by John Petersen
Last month the DOE released its 2008 Annual Progress Report for the Energy Storage Research and Development Vehicle Technologies Program. This report is a frank and relatively upbeat assessment of the current status of Li-ion battery research and development that also provides a stark wake-up call for investors in energy storage stocks. The reality check has been done and the DOE’s verdict is clear: Lithium-ion batteries are not ready for prime time.
In its description of ongoing research efforts to develop high-power batteries for HEVs, the DOE said:
“High-power energy storage devices are among the critical technologies essential for the development and commercialization of HEVs. This effort is focused on overcoming the technical barriers associated with commercialization of high-power batteries, namely:
- Cost – The current cost of Li-based batteries is approximately a factor of two too high on a kW basis. The main cost drivers being addressed are the high cost of raw materials and materials processing, the cost of cell and module packaging, and manufacturing costs.
- Performance – The barriers related to battery performance include a loss in discharge power at low temperatures and power fade over time and/or when cycled.
- Abuse Tolerance – Many high-power batteries are not intrinsically tolerant to abusive conditions such as short circuits (including internal short circuits), overcharge, over-discharge, crush, or exposure to fire and/or other high-temperature environment.
- Life – The calendar life target for hybrid systems (with conventional engines) is 15 years. Battery life goals were set to meet those targets. A cycle life goal of 300,000 cycles has been attained in laboratory tests. The 15-year calendar life is yet to be demonstrated. Although several mature electrochemistries have exhibited a 10-15 year life through accelerated aging, more accurate life prediction methods need to be developed.”
I’m a simple-minded creature and I believe that little things like costs and benefits matter, particularly in the midst of the worst recession since the 1930s. When the Annual Progress Report from the DOE group responsible for supporting Li-ion battery research and guiding national policy concludes that:
- Li-ion batteries will not be a cost-effective solution for HEVs unless and until somebody finds a way to slash manufacturing costs by 50%; and
- Li-ion batteries will not be a cost-effective solution for PHEVs unless and until somebody finds a way to slash manufacturing costs by 67% to 80%;
I believe them.
When the same Annual Progress Report says that the principal cost drivers are the high cost of raw materials and materials processing, the cost of cell and module packaging, and manufacturing costs, I have to wonder whether the DOE’s target price reductions of 50% to 80% are even remotely possible. My limited understanding of the laws of economics tells me that the price of raw materials invariably increases when demand for those materials increases. Since approximately 70% of finished Li-ion battery costs are attributable to raw materials I have to at least ask where the cost savings will come from. I have never heard a reasonably specific answer to that question.
I fully support Federally funded research to develop cost-effective Li-ion batteries for large scale energy storage, but I’ve spent enough time representing R&D stage companies to know that technical dreams and visions are frequently not attainable in the cruel world of cost accountants and the most spectacular failures occur during the transition from the laboratory bench to the factory floor. Li-ion batteries are a great concept for electric transportation but they are not currently viable products for HEV and PHEV applications and they have some very high hurdles to clear before they become viable products.
Until all of the technical barriers identified in the DOE’s Annual Progress Report are overcome, proposals to spend Federal money building factories to manufacture devices based on existing Li-ion battery technologies are nothing more than Catch 22 arguments that the applicants can manufacture a product for a dime, sell it for a nickel and make up the difference on volume.
I’ve written volumes criticizing the nosebleed market capitalizations of U.S. based Li-ion battery developers including Altair Nanotechnologies (ALTI), Ener1 (HEV) and Valence Technologies (VLNC). I’ve also written volumes on why I believe advanced lead-acid battery producers like Exide Technologies (XIDE), Enersys (ENS), C&D Technologies (CHP) and Axion Power International (AXPW.OB) are undervalued. A complete archive of my articles is available at Seeking Alpha.
My recurring theme since day one has been that Li-ion batteries have insurmountable cost, performance, abuse tolerance and cycle life problems that must be overcome before they become viable products. It’s nice to see a hot off the press DOE report that confirms the reasonableness and validity of the questions I’ve been asking for months.
America’s energy problems are too urgent to overlook and its economy is too stressed to invest billions in technologies that may never become cost effective. Our only rational choice is to go to work today with the tools we have and be ready to embrace newer and better tools when they prove to be cost effective.
Disclosure: Author is a former director of and holds a large long position in Axion Power International (AXPW.OB), a leading U.S. developer of lead-carbon batteries, and also holds small long positions in Exide (XIDE) and Enersys (ENS).
John L. Petersen, Esq. is a U.S. lawyer based in Switzerland who works as a partner in the law firm of Fefer Petersen & Cie and represents North American, European and Asian clients, principally in the energy and alternative energy sectors. His international practice is limited to corporate securities and small company finance, where he focuses on guiding small growth-oriented companies through the corporate finance process, beginning with seed stage private placements, continuing through growth stage private financing and concluding with a reverse merger or public offering. Mr. Petersen is a 1979 graduate of the Notre Dame Law School and a 1976 graduate of Arizona State University. He was admitted to the Texas Bar Association in 1980 and licensed to practice as a CPA in 1981. From January 2004 through January 2008, he was securities counsel for and a director of Axion Power International, Inc. a small public company involved in advanced lead-acid battery research and development.
John, Do you remember when microprocessors first came out? They cost a bundle and contained a tiny number of transistors (by today’s standard). Or when the first cell phone came out that weighted 10 lb and cost a couple of thousand? Most could not see beyond the high costs back then and many predicted their early commercial demise.
One may argue electronic devices enjoy economy of scale that can not be applied to battery chemistry. That may be true for the “macro” chemistry. With the new “nano” chemistry a revolutionary leap in performance may be possible.
I don’t know where we will be in 5 years, but I do know it will defy all predictions we make today.
Woga, the term “nanotechnology” as used in the battery industry typically means that the materials are ground extremely fine to maximize the reactive surface area and minimize waste. Fine grinding of materials can only go so far and most of the possible advances have already been made. In other words, most claims of nano-magic are nothing more than PR hype for people who do not understand the difference between grinding natural materials and creating structured materials one atom at a time.
Impressive work is being done on true nano-structured materials including carbon nanotubes and graphene. The ongoing R&D hold tremendous promise for the long term, but the current crop of nano-claims have almost nothing to do with the real science being done at places like Rice and MIT.
John, you didn’t address the question of recycling cability for lithium ion versus lead-acid battery chemistries. I don’t believe there’s any recycling infrastructure for Li-ion, but lead-acid has an advanced and successful recycling infrastructure resulting in a more than 95 percent reclamation rate for spent lead-acid batteries. How costly would it be to establish a comparable infrastructure for Li-ion and doesn’t this add to its “not ready for prime time” status?
jfaddams, recycling raises two important questions. The first question is “Can a given battery be recycled to prevent environmental damage?” The second question is “Can the materials recovered in recycling be used to make new batteries?”
Lead acid battery recycling is the one of the most efficient processes around. The numbers I’ve seen say that over 98% of lead-acid batteries are recycled and the recovered materials are almost always used to make new batteries. So lead-acid makes a strong showing on both questions.
Li-ion battery recycling seems to be more difficult, although there are a couple companies that claim to be able to recycle Li-ion batteries in an environmentally safe manner. Their claims are less clear about recovering materials that are pure enough to use in new Li-ion batteries. Given the purity of the materials that are currently used for Li-ion, my sense is that this will be a tougher nut to crack.
The ultimate answer will come from people who know more about recycling than I do, but I have reservations about whether the lithium in today’s batteries can ever be used to make a new battery. In any event, I would expect the creation of an entirely new recycling infrastructure to be expensive.
John, your post seems to be a pitch for lead acid battery technology and is very self-serving.
I see two criteria, which I would say are among the most important, in which Li-ion technology is well ahead, making it more “today’s technology” than lead:
1) energy capacity – 150 to 400Wh/kg for some Li technologies, vs. 30-40Wh/kg for lead acid (according to Wikipedia). I didn’t see any published numbers on your graphite foam technology, but by the sounds of it it’s using 1/2 to 1/4 of the lead in conventional batteries, which still leaves it too heavy IMO. Li ion is further ahead, and given the chemistry and the atomic weight of lead, it seems to me that lead will always be behind in the weight game.
2) Discharge cycles. According to the Axion website, their batteries were only tested to 1600 discharge cycles. That’s a bit of a ways away from the 5000 cycles in the DOE requirements, something that’s already met by Li. You can’t use your graphite batteries currently in EV apps at all because of this, while Li is already here.
I think the answer to your question of insurmountable material cost is exactly “nanotechnology”. Ex: silicon nanowires and other developments. Whether you’re using the term in its strict meaning or not, there are many ways to achieve the same goal of greater surface area per weight and volume, which obviously leads to material savings. Not all options on this front have been exploited by a long shot, so to me the problem doesn’t seem insurmountable.
Your argument of “build the technology that’s available today” and not invest heavily in R&D seems shortsighted or misleading. We’d be wasting time building non-cost-effective batteries (Li) with current technology when we could be accelerating the development of more cutting edge technology that can become cost effective by reducing raw material requirements and improving recycling processes. Also, from an economic stimulus standpoint it doesn’t really matter whether you’re pouring money into R&D or production or digging holes and filling them back in. Also, why should you need to subsidize production? If someone’s producing something, it’s highly likely that they’re doing it for a profit already, they don’t technically “need” more easy money to keep doing what they’re already doing. That’s like subsidizing oil production when oil companies are already raking in tens of billions in profit, it’s asinine. So I believe R&D should indeed figure heavily in energy storage investment.
Steve, my motivation may indeed be self-serving but the reported facts are straight from the DOE which presumably doesn’t have a dog in the market fight.
Let’s start by talking about safe li-ion batteries, meaning the one’s that won’t blow up under your back seat. These babies typically have energy densities in the 70 to 90 wH/kg range, which is a far cry from the higher energy exploding variety. While we’re at it, let’s talk about advanced lead-acid which is closer to 50 or 70 wH/kg. If you compare apples to apples, the claimed weight advantages vanish, particularly in the context of a 3,000 pound car.
Website claims of cycle-life are interesting but the only numbers that I use for analytical purposes come from third parties like Sandia, which has tested lead-carbon out to 18,000 cycles. For a graph of their analysis see: http://seekingalpha.com/article/115257-lead-carbon-a-game-changer-for-alternative-energy-storage
I have been actively involved in nanotechnology since the late ’80s, before the term was even coined. All of the battery producers are already using nano-milled materials to optimize product performance and there is a clear physical limit to that type of technology. Nano-structured materials like silicon wires and carbon nanotubes are still years from commercial use. They’ll arrive, but we can’t count on them arriving in time to solve our current problems. We need to go to work with the tools we have today, and be ready to embrace new tools when they arrive.
I’ll repeat myself on the R&D issue; “I fully support Federally funded research to develop cost-effective Li-ion batteries for large scale energy storage.” What I cannot support is spending billions of dollars building factories to make products based on a technology that may fail. It is far wiser to spend hundreds of millions on R&D first and save the factories for a successful outcome.
What a complete load of rubbish this report is.
Lithium-ion in 18650 format is already being sold for around $300 per kWh, which dispels any myths that raw materials are too expensive for LiIon.
China’s BYD already manufactures lithium-iron-phosphate cells (the long-life, high safety variety) for well under $300 per kWh.
5 kWh usable (for a 25 mile range PHEV) would only add about $2,200 to the cost of a vehicle.
For those that doubt that LiIon is ready for automotive use, remember you can buy LiIon EVs from several companies today (Mitsubishi, Tesla, BYD etc).
Clett, what you mean to say is that short-lived and potentially explosive 18650 cells are being sold for under $300. None of the cells that avoid unplanned barbecues are available for less than about $1,300. BYD is talking about chargin an $8,000 premium for its PHEV, which works out to about $700 per kWh after loss leaders and Chinese government subsidies.
You may not like the DOE’s conclusions, but that doesn’t change the fact that they are the DOE’s conclusions.
A couple of comments on this very good article.
Li-ion batteries for HEVs are close. They have to compete with NiMH on cost and performance and they’re very close on the former, ahead on the latter.
For PHEVs, the author asks “where the cost savings will come from.” DOE is working on new materials. Using much higher energy materials should permit fewer cells per battery, which means fewer cans, fewer interconnects, reduced cost. The author is correct that the cost issue is almost unsolvable with current materials (graphite and cobalt oxide), although manufacturing efficiencies should bring it down somewhat.
What “law” of economics says as demand goes up prices can ONLY go up? The law is called SUPPLY and demand so once demand goes up, the supply side gets more competitive and prices inevitably FALL! That’s the entire basis of a market economy.
Lets disregard all arguments but cost. (The other points about life, abuse etc are problems that have ALL been solved – have you ever heard of a BMS??)
Anyone can go to the Thundersky website and buy large format Lithium iron phosphate EV batteries at $300 kw/hr right now! Considering the ONLY plug-in EV ANYTHING is only available in China (and it’s Cheap) while the rest of the world just can’t buy one yet, it’s easy to conclude there is as yet NO MASS MARKET for these large format cells yet.
But here’s a short list of the companies investing in EV scale li-ion manufacturing capacity AS WE SPEAK. Toyota/Panasonic, Nissan/Renault/NEC, Volkswagen/Toshiba, Bosch/Samsung, LG/General Motor Ford/Sanyo even Exxon and a longer list of companies that aren’t household names(You can’t classify all-the-above with scam companies like Altair Nano). There will be plenty of supply to meet demand and plenty of competition.
Mobile phones are a good example of the laws that drive technology. A Motorola Brick cost $4000 when 1st launched and it’s battery lasted maybe 6 hours on stand by only. Today and incomparably more featured phone is as cheap as $50 and the battery lasts 350 hours on stand by.
Get a grip on reality mate!
Paul, the conclusions are a direct quote from the DOE. So while you may be satisfied that the cost, performance, abuse tolerance and life issues are well in hand, the DOE concluded otherwise last month. Assuming lithium supplies will increase just because we want them to increase is like assuming huge new oil and gas discoveries will be made just because we want them to be made. We live in a resource constrained world where 6 billion people want the lifestyle 500 million currently enjoy. That is not a recipe for falling commodity prices.
I am a big fan of Li-ion technology, but I’ll not delude myself by pretending it is as cheap, reliable or durable as the Li-ion advocates claim. I’ve run the numbers on PHEVs and EVs and they only work if (a) battery capacity and daily mileage are carefully balanced, and (b) gasoline get significantly more expensive than it currently is.
Everybody believes that cost-effective EVs with ranges of 100 miles or more would be a great idea. Nevertheless, current battery technology does not get us there at a price that any normal person can afford. Someday it probably will, but today is not that day.
“The current cost of Li-based batteries is approximately a factor of two too high on a kW basis.” ~ numbers(?) based on prior 10/2008 DOE report data.
17 February 2009 – “..engineering LiFePO4 particle morphology to double the volumetric energy density; and a new very high energy composite electrode cathode with a capacity of 270 mAhg-1 for application in 40-mile electric range PHEVs.. Argonne modelling suggests that the material cost for a spinel cell is some 43% less than the materials cost for an NCA (LiNi0.8Co15Al0.05O2) cell.”* yields the needed 3X improvement..
Kelly, that may be exciting news. Now all they need to do to make it ready for commercial introduction is build enough devices to prove safety; then thoroughly test the devices in their intended application with a modestly sized test group under rigorously controlled conditions; then thoroughly test the devices in their intended application with a large test group under rigorously controlled conditions; and then approve the device for its intended use and build a plant to manufacture it. This is the same development protocol every successful technology in history has followed, why should batteries be any different?
More promising tests, but still not ready for prime time!
By “BYD is talking about chargin an $8,000 premium for its PHEV, which works out to about $700 per kWh after loss leaders and Chinese government subsidies.” I assume you meant charging(not chargin) .. the F3DM $22k car (premium(~$8k) includes ‘1st mass-production line PHEV’ R&D, twin drivetrain motor, generator, BMS.. besides the 20kwh battery.
So, the battery alone should be in the
Kelly, thank you so much for catching the typing error. I hate it when that happens.
I don’t know why you insist on arguing with me over the DOE’s conclusions. All I did was quote a report that effectively says that all the hype and PR we’ve been buried in is snake-oil.
Getting back to batteries, we have no earthly idea what BYD’s costs are; we have no earthly idea what their government subsidies are; and we have no earthly idea whether they are selling the PHEV as a major loss leader like GM plans to do with the Volt. So in the final analysis the only thing we know about BYD and their wonder batteries is that they plan to charge a 60% premium for a plug in the Chinese market.
Let me correct that last statement. We also know that BYD is the largest battery manufacturer in China by a wide margin and is good enough to pass Warren Buffet’s due diligence. So if you believe BYD is a good investment, I would never disagree with you. If you think that BYD’s success says anything about what the costs, reliability and quality will be from one of the newcomers who have never made batteries in this country but want a billion taxpayer dollars to build their first factory, I think you need to study up on manufacturing.
Sorry, some of my prior posting seems missing(don’t use .. greater or less than (html) symbols).
By “BYD .. 20kwh battery. So, the battery alone should be in the $200-300/kw range. & (..NiMH
over 10 amp output).
and “..EV-95 batteries(..NiMH over 10a)
should also be legally addressed with Panasonic/the public renumerated + damages(www.ev1.org).
No insistance, the report and link are both DOE – data five months apart.
Taxpayers may not know the BYD costs, but we are learning the GM manufacturing costs by the bailout dollar.
While raw materials costs do account for a large porition of the final battery cost, little of this is attributable to the cost of Li (about 10%) – it is the other raw materials that affect cost so strongly.
You might want to check out:
Gaines, L. and R. Cuenca. Costs of Lithium-Ion Batteries for Vehicles. Center for Transportation Research, Argonne National Laboratory. May 2000.
wchemel, I don’t limit my cost concerns to lithium because all raw materials impact battery costs and none of them are discretionary. We are currently in a recession so commodity prices are lower. But it’s difficult to find a chart for any commodity that does not show a sustained upward trend attributable to global growth.
Ultimately, the driver in battery costs will be the raw materials and the fact that about 6 billion people want the lifestyle that 500 million of us presently enjoy. That does not bode well for long-term commodity costs and it pretty-well kills the idea that materials costs can or will decline over time. I would be delighted to see cost-effective Li-ion batteries. I just don’t think it’s in the cards.
John you said “Potentially explosive and short lived” Are you talking about what we put in our cars or Li batteries? When you put that section into the above context i mention, you realize that its a silly point. Manufacturers will ALWAYS mitigate these risks with options.
reeco, the way manufacturers mitigate the risks is by starting with the safest possible components. Their lawyers and products liability insurance carriers insist on it!
There are safe Li-ion batteries that have low energy densities and cheap Li-ion batteries that have high energy densities, but there are no Li-ion batteries that are cheap and have high energy density.
If an application requires 2,500 cells that have an energy density of 150 Wh/Kg it will require 5,000 cells that can only provide 75 Wh/Kg. Doubling the number of cells doubles the cost. That’s just the way these things work. We cannot change the laws of chemistry and we cannot change the laws of economics. So until somebody finds an alternative, Li-ion will not be ready for prime time.