A123 Betting Bigger Than Expected On Electric Cars

March 9, 2010

A123 Systems can hardly be called the “Netscape” of the lithium ion battery market.

The company’s stock launched last September with an impressive 50 percent first day gain. It has since retreated to $16.75, a more modest 24 percent above its offering price of $13.50.

The company plans to expand its lithium ion battery factories another 54 percent.

This swoon isn’t due to a lack of ambition. In fact, A123 is betting bigger than most analysts know on the battery market, which it expects will benefit from a flood of affordable electric cars in the next two years here and in China.

The company gave the clearest indication of its intent on Tuesday when it unveiled aggressive plans to expand its factories another 54 percent. Just two months ago, the manufacturer said it would more than double the size of the plants by the second half of 2010.

“Our customers are demanding it,” says CEO David Vieau. “As we see the forecasts (from customers)…we’re going to put the capacity in place.”

The 560 MW hours of capacity the company will have at the end of the project will be capable of making batteries for almost 500,000 hybrid electric cars or 37,000 plug-in electrics. Some of this capacity will be devoted to making storage batteries for wind and solar power plants, so not that many cars need to sell.

But it nevertheless is an ambitious approach to an automobile market just now getting underway.

A123, which received a $249 million grant from the Department of Energy to help fund the growth, says its goal is to become a billion dollar company. (Revenue was $91 million in 2009.)

Key to this achievement will be strong car sales, which Vieau says appears to be so solid he is rushing to bring all the new capacity online by the end of the year or early next year. “We feel very comfortable with it.”

Perhaps he has a point. On Tuesday Nissan seemed to confirm the enthusiasm, saying it had 56,000 advanced orders for its electric Leaf. Perhaps the ramp of electric cars might not be so slow.

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Posted by Mark Boslet

Steven Chu’s Top Green Technologies (Hint: No Thin Film)

March 9, 2010

Energy Secretary Steven Chu is the first to admit the nation faces a clean-energy technology gap.

"We don't have all the technolgy we need to reduce carbon by 80 percent by mid century," says Energy Secretary Steven Chu

“We don’t have all the technology we need to reduce carbon by 80 percent by mid century,” Chu said Monday. “We need better technology.”

Advancing the state of green tech is the reason he invested $80 billion of Recovery Act funds in clean-tech research, product development and generating capacity. The nation needs to prepare itself for the green economy of the 21st Century at a time when countries, such as China, are pouring in lots of money of their own.

We are falling behind in the clean-tech race,” he said during an address at Stanford University.

And yet, all is not bad news. During his address, Chu listed several technologies where the U.S. is making progress and which could have a powerful impact in the decades to come. They include:

*Utility-scale energy storage,  an important addition to the energy grid as more renewable power comes from sometimes on, sometimes off wind and solar. The best way to achieve store energy is by pumping water up a hill, says Chu. When the power is needed, water is released, driving turbines. The energy loss: just 25 percent, far better than batteries, he says.

*Offshore wind has a great deal of untapped potential, adds Chu. But maintaining turbines is difficult in a marine environment due to storms and salt water.

One encouraging step is Clipper Windpower’s work on a massive 10 MW offshore wind turbine, says Chu.

*In the solar market, the cost of solar cells has dropped by a factor of 10. But it isn’t low enough for panels to be competitive without government subsidies. That could rapidly change, says Chu. Module costs are about $2 a watt, but will drop to less than $1 by the end of the year.

The drop will help rooftop solar compete. Rooftop systems still cost $4 a watt to install, with the panels accounting for half of the bill. At $1.50 cents installed, solar becomes cost efficient without subsidies, he says.

Chu says it is not clear whether low cost thin-film cells will outsell the polysilicon cells that make up the majority of today’s market. Polysilicon cells keep making gains with efficiency.

*The transportation sector is the toughest to achieve energy improvements. Lithium ion batteries don’t have near the energy density of gasoline or diesel. Fortunately, electric motors are highly efficient.

One breath of fresh air may come from aluminum batteries, says Chu. Aluminum could help cut battery costs by a factor of 10. Suddenly all the energy required by a building could be stored in a battery the size of a room.

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Posted by Mark Boslet

Ford Says Its Lithium Ion Batteries Show Little Degradation

March 4, 2010

Electric cars are likely to play a big role in America’s – and the world’s – transportation future.

Forty percent of cars on the road by 2050 will be electrics, such as Ford's Transit Connect van, predicts Shell's Peter Voser.

Shell CEO Peter Voser is one advocate. By 2050, the world’s fleet of automobiles will grow to 2 billion vehicles from 1 billion today. About 40 percent of them will be electric cars, he said Thursday.

A key motivator will be the high price of oil. But improvements in electric motors and battery technology will bring in buyers who today might sit on the fence.

Perhaps the biggest improvement will need to come to batteries. Experts say advances in lithium ion batteries, the most common choice for electric cars, are hard to achieve. The batteries have the potential to double or triple in performance. But it could take a decade or more.

One company taking the first steps to understand electrics and batteries is Ford, which will begin selling its first electric vehicle in the fourth quarter of this year.

The company’s first pure electric will be the Transit Connect commercial van. The pint-sized van is powered by a 600-pound, 41 amp lithium ion battery installed under the van’s cargo bay. It has 192 cells, generates 28 kWh of juice and has shown amazing durability in testing, says Praveen Cherian, program manager.

The battery, made by Johnson Controls-Saft, has been driven about 186,000 miles in trials and shown only about 5 percent deterioration, he said on Thursday, strong results for a technology some expect to degrade more rapidly.

The vehicle is designed to last 10 years, or 120,000 miles, and should be able to meet that criteria, Chervian said during a San Francisco test drive.

The van is to go into limited production in the fourth quarter with volume manufacturing kicking off in the first. Ford projects 1,000 units will be made. No price has been announced. The vehicle is designed for short-range commercial deliveries and use by repair crews.

It will be followed by the electric Focus in 2011 and a plug-in hybrid electric in 2012. The 2012 vehicle will likely to be the Escape SUV.

While these first few vehicles represent a chance for the company to learn as much as consumers about this nascent technology, the lessons will be taught on the go. If Shell’s Voser is right, there won’t be much time to sit around contemplate.

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Posted by Mark Boslet

Groundbreaking Energy Proposal Requires Grid Storage Technologies In California

February 26, 2010

Jerry Brown may want to be governor of California. He also wants to be its newest climate crusader.

Attorney General Jerry Brown is considering a run for Califorina governor. He also wants to become the state's newest climate crusader

The state’s Attorney General, aided by Assembly member Nancy Skinner introduced a groundbreaking bill on Friday calling on California utilities to keep a reserve of electricity stored for emergency use.

The bill may be the first in the country to mandate the use of grid storage – an emerging, yet critical technology in the fight against global warming. As solar and wind technologies are increasingly used to generate power, energy storage become a crucial way to set aside power for when the wind isn’t blowing or the sun isn’t shining.

Brown’s bill appears to be aimed at providing a security net for when the peak demand for electricity spikes, such as on hot summer days when air conditioning is in wide use.  California’s energy use is particularly spiky for this reason.

The bill, if adopted, would require utilities to store 2.25 percent of daytime peak demand by 2014 and 5 percent by 2020. In a press release, Brown claims this will lower costs for consumer, since expensive peak-use plants won’t need to be brought online.

It also should accelerate California’s adoption of a smart grid capable of better managing power use and wheeling power both up and down electric lines, instead of just in one direction.

However, storage technologies, such as the use of giant lithium ion batteries, are still at a nascent stage.

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The Failure Of Lithium Ion Electric Car Batteries

February 19, 2010

Battery researcher Don Murphy once thought of lithium batteries as an interim step on the way to more energy intensive hydrogen fuel cells.

But the former Bell Labs director and expert on lithium-ion batteries knows better now. Fuel cells, which he expected would be the state of the energy-storage art today, still don’t work the way they should.

The energy density of a lithium ion battery could improve 2 to 3 times, says prominent researcher Don Murphy, but it is hard to predict when.

And lithium-ion batteries – the fuel source for a highly anticipated first generation of electric cars – are dawdling as well, remaining far less capable than some might have hoped.

Battery technology improves at the paltry rate of 7 percent or less a year, Murphy said Thursday, compared with the 35 percent advance typical with high-tech electronics. “Don’t hold your breath looking for improvements,” he said during an afternoon address at the Parc Forum in Silicon Valley.

At that pace, capacity will double in roughly 10 years, and the battery will remain a restraint on electric cars during the formative years of the industry.

Electric cars are envisioned as a key piece of the world’s response to global warming. But range limitations – 40 miles for the Chevy Volt, 100 miles for the Nissan Leaf – will likely keep many mainstream buyers away. To catch on, these relatively simple-to-build vehicles need to duplicate the long-trip ease of gasoline-powered cars. Until they recharge faster and hold a charge longer, they probably won’t become suburban necessities.

Holding back progress are limitations with the lithium ion chemistry. Murphy projects that the energy density of a lithium ion battery has the potential to increase two or three times as technical breakthroughs occur. But he can’t predict when the advances will take place.

This kind of an improvement would help. But it hardly matches the doubling of performance that take place in an Intel chip every two years.

He says that today a lithium ion battery with a 100-mile range is as large as a big gas tank. A much larger battery, such as the one in a Tesla, with a 300 miles range costs $43,500.

That makes the electric car battery an expensive proposition and a lasting limitation on a young industry.

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Posted by Mark Boslet

Plug In Hybrid To Have a 1,000 Mile Range, Velozzi Says

February 4, 2010

Velozzi's plug-in hybrid sports car and sedan, pictued above, will use diesel-powered microturbines to recharge their batteries

Secretive boutique electric car designer Velozzi said Thursday it plans a high-end plug-in electric hybrid with a driving range of up to 1,000 miles.

The Los Angeles company that intends to begin shipping cars late this year says the extended driving range will come from a diesel-powered microturbine designed to switch on when the lithium ion batteries need charging.

The news was released in a press statement announcing the company’s decision to use microturbines from Capstone Turbine. The deal is Capstone’s first with a carmaker.

The projected driving range is unusually long for an electric car and could prove a selling point for Velozzi. Many plug-in hybrids anticipate ranges of several hundred miles, and many all-electrics expect less than 100.

Velozzi plans two vehicles, a high-performance sports car and a lower-priced mass-market model. Both will be constructed with carbon-fiber nano tubes to reduce weight.

The sports car will come with a 770 horsepower electric motor, reach 60 mph in 3 seconds and be outfitted with a 65-kolowatt microturbine. Batteries will take the car 200 miles before the turbine kicks in. The car is to reach the market this year.

The Solo, which the company describes as a crossover vehicle, will have a 30-kilowatt turbine. That suggests a reduced driving range. It is to ship in 2011.

No prices for the cars have been released. However, estimates suggest a $100,000 sticker for the sports car, comparable to Tesla’s Roadster. The Solo is expected to be closer to $35,000.

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Posted by Mark Boslet

Better Place Raises More Money, Discloses Chinese Ambitions

January 25, 2010

Largely over looked in a fund raising announcement released late Sunday is the suggestion of Better Place’s next ambition: taking on the massive Chinese and Asian markets.

The electric car battery swapping company referred to its initiative in an announcement of another $350 million of venture capital. The B, or expansion, round of funding should close this quarter and values the company at $1.25 billion – a healthy sum for a business that has yet to earn real revenue.

Will Renault's $20,000 battery swappable electric car sell in China, or will a cheaper alternative be necessary?

The lead investor in the financing is the British bank HSBC, which put in $125 million and now owns 10 percent of Better Place. HSBC Global Capital Financing Head Kevin Adeson joined the Silicon Valley company’s board.

Along with the funding news, Better Place said it remains on track to launch in Denmark and Israel at the end of 2011. That’s when the first Renault electric cars with swappable batteries hit the market. The company is installing battery-swapping stations and electric car recharging stands in both countries in preparation for the launch.

It hopes drivers will worry less about a car’s limited range – likely 100 mile or less – if they can quickly exchange depleted batteries for fresh ones and continue their journeys.

The company plans to begin operating in Australia and parts of North America a few months after opening for business in Israel and Denmark. It now is testing cars and battery replacement station in Denmark and at an electric taxi project in Tokyo. More trials will begin later this year.

Yet Better Place’s real ambitions stretch beyond the West. “We expect that HSBC will help us to scale in Europe, China and beyond,” the company said in a press release. “The company intends to expand into markets where the business model economics and investor returns are optimized, notably, in Europe and Asia.”

Better Place has obliquely mentioned the possibility of a Chinese initiative before, but never so directly. With 1 billion people, a growing middle class and an emerging automotive market, the Asian tiger could spell endless opportunity. But it would suggest agreements with new vehicles suppliers or a cheaper version of Renault’s $20,000 car.

Perhaps both. It also would imply lower profit margins for a company that is still trying to prove battery swapping is will catch on with consumers.

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Posted by Mark Boslet

Nanosys Touts Lithium Ion Battery Technology, Expects To Announce LED Customer Thursday

January 20, 2010

Nanosys made a name for itself during the nanotech bubble six years ago by promising everything nano. Company management boasted it was on the verge of making nano solar cells, flexible display screen, even astonishingly dense computer memory.

Nanosys CEO Jason Hartlove says his technology can increase the capacity of a lithium ion battery 30 to 50 percent

Those heady days have passed (as has Nanosys’s plans for a 2004 IPO). In their place, more realistic executives are chasing the more achievable goals of commercializing technology to boost the capacity of lithium ion batteries and improve the quality and efficiency of LED displays and lights.

Company CEO Jason Hartlove says the battery technology should be able to increase the capacity of a lithium ion battery by 30 to 50 percent. He expects it to show up in batteries for consumer devices next year.

On the LED front, Nanosys expects to announce a major customer win on Thursday.

Perhaps the biggest long-term opportunity for the company is the battery market. Lithium ion batteries will go into an increasing number of portable consumer devices over the next few years and batteries for electric cars should generate a $25 billion market by 2020.

Nanosys’s technology calls for using nanowires made of a silicon composite as the battery’s anode. Silicon more readily reacts with lithium and creates higher voltage. The composite keeps the silicon from losing its connectivity properties over time.

The company expects to name customers later this year. The LED customer Nanosys expects to announce Thursday is a large manufacturer likely use the company’s technology in laptops and smart phones. The consumer products could reach the market by the end of the year.

The technology, which has been widely discussed in the press, makes use of tiny, nano-scale crystal quantum dots to absorb and reissue light from a solid-state LED chip. The light released is more vivid, and its source can be the more energy efficient blue LED.

That could save money and help Nanosys redefine itself as a company with real products, not just a nano vision.

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Posted by Mark Boslet

High Cost Batteries Could Limit The Spread Of Electric Cars, One Study Says. But Is This So?

January 19, 2010

The hype behind electric cars is, well, high energy.

Yet sales of these save-the-earth vehicles could be seriously constrained by the high cost of batteries. So says a study by the Boston Consulting Group. But not all carmakers are buying into the conclusion.

Some argue rapidly expanding production volumes will significantly lower the costs of batteries for electric cars

Most automakers appear to be planning on advanced batteries that will cost as little as $250 a kilowatt-hour of energy. But achieving that goal by 2020 will be a stretch without a major breakthrough in battery technology, according to the study co-written by analyst Xavier Mosquet.

Battery costs will fall over the next decade, and already lithium ion offers a lighter, more powerful alternative to the nickel-metal hydride battery in the Toyota Prius.

However, today’s prices of $1,000 to $1,200 a kWh may not reach the $250 to $500 a kWh level, the study finds. Carmakers seem focused on this lower price level because it is close to the $250 to $400 per kWh cost of lithium ion batteries used in consumer electronics. Yet consumer electronics batteries are simpler than car batteries and have less demanding requirements in terms of lifespan and safety, says Boston Consulting Group. Prices of auto batteries may not fall this far.

Some carmakers are hesitant to draw the same conclusion. Greg Frenette, manager of global electrified fleets at Ford, says a major technological breakthrough would be useful, but might not be necessary.

Battery production will increase dramatically over the decade, and prices will fall significantly as the manufacturing lines expand, he says. By Boston Consulting Group’s own estimate, the market will reach $25 billion by 2020, or triple the size of the today’s consumer market for lithium ions.

“I think volume can have a significant impact on overall cost,” says Frenette. For electric carmakers, the metric will be a key one to follow.

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Posted by Mark Boslet

Behind The Scenes At A123, Fisker Is A Drop In The Bucket

January 14, 2010

A123 Systems made hay Thursday morning by announcing a intimate pact with one of the nation’s most promising new age car maker, Fisker. But the move is only one tiny step in the electric battery maker’s grand ambitions.

An A123 lithium ion cell for plug in hybrids and electric vehicles

The Wall Street darling said it would supply lithium ion batteries for Fisker’s nameplate Karma plug in hybrid, expected late this year.

Karma is expected to have a 50-mile range with its battery and a 300-mile range when using its gasoline powered generator. It also is designed to go from 0 to 60 in 6 seconds, rivaling the performance of the all-electric Tesla Roadster, which already has 1,000 models on the road.

The complicated agreement also has A123 and Fisker working together to develop a battery for Fisker’s second model, the lower priced Nina, slated for 2012.

At the same time, A123 will invest $23 million in the car company, $13 million in cash and $10 in stock. Both companies are among the phalanx of anointed new generation transportation companies receiving grants and loan guarantees from the Department of Energy’s program to promote green technologies.

But behind the scenes, the Fisker deal is but a drop in the ambitious battery maker’s bucket. The company, which launched a well-received IPO last year, announced on Thursday a major expansion of its manufacturing capacity, fueled by its $249 million DOE grant.

The expansion will more than double its Michigan manufacturing capacity by the end of 2010 and give it the ability to produce batteries for more than 320,000 hybrid vehicles or 24,000 plug-in hybrids. – far more than Fisker could hope to produce in several years.

So watch for more deal like the one A123 unveiled today. The company will need the business to fill its newly enlarged plant.

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Posted by Mark Boslet

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