Lithium Ion Batteries and GEVs: False Gods for the New Millennium 144 comments
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Last Tuesday a reader sent me a copy of "Ending the ICE Age," a new industry overview from Bank of America Merrill Lynch analyst Steven Milunovich on the future of plug-in vehicles, which the newly organized Electrification Coalition has christened grid enabled vehicles, or GEVs. After spending several hours studying the report I concluded that Mr. Milunovich has found the true religion of the new millennium while I'm still an unwashed pagan, or worse yet a heretic.
The grim reality is that when you look at American energy policy as a faith-based initiative, a new religion with its own rigid doctrine, dogma and ritual, it begins to make sense. It explains why our Secretary of Energy feels comfortable with a public comment that he's agnostic about natural gas. It also explains why the coastal waters of California and Florida together with huge swaths of Alaska have been forever consecrated as holy ground. It even explains why climatologists, eco-clerics and the fanatic faithful feel justified suppressing facts and ostracizing skeptics that call their world-view into question.
It's a 21st century version of the Spanish Inquisition and I have a front row seat. What fun!
The Milunovich report is the third bullish analysis of GEVs that I've reviewed since the beginning of October. The other two came from Credit Suisse and HSBC. All three reports wax poetic on the fuel savings and CO2 reduction potential of GEVs, all three assume that battery pack costs will fall from current levels of roughly $1,200 per kWh to something on the order of $500 per kWh over the next five to ten years, and all three warn that the GEV industry will not bear fruit unless lithium-ion battery developers can deliver on their promises to make cheap, powerful, durable and safe products. The fundamental problem with all three reports is they don't ask whether the premise of GEVs is reality, or blue smoke and mirrors. The only way to answer that question is with a spreadsheet that presents a side-by-side comparison of the alternatives. I'll try to keep it simple.
Reality vs. Blue Smoke and Mirrors
The best information I've been able to lay my hands on indicates that the capital cost of a new lithium ion battery plant is on the order of $1,000 per kWh of annual capacity. The following table provides a simplified analysis of the economic impact of a hypothetical $500 million plant. It provides a baseline column for conventional internal combustion vehicles, together with additional columns that allocate 100% of plant capacity to battery packs for Leaf class BEVs, Volt class PHEVs and Prius class HEVs. To minimize controversy, I've assumed that the batteries will cost $500 per kWh; every vehicle will travel 12,000 miles per year; every GEV will get 4 miles of electric-only range for each kWh of charge; and all GEVs will use electricity from utilities that emit the national average of 585 grams of C02 per kWh.
| Economic Impact of $500 Million Lithium Ion Battery Plant | |||||||
| Production Capacity 500,000 kWh Per Year | |||||||
| ICE | BEV | PHEV | HEV | ||||
| Battery Pack Requirement | 24 kWh | 16 kWh | 1.3 kWh | ||||
| Vehicles enabled per year | 20,833 | 31,250 | 384,615 | ||||
| Vehicle cost without batteries | $20,000 | $19,500 | $21,600 | $21,800 | |||
| Battery Cost at $500 per kWh | $12,000 | $8,000 | $650 | ||||
| Total vehicle sales price | $20,000 | $31,500 | $29,600 | $22,450 | |||
| Annual Gasoline Use (gallons) | 400 | 0 | 0 | 240 | |||
| Annual Electricity Use (kWh) | 3,000 | 3,000 | |||||
| Annual CO2 Emissions (metric tons) | 3.7 | 1.8 | 1.8 | 2.2 | |||
| Annual economic impact | |||||||
| Battery sales (000s) | $250,000 | $250,000 | $250,000 | ||||
| Non-battery vehicle sales (000s) | $406,250 | $675,000 | $8,384,615 | ||||
| Tax credits to purchasers | -$156,250 | -$234,375 | |||||
| Net economic impact | $500,000 | $690,625 | $8,634,615 | ||||
| Annual Gasoline Savings (000s) | 8,333 | 12,500 | 61,538 | ||||
| Annual CO2 Reduction (metric tons) | 40,425 | 60,638 | 568,062 | ||||
While the HEV values in the table are very attractive in the context of a gasoline fueled car, they get downright gorgeous if you take the analysis a step further and factor in the potential use of CNG as a substitute fuel in conventional HEVs.
Think about it – a CNG fueled HEV uses no imported oil and its carbon footprint is lower than a BEV that uses electricity from an average utility. The only significant drawback is an underdeveloped retail CNG distribution system but that impediment is relatively easy to solve since America's natural gas distribution backbone is pervasive, robust and far more modern than the electric grid.
When you calculate gasoline savings and C02 emission reductions per dollar of capital investment, no technology fares better than advanced lead-carbon batteries for start-stop micro-hybrids. To put things in perspective, a $500 million investment in plant and equipment for micro-hybrid batteries would permit the production of 7.5 million vehicles per year, generate roughly $1.9 billion in battery sales, slash gasoline consumption by 180 million gallons and reduce C02 emission by 1.7 million metric tons. In other words it is very likely that the $68 million in ARRA battery manufacturing grants that went to lead-carbon battery manufacturers will generate greater gasoline savings and C02 emission reductions than the $1.2 billion in ARRA grants that went to lithium-ion battery companies. This is not a question of faith. The numbers cannot lie and the magnitude of the differences is too big to ignore. If you really want to make a difference, you take the baby steps and harvest the low-hanging fruit first.
Nobody with a spreadsheet and a rudimentary understanding of mathematics can honestly argue that subsidizing batteries for GEVs will hold a votive candle to using the same funds to subsidize batteries for Prius class HEVs. Adding the cost of GEV charging stations to the abysmal economics results in a picture that nobody but the blindly faithful could love. I have no doubt that a variety of GEVs will be introduced over the next couple of years because that's what the new religion demands. For obvious reasons, I expect the phenomenon to be a flash in the pan.
The Hype Cycle
While I was doing my background research for this article, I came across a wonderfully informative graph titled "Hype Cycle of Emerging Technology" that TIAX LLC adapted from a Gartner Group concept and presented at the Plug-in 2008 conference. The graph is particularly useful for investors because in addition to showing how public perceptions of technologies develop over time, it shows how early stage markets for equity securities develop.
While TIAX suggested that PHEVs were approaching their peak visibility level in May 2008, I don't think we'll reach the peak until 2012 at the earliest. By 2015, when significant numbers of GEVs have been sold to consumers who discover to their chagrin that their oh so sexy GEV is little more than a 20 foot power cord connected to an expensive, temperamental and inflexible automotive supermodel that doesn't like heat, cold or hills, and has a nasty habit of taking several hours to recharge and refresh just when you need it most, we should be well into the trough of disillusionment.
I can almost hear the phone conversations now, "I understand that Johnny Jr. needs to see a doctor for that projectile vomiting thing but I just plugged my GEV into the charging station and I won't be able to get to the school for another four hours. Could you do your best to keep him comfortable, give him a book or maybe an aspirin and tell him that daddy will be there soon?"
I'm a big fan of hard-core economics. I have no fundamental problem with Government subsidies to manufacturers that support critical infrastructure and have a reasonable chance of accomplishing their stated goals. It's an entirely different matter when taxpayer money is used to subsidize luxury consumption. New factories make the economy richer if the fundamental business premise is sound. Eco-bling subsidies to the new faithful have no justification in sound public policy. We deserve better.
The supermodels of the energy storage sector including A123 Systems (AONE), Ener1 (HEV) and Valence Technologies (VLNC) are well up the hype cycle curve and approaching the Peak of Inflated Expectations. In contrast the stalwarts of the battery business including Exide Technologies (XIDE) and Johnson Controls (JCI), together with new technology entrants like Maxwell Technologies (MXWL) and Axion Power International (AXPW.OB) that are developing disruptive enhancements to established battery technologies, are just approaching their technology trigger point. As stop-start and mild hybrid technologies become standard equipment on internal combustion engines over the next few years, I believe these overlooked low-priced companies with sustainable business models that work in the real world of pagans and heretics will sparkle.
DISCLOSURE: Author is a former director and executive officer of Axion Power International and holds a large long position in its stock. He also holds a small long position in Exide Technologies.
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I believe it was Winston Churchill who said: "America can always be counted on to do the right thing, after it has exhausted all other possibilities."
We'll throw billions in taxpayer subsidies toward electric vehicles only to turn around and realize they aren't really what we want.
nrgrat, reality is that the batteries we're developing are critical in the quest for energy independence, but they're a far more constrained resource than oil and have to be used very wisely. The first 1.3 kWh of batteries in an HEV makes a tremendous contribution. Everything over 1.3 kWh is ultimately a waste of battery capacity and a waste of oil.
Saying it's been tried before and didn't work is a poor excuse when the facts have changed substantially. A decade ago we didn't have shale gas reserves and oil was $25 a barrel. As I recall GM tried the EV1 at about the same time and then scrapped the program because they decided EVs wouldn't work.
We need an all encompassing policy that takes progress wherever we can find it and maximizes the economic benefits at each step. We don't have that today.
This should stir a hornet's nest & be a very entertaining comment section.
My response would be - no problem, you can have your wish tomorrow but you can only have 3 out of the 4 promises granted. Pick 3 and let us know ?
Here's a well written article some of you might be interested in:
www.businessweek.com/t...
John, you also need to be fair to Sec. Chu. It is not his job to enable the next economically viable technology, but rather to try to peer a couple of decades into the future. You argue eloquently why GEVs make absolutely no sense now, and it is hard to find any fault with your numbers. I view the billions spent more as casting a wide net with the expectation that 90%+ of the money is wasted. Coordinated government spending rarely yields anything productive in research, but it will attract enough brains to the field so that something good is bound to come out of it, even if not even $1 of the original spending achieves its goal.
But Natural Gas vehicles do work and make sense; there is no problem with making CNG charging stations, they already exist. What I stress is that if you are a "believer" in fuel cells, ask youself, why not CNG? It's here, now, it operates at lower pressure than H2, doesn't require an expensive fuel cell stack, and any car or truck can be converted to CNG. Ironically, natural gas is used to refine gasoline as well as extract high-density oil from tar sands; the natural gas used to refine gasoline would carry a CNG car about as far as the gasoline produced would take an oil-fired car. But the money is in oil, so both EVs and CNG are not pursued. Suprise??
On Nov 29 09:17 AM nrgrat wrote:
> I guess I'm not clear on whether this is an article about what makes
> sense or what is reality. Natural gas makes a whole lot of sense
> for transport, and never more than right now with these huge reserves
> being tapped from Gorgon off of Australia to Forgotonia, Pa. But
> the reality is that the auto majors tried this a decade ago. They
> got killed. They're not going back. Nobody is going to build a U.S.
> network of CNG stations for Toyota. I agree with everything you're
> saying, except the 'only significant drawback' part about the lack
> of stations. You are discounting some pretty recent pain. Nobody
> is going to invest that kind of money in technology that everyone
> describes as a bridge to battery technology. Sorry, it's battery
> or bust. Everything else is smoke and mirrors.
Again, please do your homework. Here are a few items you may wish to look at:
green.autoblog.com/200.../
Both Lead and NiMH are far less on the Energy Density curve than Lithium and have been largely replaced by major OEM's looking for high power, longer lasting, and lighter weight alternatives.
The only category Lead or NiMH can compete in is Price, and NiMH is not much of a bargain in that category compared to advanced Lithium-ion batteries.
Lithium is NOT a "one way resource" despite your mindset.
Energy policy? What energy policy? We get "Cap and Trade". That's an environmental policy. What good does it do to have a Department of Energy for anyway? We need a practical way to get to work.
We don't really have an energy policy because you can't get elected when you tell the people that they can't drive their monster SUVs, with 4 movie theaters in the back, at 75 miles per hour to the ever more distant suburbs every day. Nobody wants to hear that.
The government and GM told us that we could continue to drive these SUVs to work and back. All we had to do was to put this Ethanol substance in the gas tank, and we don't need that imported oil. We all know how that one worked out.
Now we are talking about electric vehicles - again. We have to look under the hood of high flying initiatives to make sure that they aren't driven by a squirrel in an exercise cage.
Thank you once again for stimulating thought and discussion.
As far as BEVs and PHEVs go there are a lot of unknowns that will most likely take years to sort out. However, if those who bought (or converted their own) BEVs/PHEVs had their own solar panels or wind turbines to recharge there would be a huge burden taken off of the grid. If we also built a large number of fission nuclear plants in a hurry the burden could be lifted from fossil fuels burning for electricity production. Nuclear plants have their own recycling problems but if the attitude and funding were in place to begin on finding profitable ways to recycle nuclear waste, that fear could be eliminated.
But the thing that bothers me the most is the lack of comment from the PbC battery companies. If I had that technology and it really worked and there were no problems with mass production and PbC was economically competitive with NiMh/LiFePO4/etc, I would be shouting from the rooftops and getting them on the market ASAP
So ... does PBc work? ... Is PbC competitive? Are there production issues? .... If not, then why no shouting?
Tom
GroovyGeek, 20% of new car registrations in Italy are now NG powered. It's an entirely new but vastly powerful phenomenon. My real hope is that we see a surge in HEVs while GEV technology matures and by the time we get to a point where HEV is standard equipment the GEVs will be ready to take us to the next level. For me it's just one sensible baby step at a time instead of a giant leap where there's a grave risk of breaking something.
Dialectical, the nice thing about this analysis is it doesn't focus on cost at the consumer level at all. It takes an economic resource, a battery factory, and looks at the alternative ways you can use the batteries it produces. In a macro economic context, which is the only sound basis for government policy, the GEV options only achieve a fraction of the benefit offered by the HEV option in terms of (a) total economic activity, (b) gasoline savings, and (c) C02 reductions. Moreover the differences are not small, they're a full order of magnitude. It's always critical to question your assumptions and in this case the fundamental assumptions underlying GEVs appear to be false. I think it's time to hit the reset button.
EVNow, regardless of what the real price of oil is the highest and best use of batteries is to use 1.3 kWh each to get to a 40% savings in as many cars as possible. Any other choice effectively wastes batteries, wastes gasoline and increases pollution. There is a fundamental logical fallacy in the push for GEVs and the numbers prove it.
Don, annual sales of lithium ion batteries are on the order of $7 billion. The only outfit in the world with any ability to recycle lithium batteries is Toxco and their capacity is very limited. Moreover, the recycling allocations were the only ARRA battery grant category that went unfilled (e.g. there were no takers for the free money). For now at least, lithium batteries are a one-way resource. If and when recycling technology is fully developed and infrastructure is built that may change, but there is a big difference between what is and what may be.
But John again for reason I don´t know discussion is related to Lithium versus Lead, there are options in the same stage of development (because there is no useful product from Axion yet), Ballard, Maxwell and others have fuel cells that are at least as efficient as the best battery and many car companies are betting their future on them more than batteries.
On top of that it seems that batteries (as they are now) are facing insurmountable problems in charging rate, disposal and recycling, weight and cost, not even AONE is going to make it, and finally there are other runners as GE with a sodium batt that can be Black Swan (a fashionable word this days) of this market.
Hope to see soon a product from Axion in the market.
Rgds
The forest we need to look at with respect to GEVs is technology agnostic and while substituting chemistry in our hypothetical battery manufacturing plant would change the cost numbers it wouldn't have any impact on the relative macro economic benefits of BEVs, PHEVs and HEVs. The only configuration that makes optimal use of the batteries is a Prius class HEV. Everything with a plug is grossly counterproductive because it wastes batteries, wastes gasoline and increases pollution. Since NiMH and lead-acid battery producers are not out there beating the drum for GEVs, using them as an example would have been unfair.
Ballard is in the fuel cell business and years from a commercial product. Maxwell makes supercapacitors that they hope to use in conjunction with lead-acid batteries for the stop-start market. The car companies are not yet betting their futures on anything. They're testing the solutions and each of them will make a decision based on their own product development plans.
The GE battery is being built for hybrid locomotives and while there is talk about potential use in vehicles, that does not seem to be a big priority for them at this minute.
The horses are on the track and running, but the clubhouse turn is still a way's off. Time will tell.
The Toxco beta recycling plant in British Columbia at a TECK Cominco site, I believe, was destroyed by a fire two weeks ago. The local fire brigade decided just to let it burn out, because it was believed that lithium was involved and the on site emergency response people told the fire department, correctly if metallic lithium were involved, that water would expand such a fire not contain it.
I wouldn't therefore call the TOXCO " recycling technology acceptable at this time. TOXCO has a lot of explaining to do. I was in Toronto when the story broke, and it was big news there. I don't know if it even played in the US media.
Two years ago I was told by SQM of Chile that the cost of recycling lithium from batteries was far more than the cost of producing new lithium, so that SQM did not then wish to be in that business as it was not economical.
So, where is this recyclability of lithium meme coming from?
Jack Lifton
On Nov 29 02:50 PM John Petersen wrote:
> Don, I'm waiting to see what happens with the rumored Tesla IPO.
> Since it's pretty hard to convince me that cars with plugs are not
> wasters of batteries, wasters of gasoline and profligate polluters,
> I don't figure I'll have much good to say, but I'll probably try
> to keep my opinions to myself.
>
> GroovyGeek, 20% of new car registrations in Italy are now NG powered.
> It's an entirely new but vastly powerful phenomenon. My real hope
> is that we see a surge in HEVs while GEV technology matures and by
> the time we get to a point where HEV is standard equipment the GEVs
> will be ready to take us to the next level. For me it's just one
> sensible baby step at a time instead of a giant leap where there's
> a grave risk of breaking something.
>
> Dialectical, the nice thing about this analysis is it doesn't focus
> on cost at the consumer level at all. It takes an economic resource,
> a battery factory, and looks at the alternative ways you can use
> the batteries it produces. In a macro economic context, which is
> the only sound basis for government policy, the GEV options only
> achieve a fraction of the benefit offered by the HEV option in terms
> of (a) total economic activity, (b) gasoline savings, and (c) C02
> reductions. Moreover the differences are not small, they're a full
> order of magnitude. It's always critical to question your assumptions
> and in this case the fundamental assumptions underlying GEVs appear
> to be false. I think it's time to hit the reset button.
>
> EVNow, regardless of what the real price of oil is the highest and
> best use of batteries is to use 1.3 kWh each to get to a 40% savings
> in as many cars as possible. Any other choice effectively wastes
> batteries, wastes gasoline and increases pollution. There is a fundamental
> logical fallacy in the push for GEVs and the numbers prove it.<br/>
>
> Don, annual sales of lithium ion batteries are on the order of $7
> billion. The only outfit in the world with any ability to recycle
> lithium batteries is Toxco and their capacity is very limited. Moreover,
> the recycling allocations were the only ARRA battery grant category
> that went unfilled (e.g. there were no takers for the free money).
> For now at least, lithium batteries are a one-way resource. If and
> when recycling technology is fully developed and infrastructure is
> built that may change, but there is a big difference between what
> is and what may be.