power in the flavor of the moment contest while companies formed from illusions are born and vanish spending their IPO money on raising more money through pronouncements clothed as announcements.
In the mean time institutional investors mostly ponder getting in and out as fast as possible and hoping to catch the bubble as early as possible.
We use safe reliable and cheap incandescent lamps to read about how "environmentally" correct expensive short-lived fluorescent lamps will soon make our lives "better." We start our safe reliable long lived internal combustion engine (fueled with fossil fuel) powered cars with safe reliable cheap lead-acid batteries and listen on the car radios to stories of how expensive lithium-ion batteries of unknown reliability, durability, or cycle life are going to make our lives "better." We listen to foolish celebrity scientists as well as ignorant celebrity singers and actors telling us how mining is evil while they live private lives of profligate excessive use of energy produced by burning huge quantities, as much as any ten or a hundred of us mere ordinary folk use, of the fossil fuels they condemn while they waste huge quantities of the mined metals the production of which they condemn.
The rare earth mining space has become now just like the lithium-ion battery space, so before any of you rush out to buy shares of rare earth mining stocks please read my "The Rare Earth Crisis of 2009," which you can access through jackliftonreport.com. It's free, and I hope it will put the rare earth industry in perspective for you as John Petersen has put the lithium-ion battery space in perspective.
Alphameister, ABAT seems to be following a growth path and strategy that's similar to the one being pursued by BYD. I've previously mused that their management team is too cheap to be cool (meaning that I like what they've done). As a small company kind of guy, I'll take ABAT over BYD any day. Unfortunately, I can't take any credit for prescience when it comes to ACPW. It was just one of those unfortunates that took a pretty severe beat down after its IPO and has been doing a good job of execution under difficult circumstances. I'm up over 400% on my ACPW but don't have any plains to sell because there's still a lot of room for growth before it gets back to the original IPO price. If you missed my notes about ZBB, it's another one that has the same type of dynamic going.
Valence has been in this market over 20 years, amazed over 300 patents many of them fundamentally related in the field, has been in the automotor since the beginning (the only important difference with BYD and AONE) and they has been losing money during 19 years in spite of having Segway, Smith, Renault and some scooters and military applications as well as EADS support systems for the new planes.
AONE was rejected by GM (whatever is name could be in the future), was rejected by Chrysler and Toyota perhaps something could come from Germany....but it seems that nothing amazing is coming to them in the automobile front.
I scratch my head of having so different expectatives in 2 companies, so different in everything except the product!...and trying to explain myself (from the VLNC side) how AONE is going to support the results pressure over them.
Thank you John, because as investor you opened a fresh air window in a matter that is long time ago worrying me.
Regards.
But many friendly countries has mines (assuming open markets approach), USGS reported this year they do not foresee any danger to American economy in the future related to this.
South Africa, Chile, Mexico and many others have REE ores available, it´s a matter of price in my opinion.
Regards.
On Oct 25 08:21 AM Jack Lifton wrote:
> Once again John Petersen has shed light on the contradiction between
> the reality of scientific progress and politicized science.
>
> The Wall Street casino plays musical chairs. Individuals bet against
> each other to see who has the greatest staying power in the flavor
> of the moment contest while companies formed from illusions are born
> and vanish spending their IPO money on raising more money through
> pronouncements clothed as announcements.
>
> In the mean time institutional investors mostly ponder getting in
> and out as fast as possible and hoping to catch the bubble as early
> as possible.
>
> We use safe reliable and cheap incandescent lamps to read about how
> "environmentally" correct expensive short-lived fluorescent lamps
> will soon make our lives "better." We start our safe reliable long
> lived internal combustion engine (fueled with fossil fuel) powered
> cars with safe reliable cheap lead-acid batteries and listen on the
> car radios to stories of how expensive lithium-ion batteries of unknown
> reliability, durability, or cycle life are going to make our lives
> "better." We listen to foolish celebrity scientists as well as ignorant
> celebrity singers and actors telling us how mining is evil while
> they live private lives of profligate excessive use of energy produced
> by burning huge quantities, as much as any ten or a hundred of us
> mere ordinary folk use, of the fossil fuels they condemn while they
> waste huge quantities of the mined metals the production of which
> they condemn.
>
> The rare earth mining space has become now just like the lithium-ion
> battery space, so before any of you rush out to buy shares of rare
> earth mining stocks please read my "The Rare Earth Crisis of 2009,"
> which you can access through jackliftonreport.com. It's free,
> and I hope it will put the rare earth industry in perspective for
> you as John Petersen has put the lithium-ion battery space in perspective.
I can't believe it I finally agree with John on most of this!! Glad to see you finally seeing the light on Valence and Ener1 being bad bets like I've been saying for quite a while.
Maybe you can't see how bad Exide is but I do as it's the Yugo of the battery industry. Both badly run with weak/bad quality products in a low margin business, lead batteries.
I do think comparing old time lead battery companies with new Lithium ones is comparing apples and oranges. One is sunsetting while the other is the new growth future.
But that future is not here yet as the real markets, EV's, PHEV's and utility, home peak shaving, for the huge number of battery companies there are, especially lithiums, is 3-4 yrs away so only the ones with orders and cash to survive until then will. And that is few of them as most are in a bubble now. A123 looks like one of them that will survive though I'd buy only by on dips as full valued now.
The main battery profits will be by LG, Sanyo, Panasonic but they are not pure plays but do have major orders from car companies.
Next yr as oil, coal hits new highs expect these almost all to go up as EV's, PHEV's become the hot thing.
Sadly only Ford, Nissan will have the ability to ramp up to meet it. Nissan already has 100k EV orders and using A Better Place battery swap system to lease batteries by the mile, will be able to sell at prices as low as ICE versions.
Ford is converting their Focus as on the Jay Leno show by Magna so can easily switch to much higher production levels and they are bringing out their Euro Transit Van converted by Smith to EV which too can be easily ramped up.
Johnson Controls/SAFT will supply Lithium batteries for them and their Escape PHEV in 2012.
My best experience of how the Greenies react was when I talked to the City of Berkeley the leaders in environmental concerns on Li EVs vs new Nano Carbon Pb battery EVs and their environmental concerns on the environment. I pointed out the issues with Li and the lack of recycling capabilities vs lead acid recycling for 50yrs and a compliance of 97% recycled. I stated you need to educate the "highly" educated public out here what the issues are going to be with a field test and etc. No interest in addressing the issues here so I learned quickly the Greenies only look at what feels good and looks sexy and what to impose it on all of use without looking at the science (not pseudoscience) to get it to be law.
Guys keep up the great work.
On Oct 25 08:21 AM Jack Lifton wrote:
> Once again John Petersen has shed light on the contradiction between
> the reality of scientific progress and politicized science.
>
> The Wall Street casino plays musical chairs. Individuals bet against
> each other to see who has the greatest staying power in the flavor
> of the moment contest while companies formed from illusions are born
> and vanish spending their IPO money on raising more money through
> pronouncements clothed as announcements.
>
> In the mean time institutional investors mostly ponder getting in
> and out as fast as possible and hoping to catch the bubble as early
> as possible.
>
> We use safe reliable and cheap incandescent lamps to read about how
> "environmentally" correct expensive short-lived fluorescent lamps
> will soon make our lives "better." We start our safe reliable long
> lived internal combustion engine (fueled with fossil fuel) powered
> cars with safe reliable cheap lead-acid batteries and listen on the
> car radios to stories of how expensive lithium-ion batteries of unknown
> reliability, durability, or cycle life are going to make our lives
> "better." We listen to foolish celebrity scientists as well as ignorant
> celebrity singers and actors telling us how mining is evil while
> they live private lives of profligate excessive use of energy produced
> by burning huge quantities, as much as any ten or a hundred of us
> mere ordinary folk use, of the fossil fuels they condemn while they
> waste huge quantities of the mined metals the production of which
> they condemn.
>
> The rare earth mining space has become now just like the lithium-ion
> battery space, so before any of you rush out to buy shares of rare
> earth mining stocks please read my "The Rare Earth Crisis of 2009,"
> which you can access through jackliftonreport.com. It's free,
> and I hope it will put the rare earth industry in perspective for
> you as John Petersen has put the lithium-ion battery space in perspective.
Regards.
On Oct 25 12:06 PM John Petersen wrote:
> Advill, I assumed that all companies had a great technology because
> I don't know enough to make those kinds of judgments. Likewise, I
> don't have enough knowledge of patent law to pick a winner in the
> LiFePO4 lawsuit sweepstakes. When you take it down to raw financial
> staying power, however, the only thing keeping Valence afloat is
> the forbearance of a principal stockholder who owns most of the debt.
> That scares me.
While I'm convinced that PHEVs and EVs are suboptimal uses for advanced batteries,
---
Then what would you think of burning a limited resource like oil ? Is that an optimal use of the resource ?
How about killing half a million people to secure that limited resource so that it can be burnt ? Was that an optimal use of our budget ?
EVNow, I've previously explained that 16 kWh of batteries can power one Volt class PHEV or those same batteries can power 10+ Prius class hybrids. The PHEV will save a maximum of 400 gallons of gas per year. The 10+ HEVs will save closer to 1,600 gallons of gas per year. If your goal is to reduce oil consumption, making 10 affordable HEVs is far smarter than making one Volt class PHEV for the guy who needs his eco-bling. The same rationale holds if your favorite cause is CO2 emissions. For the more detailed versions please read:
seekingalpha.com/artic...
and
seekingalpha.com/artic...
John, if the above is true, won't capital and market forces come to bear (as in previously hideously expensive large lcd panels) to eventually lower the costs of expanding production capacity (and production) of lithium-ion batteries to the point where 50KWh for a car is not at all prohibitive?
If Mr Kanode (VLNC´s CEO) is right in his bet on buses and light trucks that could explain the change on trend in the stock.
Smith has solid orders from Coca Cola, DHL and many others for his USA new plant...if Valence can keep compromises to them (which was a problem last year) they have something to show.
Rgds.
On Oct 25 11:58 AM jerrydd wrote:
>
> I can't believe it I finally agree with John on most of this!! Glad
> to see you finally seeing the light on Valence and Ener1 being bad
> bets like I've been saying for quite a while.
>
> Maybe you can't see how bad Exide is but I do as it's the Yugo of
> the battery industry. Both badly run with weak/bad quality products
> in a low margin business, lead batteries.
>
> I do think comparing old time lead battery companies with new Lithium
> ones is comparing apples and oranges. One is sunsetting while the
> other is the new growth future.
>
> But that future is not here yet as the real markets, EV's, PHEV's
> and utility, home peak shaving, for the huge number of battery companies
> there are, especially lithiums, is 3-4 yrs away so only the ones
> with orders and cash to survive until then will. And that is few
> of them as most are in a bubble now. A123 looks like one of them
> that will survive though I'd buy only by on dips as full valued now.
>
>
> The main battery profits will be by LG, Sanyo, Panasonic but they
> are not pure plays but do have major orders from car companies.<br/>
>
> Next yr as oil, coal hits new highs expect these almost all to go
> up as EV's, PHEV's become the hot thing.
>
> Sadly only Ford, Nissan will have the ability to ramp up to meet
> it. Nissan already has 100k EV orders and using A Better Place
> battery swap system to lease batteries by the mile, will be able
> to sell at prices as low as ICE versions.
>
> Ford is converting their Focus as on the Jay Leno show by Magna so
> can easily switch to much higher production levels and they are bringing
> out their Euro Transit Van converted by Smith to EV which too can
> be easily ramped up.
>
> Johnson Controls/SAFT will supply Lithium batteries for them and
> their Escape PHEV in 2012.
But 10 PHEVs will save 4000 gallons of gas per year. Why is this not better than 10 HEVs? Why is it either-or? Is it truly either-or? Are Li-ion batteries the true constraint? Why? Will this always be the case? If not, what is the true constraint then? Why can't the entire world's fleet eventually run on Li-Ion? Is lithium a rare or limited resource? Or just too costly at this point in time? What if many many more miners get in the game? Will its price remain forever high such that PHEV/EV will never be cost-competitive?
Sorry for the barrage; At this point I'm both ignorant and curious....
Welcome to the discussion. As your questions point to, you've got a lot of reading to do. If this storage "thing" has peeked your interest, the following web address you'll find fascinating. It's the archive of Mr. Peterson's work.
seekingalpha.com/autho...
It's a lot to take in, but it's the best source of intelligent discussion out there. IMHO. By all means read the comment sections too.
seekingalpha.com/artic...
So the short answer is prices may eventually fall to a point where PHEVs and EVs work from an economic perspective, but it won't be any time soon.
As a matter of national priorities, there is no meaningful domestic lithium-ion battery production capacity and the plants that are planned over the next few years won't take PHEV or EV penetration rates over a couple of percent of total auto sales. We'd all be far better off taking HEVs up into the 20% to 30% range. The numbers get really pretty if you go for HEV's with compressed natural gas fuel systems, but some things are too much to hope for.
By the way, I have to agree with DRich, read the articles but don't skip the comments. I can only speak from the shoes I fill but there are a lot of smart readers out there who argue the other sides of all issues very well. If you read it all, the final take-away is balance.
Case in point is the most recent financing in which shares are dribbled out every two weeks at a fat discount to the market price. The purchaser of the shares can quickly flip them for a quick profit, and then recycle the original investment into the next closing (at another fat discount) and flip again. A small profit compounded 26 times per year amounts to a very fat profit. Almost like a license to print money.
Second, Chrysler did not reject A123. Quite the opposite, Chrysler has said A123 is the battery supplier for their EV that is under development.
Third, A123 has been selected as the battery supplier to SAIC, the largest automobile manufacturer in China, for a hybrid vehicle application.
Finally, as John already pointed out: money talks. A123 has hundreds of millions of dollars. Valence has no money but lots of debt.
Please keep up the good work here. Thanks.
Ecomike, I understand how the various types of batteries work and what the generic manufacturing and raw materials issues are, drilling down into the fine distinctions between the LiFePO4 batteries made by Valence, A123 and BYD is out of my depth. I'm basically a securities guy and feel very comfortable with disclosure documents and contracts, but the fine points of many IP issues are out of my depth.
It's good to hear from you Don and I trust you'll understand why I don't have anything to add to or detract from your comment.
I can only say that I have the 3 amp hour cells, use them @ 3 cell density and 30 amp discharge/w other abusive modes of use and recharge 3 amp hour into the cells. The only weakness I hate is the aluminum case. I still get 95/98% charge out of the battery after really abusive i.e. 60 amp discharge use. What I waite for is a sample of the lead/carbon. I am waiting John!
The CFL's
> is great an example you break them and then you need the >hazmat team> to come in a clean it up and then you poison the >people with possible> future birth defectives down the road. The list goes on for how to
> handle the hazardous materials used in thin film solar pannels,
Jerryd Your rant does stand up to facts. CFL's barely have any mercury and clean up is with a paper towel and put it in a zip lock bag. And coal plants put out far more mercury from the extra power needed to run incandesent bulbs. I invest in my 100wt equivalent CFL's for $2.50 each and my 3 main ones save me $2each/mo on my electric bill. That's a 1000%savings/yr!! Does any of your investments do as well? And mine last many yrs. Don't know how long as they are still working after 4 yrs.
their
> desires to switch over to 100% EVs without allowing any nuclear plants
> to be built so we will increase the GHG by 50%+ depending on coal
> fired plants.
Please show proof as EPA says very differently. Even charged from coal, EV's make far less GHG or other pollution. Again EPA. Nor are all greenies be against nukes done right. The only reason I don't go for them is they cost far more than most RE .
Their answer is wind and solar. Solar does not work
> at night to charge the batteries. Wind is not reliable and is less
> reliable in the hot summers when electric demand is the highest.
> Still don't care enough if solar will run cost of electric rates
> up to over $.20kwh and run the jobs out of this State of CA and other> places.
Solar makes power at peak demand times usually so worth far more than nuke which can't be turned off. Many places now have over $.20/kwhr from coal plants. Cal doesn't as it's electric is lower than many because of RE which doesn't go up with fossil fuel prices. Much RE is now cost effective and dropping in price vs fossil fuels which are going up. Which would be a better investment? You can now buy wind for under $2k/kw and in real moss production solar CSP will cost under $3k/kw with a 3kw/kw heat bonus and can be fired by wood pellets or any fuel if needed. Coal is $4k/kw + fuel and nukes are $8.5k/kw Which is a better investment? Even PV is cheaper than nuke at $6k/kw.
> My best experience of how the Greenies react was when I talked to
> the City of Berkeley the leaders in environmental concerns on Li
> EVs vs new Nano Carbon Pb battery EVs and their environmental concerns
> on the environment. I pointed out the issues with Li and the lack
> of recycling capabilities vs lead acid recycling for 50yrs and a
> compliance of 97% recycled. I stated you need to educate the "highly"
> educated public out here what the issues are going to be with a field
> test and etc. No interest in addressing the issues here so I learned
> quickly the Greenies only look at what feels good and looks sexy
> and what to impose it on all of use without looking at the science
> (not pseudoscience) to get it to be law.
Except you are wrong as Lithium is not toxic vs lead that is. And please tell me where you buy your CL batteries? There are none for sale I know of. I'm sure they look at you like they do because of your misinformation, ranting.
Like you, I also wait for some further tests on the advanced lead/carbon batteries, but I don't hold my breath. If they already have enough customers for them lined up - why would they need to prove their claims to people like you and me?
1. Algorithm for charge control (and patents)
2. Price of product (this is a common problem)
3. Patent problems in Canada and perhaps with VLNC
4. Chrysler has a intention of buying if certain points are ok (which are not), additionally Fiat is in close relation with Bosch , Saft and Maxwell (this is a comment I received).
5. AONE has been doing a good job with small batteries for hand tools.... moving this into 250kg 16KW units is another story.
6. The have against the pressure of US government and general investors and media because one way or the other they become the american alternative to Saft, Chinese stuff, Ballard etc. they got a nice PR team...now is time to perform....everybody is watching
The comment about the investment trough Hedge Fund in VLNC in my opinion is just another way of Carl Berg to support the company via back to back with the fund.
In short,i´m 100% agree with VLNC problems and lack of direction for many many years, Kanode is moving in the right direction, if they pulse the right button... money will flood in
If you have comparisons of Saphion batteries against A123 models could be interesting to compare.
Rgds.
On Oct 25 02:55 PM noapplefanboy wrote:
> Advill, you have a couple of misconceptions about A123. First, their
> nanophosphate technology creates significant differences between
> Valence's standard phopshate batteries. A123's nanophosphate batteries
> have far greater power density, far greater discharge and recharge
> rates, broader operating temperature range, and longer cycle life.
> This may be a reason why A123's sales in the first 6 months of 2009
> doubled while Valence's fell by more than 50%.
>
> Second, Chrysler did not reject A123. Quite the opposite, Chrysler
> has said A123 is the battery supplier for their EV that is under
> development.
>
> Third, A123 has been selected as the battery supplier to SAIC, the
> largest automobile manufacturer in China, for a hybrid vehicle application.
>
>
> Finally, as John already pointed out: money talks. A123 has hundreds
> of millions of dollars. Valence has no money but lots of debt.
Don. I don't have any studies on it but the Killacycle EV drag MC does the 1/4 mile in 7.9 seconds at 168mph. And some EV's get 100 mile range on under 200lbs including everything of them. That shows very, very good power density which is what they are designed for plus not bad energy density.
As you know to get more power in lithiums as most batteries, you give up some energy density. A123 has a nice balance.
Some great info, vids and crashes here, killacycle.com
On Oct 25 04:53 PM Don Harmon wrote:
> Interesting thing about AONE is that I have yet to see a single independent
> study that supports their claims of superior energy density. Yes
> I have heard them claim it - but NO third party verification of exactly
> what this claim really means? Someone care to point me to any kind
> of published white paper that shows irrefutable proof of A123's spurious
> PR claims by Mr. Fulop?
John: Been in the shadows watching this comment stream develop.
Another terrific article! Lots of great comments. You have the patience of a saint.
Electric plants produce electricity with coal and at night when most electric vehicles would be charged they would not burn more coal to charge those vehicles they would just sell more of the power being produced. In other words the coal would still have been burned if you charged the vehicle or not. So what is the true cost, in carbon terms, of that power. I think zero.
That the dog pissed on my homework excuse for not showing up to school or work will become extinct. 7AM...dialing..."Boss, my power went out. I have no way to get to work."
Solution: Buy a gas burning generator to power your electric car.
seekingalpha.com/artic...
John, another insightful article. I'd just add that another problem with the irrational exuberance of Li is the lack of oxygen (capital) for other start-up technology companies. I am a small angel investor but am having trouble convincing various Angel groups to look past the headlines and at core issues.
Jack, right-on, right-on, right-on! Politicized science is killing innovation. Since when has the government ever picked a winning technology (e.g. $500M for Fisker - really?) They should simply put out a mandate or a challenge and then get out of the way.
Franklin76
Or at least put out a challenge (with cash prize) along with the other investments.
One thing missing from all of this is the fact that the company that gets it right is always much more valuable than its peers. Google vs. Ask.com and Yahoo. Intel vs AMD, VIA.
On Oct 25 09:15 PM Mayascribe wrote:
> Guns: If more cars are in effect, plugged into a coal plant at night,
> it still costs the owner of the car to charge his/her car. With millions
> of electric cars all charging at night, more coal will have to be
> burned. Another area of pure electrically power cars is, what happens
> when there's a power outage?
>
Most night time electric in the US is nuke or hydro. Coal use is dropping fast from 53% to about 43% now as more coal plants are shut or converted to NG cogen at far higher eff. Last yr wind was the biggest new energy source. Source EPA website plus many others.
Even if coal is used EV's are far cleaner, less GHG than gasoline cars.
Far less electricity is used at night it costs far less and enough capacity to run many millions of EV's. Check your utilities time of day rates and you'll see.
And buy the time enough EV's to make a difference RE will be the large increase in supply at lower costs than fossil fuels, easily taking care of the EV charging needed with coal if trend continues, down to only 25% of generation.
So it's unlikely EV's will cause a blackout.
In fact batteries, both in EV's and utilities will stabilize the grid by supplying it with peak power. So much EV's could be charged for free at off peak so they can be used on peak to support the grid be the utility. Isn't this why batteries are the future? If not why invest in them as there would be little market?
A123 has a 30amphr cell for OEM's and has had it for a while. Please keep up. Kinda beats yours.
And you, others can't do what A123 does in drag racing, HEV's because they can't put out the specific power which makes the racers heavier and requires a larger pack for HEV's.
The racer was an example of pure power, HEV's, PHEV's is the market.
On Oct 25 07:58 PM Don Harmon wrote:
> jerrydd. You can do the same thing with other LiFePO4 batteries
> including ours that Killacycle is doing and you can use a LOT less
> cells than they are using now with A123. That being said, drag racing
> motorcycles is a highly niche market, and while we can also do that
> our primary focus is on the broader market where both energy and
> power come into play which is why we make both types of cells.
plugbike.com/2009/10/2.../
I said it before when the Gov. steps in and starts picking winners it is saying to small businesses & starups – YOU can’t win so don’t bother even trying!
On Oct 26 09:54 AM Zenfar wrote:
> "They should simply put out a mandate or a challenge and then get
> out of the way."
>
> Or at least put out a challenge (with cash prize) along with the
> other investments.
>
> One thing missing from all of this is the fact that the company that
> gets it right is always much more valuable than its peers. Google
> vs. Ask.com and Yahoo. Intel vs AMD, VIA.
I got a great comment on this article on Altenergystocks.com that said in part:
"These results demonstrate the devastating effect of the drug on which many investors are hooked...hopium. Ah, the financials may look bad, but imagine if the technology wins....
Although some of these companies may be reorganized in the next two years, overall share price rationalization will likely take longer. Until it is clear to the investment market how the battery market will be structured, who the winners will be, such wild pricing is to be expected.
In the interim it will be interesting to see whether the large incumbent manufacturers, e.g. Exide, can re-invent themselves. Most companies that ignore new technology too long die or waste away. Consider Polaroid, Univac, Woolworth. In contrast, IBM and Apple were successful turnarounds. GE is a work in process but will likely succeed."
jjp, if you're a trader and keep an eagle eye on the market, BYD may present some great opportunities. My only reservation is the buy and hold type investor who drops things into an account for a couple years and then checks to see how he did. I know the rules are different for Chinese stocks, but am also aware of Khosla's law of economic gravity. I'm glad to hear that you were able to hitch a ride on the rocket during it's upswing.
I wish we had the gov't bonus that A123 got and the piles of cash they raised with their IPO so we could also afford to play with the Killacycle High Performance race crowd. You might just be surprised @ the results!
It's all good though - we know who we are and what we have to offer.
On Oct 26 10:06 AM jerrydd wrote:
> Don,
> A123 has a 30amphr cell for OEM's and has had it for a while. Please
> keep up. Kinda beats yours.
>
> And you, others can't do what A123 does in drag racing, HEV's because
> they can't put out the specific power which makes the racers heavier
> and requires a larger pack for HEV's.
>
> The racer was an example of pure power, HEV's, PHEV's is the market.
>
Well if you count DARPA there is the whole Internet thing as well. Without which we wouldn't even be having the chat.
I don't mind the government funding, I would just like to see challenges in addition to it. The "free market" isn't always free from politics as well.
Made much more sense than Obama's government lottery which was rigged from the get go.
This administration was supposed to be all about creating new jobs and so far I don't see that they have got it yet ? Maybe some of you here feel different - but take a look at the national unemployment statistics and show me how their stimulus program has created any new jobs ?
> Jerrydd - you seem to know a lot about A123 ? You know things that
> they don't even make public like this 30 Ah Cell. What if I told
> you we also have an even higher power cell than they do? But we only
> show it to OEM's. We learned how this game works by now too :)<br/>
The difference is A123 announced it about 9 months ago and shown it in SAE Magazine among other places. Keep up. I learned about it on the EVDL list before that on the first day it was allowed to be known, the most up to date EV people in the world.
>
> I wish we had the gov't bonus that A123 got and the piles of cash
> they raised with their IPO so we could also afford to play with the
> Killacycle High Performance race crowd. You might just be surprised
> @ the results!
Killacycle was out 3 yrs ago with A123, long before A123 got gov help. Don't blame them because they are good at what they do.
>
> It's all good though - we know who we are and what we have to offer.
>
This latest deal is simply the latest. While some have been more toxic than others, they have all shared some common characteristics: they shares are dribbled out over time (so the purchaser never has to put up much money at once) and they are purchased at a substantial discount to market price (so the purchaser has a virtually guraranteed return).
On Oct 25 05:20 PM John Petersen wrote:
> noapplefanboy, for a long time, it looked like the Berg family was
> providing the bulk of Valence's resources and the relationship with
> the outside financing group is pretty recent. The terms of the deal
> with the purchaser are actually better than many I've seen in my
> career. My only issue with the financing is that it's only a basic
> life support amount instead of something that will give them room
> to grow a business.
>
> Ecomike, I understand how the various types of batteries work and
> what the generic manufacturing and raw materials issues are, drilling
> down into the fine distinctions between the LiFePO4 batteries made
> by Valence, A123 and BYD is out of my depth. I'm basically a securities
> guy and feel very comfortable with disclosure documents and contracts,
> but the fine points of many IP issues are out of my depth.
>
> It's good to hear from you Don and I trust you'll understand why
> I don't have anything to add to or detract from your comment.
www1.eere.energy.gov/v...
That is the same cell that is on their website.
And it's funny how everyone talks about A123 doing it better. They have a great PR arm, but they still got caught with their pants down on the Volt. They had no significant interest in prismatic cells until GM went with LG. Prismatic cells allow for better use of space than cylindrical cells along with some thermal advantages, at least in mid-range cell formats (>2 or 3Ah, but less than say 50Ah).
On Oct 26 10:15 PM jerrydd wrote:
> On Oct 26 12:51 PM Don Harmon wrote:
seekingalpha.com/insta...
or here
commonstocksense.blogs...
Br,
JW
Cycle life is also not entirely dictated by the cathode. In fact, most satellite-grade Li-ion cells use LiCoO2 and are required to have >10 year of life, often at least 30 years and you have to have the data to prove it. This cycle life is dictated by the DOD, and the rates used, as well as the temperature.
As for the money, A123's money is from everyone's favorite uncle, Sam, and an IPO supported by the possibility of growth. When they start turning a regular profit, then I'll listen. Until them, as Public Enemy once said: "Don't believe the hype."
On Oct 25 02:55 PM noapplefanboy wrote:
> Advill, you have a couple of misconceptions about A123. First, their
> nanophosphate technology creates significant differences between
> Valence's standard phopshate batteries. A123's nanophosphate batteries
> have far greater power density, far greater discharge and recharge
> rates, broader operating temperature range, and longer cycle life.
> This may be a reason why A123's sales in the first 6 months of 2009
> doubled while Valence's fell by more than 50%.
>
> Second, Chrysler did not reject A123. Quite the opposite, Chrysler
> has said A123 is the battery supplier for their EV that is under
> development.
>
> Third, A123 has been selected as the battery supplier to SAIC, the
> largest automobile manufacturer in China, for a hybrid vehicle application.
>
>
> Finally, as John already pointed out: money talks. A123 has hundreds
> of millions of dollars. Valence has no money but lots of debt.
Other problems are inherent to LFPO as a material, not just A123. One is the voltage algorithim for LFPO (due to flat discharge) the second is the lower operating voltage.
I also wouldn't read too much into any battery manufacturer/car producer deal, unless the auto manufacturer's name is Toyota or Honda (maybe Ford, but that's another story). Right now most OEMs are looking at any number of sources for batteries and cells. High profile announcements are ways to keep PR people employed and give high level executives talking points from what I can tell
On Oct 25 07:37 PM Advill wrote:
> Thank you for your comments about my points i really appreciate it,
> the new VLNC LiFeMgPO4 batteries to be in the market soon are quite
> similar in performance (now) to the future product of A123, will
> tell you more, they (A123) still have problems in:
>
> 1. Algorithm for charge control (and patents)
> 2. Price of product (this is a common problem)
> 3. Patent problems in Canada and perhaps with VLNC
> 4. Chrysler has a intention of buying if certain points are ok (which
> are not), additionally Fiat is in close relation with Bosch , Saft
> and Maxwell (this is a comment I received).
> 5. AONE has been doing a good job with small batteries for hand tools....
> moving this into 250kg 16KW units is another story.
> 6. The have against the pressure of US government and general investors
> and media because one way or the other they become the american alternative
> to Saft, Chinese stuff, Ballard etc. they got a nice PR team...now
> is time to perform....everybody is watching
>
> The comment about the investment trough Hedge Fund in VLNC in my
> opinion is just another way of Carl Berg to support the company via
> back to back with the fund.
>
> In short,i´m 100% agree with VLNC problems and lack of direction
> for many many years, Kanode is moving in the right direction, if
> they pulse the right button... money will flood in
>
> If you have comparisons of Saphion batteries against A123 models
> could be interesting to compare.
>
> Rgds.
I agree that the jury is still out whether A123 can take all that money and turn it into a profitable business.
On Oct 26 11:37 PM MRTTF wrote:
> As for the money, A123's money is from everyone's favorite uncle,
> Sam, and an IPO supported by the possibility of growth. When they
> start turning a regular profit, then I'll listen. Until them, as
> Public Enemy once said: "Don't believe the hype."
>
> On Oct 25 02:55 PM noapplefanboy wrote:
Noapplefanboy, I've only been following Valence for 18 months or so and I don't have a lot of long-term knowledge about its historic financing patterns. Thanks for the clarification. I'm no fan of "life support" financing that doesn't leave room for planning, growth and expansion. Sometimes it's better to just pull the plug on grandma's ventilator.
Jeffrey, it's always nice to hear from another SA contributor. Your article was a very good piece and it's a shame it wasn't published. We're in a frothy time right now where the politicians have decided that PHEVs and EVs are good for America and that lithium-ion batteries are the answer. The lithium-ion developers have chimed in and said "sure, we can do that if you give us enough money" and the automakers have capitulated and agreed to introduce products, but are beset by nagging worries about whether a market will develop. The one voice that has not been heard is the only one that matters - the voice of the consumer. Actually it has been heard, but everybody ignores the studies that consistently say the only sure buyers for PHEVs and EVs are the emotionally committed and the mathematically challenged.
HEVs make a huge amount of sense because they're proven performers that carry relatively small price premiums and save up to 50% on fuel costs. As soon as you add the plug, the price premium soars into the 100% range, customer comfort and convenience all but disappear and the overall usefulness of the product plummets. Until gas prices climb into double digits, it will be very difficult for budget conscious consumers to justify the cost.
There will be lots of flashy product introductions and there will no doubt be an initial sales surge, but once the hype and excitement dies down and the consumer grapevine starts talking about the real life owner experience with EVs, I'm convinced the overwhelming majority of consumers will say "give me the HEV" because it's the clear winner in comfort, safety, flexibility and fuel economy.
MRTTF, once again, thanks for taking the time to read and comment on technical issues that are far beyond my meager capacity to explain.
Retail investors and dribble-out pipe purchasers may be willing to pay something close to current market prices based on hype and limited financial exposure, but I worry about the price professional investors will be willing to pay for millions of shares based on business fundamentals. Retail stockholders better pray that Ener1 and Valence have access to kinder and gentler financing sources than the ones I've dealt with for the last 30 years.
But about the number of things "wrong" about my post, I will take exception to. First and foremost, I was being a little facetious in saying "millions of cars." That's not happening anytime soon. Second, when it does happen, coal plants will indeed have to burn more coal. I live in PA. Yes I get electricity from the largest nuke on the planet; Kimberton. And from that, my electricity rate may be much higher than yours, regardless of the fact that the time of day is cheaper at night.
Bottom line. Electricity ain't free. I've been following John since his first article he wrote here on SA. Plug-in cars are way off in the future. And, further, if you live in a condo like I do (I have a garage) and don't have a garage, there is going to be all kinds of extension cords everywhere out to the parking lot.
Fully electric vehicles are only practical in fleet form; like US Postal vehicles. Fully electric vehicles are complete nonsense, and I would never invest in one until I get 300 miles of sustained driving experience with a five minute recharge. Anything else is highly inconvenient, as things stand now and for the forseeable future.
Further, I did not even intimate that EV's would induce a blackout. Do you not have thunderstorms where you live? Squirrels running into transformers? An occasional car ramming a telephone pole. Do I have to think of anymore reasons power could go out?
I'm interested in the 2 megawatt and up storage batteries which will be able to deliver constant energy to the Grid from the Anticipated Wind and Solar farms. To my knowledge only one Battery maker is even close, ALTI.
Any others available?
So far, the only battery maker that has demonstrated the long-term cost effectiveness of battery backed renewable energy is Exide. Others have started tests, but it will be years before anybody can prepare a spreadsheet that isn't 75% assumptions.
> Jerrydd: Surely you are correct.
> But about the number of things "wrong" about my post, I will take
exception to. First and foremost, I was being a little facetious
> in saying "millions of cars." That's not happening anytime soon.
I agree and said many times here EV's, PHEV's will not be in large numbers for 4-5 yrs. And by then prices will be low and lithium production ramped up. It's also why many battery companies will go belly up.
> Second, when it does happen, coal plants will indeed have to burn
> more coal. I live in PA.
That is your opinion and most in the utility business disagree with you. Coal use has dropped 20%. I know of no new coal plants being built except the CCS experiment and many being shut down or canceled. Here in Fla at least 4 coal plants have recently been canceled, replaced by either solar, wind or NG cogen ones. Obama is dedicatiing the largest US solar today 40 miles from me.
Yes I get electricity from the largest nuke
> on the planet; Kimberton. And from that, my electricity rate may
> be much higher than yours, regardless of the fact that the time of
> day is cheaper at night.
That's only because you picked the constant rate plan vs the time of day plan.
>
> Bottom line. Electricity ain't free. I've been following John since
> his first article he wrote here on SA. Plug-in cars are way off in
> the future. And, further, if you live in a condo like I do (I have
> a garage) and don't have a garage, there is going to be all kinds
> of extension cords everywhere out to the parking lot.
There are funds for EV charge stations for apartments, govs to do these at no cost. Most places have been glad to help secure EV charging for present EVers so not likely to be a problem. There are probably 10B 120vac outlets in thge US. Most EVers can find one to use. Almost all parking garages have them already.
> Fully electric vehicles are only practical in fleet form; like US
> Postal vehicles. Fully electric vehicles are complete nonsense, and
> I would never invest in one until I get 300 miles of sustained driving
> experience with a five minute recharge. Anything else is highly inconvenient,
> as things stand now and for the forseeable future.
Again that is only your opinion. I drive mine every day and have charging outlets OKed at 7-11's, libraries and parking garages all around tripling my daily range if needed. Most businesses are quite happy to lend a plug. I alway offer to pay though my very eff EV's, 100 + 40 wthrs/mile use very little power, between $.60 and $1.50 to charge at $.13kwhr for 40 and 100 mile packs.
A 60 mile range 2 seat EV will do 80% of US trips according to the EPA, others. Light, aero EV's with 60-100 mile range using forklift EV drive tech and even standard lead EV batteries can be built for under ICE's costs. Sadly car companies don't want to do this as it ruins their profit centers of aftermarket service, parts as EV's are simple, need little of them and last too long.
Most EV's will charge in 15 minutes at fast charging stations and in 5 yrs EV's will have 300 mile range I believe at prices the same as ICE's. But a 100 mile range with a very small generator of 5-15kw will give on unlimited range too, depending on vehicle size.
>
> Further, I did not even intimate that EV's would induce a blackout.
> Do you not have thunderstorms where you live? Squirrels running into
> transformers? An occasional car ramming a telephone pole. Do I have
> to think of anymore reasons power could go out?
It wasn't clear. But even that point is moot because how long would the electric be out? A couple hrs at the most in 12/ charging hrs available.
MTRRF wrote,
And it's funny how everyone talks about A123 doing it better. They have a great PR arm, but they still got caught with their pants down on the Volt. They had no significant interest in prismatic cells until GM went with LG. Prismatic cells allow for better use of space than cylindrical cells along with some thermal advantages, at least in mid-range cell formats (>2 or 3Ah, but less than say 50Ah).
JD I agree!! I've heard of the prismatic version too but don't know much about it. On a PHEV the pack is rather small so space is not as much an issue. I too was surprised GM picked a low specific power cell though higher specific energy cell with such a small pack which is likely to strain the pack putting out peak power. They will have to limit acceleration to use them.
On Oct 27 01:53 AM noapplefanboy wrote:
> Not entirely true. A123 had $100 million in the bank before the govt.
> grant and before the IPO. Which is a far cry from the other companies
> mentioned in the article with the exception of BYD.
>
> I agree that the jury is still out whether A123 can take all that
> money and turn it into a profitable business.
>
On Oct 27 03:17 PM John Petersen wrote:
> GE was a big pre-IPO investor in A123, but by no means the only one.
> Other notables included North Bridge Ventures, Qualcomm, Motorola,
> Morgan Stanley Emerging Markets, Sequoia Capital Anchorage Capital
> and AllianceBernstein Venture Fund.
oh, and about to enter euro and north american markets as well....
then there is the investment in other vehicle production (transport vans)........
one does not know too much about boyd reading this article....
On Oct 27 04:14 PM John Petersen wrote:
> By the time any company makes it to the first tier investment banks
> for an IPO, the bulk of the money invariably came from VCs and corporate
> funders. That's just the way of the world. Back when I was a baby
> lawyer, a small company could go out and do a small IPO and raise
> $3 to $5 million. Anymore that's the preliminary budget for legal
> and accounting fees. It's a shame because there are lots of small
> companies that could reasonably justify an $18 to $25 million IPO
> that will never get a chance.
I´m still waiting from the other participants a technical note on what is different in AONE over Saft or VLNC product that justify the investments of VC on them, is cheaper refunding Ener1 or buying VLNC from Mr. Berg that pushing from scratch (in heavy batts) the AONE venture and risks attached.
My point is THERE ARE NOT DIFFERENCES BETWEEN AONE product and others LIFO batts in the market, they will have the same costs problems, the same charge problems and the rest of chemistry problems.... PLUS patents problems.
Well time will come to verify this suppositions.
Rgds.
On Oct 27 03:17 PM John Petersen wrote:
> GE was a big pre-IPO investor in A123, but by no means the only one.
> Other notables included North Bridge Ventures, Qualcomm, Motorola,
> Morgan Stanley Emerging Markets, Sequoia Capital Anchorage Capital
> and AllianceBernstein Venture Fund.
MRTTF, on June 30, 2009, before the big push for the IPO really got up and rolling, A123 was carrying $4.85 million on it's balance sheet for "deferred offering costs," which is what you call the amount you've spent on an in-process IPO. Their last amendment prior to the effective date estimated the total IPO costs at $6.8 million, including $3.4 million in accounting and $1.9 million in legal. It's neither good nor bad, but it is dreadful expensive.
Advill, the funds and technical companies invested in A123 over the last couple of years and they paid something less than $9 per share. The IPO which was priced at $13.50 put the rest of the money on A123's balance sheet. Now that the offering is done, the company has nothing to do with the daily trading activity and it's all a new investor buying stock from an old investor.
Whenever a company like Ener1, Valence or for that matter Axion goes to the market for additional capital, the new investors take a very hard look at what the current values are and then negotiate a price based on their perception of those values. In a market like the one we have right now, those negotiations are bare knuckle affairs where the company that needs money is at a distinct disadvantage to the investor who has money. That disadvantage is particularly acute when the spread between financial statement values and market capitalization is measured in hundreds of millions of dollars.
Further, where do you live? Jettson-ville? No way here in Philly are parking garages set up for something yet that has not even occurred. Plug-in vehicles that have plugs nearby in 30-50 year old garages? Don't want to mock in public, not my nature, but WTF are you talking about? Where do you live, where you can walk into anywhere and say, "Can I get a charge?"
Either you are way ahead of the curve, brilliantly so, or you are abusing or with greater nonsense, enhancing the coupon clipping society, and getting away with it. Either way, makes no difference, because either way, neither way is possible, on a grand scale.
Thanks for the electric bill tip. Invest your knowledge accordingly.
John: I don't envy your position and really admire your ability to refrain from erupting. There is room for every Tech that works. Every single one. No one Tech is going to get a Nod from This Government, nor has any Tech been given the Nod by any previous Administration over and above all others.
Thinking in terms of the Normal Bidding that occurs for Contracts helps. Thinking in terms of the number of Lobbyists for anything specific helps too. Its not "what you have, its who you know".
I paraphrased Crain's a bit.
While there isn't any one technology that will get a definitive nod from any administration, bureaucrats are as subject to PR hype as the rest of us. The fact that many of them are ideologues that have never worked for companies that had to produce something and make a profit in the process can complicate the issue. When you add a presumption that resources will be as available in the future as they have been in the past, you can get some pretty unreasonable policy initiatives (think fuel cells and ethanol). I also can't discount the importance of having an ear in high places, although I can think of any number of places where the ear listened politely and still said no.
I want to see Inovation, not the stifling of it.
On Oct 26 12:29 PM jjp wrote:
> Your comments on BYD sure ruined my morning. Yes they are true, but
> having someone write about them made me have to pull the plug to
> grab my profits before other people caught on. I was thinking of
> doing anyway because of the high price, but also before there had
> been talk of a posible pull back in the China market in November.
You should be teaching a course in the psychology of the market. The comments below are literally part of a universally applicable template that everyone should apply to the so-called technology stocks. When I read them a moment ago, out of context, I though to myself that "This guy is talking about the thin-film PV solar cell industry."
I'm organizing as co-chairman a conference called "Technology and Rare Earth Metals 2010," TREM 2010, the details of which will be posted shortly at iags.org. The conference will be held in Washington, DC, on March 24-25, 2010, and I'm inviting you to be a speaker and panelist (with travel and compensation to be negotiated, of course). Obviously, John, I don't know if you can accept this offer, but I know if you do that the 300 attendees expected will be added to significantly by your readers. The keynoter will be either a member of the US Cabinet or a distinguished (are there any other kinds) US Senator. The point is that official Washington, and not just policy wonks and commentators [i.e., people like you and me] is taking note of the importance of natural resources to the future of our civilization.
Back yo you, John
On Oct 28 06:01 AM John Petersen wrote:
> Freya, the biggest market losses I've ever taken came from my failures
> to separate emotion and optimism from financial facts. I understand
> all too well that we're going to need every storage technology that
> exists and many that haven't even been invented yet. So when I'm
> looking at a sector that has effectively unlimited growth potential
> across the board, it's fairly easy to predict that the biggest upside
> potential is found in the stocks that are beaten down in price. I'll
> take a $50 million market cap with a $1 billion revenue potential
> over a $200 billion market cap with a $1 billion revenue potential
> any day of the week. I'll also take a $500 million short term revenue
> potential over $1 billion revenue potential a decade out. The goal
> is simple, buy them when they're undervalued and sell them when they're
> overvalued and don't fall in love with an idea.
>
> While there isn't any one technology that will get a definitive nod
> from any administration, bureaucrats are as subject to PR hype as
> the rest of us. The fact that many of them are ideologues that have
> never worked for companies that had to produce something and make
> a profit in the process can complicate the issue. When you add a
> presumption that resources will be as available in the future as
> they have been in the past, you can get some pretty unreasonable
> policy initiatives (think fuel cells and ethanol). I also can't discount
> the importance of having an ear in high places, although I can think
> of any number of places where the ear listened politely and still
> said no.
A123's major position, from what I can tell is using "nano" phosphate, although, Phostech's LFPO is sub-micron in size as well. Also, A123 dopes their LFPO with different metals up to ~1%
to increase the conductivity, which is a major part of the patent dispute.
On Oct 28 01:27 AM Advill wrote:
> My point is THERE ARE NOT DIFFERENCES BETWEEN AONE product and others
> LIFO batts in the market, they will have the same costs problems,
> the same charge problems and the rest of chemistry problems.... PLUS
> patents problems.
> Well time will come to verify this suppositions.
>
> Rgds.
>
> On Oct 27 03:17 PM John Petersen wrote:
MRTTF, while translating SAFT's financial statements is a major pain because everything is stated in Euros, it trades at 3.8x book value, 1.1x sales, and 14.6x net income.
Not really.
The ALTI battery can charge and discharge at the same very high rate. AES is using the ALTI battery for grid Frequency Regulation (they have shown charts of it in use for 4 continuous hours, but that's not a limit) because FR is a "net zero energy" service -- i.e. typically storing energy from one or more minutes and re-delivering it several minutes later. This *requires* a battery that can charge just as fast as it can discharge -- kind of like a shock absorber. Flywheels can behave this way also, although they are more expensive in initial price per MWh.
The A123 battery would be very thermodynamically challenged to be repeatedly charged at the same rate that it can be discharged. So AES has positioned the A123 battery for a different grid service called "spinning reserve" -- this is why the A123 battery is called a "Hybrid APU". When tied to a normal thermal generator, the A123 battery allows the utility to run its generator at a higher capacity because the A123 battery is sitting there (doing nothing most of the time) but available to provide the "reserve capacity" that most generators are require to have. When a "spinning reserve" event occurs (about 50 times per year) the A123 battery discharges smoothly over 15 minutes, after which it can be re-charged at a *slower* rate for use at some other time -- the slow re-charge would preserve the life of the A123 battery.
"Our products provide standby reserve capacity, by delivering power quickly in order to offset supply shortages caused by generator or transmission outages, and frequency regulation, by regulating the minute-to-minute frequency fluctuations in the grid that are caused by changes in supply and demand. The first of the AES systems, a two megawatt system housed in a 53-foot trailer, is installed at an AES facility, and we have shipped additional units for AES, totaling 16 megawatts."
So it certainly appears that A123 and Altair are competing head-to-head for the same customers and A123 has the lead in shipments by a pretty wide margin.
AES has (so far) consistently shown the A123 battery doing standby reserve (i.e. spinning reserve) in presentations and technical documents (apparently including that 16MW) and the ALTI battery as a frequency regulation device.
Reserve capacity might be called upon to perform frequency regulation for a short duration because of a supply/demand mismatch (which shows up as a frequency error), but that is missing the point. A device scheduled for FR is typically paid noticeably more than a reserve device per MWh.
So technically the A123 system can do limited FR, but would not be getting paid for that hour after hour. There is nothing wrong with getting capacity payments, but it doesn't pay as much. That "fine distinction" affects how much you can get paid.
Never take what you see @ a trade show encased in plexiglas or what you read on a PR release as anything more than "hype" until you actually see a report from a reputable independent lab or an actual real world study.
Buyer beware and the false prophets abound once again!
Thank you for the information as a investor in VLNC for years and knowing a little what they are doing, is extremely useful another angle approach, it´s very interesting the information that you provide to us.
Kind Regrds.
On Oct 28 11:57 AM MRTTF wrote:
> I will try to comment, although I might be wrong. There is very little
> difference in A123 LFPO and Saft. Both are of higher quality than
> Valence, from my understanding. Saft has none of the patent issues
> that A123 has. They license their LFPO technology from Phostech Lithium/Hydro
> Quebec (who shares the patent rights with UT; here is a link to others:
> www.phostechlithium.co...). I would put my
> money on Saft, they have the muscle and the experience from their
> military and aerospace markets to meet a number of requirements desirable
> to the automotive market.
>
> A123's major position, from what I can tell is using "nano" phosphate,
> although, Phostech's LFPO is sub-micron in size as well. Also, A123
> dopes their LFPO with different metals up to ~1%
> to increase the conductivity, which is a major part of the patent
> dispute.
tireman63, I'm with you 100% on the time-to-profitability issues. I still buy green bananas, but I don't want to start from scratch and clear a new plantation from the jungle. As a result, I generally use a very high discount factor for markets that are subject to substantial uncertainty and won't be profitable for another decade. The investor in me is far more interested in markets that will experience outsized growth and profitability over the next three to five years.
Exactly.
Deja vu though, as I noted this same issue back on April 2 in your piece on cleantech that getting "around the 'single benefit' cost comparison in the Sandia chart" is a key pursuit. One snark point for me. :-)
However, the FR market has a very public payment system in several ISO markets, and a manager at the PJM stated publicly that the Altair battery was receiving $850 per day doing FR -- that's over $300k per year for a system that cost $500k and is expected to last for at least 7 years (probably more). An independent consultant also said then that the system should earn about $350k per year in the PJM and about $450k per year in the NYISO (he apparently was using a several year price avg rather than just the current year). FR prices may stay drooped due to excess supply, so some "grain of salt" may apply here.
Altair said during that same public forum that their price had now come down by a quarter from $2/Wh to $1.50/Wh. On top of all this, the recovery act grants may pay for half the cost of "demo" projects if approved!
Back to A123: with the current fall-off in electricity demand there is piles of surplus capacity, and therefor perhaps not as much desire for a system that only adds more capacity. A123's "niche" markets may be getting "nichier". Multiple value streams may be a requirement for them.
1. I will be able to steal my electricity from my neighbors - since I doubt I will be able to afford it legally - I figure if I rotate a grass colored (white in winter) cord around the neighborhood, the neighbors will not notice a pattern and blame it on the new technology. Great plan for affordable utilities I think [/sarcasm]
2. Other ways to lose power (at least in my neighborhood): birds running into transformers, slight breeze, clouds, a tree falling somewhere in some forest. I live in a good sized 'burb and have lost power more times in the past 5 years here, than my previous 35 years in the boondocks.
On Oct 27 02:59 AM Mayascribe wrote:
> Jerrydd: Surely you are correct.
> But about the number of things "wrong" about my post, I will take
> exception to. First and foremost, I was being a little facetious
> in saying "millions of cars." That's not happening anytime soon.
> Second, when it does happen, coal plants will indeed have to burn
> more coal. I live in PA. Yes I get electricity from the largest nuke
> on the planet; Kimberton. And from that, my electricity rate may
> be much higher than yours, regardless of the fact that the time of
> day is cheaper at night.
>
> Bottom line. Electricity ain't free. I've been following John since
> his first article he wrote here on SA. Plug-in cars are way off in
> the future. And, further, if you live in a condo like I do (I have
> a garage) and don't have a garage, there is going to be all kinds
> of extension cords everywhere out to the parking lot.
>
> Fully electric vehicles are only practical in fleet form; like US
> Postal vehicles. Fully electric vehicles are complete nonsense, and
> I would never invest in one until I get 300 miles of sustained driving
> experience with a five minute recharge. Anything else is highly inconvenient,
> as things stand now and for the forseeable future.
>
> Further, I did not even intimate that EV's would induce a blackout.
> Do you not have thunderstorms where you live? Squirrels running into
> transformers? An occasional car ramming a telephone pole. Do I have
> to think of anymore reasons power could go out?
> jerrydd: You carve up my stuff, and yet ignore the spaghetti trails
> of condo living extension cords out to cars that lay in some kind
> of potential condo internecine neighborhood warfare abyss? You believe
> what you want. Kudos that you live a life where you can say you have
> a vehicle... "Hey dude, can I plug in for a moment?" Just think about
> when millions are as clever as you.
>
> Further, where do you live? Jettson-ville? No way here in Philly
> are parking garages set up for something yet that has not even occurred.
> Plug-in vehicles that have plugs nearby in 30-50 year old garages?
> Don't want to mock in public, not my nature, but WTF are you talking
> about? Where do you live, where you can walk into anywhere and say,
> "Can I get a charge?"
>
> Either you are way ahead of the curve, brilliantly so, or you are
> abusing or with greater nonsense, enhancing the coupon clipping society,
> and getting away with it. Either way, makes no difference, because
> either way, neither way is possible, on a grand scale.
>
> Thanks for the electric bill tip. Invest your knowledge accordingly.
I live in Fla in my home as many do. While true many like you living in apartments can have a problem as old garages, might, it's not that big a deal.
I've been an electrician and it's easy to put in plugs at the parking spots, just a matter of running the wires. And there are tax credits/grants for them to install charging stations at little or no cost.
Most people live in their own homes in the US so not a problem
As Fla is rather new our parking garages have 120vac outlets every 50' or so. Many place in the far north far block heater outlets everywhere already.
Now it's rather novel to plug in so it's not hard to find a plug. And I have a network of libraries, parking garages and 7-11's that I have permission to use. As many housing/ business complexes have golf carts for their use they are use to charging and have a set up for them. Our senior communities/ homes even have separate garages as standard equipment for NEV's, golf carts.
By the time enough EV's, PHEV's are around plugs will be available and many are being installed now in many states like Hawaii, Cal, Oregon getting ready for EV's. A Better Place is putting these in and battery swap stations for the 100k Nissan EV's that have been ordered. Plus other gov programs including one here in Fla.
It's been stalled somewhat because the plug standard has just been finalized by the SAE last month so now the stations can be built, installed. There are a good number of companies that are putting these in paid by the states, feds.
.
While I don't believe in Lithium batteries for EVs and HEV, since lead-acid and NiMH are much cheaper and have a sunset (recycle) value instead of being discarded into landfills, certainly they work in power tools and consumer electronics. Li has been improved, but still there is
<br>no Lithium hybrid,
<br>no Lithium plug-in hybrid, and
<br> no Lithium EV battery pack has lasted more than 50K miles (Tesla included).
<br>Nissan leases the battery for $150/month; that should give you a hint about how high the cost. GM is already singing the weeps about VOLT-hoax costing, because they are using the wrong battery, of course.
Whereas, our NiMH EVs are still running over 100K miles, and the batteries contain ALL the metals needed for new batteries, they recycle 100% and don't require any mining of new metals; Lithium requires a continuous supply of new mined metal, which is unsustainable.
Aone may find a use for their batteries in EVs, but so far, the bulk of their revenue is in power tools, like all the other Lithium makers.
As for Valence, it's been touting its "superior technology" for a long time, but has only managed pitifully small sales, even compared to marginal companies who try to sell Lithium batteries. Valence has become an article of faith, with a circle-jerk of the same old sales pitch about the coming deluge of cash.
Well, as Aone will find out, it's a lot more difficult to make a living off Li batteries than it is to make hoopla about them.
"Lithium-Ion Batteries Could be Too Expensive, MIT Team Says"
industry.bnet.com/auto.../
The only point that you make (which everyone makes) has to do with the cost of the technology (materials & supply) and the lack of mfg. plants on-line that can supply the Lithium-ion market. I won't disagree with that one.
I could spend a great deal of time refuting you point by point - but will spare the readers the trouble wading into it all over again.
It's all very well docimented here and elswhere should you open your mind and read a lot more before you post utter nonsense.
China National Offshore in July invested 5 billion yuan ($732 million) in Tianjin Lishen Battery Joint-Stock Co., a Chinese company that makes lithium batteries for electric vehicles. Lishen said it would use the investment to build 20 battery assembly lines at a new facility in the port city of Tianjin. Lishen has a joint venture with Coda Automotive, a California-based company that is planning to sell an all-electric car powered by Lishen's batteries in California in late 2010.
China National Offshore's foray into battery-powered car technology comes amid similar moves by big Western oil majors like Exxon Mobil Corp. The battery "filling stations" concept for electrified cars seems similar to the business model pursued by Better Place PLC, a Palo Alto, Calif., company.
online.wsj.com/article...
news.alibaba.com/artic...
Li Ion is the technology the chinese are pursuing, even though they would have a monopoly benefit by promoting NiMH. Get over it.
What also caught my attention was the mention of battery swap stations, very Better Place sounding. actually this whole article is pretty similar to my understanding of Better Place's expectation of the future, that is that Big Oil companies (if dependent on reserves outside of their domestic country) are the natural providers for recharge points and swap stations.
Get back to me when EV sales in the U.S. top 100,000 units per year. Washington may not understand the difference between $20,000 and $40,000, but I'll guarantee that budget stressed consumers do.