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John Petersen  

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  • Watching the EV Rose Wilt [View article]
    The article is titled "Deutsche Bank lowers their li-ion battery cost forecasts." That means they are lowering their estimates of what lithium-ion battery costs will be in the future.

    I've gotten quite conservative when it comes to discussing lithium-ion battery prices because they're all over the place and no matter what number I pick somebody always finds a way to disagree.

    About the only battery price numbers I quote with specificity are the values I calculate from A123's SEC filings, which conveniently disclose watt-hours shipped, gross revenue from battery sales, cost of battery sales and unabsorbed manufacturing costs.

    The most wonderful part is they do it every quarter. For their last report the numbers were as follows for the September quarter:

    15,779 watt hours shipped

    $18,965 Revenue from product sales

    That works out to an average of $1,201.90 per kWh.

    $23,755 Cost of product sales
    ($5,200) Unabsorbed manufacturing costs
    $18,555 Unburdened cost of product sales

    That works out to an average of $1,175.90 per kWh.

    ($43,656) Net loss to common stockholders.

    That works out to an average of ($2,766.70) per kWh.

    You're free to point to internet prices for batteries from China if you wish, but those companies are irrelevant to investors who can't buy their stocks. They're also irrelevant to first tier manufacturers who can't buy their products.

    I wish everybody in the battery industry was as forthcoming in their disclosure as A123. There would be a good deal less fog in the air and bombast from trolls like you.

    Given a choice between believing A123's SEC reports and DB's optimistic sell-side forecasts, I have to stick with the SEC reports because they're the ones that are backed up by force of law.
    Jan 13, 2011. 11:41 AM | Likes Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    I was never comfortable with Zenn promoting EESTOR to maintain a silly market capitalization, but EESTOR still intrigues me. I had a chance to ask representatives of Lockheed and Kleiner Perkins about EESTOR a little over a year ago. They were both tight lipped but said that there was more than just smoke. My conclusion was that the EESTOR device might indeed be very cool, but didn't stand a chance of being cheap enough for use outside of aerospace.

    I have no idea whether EESTOR will get to a product or any benefit will flow through to the Zenn stockholders, but I've learned far more from my losers over the years than I have from the winners.
    Jan 13, 2011. 10:54 AM | Likes Like |Link to Comment
  • Plug-in Vehicles and Their Dirty Little Secret [View article]
    I think our mindsets sound pretty close datadave. My biggest nightmare is the 6 billion in emerging economies that are working very hard to earn a small slice of the lifestyle 600 million of us take for granted. If they even get to 10% purchasing power parity then global demand for everything will double and the globe can't double production of everything. That leads me to the conclusion that we need to be Scrooge-like in our consumption of water, food, energy and every commodity known to man. That mindset leaves me in a position where I think we have an ethical duty to use everything for its highest and best use. I also think we need to have a proven ability to recycle something before we begin manufacturing it in mass volumes.

    My biggest problem with plug-in drive is that it's a suboptimal user of batteries, and by transitivity the raw materials that the batteries are made from. Batteries are incredibly valuable devices if you're using them to recapture braking energy in an HEV and immediately return it to the drive-train. All it takes is a 1.5 kWh battery to reduce fuel consumption by 40%. The marginal utility of batteries falls off remarkably when you add a plug. In a Leaf it takes another 22.5 kWh of batteries to save that last 60%. By my math, we'd be far better off with a fleet of 15 HEVs that will save 2,400 gallons of fuel a year than 1 Leaf that will save 400 gallons.

    I'm not afraid of nuclear but I'm also not blase about the need for tight regulation. If I'm a big booster of anything, it's shifting transportation to compressed natural gas, preferably with hybrid drive so that money spent on imports can be spent domestically.

    Ultimately I'm a lawyer who's spent 30 years in the corporate finance trenches and I know what it takes to make a successful equity investment. Things that can happen very quickly can be very good for investors. Things that take a long time to develop can be very bad for investors. While a lot of the vehicle electrification plans may be great businesses by 2020 or 2030, they're not going to be great businesses in 2012 and 2014, which means prices are almost certain to fall from current lofty levels.
    Jan 13, 2011. 09:25 AM | 1 Like Like |Link to Comment
  • Kandi Technologies: An Intelligent Vehicle Electrification Plan [View article]
    It's my understanding that drivers will be charged less for swapping out partially depleted packs. How they'll do that isn't exactly clear but my bet would be a base swap charge of X and a battery depletion charge of Y where X+Y=$6
    Jan 13, 2011. 02:52 AM | Likes Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    I put myself through college working as a cabinetmaker and learned to measure three or four times and cut once. Sometimes the early lessons are the most valuable.
    Jan 13, 2011. 02:15 AM | 1 Like Like |Link to Comment
  • Plug-in Vehicles and Their Dirty Little Secret [View article]
    I usually recoil when readers try to summarize my thoughts but you've actually done a pretty good job. About the only thing I'd add to your list is that there should be a big focus on shifting from gasoline to natural gas as the fuel of choice for HEVs.

    A decade from now things will almost certainly be different, but for now I see far more problems than opportunities in pure electric drive and expect that today's market leaders will not be the leaders when the technology advances to a point where the principal problems have been overcome or at least minimized.
    Jan 13, 2011. 02:11 AM | Likes Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    The big problem with trying to find companies that are approaching the trough is you need to have some pretty solid industry knowledge to be able to test the claims. If you accept their forecasts at face value, A123, Ener1 and Tesla are all on the cusp of greatness. I'm not entirely sure how you can go hunting without a guide, but if anything brilliant springs to mind I'll share it in a future article.
    Jan 13, 2011. 01:20 AM | Likes Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    I gauge working capital adequacy based on both operating costs and planned capital spending. Axion has said they've got plenty of cash for the next year and that certainly seems likely since the boys throw nickels around like manhole covers. In the final analysis, working capital adequacy is something that I view as cash in fist or cash that's available without too much pain.
    Jan 13, 2011. 01:14 AM | Likes Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    I frequently tell readers that while I'll buy green bananas, I have no desire to go carving new plantations out of the jungle. I don't mind waiting till 2012 or 2013 for a happy ending, but an ending that can't come till 2020 or beyond is not what I'd call wise investing. After seven years of work in the storage sector I'm all about timing and when technologies will turn the corner. The choices I made seven years ago are looking pretty smart right now, but if somebody had told me on the front end that it would take eight years I'd have done something else.
    Jan 13, 2011. 12:18 AM | 3 Likes Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    This blog has been a priceless lesson in how to communicate. I get into any number of arguments with readers who want me to focus on what the world will be like in 2020 or 2030, when all I really care about is whether a company will be able to generate enough revenue to support itself in 2012 or 2013. Investing for the long term in companies that have stable or increasing cash flow is wonderful. Investing for the long term in companies that will run out of cash in the short term is just begging for disappointment and losses. At the end of the day I'm all about timing and sustainable businesses.
    Jan 13, 2011. 12:11 AM | 1 Like Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    It will be a long time before we can wrap our arms around any of these technologies and say with clarity that they're commercial. I think Beacon has a huge lead in grid-sized flywheel systems and will finally start creating the basic data that utilities will eventually rely on for their purchasing decisions. I also think it will take years of experience before utilities are ready to make buying decisions and public utility commissions are ready to include storage in rate bases.

    I keep going back to Bill Gates at Techonomy 2010 when he said that "we’ve all been spoiled and deeply confused by the IT model" where Steve Jobs can introduce a product in January and sell millions of units by the end of the year. That's just not going to happen for things like cars and utility systems were it can take a decade of testing in a relatively large number of systems to know whether you the requisite reliability. We know a lot of things about utilities and transportation, but the things we don't know are legion and before any of today's gee-whiz solutions can become commonplace somebody will have to complete the process. It's a long, slow grind.
    Jan 13, 2011. 12:03 AM | Likes Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    I don't generally write about UQM because it's business is focused on motors, generators and power electronics. Since I don't have any hands on experience in that sector I don't have much insight to offer.
    Jan 12, 2011. 11:49 PM | Likes Like |Link to Comment
  • Energy Storage, The Valley of Death and the Elephant Hunters [View article]
    All of the grid-based storage projects are technology demonstration and validation experiments and at the earliest possible stages. In February of last year I wrote on grid based storage opportunities and used a table from Sandia that identified 1.4 million MWh of potential storage demand and $227 billion of potential revenue. What we're seeing now are studies to determine whether solutions are technically feasible. Determinations of financial feasibility won't be made for years.

    This is not a mature market in any sense of the word and would be placed between technology transfer and product launch on the Osawa chart. Beacon is well on its way to assured survival, but large and growing profits are a long way out. It's a good company and at this point survival is the most important thing, but don't expect too much too soon.
    Jan 12, 2011. 11:42 PM | Likes Like |Link to Comment
  • Plug-in Vehicles and Their Dirty Little Secret [View article]
    I posted a new article today on how I make investment decisions.

    seekingalpha.com/artic...

    I have no doubt that the world will be very different in 2020 or 2030 because it has to be. There are six billion people out there working very hard to earn a small slice of the lifestyle 600 million of us take for granted. If they only get to 10% purchasing power parity, global demand for everything doubles and production can't possibly keep pace. The only way we can possibly solve the crushing resource demands we are certain to encounter is to scrupulously conserve everything. I'm not convinced that EVs do that when you consider that it's not just a looming oil shortage, it's a looming everything shortage.

    When it comes to investing, I've spent my career working for small companies that had big plans an inadequate capital to implement them. I know the investor fatigue that sets in as losses mount and stock prices slide. EVs may be quite successful in 2020 or 2030 if somebody comes up with a good enough battery technology. They won't be successful, however, in 2012 or 2013 which is when the market is expecting results.
    Jan 12, 2011. 05:07 PM | Likes Like |Link to Comment
  • Plug-in Vehicles and Their Dirty Little Secret [View article]
    573 units a year is not a sustainable business. I wish you the best of luck with your investment but am already on record suggesting Tesla as a wonderful short.
    Jan 12, 2011. 04:09 PM | Likes Like |Link to Comment
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