April 15, 2007
US Auto Industry Desperate For Better Batteries

A Wall Street Journal article reports how much Detroit car company attitudes have shifted on batteries. American car companies feel an urgent need for leading edge domestic lithium ion battery suppliers.

Facing growing pressure to curtail greenhouse-gas emissions, U.S. auto makers are increasingly worried that the critical battery technology they'll need to compete is getting locked up by Japanese rivals who moved more quickly to develop gas-electric hybrid vehicles.

"It's important to have the knowledge base on advanced automotive battery technology and manufacturing capacity right here locally in the U.S." says Beth Lowery, GM vice president of Environment and Energy.

One of the biggest hybrid battery suppliers is owned by the most formidable competitor of the Detroit auto industry (Toyota). The American car companies finally figured out that's a problem. Fortunately for Detroit the Nickel Metal Hydride (NiMH) batteries used in Toyota Priuses are a technological dead-end. The future lies with lithium ion chemistries and perhaps nanotubes and other nanotech. On that playing field US venture capital start-ups stand a good chance of winning. But a larger effort at funding university research would produce more advances in electrochemistry suitable for spinning off into VC battery start-ups.

A123 Systems is among the start-ups that are suddenly getting lots of attention from both government and corporate interests.

The U.S. Department of Energy, in collaboration with the U.S. Advanced Battery Consortium, which is made up of Detroit's three auto makers, last year awarded A123 a $15 million contract to develop its version of lithium-ion technology for hybrid-electric vehicle applications. In addition to the A123 contract, the Energy Department has requested $41 million this year to continue advanced battery research.

This is still chump change. Consider the benefits of battery advances. Sufficiently advanced battery technologies will some day enable cars to run 100 and more miles between recharges. This capability will end the use of liquid fuels for most local travel. Liquid fuels will continue to get used in longer road trips, air flights, and in ships. But for most commutes and trips to stores batteries will displace gasoline, diesel, and ethanol.

The ability to use batteries for transportation will, in turn, enable the use of nuclear, solar, geothermal, and wind power for transportation. Granted, today we are seeing a huge scaling up in the use of coal for electric generation. But that trend will end due to a combination of rising regulatory limits on emissions and dropping costs of cleaner competitors.

Smarter energy policies by governments could accelerate the development of next generation batteries and cleaner ways to generate electricity.

Milwaukee-based Johnson Controls, one of the biggest suppliers of lead acid batteries, has joined the growing list of groups attempting to produce next generation batteries. The race is on.

South Korea, China and the European Union also have government-supported advanced battery projects, according to U.S. and Japanese government officials and documents. And a joint venture between Johnson Controls and French battery cell producer SAFT, a €560 million ($751.9 million) a year maker of batteries for industrial and electronics uses, also is vying to supply GM.

A123 was founded in 2002 by Massachusetts Institute of Technology professor Yet-Ming Chiang, former American Superconductor executive Bart Riley and entrepreneur Ric Fulop. The company, which has 250 workers compared with about 1,000 at Panasonic EV, has raised $100 million in capital from investors, including Sequoia Capital, a Menlo Park, Calif., venture capital firm, and General Electric Co.'s commercial-finance unit.

If Toyota comes out with a cheap lithium ion battery usable in pluggable hybrids and does this a few years before Detroit automakers find a supplier for such a battery then Toyota's gains in marketshare will accelerate. Both the American and European auto industries face the very real threat that an East Asian win in next gen batteries will translate into a big East Asian win in the automotive marketshare.

Share |      Randall Parker, 2007 April 15 09:39 AM  Energy Batteries


Comments
Reality Czech said at April 15, 2007 11:42 AM:

The automakers have been out-maneuvered by the oil companies.  The US patent for large-format NiMH cells is controlled by Cobasys, which is controlled by Chevron-Texaco.  Toyota had to stop building the RAV4 EV because Cobasys would not license the patent at an affordable price, and no other would-be EV maker has been able to either.  In short, Chevron-Texaco has been at work to starve its competition of the oxygen (technology) it needs to go forward.

Ovonics has not been pleased about this, but does not have the leverage to do anything.

There's news about Cobasys getting in bed with A123Systems, with the prospect of this happening all over again with Li-ion.  Perhaps an anti-trust or eminent domain action to free up the patent will happen soon.

rsilvetz said at April 15, 2007 1:09 PM:

Then again, there are persistent reports in wide-scope accounting that the Prius is a deeper net-energy sinkhole than other vehicles. This is mostly due to the relative cost of creating the nickal metal hydride batteries.

Hopefully as fusion moves out of the lab shortly as Boussard perfects Farnsworth's stuff and the Australians perfect their pion-based stuff, all this will become just a bad memory of the fossil fuel era....

Kurt9 said at April 15, 2007 1:23 PM:

I understand that one of the problems with current hybrid cars is that the batteries do not last the life of the car (unlike, say, a gasoline engine). That is, you have to replace them every 3-4 years. Can anyone confirm this?

Randall Parker said at April 15, 2007 2:25 PM:

Kurt,

Depends on what you define as the lifetime of the car. The original model Prius batteries supposedly are going to last longer than 100,000 miles and the later models have improved batteries with even longer lifetimes. The batteries might well last the length of the car lives.

As for being energy sinks: Keep in mind that the nickel in the batteries can be recycled at the end of the lifetimes of the batteries. Also, the energy costs of making the batteries should show up in thir market costs. So I do not believe the energy sink argument.

So far Prius battery failures have been extremely rare.

Near as I can tell the better hybrids are big net money savers. Note that the savings varies greatly depending on the model. The Prius pays back the fastest followed by the Ford Escape Hybrid. Some of the hybrids boost gas mileage so little as compared to non-hybrid models that they do not make economic sense.

Zeyphod45 said at April 15, 2007 2:38 PM:

Speaking of Bussard does anyone know if google: http://video.google.com/videoplay?docid=1996321846673788606 decided to fund Bussard's polywell fusion device? Or anyone else?

rsilvetz said at April 15, 2007 3:42 PM:

Randall,

I agree that all things being equal it should show in the price. Unfortunately green credits and subsidies pervade this field and so the true price of the Prius is not reflected in the sticker price. If we are to believe the total system-wide economic cost from the CNW Marketing report, quote: The Prius costs an average of $3.25 per mile driven over a lifetime of 100,000 miles - the expected lifespan of the Hybrid.: which is very high!

The referenced article also suggests that the cost recovery time is approximately 60 months... 48 months if you use several tax credits that are available. (Upto $3000 it seems.) And you get some more off in California. So ... YMMV!

***

Zeyphod -- I believe it is up in the air due to a report on Boussard being seriously ill. Time will tell.

Randall Parker said at April 15, 2007 4:06 PM:

Robert Silvetz,

The CNW Marketing Report press release I read a year or two ago did not provide enough details to explain how they arrived at their cost estimates. Edmunds and other organizations have done analyses which produced much lower costs for hybrids.

The idea of $3.25 per mile for hybrid costs is absurd on its face. That's $325,000. That doesn't work unless Toyota is secretly subsidizing Prius purchase prices to the tune of hundreds of thousands of dollars. Not happening. At worst they are discounting a few thousand dollars and selling with no profit.

Also, I expect hybrids to last a lot longer than 100,000 miles. What is going wear out on them at 100,000 miles? I've come across anecdotal reports of Priuses going for 150,000 and 200,000 miles. Some of the Prius taxis are running up lots of miles.

Parenthetically, I've been asking some taxi drivers why they drive Lincoln Town Cars. Their answer: the cars last hundreds of thousands of miles. I've been in ones at 185,000 and 250,000 miles and been told about ones around town which have reached 340,000 and 460,000 miles. The 460,000 mile one finally had engine failure at 460,000 miles. I hear talk about Toyota longevity. But Lincolns last a long time. One taxi driver told me that used Crown Victoria cop cars also last hundreds of thousands of miles.

Brian Wang said at April 16, 2007 8:50 AM:

Nissan and NEC also have a battery JV set for high volume production in 2009 and lot of Nissan
production for 2010. They also will supply other car makers. So any car companies
that are still having battery supply problems could use this supplier.
http://money.cnn.com/2007/04/13/news/international/bc.nissan.nec.reut/index.htm

Sanyo Electric, which supplies hybrid batteries to Honda and Ford, and Panasonic EV Energy, in which Toyota has a 60%
stake, are the leading makers of nickel hydride hybrid batteries and are investing heavily in Li-ions (see BusinessWeek.com, 9/20/06, "Battery Woes Spark Few Concerns Among Asian Carmakers").
http://www.calcars.org/calcars-news/663.html

Merrill Lynch is quoted in the businessweek article :
Toyota has already achieved what many in Detroit thought was impossible: making hybrids profitable. Although the company doesn't break out figures by model, Merrill Lynch analyst Koichi Sugimoto estimates that profit margins on
the Prius hybrid are between 3% and 5%. For more expensive models, like the Lexus RX 400h, margins are even higher.


Toyota may produce an entire line (multiple models) of Prius
http://thefraserdomain.typepad.com/energy/2006/11/toyota_may_prud.html

The cost premium for hybrids is coming down. The new hybrid technology, which will be used in the next-generation Prius (out next year end of 2008 for 2009 models), will be about half the size and weight of the current system. In July 2006, Honda said it expected to cut the cost premium of its hybrid system to about $1,700 per vehicle by 2009.
http://www.ft.com/cms/s/a2a9056a-51b1-11db-b736-0000779e2340,dwp_uuid=4e612cca-6707-11da-a650-0000779e2340,print=yes.html

Diesel hybrids are also here and more are coming
http://www.mobilemag.com/content/100/354/C11553/
http://www.wired.com/cars/energy/news/2005/03/66949

Model release timeline
http://www.hybridcenter.org/hybrid-timeline.html#2007
http://www.hybridcenter.org/hybrid-timeline.html#20082009

The US car makers are still behind and look like they will continue to lose for another 3-5 years.
The only catch up so far are inferior hybrids (but at least they have some) and some concept and prototype cars.

New companies are coming up with all electrics cars. Including several chinese car makers. They are talking productions in the 50,000 to 100,000 ranges.
There are also the $2500-4000 cars that being made in china and India. Main place they cut back is no anti-lock breaks and some other safety systems. 33 HP engines able to go 80mph. Those may make up a large part of the 16 million cars per year in China in 2015 and similar numbers for India.

Nick said at April 16, 2007 9:31 AM:

Randall, one taxi driver told me that Crown Victoria's have decent reliability, but that their key virtue is inexpensive maintenance, where asian cars tend to have higher per-repair costs.

Robert,AA NIMH batteries cost around $3/watt-hour. The Prius battery (it's only really unusual component) is 1,300 watt-hours, so at AA battery costs it would cost less then $4,000, and you can expect the actual cost to be substantially less.

CNW is obviously not credible in any way.

In other news: the 2009 Prius is expected to cut the hybrid cost-premium by about 50%, and raise MPG by about 20%; and

GM has said quite clearly that the A123systems basic battery cell meets their specs: it's the battery pack engineering that is the holdup, and that doesn't require any breakthroughs, just time-consuming (and expensive) work.

K said at April 16, 2007 8:35 PM:

'Fortunately for Detroit the Nickel Metal Hydride (NiMH) batteries used in Toyota Priuses are a technological dead-end.'

Yes. But that dead end is likely to yield reasonably-sized cars in the 40-60 mpg range. They aren't that good yet. And some of the increase will depend upon ICE improvements that seem near.
If durable lithium batteries become affordable there is no reason they can't replace NIMH and improve hybrids more.

I want EVs too. But US car makers had repeated opportunities to introduce technology to match the Japanese. And they chose to build other stuff. They had plenty of time and funding over at the USABC in the 1990s. The USABC did some good work but not, I think, enough for the money spent. The Japanese went faster and made better decisions as well as better cars across the board and hybrids.

Nothing on Earth is going to stop Washington from funding more lithium battery research, probably with a lot of congressional pork and earmarking built in. I would like that to lead to US success. But there is little reason to believe foreign makers won't make smarter decisions about batteries and EVs too.

I hope GM does get that EV ready and selling. Until then I don't care to hear about how tough it is.

Bigelow said at April 17, 2007 8:47 AM:

As Nick wrote “it's the battery pack engineering that is the holdup…” I find it hard to be patient these days. Look at folks doing conversions with –gasp-- passé lead acid batteries (Electroauto). GM’s Chevy Volt has a concept similar to the Mother Earth News Opal hybrid conversion from 1973. Will we ever have ‘good enough’ tech to get off the internal combustion bandwagon? Holdup?

Bigelow

Nick said at April 17, 2007 1:13 PM:

Lead acid will work, but it can't compete with $1 gasoline. It might be able to break even with $3 gasoline, but something new has to BETTER than the status quo to break in with anyone but hobbyists and those dedicated to the cause.

Of course, it would help if we'd internalize the externalities of ICE's (pollution, GW, etc), to make the market price of gasoline reflect it's real cost.

The first EV-1 used lead-acid, and got maybe 60 mile range. The 2nd EV-1 used NIMH, and got maybe 110 mile range. Again, useable, but not good enough for anyone but a relatively small group of early-adopters (though I don't mean to entirely let GM off the hook here: they should have persisted with a niche, and worked to expand it, while improving the vehicle).

No, we needed something better than the status-quo, and that didn't exist until the latest generation of li-ion. With economies of scale, and some fairly straightforward (though not easy) engineering, they can be the breakthrough we've all been waiting for.

hmmmmm said at January 30, 2009 2:19 PM:

Ever notice how after McCain proposed the reward for a better battery, things got much worse for him...
Just something I noticed, not saying the oil dynasty had anything to do with it. 8^)

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