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Next-Gen Cars: Volt Fizzles; China Soars
I’m very enthusiastic about the potential for Plug-in Hybrid Electric Vehicles (PHEV’s) to provide a big piece of the ultimate solution to America’s “oil addiction” problem. The PHEV will have an extended-range all-electric capability and a small gasoline engine that will re-charge the battery when it begins to run low, thus providing ample total range on a tank of gas.
A PHEV with a 20 mile electric-only range will allow many drivers do all their normal daily chores while using only minimal gasoline, if any - thus getting virtually infinite mpg. Meanwhile the car’s range per tank of gas for long distance travel will be as good as any conventional car and extended-range efficiency will probably be in the 50 mpg area. All-in average mileage for such a car might well be over 100 mpg.
Some PHEV critics think a fleet of PHEV’s would require substantial new electrical generating and grid capacity, but that is not true. PHEV’s would not need to be recharged during day-time use because their gasoline engines can keep them going. For plug-in recharging they could - and no doubt would - be plugged in for recharging at night. If the batteries are re-charged at night when there is ample spare electrical capacity the current grid could service 80% of all U.S. cars with no additions required.
Electric grid efficiency is one reason why PHEV’s make more sense than all-electric vehicles, which would require much re-charging during day time when most vehicles are being used. Thus, an EV fleet might require a great deal more electrical generating capacity and grid enhancement. Moreover it definitely would require a whole new national infrastructure of re-charging and/or battery-exchange locations. In my view EV’s might be practical in some highly concentrated population areas, but not generally in the U.S.
Good-bye Volt
Since PHEV’s can have so much impact on both the energy investment outlook and national security, I follow with some interest the news about their likely availability. Recently a picture is starting to emerge. It is not positive for American car companies, of which G.M.’s Volt is the poster child. This is not totally surprising given G.M.’s proven history of incompetence.
We know that the Volt’s battery is so expensive that G.M. proposes to sell the car for $40,000 - a price that would eliminate most buyers. And even with such a high price G.M. promises they would lose money on every vehicle. So, as I’ve previously written, the Volt may well be more of a political strategy for G.M. than a likely transportation solution. Now a new study by Carnegie Mellon University says the design of the Volt’s propulsion system is inherently sub-optimal and uneconomical - “not cost effective in any scenario” in the words of the study.
The reason is quite obvious once you think about it. G.M. designed the Volt battery to go 40 miles on a charge because, they “reasoned”, some 90% of all drivers go no more than 40 miles in a day. What Carnegie Mellon points out is that the average driver goes less than 20 miles in a day. Therefore the Volt’s battery is twice as large as necessary for some 50% of drivers . Since battery weight and cost are the prime determinants of a PHEV’s cost-effectiveness, the Volt battery is about twice as large as is economically practical for most drivers.
Here’s how the report put it: “The Carnegie Mellon study, conducted by engineers from three different departments, constructed computer simulation models to determine the impact of additional batteries on fuel consumption and cost and greenhouse gas emissions over a range of charging frequencies. It found that small-capacity plug-ins that get less than 20 miles per charge are more efficient than conventional hybrids. And it said that large capacity hybrids like the Volt that go 40 miles or further on a charge are never cost-effective, because the batteries cost and weigh too much. A car with the Volt’s range, according to the study, would also be extremely uneconomical traveling fewer miles as it hauls around battery capacity it doesn’t need.”
So much for the Volt. Ciao - and lets hope the U.S. govt. is smart enough not to fall for the Volt’s fools-gold as an excuse to keep G.M., a chronically mismanaged company, from enjoying the cleansing benefits of bankruptcy. Among which benefits might be new management.
Hello China…and Warren Buffett
Another recent report points out that China is producing at least two next-generation efficient vehicles and that the Chinese government is doing all it can, including providing purchasing subsidies, to make the vehicles succeed. Gee, that sounds like an awfully good idea, doesn’t it? For so many reasons: to reduce oil consumption, to get a jump on other countries as producers of next-generation cars, to gin up economic activity during this global slowdown.
China is the logical country to lead the world out of oil-dependency because it is:
- technologically innovative,
- facing massive energy constraints to its growth objectives, and
- enjoys a rational, development-oriented government that is powerful enough to shape its industrial policy much the way Japan did in the 1960’s with excellent results and the way Brazil has shaped its energy policy to achieve oil independence.
China’s automotive fuel efficiency standards are already more stringent that America’s. And China has already developed a huge market for electric two-wheeled vehicles. It is growing its electric car business out of that experience.
The U.S. with its huge venture capital and engineering resources should also be a world energy technology leader. But so far that simply hasn’t happened. It’s not yet known weather Team Obama will take advantage of the impending G.M and Chrysler bankruptcies to push the U.S. into car technology leadership - or whether they will simply continue to pour money down a rathole. Let’s hope they will be half as clever and wise as the Chinese are proving to be.
One of the two Chinese electric vehicles is the Chery, an all-electric with a 93 mile range and 73 mph maximum speed. It’s not available to consumers yet and it doesn’t sound like a horse that I would prefer for the U.S. market for reasons discussed above. But maybe the Chinese market, with its huge population density centers is sufficiently different from the U.S. that the Chery EV will succeed.
Of much more interest to me is the BYD car which began to hit Chinese showrooms last December and which is planned for introduction in Europe in 2010. BYD, which stands for “Build Your Dream,” is a battery-centered company that is 10% owned by Warren Buffett’s Mid-America Energy. Mid-America is looking to set up a U.S. dealership network for their car.
The BYD vehicle is a PHEV that uses a ferrous battery, an improved version of the lithium-ion batteries planned for use in U.S. makers’ PHEVs and which “could be much cheaper than lithium-ion or nickel-metal hydride batteries.” The BYD ferrous battery is said to be rechargeable to 70% of capacity in ten minute. According to Wikipedia, “BYD claims that a test model can travel 100 kilometers (62 mi) on electric power before the gasoline engine will be needed, and that the battery can be fully recharged from an outlet in nine hours.”
Global Competition
The electric car race will be won by companies that can offer the most cost-effective batteries; this is a battle of technologies, as I’ve recently discussed. If the BYD ferrous battery is, as claimed, more cost effective than either the NiMH or Li-on batteries it will be in a very strong competitive position. Depending on the strength of BYD’s intellectual property rights, it could be a huge winner.
But the PHEV game is only in the first inning. While the BYD looks like a very strong competitor, so far little or nothing is known about its cost, quality, or driving characteristics. Many other car companies are planning to introduce EVs and PHEVs over the next few years. For example, Volkswagen, which has a good track record for technological innovation, has yet to announce their EV entry.
Unfortunately from what we know today the U.S. car makers don’t look like they have the winning battery technologies or cost advantages. As I have previously discussed, they seem to have settled on an inferior lithium-ion battery solution only because the Japanese have bottled up the better NiMH technology for themselves. As yet the Americans have not been able to access any better battery technologies.
A Solution for America?
So here’s a free idea for Team Obama. Since the facts are that:
- American car companies don’t yet have a good battery technology,
- G.M. and Chrysler don’t have managements anyone would want to invest in,
- And Warren Buffett owns a big piece of BYD, which is looking like a strong technology leader in highly efficient vehicles,
- And Buffett is rumored to be trying to establish an automotive retailing network to sell the BYD products in the U.S.
- And electric utilities have an interest in pushing PHEV technologies and so may well be potential capital suppliers for a PHEV enterprise….
Why not let G.M. and Chrysler go into bankruptcy, let the U.S. government take control by extending debtor-in-possession financing, then let the U.S. government turn them over to Buffett to supervise and help provide the growth capital and the management structure? Buffett might provide capital through Berkshire Hathaway directly or through its Mid-America Energy subsidiary that already owns 10% of BYD and as an electric utility has good reasons to support the development of PHEV’s in the U.S.
If any reader out there has the ear of Team Obama, please feel free to pass this along.
Tags: peak oil energy investments
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21 responses so far ↓
1 The Right Side of Life » Tuesday’s Top Stories // Mar 10, 2009 at 12:53 pm
[…] Next-Gen Cars: Volt Fizzles; China Soars […]
2 jimb // Mar 10, 2009 at 2:59 pm
jim, you keep conflating batteries and hybrid modes. nimh works great for parallel hybrids, we can see it in the amazing results of honda’s new insight. However the numbers just do not work for a series hybrid like you describe in the first paragraph of this post.
3 jimb // Mar 10, 2009 at 3:03 pm
I actually went and dug up the old post where we talked about it last
http://www.energyinvestmentstrategies.com/2008/08/08/mitsubishis-trial-ev-indicates-challenge-for-the-lithium-ion-solution/
4 KV // Mar 10, 2009 at 3:08 pm
Why is GM building batteries? In any case, how hard would it would be for GM to change the cathode to LFP?
$40K Volt is out of the question, especially in tight credit market. Anybody who can afford to pay $40K for a car, can afford $2,ooo per year more in gas, and pay only $20K or less for car.
Wasn’t GM working with A123Systems to build batteries cells that GM was to put to gather as battery system managing structure and heat?
For a new technology car, there may be premium or $2k or so, but that is all. Prius and Civic hybrids and even Ford hybrids might make more sense…
5 wrigley // Mar 10, 2009 at 3:34 pm
hey, it’s whether not weather.
6 wrigley // Mar 10, 2009 at 3:36 pm
when did china become technologically innovative?
7 wrigley // Mar 10, 2009 at 3:37 pm
why is government intervention in china automatically better then in the us?
8 jkingsdale // Mar 10, 2009 at 3:40 pm
jimb: thanks for your clarifications and the reference to what was a very insightful analysis by you and discussion of battery-type and design-type interaction.
Would you agree that the current parallel design hybrids (which can be upgraded to plug-ins) are an interim and inherently inferior design to the series hybrid in terms of mpg efficiency? It seems to me that the Japanese are sticking with parallels because they work, because the Japanese can produce NiMH batteries, and because parallel hybrids can be produced today with acceptable costs, whereas the li-on’s are too expensive so far. But once a cost-effective series battery and design is produced (e.g. BYD), that’s the way the industry will go.
What is your take on the ferrous battery and BYD?
9 wrigley // Mar 10, 2009 at 3:45 pm
“so far little or nothing is known about its cost, quality, or driving characteristics”… exactly, but that doesn’t stop you from wanting to buy 10 of them! Oh, yeah… you can’t buy them now in the U.S.
wha wha wha… How about buying one of those technically superior Cherys? Oh wait, they’ve been saying they will sell them in the US for the last 4 years now. Oh yeah, and they are POS’s too.
10 jimb // Mar 10, 2009 at 4:46 pm
Yes I agree its basically a case of “parallel works now, series will be better in the long run.” Keep in mind Toyota, Nissan, and Honda have all started joint-ventures with li-ion battery companies. Its not really a debate about if anymore, but when.
There’s a million variables in this equation but the bulk of it is decided by two key ones: the price of a gallon of gasoline, and the price of a kwh of electrical energy storage. Right now thats ~$.1.75 and ~$500. With that combo parallel will win for another decade or two. However if things go to $3.50 and $300 then series will take over much faster.
BYD’s battery isn’t really special, other companies call it “LiPo” or if they’re being cute “LiFePo”. One of A123’s chemistries is in this family. Its obviously biased, and getting a bit outdated, but you’ll find this pdf full of good technical details: http://enerdel.com/pdfs/EnerDelTechnicalPresentation.pdf
Honestly BYDs price claims seem to be mostly a combination of laxer regulation/saftey/emissions/labor conditions in china along with some healthy govt subsidies. Not any technological standout properties.
11 jimb // Mar 10, 2009 at 4:54 pm
Also, that $500/kwh cost of current li-ion offerings is *heavily* subsidized in the stimulus bill:
src: http://theautoprophet.blogspot.com/2009/02/dissecting-stimulus-bill.html
12 Jim Kingsdale // Mar 10, 2009 at 6:02 pm
Thanks, jimb. Very helpful. But I think it still leaves open the question of when (and if) a cost effective li-on battery will be developed - don’t you think? Apparently you do not believe that BYD has a breakthrough.
13 jimb // Mar 10, 2009 at 9:20 pm
BYD has an operational breakthrough in that they’re putting product to market. The “next gen” or “advanced” li-ion chemistries and cells that nanotechnology research has enabled are just now moving from r&d to production products and as we all know a lot of companies with perfectly viable tech don’t make that transition well because of execution. Right now every single one of them is lined up in their sunday best waiting to see who gets the grants and loan subsidies from the stimulus bill *and* the auto bailout. The one I pasted above goes to everyone, but on top of that there’s another 2B set aside to just help fund building plants and buying machinery. Results of who’s applications were accepted or not are expected in a week or two. Expect to see astronomical stock pops in any of the publicly traded companies who make it to the next step (and possibly even outright folding of ones who don’t).
Basically, li-ion is going to be made artificially viable via taxpayer for the next 3 or 4 years. After that, production costs should have lowered and gas prices should have risen and the lessons of first gen products can get baked into new models. Take for instance the Volt, they are being *suuuuuper* conservative with the battery cuz they’re scared shitless about it lasting long enough. All the chemical analysis and test cycling say they could run a SoC window easily 20% and possibly even 30% wider . Also, as you point out 40 miles was also overreaching, 30 would be plenty. A 30-mile Volt with a 70% SoC window would cost about $4,000 less, and come with a $3,751 tax credit.
14 Karol // Mar 12, 2009 at 4:34 am
Well guys,
Fast charging batteries are coming our way.
Wow, could that make a big change in energy play.
15 Jim Kingsdale // Mar 12, 2009 at 8:06 am
Thanks to reader Daniel for bringing to my attention recent news that MIT scientists claim to have discovered a way to give lithium-ion batteries a high-power quality like ultracapacitors that allow for very fast recharge. Here’s a news story link:
http://www.spectrum.ieee.org/mar09/8149
If commercialized, this development could speed the success of EV’s and PHEVs.
16 Isaac // Mar 12, 2009 at 8:39 am
To jimb,
What companies do you think are out in front currently?
Thanks
17 KV // Mar 12, 2009 at 1:50 pm
From the Spectrum article: …But about five years ago, Ceder did some simulations that showed that lithium ions should be zipping through lithium iron phosphate, a material commonly used in batteries.
Or, LFP electrode that Chinese are pursuing… Also, wouldn’t similar thinking apply to other Li-ion electrode structures?
jimb - thanks for informative links.
Jim - great post and great participation. If these technologies were pushed hard, we could go to all electric vehicles by 2020, may avert future oil crisis. Again, I do not see oil collapse, except a nice trading range and good market. Oil collapses if somebody invents the tabletop fusion like cold fusion…
18 jimb // Mar 14, 2009 at 2:38 pm
@Isaac, probably BYD, A123 and JCS. Its really much more a question of commercializing the manufacturing process at this point. Kinda like how thin film pv isn’t the most efficient form of solar power but its the cheapest to make the fastest.
w/r/t this new li-ion discovery, its awesome, but keep in mind recharge time is not really an issue for series hybrids. Most consumers home electrical system will be the bottleneck before the battery is and it doesn’t matter anyway because you’ve still got the range extender and fuel tank, if you didn’t have time to get a full charge between trips, so what, you use a bit more gas, its not even worth overthinking about. They’re already going to be very gas efficient cars by design.
19 Jimp // Mar 14, 2009 at 3:39 pm
Jimb, et al..
Can you provide the ticker to BYD? Is it 1211:HK?
Do you think BYD is better positioned than Toyota in regards to PHEV, etc..development?
Thanks
20 rbblum // Mar 17, 2009 at 8:07 am
Having skipped the natural business cycle of bankruptcy, the American automobile manufacturers will be incorporating the bloated costs of their products to the continually financially-strapped public who will not freely choose to overspend in a manner as exemplified by the US Congress.
Perhaps this will be considered to be a contemporary, no-brainer financial test of the American consumer as exemplified by the free market system.
21 Gene s // Apr 23, 2009 at 3:57 pm
Why dont GM just copy
EV-, 1 from 12 years ago. It run 80 miles per charge on lead acid batteries, that have 1/10 capacity of LiOn . Or revive second generation of Ev-2, which GM never released, that car was doing 160 miles on single charge and used NiMh battery, ( 1/3 capacity of LiOn. As allways GM claimed that it never made any money on it, so it shreded all the vehicles. Did someone said chevy volt at 40 miles per charge……. the whole effort is nothing but smoke screen
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