John Petersen

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

I'm with you Battman; confident that China won't give preference to a billion or so local consumers when America has 300 million people who want stuff too. I am, however, hedging my bets by learning how to say "Welcome to WalMart" in Mandarin.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

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thprice, the Electrification Coalition's answer would be higher gas tax rates. From page 133 of the Roadmap:

"The primary challenge that GEVs will need to overcome if they are to penetrate the market significantly and not be relegated to a niche market is their high upfront cost, much of which is attributable to the cost of the battery. This challenge is exacerbated by relatively low gasoline prices in the United States. The average gasoline tax in the United States is 47 cents per gallon—18.4 cents of which is a nationwide federal tax. Fuel taxes in many other developed countries are significantly higher. In the United Kingdom, for example, the rate is equivalent to $3.28 per gallon, almost 20 times as large as in the United States. Because the price of gasoline is much higher in most other developed countries, GEVs are much more cost competitive as compared to traditional IC engine powered vehicles. In most other developed countries, GEVs will have a lower total cost of ownership than IC engine powered vehicles almost from the moment they hit the market.

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A higher, equitable, and sustained gas tax is arguably the most transparent and direct policy path to assist GEV market penetration, which would under a range of scenarios provide benefits to taxpayers far in excess of the cost. However, the substantial likelihood of a rapid repeal of such taxes in the early years after enactment for political reasons, as well as the political difficulties of enacting a gas tax increase at a level that would have a dramatic impact, argue for a GEV deployment plan that assumes gas taxes at the current level."

Don, when I first started writing Axion's disclosure documents I wanted to focus on the applied nanotechnology aspects of the carbon electrodes but the directors shut it down because nano is such a meaningless term until you get to nanostructured materials, which of course haven't even begun to make it out of the lab.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

nakedjaybird, the mountain railways always went in for the sake of tourists who wanted to get to the top without doing the work of getting there under their own power. The system continues to be immensely profitable, which is why we have so many trains to nowhere. I can't speak for other Europeans, but the Swiss don't take kindly to money losing ventures and subsidies are very few and far between.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

MRTTF, like the grateful farmer in a 1960s horse opera I just have to know "who is that masked man?" Please send me an e-mail:

[e-mail]

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

GroovyGeek, rare earth metals are more Jack Lifton's province than mine, but he's been doing a great job of sounding the wake-up call on that sector. There are substantial REM deposits in the US, Canada and other stable places. The only thing standing in the way of re-opening mines like Mountain Pass in California is our old nemesis the NIMBY attitude. Within a couple years one of two things will happen, we'll either become wholly reliant on China for the essential metals in NiMH batteries, permanent magnet motors and permanent magnet wind turbines, or we'll wake up and smell the coffee.

Currently, almost everybody who claims nanotech in the battery business means "milled really fine to maximize surface area." It's one of those meaningless terms that has a huge amount of hype value. Nanostructured materials have existed in the laboratory for the last 20 years or so. In 1992 I did an IPO for a company that came out of the carbon nanotechnology group at Rice University and was using carbon vapor deposition to create diamond films on non-diamond surfaces. The material also had tremendous potential for use in carbon semiconductors. Other nanostructured carbons were going to be the salvation of the battery industry. Seventeen years later Applied Nanotech is still looking for a business after $110 million in accumulated losses.

The object lesson of this fairly lengthy story is that nanostructured materials have tremendous technical potential and can do magical things to optimize battery performance, but taking them from an observable laboratory phenomenon to a product that can be produced in volume by guys in gimme caps is a major feat of high-level industrial engineering. I'm currently 58 and fully expect to see nanostructured products during my lifetime. I'm not holding my breath for affordable nanostructured products.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

Mayascribe, I have to admit that it's almost no fun when the icons of the industry that put out reports that take everything I've been saying for the last 18 months, wrap it in a flag and then say it leads to another conclusion. In the past, war profiteering and snake oil sales were considered shameful conduct. Today, I'm not so sure.

koolsool, there really is a lot of truth to the assertion that GEVs will simply be plugging into a lump of coal. By the time you turn the crank on the numbers, even a pure EV will not take CO2 emissions below 146 grams per mile, as opposed to 336 gpm for straight internal combustion and 201 for a Prius class HEV. For all the gory detail see:

seekingalpha.com/artic...

Folks criticize me for returning over and over to the same old message, but the days of real reporting are gone from the MSM and as long as they're happy to take a press release and put it out under a byline without any fact checking, I'll continue to be a thorn because somebody needs to point out that the emperor has no clothes.

Tripleblack, I've always been a global warming agnostic, but pretty much get to the same place with pure economics. We have 6 billion people who know that there is more than abject poverty and are working very hard for a small piece of the pie. The only way to make room at the table is to waste nothing that could be classified as food, water, energy or other commodities.

Nakedjaybird, the swiss got their electrified rail system by starting with a bunch of privately owned local rail companies that ultimately consolidated into a unified system that works amazingly well. Having loads of cheap hydropower certainly made the process easier. The bad choices where governments try to pick technological winners is a relatively recent phenomenon. The last mega-project that worked well was the space program where the message was "We don't know how to put a man on the moon - but we want you to find a way." Every spending program since then has been fraught with failure and unintended consequences. Good intentions are not enough to ensure good results.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

GhostOfSpec, taking money from one taxpayer or consumer to pay for somebody else's private spending priorities is not sound public policy, it is plunder; slaughter of the sheep for the benefit of the wolves. Using batteries for primary drive power isn't cost effective today and likely won't be cost effective for another 10 to 15 years (at least if you believe the DOEs roadmap for lithium ion battery development). Using the batteries that would be needed to power a single GEV to build ten or twenty times as many pure HEVs without plugs is cost effective today, will remain so forever and can actually make a meaningful contribution to solving the problems today instead of someday. Until batteries are so plentiful that you can make pure HEV technology standard equipment across the board, using batteries for extravagances like electric drive is both wasteful and arrogant beyond words.

Sensible governmental spending priorities must focus first on the low hanging fruit that offer the best return on the money invested. When we get to a point where we can harvest all of the low hanging fruit with ease, we can begin to worry about the more difficult and more expensive fruit that's higher on the tree and a lot less plentiful.

Refusing to take the baby steps because we need to plan for the days when running will be critical is senseless. We can learn many lessons from nature, but the most critical is that all animals must learn to walk first, then learn to run and then worry about perfecting hunting or evasion skills.

Nakedjaybird, what we really need is a government that sets policy level goals and leaves it to private enterprise to figure out how. Anything else creates malinvestment in favored technologies while stifling creativity and innovation in all others. The one thing that is proven beyond doubt is that government choices of "best technologies" are always wrong and the only things that work out right are the things the government does not try to manage.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

Art005, it's probably more like a $17,500 battery before tax credits, or at least that's the price Ener1 has always talked about for the Th!nk City battery. A recent Wired article I found when I did the google search I suggested for Jerry spoke of battery leasing metrics based on gas costs for a 15,000 mile per year driver at $4 gasoline. See:

www.wired.com/autopia/.../

A $10,000 lease amortization over a five year term would work out to about $200 per month. We won't know Nissan's real number till they release it, but I'll bet dollars to donuts that it's closer to $200 than $100.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

Don, you've got a great product and I'm personally convinced that LifeBatt will have all the business you can handle and then some from rational applications that use reasonable amounts of battery capacity to do things that can't be done easier and cheaper with other technologies.

Jerry, I keep explaining that the experience of a do-it-yourself EV aficionado is irrelevant when it comes to mass market products from companies that need to worry about things like safety regulations and product liability lawsuits. The same goes for building a public infrastructure for pay as you go charging stations. The numbers I quoted came from the Electrification Coalition and you may disagree with their assessment but that doesn't change their assessment. You may have been able to get by with convenience store courtesies in the past, but that won't happen in the future.

With respect to the Leaf, the fact that you've missed all the stories about the battery being separate from the car doesn't mean they haven't been printed frequently and at length. For reasons that are very clear to me, Nissan is still being very tight lipped about the battery leas costs. Try a google search of Nissan Leaf Battery Lease and you'll learn all you ever wanted to know about the unvarnished truth.

I didn't bring up the order shortage issue. You did. The exact quote is "Your premise that building EV's, PHEV's will keep hybrids from being built is also wrong. There is no shortage of batteries, the only shortage is battery orders, No? There are over 100 lithium, other battery companies just waiting for orders. Not a shortage to me." I'm delighted to hear that Tesla was able to fill its order book with movie stars, dilettantes and other buyers who have more money than sense and are willing to splash out $100,000 for a play-toy. That doesn't change the fact that GEVs are not and never will be affordable for Joe Lunchbucket.

Mines take a minimum of seven to ten years to engineer, permit, plan, develop and open. If the work isn't already underway to satisfy the needs of 2020, it's too late already and the supply chain will never be filled.

Fran, I think Bulls Eye was referring to reliable domestic supply rather than control over cost and availability, or at least I hope that's what he was doing. What we really need is a national purge of NIMBY thinking that precludes rational action that could be taken to improve the daily lives of everyone.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

pk de cviile, I was originally worried by your entry because way too many people think they can follow the money as an investment philosophy and not end up in the clutches of a Bernie Madoff. But any time there seem to be piles of money for the taking, there will be scoundrels who are happy to wrap snake oil in the flag to get as much as they can.

Art005, I worry a lot about seeming too negative because I believe all energy storage technologies are important and have critical places in our clean energy future. But I recoil in horror when people want to use great technologies for foolish applications and history will show that GEVs were one of the most foolish applications of our age,

Franklin, I love it when battery guys like you and MRTTF can read my musings without finding serious fault with either the facts or the logic. These issues matter to me and I want to be fair and accurate.

Jerrydd, I typically try to ignore you but this time you've carried the distortions a bit too far. So I will clarify a couple of points:

1. Nissan is going to sell the Leaf the same way Mattel sells toys - BATTERIES NOT INCLUDED. It is then going to lease the batteries for a supplemental monthly charge that approximates the cost a user would pay to buy gasoline. Unless they have kick-ass financing terms, they may well lose money on the battery leasing. Their principal perceived market is Europe where gas prices are typically well over $5.

2. The Roadmap talks about two PUBLIC charging stations per GEV that the proponents want included in the utility rate base. It says those public charging stations will cost up to $5,000 each. The cost of a box you can hang on the wall of your garage has no bearing on the cost of running cables to the curb and installing an all-weather electrical device that can stand up to the vandalism, abuse and neglect that all public installations suffer.

3. Everybody wants to argue about the availability of lithium and whether new mines can be developed somewhere in the world. There is no question in my mind that they can. There is also no question in my mind that they have not been. The real issues are all of the other high purity commodities and the cost of special purpose manufacturing equipment. There is a reason that lithium-ion battery factories have capital costs of 1x anticipated sales while lead-acid factories have capital costs of 0.2x anticipated sales.

4. The shortage of orders comes from the inescapable fact that GEVs are basically science fair projects and nobody on the planet has any relevant experience with them. You may think spending $40,000 to finance somebody else's dream is a good idea. I'd rather spend $20,000 to get back and forth from work.

I'm not entirely sure why you bother to read and comment on my articles since our views are diametrically opposed, but I know my life would be more pleasant if you would stop.

Art005, both of my in-laws are PhD chemists and before I shifted to accounting in my third year of college, my core work was in science. I understand that there are immutable laws of nature that limit the number of electrons a given weight of battery material can store and that most battery chemistries are very well developed. That basically means that the best one can hope for is moving a process from 80% of theoretical capacity to 90%, a small incremental gain. If you make electronics smaller they get faster, cheaper and more powerful. If you make batteries smaller, you get less energy storage. That's why I keep pounding on the point that Moore's Law does not apply to chemistry. Many thanks for the slow pitch:-)

LaMarque, I didn't even get into the roadmap's discussion of low fuel tax rates in the U.S. But it really worries me when a public interest group thinks that it's a good idea to increase my 80-year old mother's electric rates so that somebody can have a convenient public charging station for their GEV.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

Jack, after our e-mail exchange yesterday I didn't expect to hear from you until after your presentation on rare earth metals at the hard earth assets conference. Thanks for taking the time out of your schedule to comment on the mineral issues.

User450850, I'm not as concerned about the lithium availability issues in isolation as I am about the economic and performance issues. I keep hearing about "economies of scale" and have to stifle a laugh every time because lithium-ion battery manufacturing is already at a $7 billion scale and the bulk of the battery costs are commodity materials that are not going to decline in price as demand increases. We've all gotten used to the IT business where price falls and performance soars with each new generation. That cannot happen in the battery business because we are dealing with chemistry instead of physics. From time to time I provide a link to an unpublished DOE paper that says price improvements will come from three generations of improvement in chemistry and two generations of improvement in manufacturing technology. The process will take 6 to 7 years and cost about $8 billion if everything goes right and stays on schedule. In my experience, R&D projects take at least twice as long as expected and cost at least twice as much. For complex projects the multiplier is generally closer to three. I can accept the proposition that we will have batteries that approach the USCAR price and performance targets by 2025 or 2030. Anything earlier will require a pretty major miracle.

Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable

I never forget the monetary and emotional costs of the foreign entanglements and conflicts required to keep supply lines open and agree that reducing oil dependence is a top priority. But we can accomplish far more with far less money by encouraging natural gas vehicles and pure hybrids than we'll ever accomplish by creating a white elephant infrastructure for a technology that trades power-plant pollution for tail pipe pollution. Read the roadmap. Then read my articles on how GEVs will sabotage the drive for energy independence and will be plugging into a lump of coal. Sometimes the solutions that seem perfect in the talking lose their luster when you start cranking the numbers.

Battery Investing for Beginners, Part 4

GroovyGeek, the short answer is that we are on the cusp of an entirely new industrial era. The established pure play energy storage companies with years of successful operations are manufacturers of widely used commodity products that have historically traded at rust-belt valuations based on perception. The emerging pure play companies are doing what emerging companies always do in preparation for new markets, they're developing new products and manufacturing technologies and losing a lot of money in the process.

As we turn the corner from the age of IT to the age of cleantech, all things old will be new again. The old line manufacturers that have fallen out of favor over the last 50 years will surge to prominence because of their unique ability to serve a booming global market with proven and cost effective products. The emerging manufacturers will have to prove themselves as young companies always do, but they will serve markets that were more properly though of a science fiction a few short years ago.

Energy storage is not a sector where historical performance has any meaning because completely new markets of unimaginable size are just now coming to prominence. For a deeper background of what was and what will be the following piece from Merrill Lynch strategist Steve Millunovich is priceless:

www.responsible-invest...

Battery Investing for Beginners, Part 3

truthteller, I've been quiet for a couple of weeks while I waited for everybody to post Q-3 results but expect to start back in again soon. One of the areas that I plan to focus on in detail is timelines and probabilities for emerging technologies. One of the more interesting factoids that came up in this round of conference calls is that Enersys is already doing about $30 million a year in grid-based business, which seems to support the idea that cheap beats cool, particularly when the companies that make cheap products also generally have objectively cheap stocks.

How PHEVs and EVs Will Sabotage America's Drive for Energy Independence

fireofenenergy, one of the reasons my articles contain as many links as they do is so that readers who want to understand can refer to the source documents themselves. LiFePO4 is a good battery chemistry but it is not cheap and it is not likely to become cheap unless the industry can successfully take the chemistry through three additional generations of chemistry and two additional generations of manufacturing technology. Under the best of conditions that's a six to eight year process that will cost billions and carries no guarantee of success. In my experience, R&D rarely follows the path people expect and the projects that do succeed take twice as long, cost twice as much and deliver about half of the intended benefit.

I've written on the difference between resource availability and commodity availability. The resources may exist in nature, but the mines and processing facilities do not. They will take decades to develop and cost billions more.

Vehicle electrification like most things economic is subject to the laws of diminishing returns. A Prius class HEV needs a little more than one kWh of battery capacity to eliminate the first 40% of gasoline use. Eliminating the other 60% of gasoline use requires another 15 to 50 kWh of battery capacity depending on what you think an electric driving range would be. To make that decision you can use a rough standard of 4 miles per kWh.

As of today, batteries that can be used in cars are a very limited commodity. The highest and best use of those batteries is the low-hanging fruit of the HEV, not the tree-clearing harvest of a plug-in.