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Mike Holt is a Senior VP, Wealth Management Strategist with The MDE Group, an innovative Wealth Management Firm located in Morristown, NJ that manages over $1 billion for corporate executives and other high net worth individuals located across the US. Mike's diverse background includes auditing... More
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  • Epilogue to TREM '11 -- Rare Earths in the Transportation Sector and the Electrification of Automobiles 27 comments
    Sep 9, 2011 8:37 PM
    The purpose of this article is to research and compile information related to the topic of potential applications for rare earths in the transportation sector, and the outlook for electrification of automobiles.
    It was inspired by the memory of Thomas Jefferson’s reason and imagination, and by the main reading room of the Library of Congress, pictured below.
     LOC Main Reading Room
    The LOC Main Reading Room is encircled by bronze portrait statues paying tribute to great thinkers on various topics. Let’s call them the smartest guys in the room, who were very influential in their fields. This article is intended to serve as a virtual reading room that likewise seeks inspiration from great thinkers, but rather than relying upon statues with plaques known as pendentives, this virtual reading room will draw upon the knowledge of credible experts in fields related to the topic of this article.
    Comments posted to this article should therefore include links or references to primary sources of information, and the comments themselves should consist only of brief descriptions of the source material or its author accompanied by a key quote or passage capturing the essence of the main point(s) deemed to be of greatest interest or importance. If it is believed that personal knowledge or interpretations might be helpful, they should be clearly identified as being your own thoughts or opinions, so that the integrity of information compiled in this virtual reading room is preserved to the greatest extent possible.
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  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » In their book, "Turning Oil into Salt," Gal Luft and Anne Korin write:

     

    "This book argues that the threat oil dependence presents to our national and economic security is not a function of the amount of oil we consume or import. It is a function of oil's status as a strategic commodity. Oil's strategic status stems from its virtual monopoly over fuel for transportation, which underlies the global economy and our entire way of life. Without oil, food cannot travel from farm to plate, mail cannot reach its destination, raw materials cannot reach their factories and children cannot attend their schools. Indeed, without oil, every child is left behind. Oil is the mortar that holds our economy together.

     

    To understand the implications of overdependence on a strategic commodity and what can be done to diminish the destructive status of certain strategic commodities, we can look to history. Years ago, SALT was a strategic commodity, one that determined the course of world affairs and the status of countries on the global stage. Wars were fought over salt, and colonies were formed in remote places where it happened to be found. That was because salt had a virtual monopoly over food preservation. With the advent of canning, electricity, and refrigeration, salt lost its strategic status. We still use and trade salt -- the worldwide average for salt intake per individual is about 10 grams per day -- but we would bet most readers don't know who the world's big salt reserve holders are, and whether or how much salt the United States imports."

     

    "...This is what energy independence means: that it no longer matters who holds the reserves, that oil becomes much less relevant to global affairs, that it becomes just another commodity."

     

    http://amzn.to/n2uf8R
    28 Sep 2011, 09:01 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » Twenty years ago, Daniel Yergin authored the Pullitzer Prize winning book, "The Prize: The Epic Quest for Oil, Money and Power."

     

    (He is also the author of the epic book, "Commanding Heights," which I have referenced in another "Reading Room," since that book examines how countries around the world have experimented with the role of government in the economy.)

     

    Now Daniel Yergin has done it again; he has written a new masterpiece, "The Quest," which essentially picks up where "The Prize" left off. Additional information about this important new work can be found in this link:

     

    http://danielyergin.com///

     

    The introductory paragraphs from Chapter 13, "The Security of Energy" help to put the importance of the issues discussed into better perspective:

     

    "Energy security may seem like an abstract concern--certainly important, yet vague, a little hard to pin down. But disruption and turmoil--and the evident risks--demonstrate both its tangibility and how fundamental it is to modern life. Without oil there is virtually no mobility, and without electricity--there would be no Internet age.

     

    But the dependence on energy systems, and their growing complexity and reach, all underline the nead to understand the risks and requirements of energy security in the twenty-frist century. Increasingly, energy trade traverses national borders. Moreover, energy security is not just about countering the wide variety of threats; it is also about the relations among nations, how they interact with each other, and how energy impacts their overall national security."
    28 Sep 2011, 09:19 AM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    RAND on oil and national security
    http://bit.ly/AFvNHt

     

    My thoughts on oil demand. a reflection of a modern Jevons paradox.

     

    The greater the fuel efficiency of the global parcel of vehicles, the greater the number and variety of buyers of oil, which leads to the rebound in oil price exceeding the savings from fuel efficiency.

     

    This is the treadmill, the more efficient, the more users of oil, the higher the oil price.
    Those which didn’t adapt to higher oil price were broken by it. (GM and Chrysler etc.) and we have Brent at highs despite an Euro economic train wreck.

     

    Or to put it simply as China, India, Brazil, Middle East, Russia etc. are all adding new additional vehicles to the global parcel of cars, the fuel for these cars is extracted from the fuel savings in the OECD vehicle fleet.
    15 Feb 2012, 07:24 AM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    the 2007 Project Better Place White Paper
    http://bit.ly/y1oNKg

     

    listen to the audio link at the following
    http://bit.ly/zfK1I6
    4 Mar 2012, 07:52 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » Thanks renim. As always, I welcome your insights and appreciate the fact that your scientific background allows you to shed additional light on many of the trends and developments that I have chosen to focus upon in my effort to better understand the global macro risks affecting all investors.

     

    Although some investment advisors have told me that they are not capable of thinking at this level, and others have suggested that individual investors should not concern themselves with anything other than bottom-up fundamental analysis of individual companies expected to generate returns within a five-year timeframe, it was this lack of understanding and lack of focus upon the larger, broader issues at the core of the “new market realities” in which we now find ourselves swimming that caused many investors to suffer steep losses during the 2008 market meltdown.

     

    Our reliance upon oil for nearly 100% of our critical transportation needs is one of these larger, broader issues, but it is also a very complicated issue requiring an understanding of not only markets and geopolitics, but also of science and engineering. That is why your contributions are so appreciated. It’s as if the following Xerox commercial was extended to reveal “renim man” arriving on the scene in an electric car to assist the Michelin man in his attempts to keep the world moving despite the threat imposed by a monster wreaking havoc with its tentacles shaped like the hoses of a gasoline pump, while some very conventional thinkers who don’t recognize the danger are trying to convince him that returning to the office to reconcile the accounts receivable records would be just as important.

     

    http://bit.ly/z3di7L

     

    Unfortunately, some people would rather fail conventionally than to succeed unconventionally, so we have our work cut out for us “renim man.” Maybe we can solicit the help of “Jake” to demonstrate the patterns and connections that so many others don’t seem to recognize. After all, March 18 is just around the corner.

     

    http://bit.ly/yN6ccp
    4 Mar 2012, 11:24 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » renim, I had never heard of the Jevons paradox before. Its another example of the frustrating array of hurdles that must be overcome in order to address the many concerns, on multiple fronts, regarding our near 100% reliance upon oil for our vehicle transportation needs. The fact that there are over 800 million vehicles in the world, and global oil consumption is now 85.6 million barrels per day (at $100/barrel that's $8.56 billion dollars of revenue per day and $3.1 trillion dollars per year) any attempt to even put a dent in this enormous market almost seemed futile as it was.

     

    However, the magnitude of these numbers also serves to illustrate the magnitude of the risks associated with relying so heavily upon a single commodity found primarily in politically unstable regions of the world, often in countries whose leaders are openly hostile to the US. But, alternatives must achieve similar economies of scale in order to be profitable within a timeframe that would satisfy the demands of most investors, and that is not likely to be possible without some government involvement.

     

    Unfortunately -- from the perspective of those anxious to witness the successful development of electrified automobiles by an American car company, a number of other developments have caused government involvement of any kind to be extremely unpopular in the US, and the near-term potential for abundant new supplies of natural gas in the US could create an alternative means of reducing our reliance upon foreign oil. As such, I expect the electrification of vehicles to be more popular in countries with less abundant sources of oil and natural gas available to them, or in certain regions where the combustion of fossil fuels presents significant environmental problems, such as California's LA basin. There, even if electrical generation plants were no cleaner than internal combustion engines in automobiles as some argue, it would still make sense to locate the source of emissions outside a highly populated area that is also plagued by an inversion layer that traps the smog created within the basin.

     

    Some individuals such as myself, after having had the opportunity to enjoy the pleasurable driving experience that electric vehicles provide may also represent another source of demand, but collectively there does not appear to be sufficient demand for electrified vehicles within the United States at this time to entice automakers to scale-up the production of electrified vehicles for sales in the US market.

     

    The opportunity to manufacture electrified vehicles for export to other markets is another matter, but due to the need for government involvement to jump start this industry, and the geocentric outlook that still prevails in the US, I suspect that China and possibly Japan and South Korea will emerge as the dominant producers of electrified vehicles, and that by the time nuclear energy plants employing newer safer technologies come on stream, pushing down the cost of electricity in the process, automakers in these Asian countries will have developed such a technological lead that it will be too late for the US to catch up.

     

    This does not spell the end of electrified vehicles. I just don't expect the US to retain the technological lead that it has developed in this area. Oddly, many Americans seem to relish this outcome, but I personally find this to be deeply disappointing.
    4 Mar 2012, 11:50 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » Here is a link to an article and video interview with Daniel Yergin featured in the most recent issue of The McKinsey Quarterly. In this interview, Daniel Yergin expresses his view that

     

    "By 2030, the world will be using a lot more energy than it does today, but the mix will still be dominated by oil, natural gas, and coal.

     

    http://bit.ly/zr7mtR

     

    By the way the energy research consultancy firm, IHS Cambridge Energy Research Associates (IHS CERA) of which Daniel Yergin is the chairman, is hosting its annual IHS CERAweek in Houston, TX as I write this comment. This is the largest event in the energy industry, and features a very impressive roster of speakers who will present to an equally impressive list of over 1,000 attendees.

     

    We are at many crossroads within the energy industry this year, so this year's event is attracting attendees from around the world, who are greeted at the entrance by attendants handing out devices that will translate the presentations into other languages, including Russian and Chinese. As indicated in the agenda for this event (see link below), new sources of natural gas in the US made possible by developments in fracking technology is garnering much attention.

     

    http://bit.ly/AiM32p

     

    In contrast, the panel discussing the potential for electric cars at 5:15 - 6:15 this evening features only two panelists, and will be conducted alongside a number of other optional panel discussions that attendees may choose to attend if they'd rather not be networking and enjoying cocktails at that hour, or perhaps paying attention to the "Super Tuesday" Republican presidential candidate election results as they are taking shape.
    6 Mar 2012, 01:50 PM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    Chinese resource's demand predated 2004, i would place it kicking off more like 2000-2001 as the start of the boom.

     

    energy come 2030,
    http://bit.ly/yd3dmr
    continue these lines for a further 15 years and coal equals oil+gas combined. that may not happen, but its a reasonable starting expectation.

     

    IHS CERAweek is very oil focused, Electric vehicles is not in their understanding,
    At their core, electric vehicles transfer the resourcing of transportation miles from oil companies to electricity utilities.

     

    http://bloom.bg/yic77E
    7 Mar 2012, 08:16 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » After March 18 production of the Chevrolet Volt will be suspended for several weeks in order to work off inventories. Hmmm, there's that 318 number again. Is "Jake" trying to tell us something?

     

    Regardless, the real message is that the sales volume for the Volt is less than expected, despite the fact that it is a revolutionary car that Bob Lutz still insists is a "bases loaded home run."

     

    Technologically, I agree with that assessment, but the problem seems to be that most consumers -- even those philosophically committed to reducing our dependence on oil -- are just not willing to pay the price being asked for this car, even after the $7,500 credit. Yes, the car is a joy to drive, and it may yield fuel savings of about $1,000 per year, but this alone is not enough to justify the higher price tag.

     

    Even to those who understand and appreciate what makes the Volt such a remarkable car, it should still be recognized that the price tag for the Chevrolet Volt is high relative to a similarly equipped, similar size car, and saving 1.5 gallons of gasoline per day is only worth so much. As such, for the Volt to succeed in the market place, its price must be reduced.

     

    Whether that's possible, is likely to depend heavily upon whether the added cost of a Volt is due to the variable cost of the added components, particularly the battery, or to the fixed costs of design and development that must somehow be recouped. If the latter, GM should consider whether a lower price point coupled with higher sales volume would be more effective in recouping those upfront costs.
    7 Mar 2012, 04:57 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » The Chevrolet Volt is a revolutionary new car that many anticipated would be a game changer with tremendous implications for the automobile industry -- and the world. Those involved in its intial design and development poured their hearts and souls into making this the car that it is, and the results of their efforts were spectacular. Eventually, however, the development team that accomplished the equivalent of America's first successful launch of a manned spacecraft in 1961 -- and left me feeling just as proud -- had to turn their project over to those within GM with more experience in the final production and commercialization of automobiles.

     

    One of the tasks left to those more established members of the GM organization was to establish the car's price. For a project of such tremendous significance, this was a very important decision since it could determine the fate of this revolutionary automobile that had so far survived all the organizational "antibodies" within GM that are very resistant to anything other than tiny incremental changes.

     

    According to the following article, GM claimed for a long time that they didn't know what they would charge for the Volt, but said that it would probably depend, of all things, upon the price of gasoline at the time that the car was launched.

     

    http://bit.ly/zo7JM0

     

    In early 2009, best estimates by those anxiously awaiting the Volt's introduction placed the price in the mid to upper 30's, before the $7,500 credit. Finally on July 27th 2010, and two CEOs later, GM announced that the official price of the Chevy Volt would be $41,000 before the $7,500 federal tax credit.

     

    Although the dedicated members of the Volt team had so far executed so many things so well, this singular decision employing what appears to be a "which way is the Kentucy wind blowing?" approach represents perhaps the Volt's single biggest flaw -- other than the choice of GM's trademark cheap plastic material throughout the car's interior, which can obscure the Volt's otherwise high quality because it is so visible, and so closely associated with much inferior automobiles.

     

    The more seasoned veterans of GM may have expected to save a few extra pennies by using these cheap plastic materials rather than the higher quality materials that are used in the best selling automobiles and that GM had earlier noted can have a tremendous impact on buyer's perceptions of a car's quality. However, by scrimping on this final touch they may have instead cost GM hundreds of millions of dollars, and defeated the hopes and dreams of a new generation of employees who somehow thought they could overcome GM's stodgy ways and were destined to "make history."

     

    Despite this setback, and the stereotypical image that GM presents as a result of misguided cost-cutting decisions such as this, it should be noted that Volt owners including myself still assign the highest customer satisfaction rating to the Volt, just edging out the Porsche 911 in a recent poll. This, I believe, is due to the unquashed efforts of a new generation of employees within GM who remain visibly dedicated to their cause, and are obviously capable of achieving all of the great things that too many of us believe Americans are no longer capable of achieving. Cheap plastic and all, the Volt is still a great car, and at a slightly lower price point I would expect it to sell quite well.
    7 Mar 2012, 11:07 PM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    Mike, some comments about risk provisions and how they relate to vehicle electrification and battery lease. i hope you don't them being posted here.

     

    Known knowns: lab performance of batteries & difference between engineered target life (200,000 miles average) and ‘warranted life’ (warranty 100,000 miles – 8 years, with statutory requirement for support for 10 years)

     

    Known , unknowns: Users duty placed on batteries (location, temperature, aggressive / fuel efficient driving styles), allotment and duplication of risk between battery supplier and car manufacturer, historic currency fluctuations.

     

    Unknown unknowns: Tsunami/Nuclear Meltdown/Floods/Very high Yen & Terrorism / War

     

    Back to your post

     

    Is the opportunity to lease the battery dependent upon an automobile being classified as an EV rather than a PHEV?
    No, GM could lease the battery separately, it appears that they use the whole vehicle lease rates to claw back some of advantages that battery lease allows. GM Volt on lease is reasonably competitive to a an equivalent performance Chevolet on lease + fuel cost.

     

    If so, do you know why the battery lease option is only available for EVs, and not PHEVs?
    It’s a marketing, legal and life of product decision. I suspect that the US $7,500 tax credit is not compatible with the concept of the battery being separate to the vehicle. (I.e. the wording is to the effect that the tax credit belongs to vehicle, the vehicle to qualify must have a battery)

     

    Does the added complexity of a PHEV have something to do with this?
    I don’t think so, if anything I suspect the opposite would be true.
    When a vehicle has a tail pipe, the whole system needs to perform the same at 10 years as at beginning of life. GM could lease the battery and control more of the risk.

     

    Back to discussion between PHEV / EREV semantics
    To my mind, the difference between a PHEV and an EREV is only about risk allocation. That an EREV does not require (EPA or any other department) performance guarantee of what comes out the tail pipe. Ie the Vehicle Identify Number (VIN) and the engine number are not matched. This is a conceptual difference and would only apply to someone like a EV having a swappable petrol engine, towing generator or a GM Volt being located in a place like Dubai.
    Ie emissions liability rests with the power station operator, not the car manufacturer.

     

    Due to PHEVs being marketed against other PHEVs and EVs, we will see PHEVs called EREVs. (Ie Toyota calls its plug in Prius as an EREV)

     

    nb Chevy Volt primer
    http://bit.ly/z7IEX4
    16 Jan 2012, 02:59 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » renim, thanks for your response and for sharing your insights. I also appreciate the link to the articles describing the Chevrolet Volt and its development. Shortly after I purchased my Volt, I received a book in the mail from GM which also describes the Volt's development, broken down into chapters covering various aspects of the car, e.g., the dual drive system, the battery, the aerodynamic body style, the interior, etc. However, the articles included in your link seem to cover some topics not covered in the book, or in other sources I've read, so I'll read it with great interest. Thank you, again.
    16 Jan 2012, 06:59 PM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    http://bit.ly/ADrJvJ

     

    Page 21 confirms the pricing of $6,000 / tonne for 99.5% ‘battery grade’ lithium carbonate.
    Nb higher grades of lithium carbonate are available but pricing is more opaque, from memory Galaxy resources is planning to up sell a $12,000 a tonne product, their plant in China should be capable of producing grades of 99.5% (standard battery grade), 99.9% and a 99.99%
    For batteries, the actual impurities matter, so not all 99.5% grades are equal.

     

    Prabhakar Patil the CEO of Compact Power, which is the subsidiary of LG Chem, discusses the GM Volt battery pack and costs in the following link (if it works) http://bit.ly/yT2GpZ
    note page 9, 10 Million cells at 288 cells per car is only 35,000 cars pa. cost is $350-$400 per kWh. Due to volume, own supply, and energy focus (not power) Nissan's cells is likely to be substantially cheaper than these.
    18 Jan 2012, 08:31 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » renim, thank you again for your insights and for sharing the interesting and valuable presentations regarding Galaxy, a major provider of battery grade lithium carbonate for use in lithium ion car batteries. Your second link focusing on the battery packs themselves, including those used in the Chevrolet Volt, complements the first link very well. A familiarity with the past and future trends regarding both technological improvements and cost reductions for batteries used in electrified vehicles is vital to the understanding of past and future trends in electrified vehicles, so your comments and the information you have shared are very welcome here. Based upon your articles and comments elsewhere on Seeking Alpha, I also recognize your expertise in this area, and that is exactly what I hope to feature in this article. Thank you again.
    18 Jan 2012, 09:54 PM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    Mike, I'm not a battery expert, In regard to past and future trends, Panasonic is averaging a 11% linear increment in energy capacity for an 18650 cell. This is different to cost reductions but still useful for forecasts about range improvements.

     

    http://nkbp.jp/xMwohh

     

    The LG chem presentation in the last post was where i got my price points for commodity Li ion, which i then placed in a graph and compared to gasoline.

     

    http://bit.ly/Aa0rgh

     

    The question becomes one of what is an automotive EV battery requirement and how does it differ to commodity li ion cells, Renault/Nissans pricing indicates to me that they have a different perspective than the rest of the industry.

     

    Nissan often states that their 'breakthrough' came in 2003 http://bit.ly/xp4L4X and make some vague comment about using boxes instead of cylinders for battery shape and being happy with their chemistry. What they have demonstrated but don't articulate, is that they are approaching the making of cells/modules/battery packs from an automotive mindset http://bit.ly/AuYvSq
    20 Jan 2012, 10:22 AM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    About Hybrids

     

    Carlos Ghosn (CEO Renault Nissan alliance) famously stated "A hybrid is like a mermaid," "If you want a fish, you get a woman; if you want a woman, you get a fish." Now he says that Nissan is proud of its hybrids that are coming to market, what has changed?

     

    Right sizing and reduction of complexity due to progress of clutch technology. http://nkbp.jp/zmqSJ9

     

    The earlier Japanese hybrids were designs that removed the need for clutching between an electric motor and an combustion engine, Honda’s simple design replaces the flywheel with a electric motor whereas Toyota’s hybrids uses a planetary gearset + 2 electric motors. Both of these are designs to avoid the wear and tear issues of having a clutch.

     

    Now we have Hyundai/Kia http://1.usa.gov/yZbRcI , Nissan http://bit.ly/xfsIOx /Infiniti http://bit.ly/z31zJl , BMW http://bit.ly/A5b7Hl developing/releasing HEV/PHEV with a similar design of simply placing an electric motor between the engine and transmission, with an additional clutch. This is both cheap and simple, it achieves 95% of Toyota’s synergy hybrid system performance for similar cost of an upsized Honda hybrid’s E- motor plus an additional clutch. These cars will come in both HEV and PHEV flavours, the difference being, specifying small but powerful / cells (HEV) or larger energy cells (PHEV). The incremental battery cost is only around $250 per kWh (+mark-ups) if the kW stays the same.

     

    GM Voltec was developed during the transitional period between these 2 design philosophies, its similar to a Toyota hybrid but adds 3 clutches to it. Expensive, its worthy of a Cadillac, but placed in a Chevy. Mostly by subtracting the more expensive parts, GM could end up with similar HEV/PHEV to the Hyundai/Nissan/BMW design.

     

    Its very difficult to profitably compete against Toyota using powersplit (planetary gear sets) HEV technology. But the upcoming technique of merely sandwiching an electric motor between the engine and the transmission, >50% of the benefit at <50% of the additional cost. http://reut.rs/zoP71A

     

    To see a car manufacturer's intention's look at their suppliers
    http://bit.ly/z6Bipl
    Toyota famously doesn't like EVs, but they are going deep in Li ion.
    5 Feb 2012, 07:45 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » The achilles heel of vehicle electrification is battery technology. For more on this topic, readers would be well advised to read the many Seeking Alpha articles written by John Petersen. Here are a few links:

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    Many readers attracted to an article discussing electrification of vehicles will likely be inclined to view their potential popularity with some optimism. As you can see by the title of the last of John Petersen's articles listed above, John will make you think long and hard about the hurdles that must be overcome, and whether they will be overcome within the near future.

     

    It is, perhaps, partly for this reason that each of John's articles typically attract several hundreds of comments. You may find yourself wanting to review those comments in search of the one that reveals some flaw in his arguments. With so many comments, that can be a time-consuming process, so I would urge you to read his articles first and then decide whether to wade into the morass of comments that his articles have spawned.
    13 Feb 2012, 04:04 PM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    JP's - Researchers-prove-the-...
    http://seekingalpha.co...

     

    Draws upon this report,
    http://1.usa.gov/zyGkaz

     

    which states that

     

    ‘Cobalt (Co) is the limiting element for low volume Li-ion chemistries
    Li is the limiting element for high volume Li-ion chemistries (this is our focus)’
    We will assume C6/LiMn2O4moving forward (Chemistry in the Nissan LEAF and Chevy Volt)’
    ……requires ~7%/yr increase in Li production.

     

    And then proceeds to the hypothetical scenario of battery analysis based solely maximizing the value of Lithium,

     

    The analysis of materials required refers back to Wadia http://bit.ly/wBvFLQ who essentially models that there is enough material for ‘Eventually, on the order of 1 billion 40kWh Li-based EV batteries can be built with the currently estimated reserve base of Li.’
    http://bit.ly/y8JBUQ
    Reserves are actually larger and growing due to improved technology and economics of Li extraction, the price of lithium is effectively capped because (as with the similar magnesium), Li is extractable from seawater, although unlike seawater magnesium extraction, Li from seawater will probably never be competitive with land resources.

     

    Li from sea water
    http://bit.ly/xAhJKQ;current_page=

     

    http://bit.ly/ABiqLY

     

    Fundamentally, the issue with treating Li as a material that must be conserved to a greater degree than any of the other constituents in Li Ion batteries is that Li is widely available, clean to extract and bound in price. High resources prices will actually push the market to maximise the utility of other raw materials (oil/coal/iron/alumini... etc) by using as much Li as possible for a given amount of vehicle. This is clearest demonstrated in Renault Battery leases from $95 per month. Which raises the question, why bother with conserving oil when its use is eliminated so cheaply?

     

    My own thought of material battery supply would be that the compound annual growth in materials over the past decade is a decent indicator of a minerals plenty or scarcity. These can derived from the USGS http://www.usgs.gov

     

    My brief analysis for the Compound Annual Growth Rate using a nominal 24kwH LEAF sized battery is attached,
    http://bit.ly/AncxzH
    We can surmise the following

     

    Steel, Aluminium, Manganese are not resource constrained at CAGR of >6%

     

    Phosphate is mildly resource constrained CACGR of about 4%
    Nickel and Copper have a mid level constraint CACGR of 2-3%

     

    Oil is highly constrained at a CAGR of less than 1% (0.9%)

     

    Essentially, the world’s auto fleet will turn electric because of raw materials, oil has peaked, everything else is still increasing in availability.

     

    http://bit.ly/y3Bs51

     

    There is also the nuance that recycling of these batteries is optimally performed by the company that manufactured them, ie a closed market of 1 strong vendor (lock in). Alternatively the Chinese recycle Li ion batteries, they are like any other mineral product. The free market will not allow open competition against manufacturers who can capture far greater value at recycling than general market, let alone that the Chinese are also competing for this as a resource. What do the Chinese recycle from a Li Ion battery? – Li, Al, Cu, Co, Mn & Ni + the casing

     

    http://1.usa.gov/yT7SyB

     

    The challenge for China is ‘It is still necessary to develop an efficient collection system in order to receive the spent LIBs consumed around the world and recycle the spent LIBs.’

     

    Unlike burning oil, Li ion batteries are recyclable, and unlike tailpipe emissions, they are a input commodity to supply China.

     

    3.3kg Li is about 17kg of Li Carbonate which is about $100 worth of lithium and when used in an EV displaces the vehicle’s lifetime entire gasoline/diesel demand. The optimal use of lithium is not in small batteries (as if it resource constrained), but in large batteries, the principle of diminishing returns may exist but that doesn’t stop the reality that profit maximization is achieved at full battery EV.

     

    Both Oil (ICE cars) and ‘battery included’ (common EVs) will have to compete with the economics of battery lease, a formidable competitor.

     

    Initial teardown comparison of EV and equivalent combustion engine car.
    http://bit.ly/wY7aF4
    nb predicated large copper usage did not materialise in real world EVs.
    5 Mar 2012, 08:05 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » renim, you've provided a lot of information. Let me acknowledge your comments in a piecemeal fashion.

     

    In the first link, you point our attention to the fact that Seeking Alpha author John Petersen argues that electrification of automobiles beyond the addition of a very small battery for a mild hybrid vehicle don't make sense because each additional increment in battery capacity achieves a lower reduction in carbon dioxide emissions and in gasoline displacement.

     

    Then, in the second link, you share with us the full report from which John Petersen derived his data, and this second link indicates that the chief component of the lithium batteries used in today's hybrid- and full-electric vehicles is lithium, and lithium is not expected to be resource constrained, even under aggressive assumptions regarding the deployment of electrified vehicles, given the reserve and production quantities known to exist today.

     

    This report then summarizes that the issue of how much lithium is required in order to achieve an incremental reduction in both carbon dioxide emissions and gasoline consumption is intended to address a hypothetical scenario in which the supply of lithium was to become a concern, even though that is not expected to be the case.

     

    It follows then readers should attach little signfiicance to the diminishing marginal utility argument included in this report, which John Petersen has seized upon to support his view that electrification of vehicles beyond mild hybridization, or beyond that required to implement the "idle start-stop" technology such as that employed by a company in which he maintains a substantial investment, does not make economic sense. In fact, if lithium is so abundant, and its use in larger batteries will enable vehicles to achieve much larger reductions in gasoline consumption and carbond dioxide emissions, why wouldn't it make sense to deploy lithium to achieve these positive ends?

     

    If I understand correctly, you have essentially answered this question in other comments that you have made elsewhere by stating that the proper way to frame the economics of this marginal utility issue is to recognize that the bulk of a battery's cost is fixed, so the modest additional cost of lithium to provide that battery with additional capacity actually serves to increase, not decrease, the marginal utility to be derived from the incremental costs incurred -- up to a point defined by other constraints such as the size of the vehicle in which the battery is to be fitted. In other words, for only a modest incremental cost, a battery can be relied upon to fully power a vehicle over a range sufficient to satisfy the daily commuting needs for most individuals, rather than serving only to provide a modest improvement in the performance and/or efficiency of an internal combustion engine.

     

    If this is true, this may explain why the Chinese Communist Party, comprised largely of individuals with engineering backgrounds, has decided to invest about $1 trillion on vehicle electrification technology over the next decade, while politicians in the US seem to be more intent on impeding the successful development of this technology for fear that credit for such success may be attributed to the opposing political party.

     

    In short order, "China Inc." will be dominating the global automobile industry and creating jobs for the Chinese in the process, while Americans and American politicians will continue to argue over who should be blamed for our sluggish economy and high rate of unemployment.
    5 Mar 2012, 02:36 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » Despite the well reasoned arguments by John Petersen that call into question the viability of vehicle electrification "once it involves a plug," there remains, in my mind at least, a long-term allure for vehicle electrification. It's not yet clear what breakthroughs may be required in order for this to become a practical reality, but it is clear that the landscape is changing rapidly and I intend to continue monitoring these developments.
    13 Feb 2012, 04:51 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » Every major recession since the 1970's has been preceded by a spike in oil prices. As such, it would seem obvious that efforts to diversify our sources of energy needed to satisfy our transportation needs should have been put into place almost 40 years ago. Frustrated by the lack of progress on this front by the gub'mint, many of us have decided that its time to take matters into our own hands, rather than waiting another 35 years for a national energy policy to emerge. But are we just grasping for straws?

     

    As Gal Luft and Anne Korin remind us in the final paragraph of their book, "Turning Oil Into Salt: Energy Independence Through Fuel Choice," Winston Churchill once observed that

     

    "Americans' national psychology is such that the bigger the Idea, the more wholeheartedly and obstinately do they throw themselves into making it a success. It is an admirable characteristic, provided that the Idea is good."

     

    So, before we ask ourselves what is the best way for us to contribute to efforts to now send an electric car to the moon, let's spend some time surveying the landscape here on planet earth. Because we currently rely on oil for nearly 100% of our surface transportation needs, a good place to start would be to develop a better understanding of why we rely upon oil in the first place, and then to evaluate the various alternatives and the circumstances under which these alternatives might make sense.

     

    Fortunately, there are two excellent articles in the July 2011 issue of Popular Science magazine that provide an excellent framework for further analysis, and I have provided links to these articles below, for your convenience.

     

    http://bit.ly/xWuNea

     

    http://bit.ly/zmamJ4

     

    As indicated in the first article by Paul Roberts [author of "The End of Oil: On the Edge of a Perilous New World"], "our dependence on oil is driven less by the political might of the oil industry than it is by the fact that oil itself is a terrific source of power. [Among other things] It packs more energy into less space than any other commonly available resource, and it requires much less energy to produce."

     

    Furthermore, "sustainability is an economic concept as much as it is an environmental one. People will always prefer cheap energy to expensive energy."

     

    And, on top of all this, "Even if we were ready to mass-produce a new generation of, say, biofueled plug-in hybrid electric cars by 2020 [or Chevy Volts beginning last year], and even if we -- in an absurdly best-case scenario -- started cranking out those new cars as fast we we now make gas guzzlers (about 70 million a year, worldwide), we would still need another 15 years to swap out the fleet. In the meantime, oil consumption will continue to rise, as demand from fast-growing economies in Asia outweighs any green [or energy security] gains by Western nations."

     

    As such, those committed to finding alternatives to oil for our critical transportation needs for any number of well-intentioned causes, must be prepared to buckle up for quite awhile longer rather than expecting every car to be equipped with an ejection seat tomorrow. But, in the words of Lao Tzu--founder of Taoism, "even the longest journey begins with a single step."
    3 Mar 2012, 02:20 PM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    Mike, I've made some 'back of the envelope' charts

     

    Firstly http://bit.ly/zgsdrX
    Comparing the 'innards' of a commodity cell (as used in Tesla model S) and the Nissan LEAF.
    I see that Nissan prioritized many other attributes above energy density.
    I expect Nissan can relatively easily progress to greater energy density if desired.
    The 2 ovals represent today's art.

     

    Second 'back of the envelope' chart
    http://bit.ly/wC6qPh
    this was by applying the curve fit to LG's price points.

     

    going forward, will AESC capture 6 years worth of price reduction over the space of 4 years? will it represent the range from 2006-2012 come 2014?

     

    i probably should've added a further $1000 for pack costs.

     

    http://bit.ly/zaTR3P
    Renault/Nissan by launching multiple models as EVs will reduce the single model popularity risk.
    9 Mar 2012, 09:09 AM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    Mike, a link on EV costs and depreciation http://bit.ly/H7JVC0

     

    page 6 is a decent summary, the expectation is that battery lease significantly reduces the depreciation risk.
    5 Apr 2012, 10:37 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » This CNBC interview conducted this morning with Fred Smith (CEO of FedEx) and Bob Lutz (former GM Vice-Chairman) frames the issue regarding vehicle electrification very well.

     

    http://bit.ly/HRZYQD

     

    Unfortunately, background events seem to have caused many to develop an irrational bias against vehicle electrification efforts. I observed this bias first-hand when I attempted to communicate many of these concepts in a series of comments posted under articles published by John Petersen (a harsh critic of vehicle electrification). Hopefully, with the passage of time, people will recognize:

     

    the danger of relying upon a single energy source, oil, for nearly 100% of our critical transportation needs -- even if we are no longer reliant upon imports of foreign oil; and

     

    the danger of falling behind foreign competitors, particularly those being heavily subsidized by China, who recognize the global economic growth opportunities associated with a leadership position in the vehicle electrification industry.
    16 Apr 2012, 12:13 PM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    Mike
    If the Right could not act on America's addiction to foreign oil after 911 & if the Left could not act on America's addiction to foreign oil after BP's deepwater horizon oil spill then it's a challenge for Smith & Lutz to communicate the oil dependency issue to USA.

     

    However - It is not the Chinese nature to be dependent on outsiders. Although the Chinese have gained confidence that they can outbid anyone for global oil, they are coordinating a wide ranging / long term new energy vehicle plan. http://bit.ly/J7xBA4

     

    while this plan will be wide ranging, it shares considerable synergy with China's 2 wheel EV market. http://bit.ly/IALu7y the cells in E-bikes are closer in duty to PHEV40 than BEV. i would surmise that the initial deployment grounds for EV chemistry is occurring now, in Chinese E-bikes. ala 100 flowers blossom

     

    19 Apr 2012, 08:55 AM Reply Like
  • renim
    , contributor
    Comments (1103) | Send Message
     
    A 2009 presentation regarding Li-air etc, note the challenges for Li-air are far greater than for Zinc-air
    http://ibm.co/XzhrUB

     

    A McKinsey Quarterly 2012 report
    http://bit.ly/14mq0tq
    note well, their graph shows a triple point, which is close enough to be a quadruple point. Ie all ICE/HEV/PHEV/BEV tech can be viable simultaneously, what matters will tend to be the execution. This is what is happening currently.
    24 Mar 2013, 07:27 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1538) | Send Message
     
    Author’s reply » Many short-term traders attach a lot of significance to "the triple witching hour" which is the last hour of the stock market trading session on the third Friday of the last month of each calendar quarter when three types of futures and options contracts expire. Heightened volatility during this period can be attractive to the "market witches."

     

    For someone who focuses on longer-term macro trends, this Friday of the following week represents a confluence of news and events that could be of great significance particularly to those following the energy and transportation sectors:

     

    1. With national elections in Pakistan due on May 11, the Awami National Party, part of the departing central government coalition, is being overwhelmed by the Taliban in parts of Karachi, a city of 20 million people. This follows another political destablizing event, the return earlier this week of former President Pervez Musharraf, who seized power in a military coup in 1999 but was forced to step down nearly a decade later. These events call into question who will control the military in Pakistan, which unlike Iran, already possesses nuclear weapons capability in this politically unstable region of the world known for both its oil and terrorist groups.

     

    2. Two American B-2 stealth bombers dropped inert versions of 2,000 pound bombs on targets near North Korea as a display of military force amid months of escalating tension with North Korea.

     

    3. The European owners of Urenco, the world's second-largest maker of nuclear fuel, are seeking potential buyers for the company.

     

    4. Fisker has hired bankrupty lawyers amid the electric-car maker's efforts to find a buyer or strategic partner ahead of an Apirl loan payment.

     

    The fork in the road ahead is beginning to look more like a traffic circle with many appendages, and this time all roads may not lead to Baghdad.

     

    However, unless their traveling in an EV, many Americans are likely to focus more closely on the EPA's decision to require cleaner gasoline which could raise the cost of producing gasoline by ten cents a gallon.
    29 Mar 2013, 08:43 AM Reply Like
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