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Captain Hybrid

Electric Car Battery Makers Face Shakeup Amid Soft Demand

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Rob Spiegel
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High expectations
Rob Spiegel   9/8/2011 10:41:11 AM
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In reading between the lines, Chuck, it sounds like there were high expectations for the EV market that didn't come to realization. Otherwise, why would the market pump up to the point that a shakeout is coming? Have EVs been less popular than expected? If so, why? Is it the costs? Performance issues?

Charles Murray
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Re: High expectations
Charles Murray   9/8/2011 11:17:14 AM
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You're right, Rob. High expectations play a big role in this. But the analysts we talked to allowed for a wide range of possible scenarios -- a demand of 2 GWh on the low end and 20 GWh on the high end. Even at 20 GWh, however, the demand is still about 10 GWh short of the supply. As a result, companies will still be winnowed out, even under those relatively good conditions.

herbissimus
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Re: High expectations
herbissimus   9/9/2011 2:35:04 PM
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for the few companies that are successful at batteries, there will be a fantastic amount of money to be made, and alot of financial and technological risks to be taken by these early companies before the flow of gravy rewards the few left standing. enjoy the show. hope you all pick the winners !

Ivan Kirkpatrick
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Lithium Battery Production costs
Ivan Kirkpatrick   9/8/2011 11:32:33 AM
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What about the costs of producing the batteries?  One way to increase demand is to drive down teh costs.  I am not sure what the cost breakout is but R&D must be significant.  I would also expect eh electronics to manage the battery charging and discharging to be significant as well but probably very sensitive to demand.  after all once the basic controls are designed and implemented with approppriate processors they are readily amenable to cost reductions liek the rest of the digital cotnrol systems have been.  The matieral cost, Lithium and some alloys I am told are not so expensive either.

As we mentioned before increasing the demand by other than EV uses might also be possible.  I can see homeowners adding batteries when they can store lower cost energy for use during higher cost times that depend on their local utility cycles.

Coupling batteries with wind and solar systems would also increase demand but drives the costs of the systems up significantly.

An industry shakeout is coming for sure regardless. 

Charles Murray
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Re: Lithium Battery Production costs
Charles Murray   9/8/2011 11:49:16 AM
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Ivan: You're right. The costs will undoubtedly decline as production volume rises, and that will certainly boost sales. Most analysts say, however, that the costs won't drop below $400/kWh, and may remain as high as $650/kWh, even as economies of scale kick in. (With the exception of Tesla, which employs 18650 batteries, today's costs are approximately $800-$1,000/kWh.) Assuming an optimistic cost of $400/kWh, a 40-kWh battery will still cost $16,000.

KingDWS
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Re: Lithium Battery Production costs
KingDWS   9/9/2011 12:09:37 PM
Ivan I think your ROI on the PV panels is a bit optomistic. I've been consistantly told that it is closer to 10 to 20 years for a pv roi based on current effieciencys and costs.

 

All in all the demand is much much softer than anticipated and you are corrct in that it sounds like the dot.com bubble and bust. I guess this is the dot.green bubble?

I think the biggest cause of the soft demand from my experiences in talking to people is simply that they don't feel these offered vehicles are a "car". They feel they need to drive and maintain them and they will not be able to use them as needed. So regaurdlesss of what the realworld experiences might prove to them typically they are afraid of chance and just not willing to take a chance. With all the over hyping on some aspects it is easy to see why.

Personally I worked on a ethanol fuel cell/ultra cap drive system. In my mind it had none of the issues of a battery powered car or even a hydrogen fuel cell powered vehicle (fuel scources and cost). What I ran across a lot was all the misinformation you see about ethanol mainly originating from the subsidies or people only familiar with older forms of production ie distilling.

I think there definitly are technologies that are here and available now that would allow the consumer to have and drive just a "car". I doubt we will ever see them until the opec gun to our heads literally runs dry and we are actually forced to do something.

/rant mode off ;-]

 

Dave

cvandewater
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Re: Lithium Battery Production costs
cvandewater   9/12/2011 7:36:16 PM
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Hi Dave (KingDWS),

The ROI of solar PV panels was quite stable and indeed in the order of 15 years for a long period, while the efficiency and price of the panels were very stable. However, since a few years the price has suddenly fallen from a plateau of $4/Wp to around only $1/Wp (!) with the Chinese and Indian solar manufacturers coming online and starting to produce cells at extemely competitive prices ($1.5 for a 6x6" cell of about 3.6Wp)

So, with the sudden price drop also came a sudden boost to solar installations so that even in the difficult market of today you see solar installers busy and the RoI time has shrunk to only a few years, more dependent on who installs and the cost of the other equipment, since the panel price is not so much dominating any longer.

Since a long time it has been possible to get a solar installation with zero money down and a lease price setup as a payment for the (solar) electricity supplied, this is a great way to start using green power without upfront investment by the customer and the terms have become much more interesting with the reduction of panel prices.

Note: for off-grid application you can actually buy laminates (unframed panels) for a price below $0.75 per Wp. I think the time to get into solar has never been easier or more attractive. Even from a financial point of view, which was usually the bottleneck.

Ivan Kirkpatrick
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Home Battery pack with Time of Use
Ivan Kirkpatrick   9/8/2011 3:45:12 PM
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Okay, does this make economic sense?  Suppose I can get a 40KWhr battery for my home for $16K.  My utility used to offer a Time of Use option which is now closed to new subscribers, however others have claimed a savings of $200 amonth.  The estimated payback time is around 80 months or just under 7 years.  This is about the same payback period and cost to the homeowenr as installing a 5KW PV array.

I suspect a more detailed analysis of the rate schedule and duty cycle of a home battery storage system might yield more favorable numbers.  For example the Time of Use is split into on-peak hours usually around 8 hours of the day and off peak hours.  The previously offered rate is about 5 to 1 or 15 cents per KWhr on - peak and 3 cents off-peak.  By charging the battery during off-peak and running the home on battery only during on-peak should give better numbers than the 7 year payback. 

I looked at the utility rate schedule and all the extra fees, taxes and calculations that go into the bill.  It is truly amazing to me that they can make this so complicated.  A realistic analysis requires a lot more work and detailed study.  One would think it would be helpful to the homeowner adn to the utility in the long run, especially if renewables were making up a larger portion of the utilities total generating capacity.

bronorb
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Re: Home Battery pack with Time of Use
bronorb   9/9/2011 9:25:41 AM
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@Ivan, you hit the nail on the head. It takes so long to get payback on this technology investment, few people will do it.

Same with hybrids and EVs. I have a 10-year old gas-hog of a pickup truck that I drive everyday. It was paid for a long time ago. Gas prices would have to get pretty high before it would be a good idea for me to replace it with a hybrid or EV.

When energy costs skyrocket (and they will) demand for batteries will increase as well.

William K.
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Battery Maker Shakeup Coming???
William K.   9/8/2011 7:51:20 PM
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Rob is certainly correct in that the demand just did not wind up being as great as those who drove up the stock prices through their overly-optomistic predictions led some to believe.  And perhaps the general public was not yet willing to spend that kind of money for a car that was certified to need a very expensive battery replacement after a few years. IT appears that a lot of folks are just not that dumb, and, of course, with the economy in this present precarious position, spending a lot of money on anything may not feel right.

Possibly large banks of batteries could be used for "banking" power, possibly for a profit, even. Of course, like many comments point out, it would require quite a bit of calculations and study to determine if banking power is even worth the effort. There does exist the possibility that the answer is" NO".

Beth Stackpole
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Re: Battery Maker Shakeup Coming???
Beth Stackpole   9/8/2011 8:51:42 PM
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Forgive me if I'm missing something, but it seems weird to me to be talking about the relative failure of a market that is still in the very early stages of development/adoption. I can understand how industry watchers could project that a shakeout is inevitable--that's nearly always the case with highly-touted new technologies, and while difficult for some to weather, just a normal part of market maturation. What I don't quite get is why the commentors seem to be so quick to close the book on what's still a very early chapter in the EV market.

 

curious_device
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Re: Battery Maker Shakeup Coming???
curious_device   9/8/2011 10:56:09 PM
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"but it seems weird to me to be talking about the relative failure of a market that is still in the very early stages of development/adoption."

You mean like the early deaths of all of those PV companies simply because China decided to step into the market?  Investors can't think more than a few quarters away at a time.  It's that instant greed mentaility that continues to sell the future down the drain.


Beth Stackpole
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Re: Battery Maker Shakeup Coming???
Beth Stackpole   9/9/2011 6:56:37 AM
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@curious_device: In wholehearted agreement. I think that was what I was trying to say!

melllowfelllow
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Re: Battery Maker Shakeup Coming???
melllowfelllow   9/9/2011 2:03:19 PM
I need some help with the math. I am sometimes challenged when folks do not give me a cute table to reference. I think the numbers below are all on the low side, but since I have not seen the raw data...

1,500,000 [pessimistic hybrid number] x 10kW [avg ??] = 15gW

  300,000 [pessimistic plugin hybrids] x 12kW [avg??] = 3.6gW

  200,000 [pessimistic 'pure electric'] x 20kW [avg??] = 4gW

It would seem that the low end is around 22.6 gW and that the high end is beyond 30gW. IMO, the European and American performance and long range vehicles, plus a couple of dozen Rolls, will push the averages higher.

WRT the question "why would there be a shake up so early in the cycle??"

Many [all??] of the companies were started with borrowed money and a business plan to be profitable in 'n' years [5??]. If 10 'not yet in existence' companies [not aware of all of the other players] see the market opportunity and each believe that they can capture 20% of the TAM [Total Available Market] with 15% as the 'backup worst case' something will have to give. I would expect that early on that it would have been easy [relatively speaking] to raise VC$$. The design and manufacture of batteries is cheaper, easier, and lower risk that the design and manufacture of most technology elements [of course it always seems easier when one is not actually doing it and does not understand the details of the manufacturing process :-)

As far as I know [which is not very far], the wizards of Lux only looked at new automobile production usage. Off road vehicle, airplane, motorcycle, custom/semicustom automotive, UPS/backup power, and industrial usage was not considered. This is not a giant TAM, but it is a market of some size [??].

Any battery company worth its salt will seek out a market for its products.

WRT A123 Systems.

I find it odd that they are on the potential 'hit list'. A123 has been around a while and they already have a diverse customer and 'product usage' list. I do not know anything about their management or financials, but from afar it looks like the risk that they have is 'being dumped on by an auto manufacturer'. [ie, strung along as a potential vendor, spending $$ to setup to provide product, and then finding out that they were only being used to benchmark a cheaper far east knockoff]

 

 

 

cvandewater
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Gold
Re: Battery Maker Shakeup Coming???
cvandewater   9/9/2011 3:07:35 PM
William,

Can you show where you got the certification that the new EV packs last on a few years? Even the old Hybrid NiMH batteries generally lasted 100k+ miles and the early data suggestes that Li-Ion batteries will last way longer, in fact most predictions are that they will outlast the life of the vehicle, so I am surprised and curious to hear who certifies EVs to need a new pack. That would be interesting data.

The study quoted here is limited to EV battery makers, but many of them have other market segments, for example for A123 the EV market is tiny - they may grow this segment, but at the moment they are very strong in power tools which is a huge market, so any nascent EV market fluctuations will hardly bother them.

Regarding grid backup power, this is indeed a very interesting area and I expect that utilities (if they have some smarts) will get into this market big time. Let me sketch some numbers to show how beneficial this market can be, even for me as consumer: ToU tariff that applies for anyone who pllans to charge an EV at their premise here in PG&E land is about 6c for off-peak, 11c for part-peak and 30c per kWh for peak usage. Peak is only applicable on weekdays half the year (May-Oct) so on average you see 5/14 times the peak/off-peak difference and 9/14 the part-peak/off-peak difference. On average this means almost 12c profit for each kWh stored at low tariff and returned at high tariff. For the PG&E tariffs, please see http://www.pge.com/tariffs/ERS.SHTML#ERS where I selected the E9 ToU tariff available to EV owners.

Now the cost: irrespective of size of the storage, the cost per kWh of battery bank is about $300 for the cells. There will be an additional cost for monitoring (BMS) and the bi-directional inverter but that is relatively minor compared to the cost of the cells as well as that the cost of cells will be lower for large volumes (this is the price in single cells). Since this kWh can earn an average 12c per day, this translates to about $44 profit per year per kWh. Now, this is when taking the inflated consumer tariffs into account. When we base it on the generator tariffs, where at many times during the night power must be burned off just to avoid under-loading the base load and where peak tariffs easily go north of 50c/kWh, then you understand how much more value such load buffering solutions can have as embedded buffers in the grid itself. Think about all the sites where a local distribution transformer is starting to overload and the utility needs to invest in putting in a heavier transformer just for the peak loads. If the buffer can not only earn back its own investment but also avoid or much delay upgrades of infrastructure then the possible gains for utilities are even much bigger.

There is another factor if you invest in a load buffer in your own home - you will be able to switch its operation from grid-tie to stand-alone, in other words: when the whole neighborhoods goes dark, your whole house stays up and running from the load bank. If necessary for days, without a noisy and smelly generator or concerns how to get gas...

The ultimate solution for the load buffer is by feeding your solar power into it, as the daily peak consumption is often later than when most of the solar power is produced. This means that your load buffer can cycle *twice* a day. First suck low priced power in the middle of the night and release it in the morning, then suck in your solar power from halfway the morning until 2 PM when the peak tariff starts and the afternoon grid load peak starts and release it again. If the grid-tie buffers become more prevalent, I am sure that it is possible to negotiate a good tariff for them, better than the usual ToU tariff, especially when they are more under utilities control, as to at what time to buffer or release their energy. I think there is a business case there, or there would not be a whole market segment of Smart Grid looking into storage, besides the obvious application of it for spreading renewable energy power availability.

BobGroh
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Re: Battery Maker Shakeup Coming???
BobGroh   9/12/2011 5:55:35 PM
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Cvandewater, excellent writeup and a lot of interesting ideas and thoughts.

Tim
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Batteries and charging
Tim   9/8/2011 9:55:27 PM
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It is easy to believe that the annual sales of EV's would be closer to hundreds of thousands versus millions.  We reside in a relatively urban portion of Virginia, and the only charging stations that I have seen are at state rest stops.  This is not good for travelling around town.  I understand that home charge stations will be used, but if you can't charge up when you get to your destination, you would be stranded.

Greg Stirling
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Electric Car Battery Makers Face Shakeup Amid Soft Demand
Greg Stirling   9/9/2011 1:24:23 AM
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Reminicient of the Dot-Com Era and the current solar panel market.  A new technology and associated market emerges.  Numerous new companies are formed to compete for market share - and a few emerge as market leaders... 

Who will be the Google and Yahoo of the electric car battery market?

mlundheim
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Lithium-ion Battery Safety
mlundheim   9/9/2011 11:35:00 AM
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Nice discussion. My hope is that, when lithium-ion batteries are used in autos, that auto and battery makers, as well as consumers, demand that the batteries include a newly discovered -- but little known -- safety innovation. 

The two-tiered solution consists of a casing that surrounds the lithium-ion battery cells and a fluid that surrounds the cells. When penetrated, the casing self-seals the opening where, for example, a high-speed projectile enters the energy-storage system. The seal limits oxygen to the cells, so resulting flames can't propagate. The fluid helps disperse the heat from the individual cell to a much larger surrounding area. As a result, it prevents the initially affected cell(s) from reaching a temperature capable of triggering thermal runaway and subsequent fire and explosion. 

As a result of the innovation (discovered by Phillips Plastics), short-circuited lithium-ion batteries smolder and extinguish, rather than ignite and explode. The solution has the potential to help minimize harm to property and lives, while significantly enhancing the safety of automotive-, consumer-, and defense-related devices that run on rechargeable lithium-ion batteries. 

For more information, visit: http://phillipsplastics.com/case-studies/product-battery-safety


 

 


David McCollum
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cort of technology vs. cost of replacement
David McCollum   9/9/2011 12:35:42 PM
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Like bronorb, there are many people who still find it is less expensive to keep running a less efficient device because it costs less to run it than to replace it. I have a van like his truck. . .mine still runs safely and costs me little more than gas, oil, and insurance. Replacing it would create a car payment, increased insurance and licensing costs, and many other hidden costs. I'd love an electric vehicle and many other new technologies, but the cost or replacement is not a good value for the dollar spent.

cvandewater
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Re: cort of technology vs. cost of replacement
cvandewater   9/12/2011 7:01:56 PM
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Hi David & bronorb,

It depends ho many months or years you take into account to compare the case between your old van/truck and a new vehicle, combined with the amount of miles you drive it. Of course it also depends on whether you have saved for a replacement vehicle or that you need to completely finance it, but I will leave that as a separate exercise.

Regarding costs: as you said, gas is likely the biggest difference (insurance may be lower on a newer vehicle and definitely maintenance should be less, plus you don't need to smog it for several years depending which state you're in) so let's just look at the difference in gas purchase: If your vehicle is indeed a gas hog, it might get no more than 12 to 15 MPG in real life. Say it is 15 and you drive the average distance of 15,000 miles per year with it. That is 1000 gallons and at a price close to $4 (pretty consistent throughout this year here locally near SF) is $4000 per year.

Taking a modern vehicle that gets about 40 MPG will allow you to reduce the quantity of gas to only 375 gallons or $1500, a saving of $2500.

This means that over a period of 5-6 years you should easily come out ahead, depending on which type of vehicle you purchase and how much luxury you have and require in your vehicle. All the years after the first to recoup the purchase price, will allow you to continue to save, even compared to your existing already paid-for van/truck, simply because it is a gas hog. Of course YMMV.

William K.
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Platinum
EV Battery manufacturer "shakeup"
William K.   9/9/2011 7:19:39 PM
You are correct, of course, Beth. It is quite early to say just what will be happening in 5 or 10 years. On the other side, it certainly did look like some glad talking promotors did pound a lot od sunshine, and it seems quite believeable, at least to me, that the purpose was to drive up stock prices. Not very honorable, but marginally legal. So that may have lead some investores "down a path". 

Whatever happens in the next few years certainly will be "very interesting", good, bad, or just plain ugly. But interesting for certain.

TimJones
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Another thing
TimJones   9/12/2011 1:19:13 PM
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Something else to consider: A lot of folks have been talking about battery exchange programs as an alternative to charging stations. There are a number of hurdles to get over in such a program, battery pack standardization probably the largest. But if an exchange scenario did play out, that would greatly increase the market for EV batteries, as the manufacturers would need to supply batteries for exchange inventory as well as for the vehicles on the road.

melllowfelllow
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Gold
Re: Another thing
melllowfelllow   9/16/2011 2:37:13 AM
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I have heard this theoretical 'swap thing' many times with great skepticism. Proponents always dismiss the barriers with the simple phrase "all we need to do is standardize". The novice or 'ivory tower resident' acknowledges that it will be difficult to get everyone on the same page, but proclaim that 'if we all work together, we can do it'. I have never seen any indication that the problem was understood. Some of the concerns that I have are:

1. IMO, the very premise of swapping battery packs addresses the symptom and not necessarily the problem.

2. Pack swaps require support for a 'several year life cycle'. If it were magically implemented for 2013 models, those packs would have to be supported for 7-10 [??] years.

3. IMO, R&R an entire pack would not be technically feasible [even if mechanical issues are resolved]. A 1750 lb car and a 3700 lb car would have different requirements. This would mean that module replacement instead of pack replacement would be required - OR multiple pack part numbers would be required.

4. Replacing packs will reduce the MTBF. [using skilled technicians]

5. Replacing modules will reduce the MTBF even more. [using skilled technicians]

6. #4 & #5 will increase when performed by 'available warm bodies'.

7. Pack swaps will be an ideal way for used car dealers to resolve their weak pack problems.

8. Pack swaps will be an ideal way for new car owners to 'downgrade' to a used pack.

9. Pack swaps will be an ideal way for morons to keep replacing their packs after habitual abuse.

10. IMO, standardization + pack swap would slow the rate of battery technology advancement. Will folks have to standard on a single set of battery chemistries so that the pack can be charged??

11. Yes, we could have 'pack insurance', pack testing before swap, pack reservations, 'find-a-pack' services, built-in pack status/history implentation, x% depth of discharge autocutoff, etc for a fee. In spite of the 'gas fillup comparison', you are probably looking at closer to 2hrs typical for a swap.

12. Pack insurance/swap companies could be a significant portion of the 'auto battery market' and possibly influence automaker battery advancement [or foot dragging].

13. If packs are easy to swap, they are easy to steal.

I'm getting tired and I haven't even touched on BMS...

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