Power To The People: Rapid-Discharge Li-ion Batteries

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 |  Includes: LIT, PCRFY, SWK, TROX, TSLA
by: Wilmont Howard

Summary

Li-ion batteries for power applications: hybrid vehicles and portable tools.

Summary of material and battery producers, and OEMs using power batteries.

It's an international industry: many Asian (ex-China) companies are mentioned.

The US is not a production leader in any aspect of Li-ion power batteries.

There are several chemistries associated with Li-ion technology, falling into two usage categories: high energy/long run time and high power/acceleration. My previous Seeking Alpha article discussed the "traditional" Li-ion chemistry, utilizing lithium cobaltate active ingredient, which targets ever-longer periods between charges in portable communication devices, for example. This report focuses on different cathode materials and cell architectures that allow fast charge and discharge, and are thus appropriate for situations requiring energy bursts, such as portable tools or vehicular acceleration. Companies that produce raw materials, battery manufacturers, and end users will be noted in the context of power applications.

First, an explanation: the energy in an individual cell (battery is defined as an array of cells) is a function of its size and active components, while power ratings have a time component - how much energy can be drawn out per unit time, as the discharge rate is increased? Every battery chemistry is governed by ionic diffusion, the speed at which critical ions (such as Li+) move through the electrodes. As the current draw gets greater, ion movement can't keep up, and the energy produced drops at higher discharge rates.

The first Li-ion cathode material suitable for power cells was lithium manganate (aka spinel, after its crystal structure), still the most inexpensive material of its kind. An early spinel producer was Kerr-McGee, now Tronox (NYSE:TROX), but the US market never really developed: most Li-ion material and battery production is in Asia, and Tronox's present output is equivalent to an advanced pilot plant. Tronox is, however, the world's leading producer of electrolytic manganese dioxide, the electron source in non-rechargeable alkaline batteries.

Lithium manganate suffers from a (relatively) short working life and low intrinsic energy relative to lithium cobaltate, with limited OEM acceptance, but its stability/safety is superior. Today's spinel is doped with other metals to enhance longevity, and is typically found in batteries utilized in less expensive hardware. Examples include portable tools, motorbikes (especially in SE Asia), and some electric/hybrid vehicles.

Spinel's main competition comes from lithium iron phosphate/LFP, aka nano-phosphate, as found in batteries from A123 Systems (now part of Wanxiang Group). This is the most stable/safest cathode material in Li-ion batteries (LIBs), and has excellent power characteristics, but only two-thirds the density of spinel (therefore less active ingredient per unit volume), lower voltage (3.3V vs. 3.7V, thus lower energy), and is more expensive. Not unexpectedly, some companies prefer to minimize liability risk by going with the safer chemistry, and coupled with longer working life, is the reason LFP batteries enjoy wider usage than spinel cells. Note that Saphion® batteries, from Valence Technology (OTCPK:VLNCQ), utilize an LFP derivative, but other architectural cell features keep them out of the power classification.

The potential for high volume Li-ion production definitely comes from hybrid electric vehicles (HEVs), where the batteries are used for power assistance during acceleration and warm-up. Liability concerns in the auto industry dictate that LFP and spinel cells are more widely used than other battery cathodes, although Toyota's (NYSE:TM) Prius contains nickel metal hydride batteries that contain no solvent and therefore have a miniscule chance of catching fire or exploding. The following table identifies HEV producers, the Li-ion chemistry powering the cars, and the battery sources. Note that almost all the batteries are produced abroad, although there is considerable HEV assembly in the US.

Automotive Manufacturer

Li-ion Chemistry

Battery Supplier

BMW (OTCPK:BAMXY)

Spinel

E-One Moli Energy

GM (NYSE:GM), Renault

Spinel

LG Chem

Subaru, Nissan (OTCPK:NSANY)

Spinel

Automotive Energy Supply[5]

Mitsubishi

Spinel

Lithium Energy Japan

Rolls Royce (OTCPK:RYCEY), Jaguar[1], Land Rover[1]

LFP

Axeon

BAE Systems (OTCPK:BAESY), Daimler (OTCPK:DDAIF)

Nano-phosphate

A123 Systems (OTC:AONEQ)

Honda[3] (NYSE:HMC)

Nickel-cobalt-manganese[4]

GS Yuasa (OTC:GYUAF)

Volkswagen (OTCQX:VLKAY), Audi

Nickel-cobalt-manganese[4]

Sanyo (OTC:SANYY)

Ford (NYSE:F), Daimler (OTCPK:DDAIY)

Nickel-cobalt-manganese[4]

Johnson Controls (NYSE:JCI)

Tesla (NASDAQ:TSLA) - high power EV

Nickel-cobalt-aluminum[4]

Panasonic (OTCPK:PCRFY)

Phoenix Motorcars, Lightning Car[2] - EVs with high power

Lithium titanate (anode)

AltairNano (OTC:ALTI)

Click to enlarge

[1] Owned by Tata Motors (NYSE:TTM); [2] Production starting in late 2014; [3] Highest rate of battery problems among HEVs; [4] NCM and NCA - not optimum chemistries for acceleration; [5] JV between Nissan and NEC (OTC:NIPNF)

A quick technical note: nickel-based cathodes (NCM, NCA) provide greater energy than the other materials, but falter when subjected to rapid discharge, resulting in batteries delivering a longer driving range at the expense of acceleration. Tesla gets around this limitation by using several thousand small cells, which are much more nimble and less prone to heat-shortened lives than their briefcase-sized brethren in HEVs. Lithium titanate has a spinel structure and is capable of speedy charge and discharge, but has very low energy output, thus their EVs have a limited range unless the car is overloaded with batteries.

Power tools are in a smaller (monetary) market, and are available in several performance ratings, with 8V to 36V battery packs. Knowledgeable DIYers and professionals choose the larger units to maximize run time and job capability; small packs wimp out far too quickly. Note that a 28V spinel battery provides almost identical energy to a 36V LFP pack (about 84 watt-hrs) but will be lighter and less expensive due to fewer cells. Stanley (NYSE:SWK) is perhaps the best-known manufacturer in this genre, and their Black & Decker, Porter-Cable, and DeWalt portable tools run on A123's LFP packs. Spinel cells from E-One Moli Energy (Canadian-born but trades on the Taiwan exchange) are found in Milwaukee Tools (owned by Hong Kong-based Techtronic Industries - TTNDY), and Ridgid® Power Tools, a business of Emerson (NYSE:EMR) but manufactured by a TTNDY subsidiary, targeting professional users. Makita utilizes Panasonic's LFP batteries, Bosch's LFP cells are manufactured in China, and Ryobi is another TTNDY subsidiary.

Tesla is the only OEM truly dependent on Li-ion power, and Elon Musk's belief in the success of this technology - the billion-dollar gigafactory - is well publicized. Any of the long-established battery manufacturing companies hedge their bets by producing cells of several chemistries, and major OEMs will use different cell types in their products. For the investor in Li-ion, only a handful of companies in the arena are US-based, although many larger international firms are available for investment through ADRs or on NASDAQ (symbols given in the text). Chinese Li-ion producers and users have been purposely omitted: lack of regulatory enforcement make investing in China unsuitable for all but the strongest of risk-takers, and seemingly stable companies have been known to vanish overnight.

The takeaway for Li-ion investors is that there is no pure play short of Tesla, although there is an ETF - Global X Lithium (NYSEARCA:LIT) - that touches the entire industry, from mines to minivan hybrids. For the more adventuresome, putting money in start-ups can have big rewards, but due diligence is mandatory - the failure rate among fledgling Li-ion companies boasting of a great breakthrough in performance is dizzyingly high. A tip from personal experience: make sure the cell chemistry matches the specifications of the targeted market niche, and isn't intended for several battery applications - one size definitely does not fit all.

Note on the author: W F "Rick" Howard has over 23 years of experience in the lithium-ion industry, from composition patents to production of materials and batteries.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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