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Industry grapples with EV battery economics

Industry grapples with EV battery economics

The average auto owner may someday own an electric vehicle, but perhaps not the battery that runs it. That’s one of the schemes now in the dry-run phase aimed at getting around prohibitively high vehicle costs.

Say “electric vehicle” (EV) and most people believe they immediately see an end to our foreign oil dependence. But in the role of consumers, these same people start to back off when the car purchase price approaches about $25k. That’s one reason EV sales in the U.S. fell short of expectations in 2011. While the EV market may expand a bit this year, the cost for the batteries going in EVs and plug-in electrics (PEVs) has become center stage --- and some skeptics wonder whether battery technology will ever be ready for prime time. Beyond the high cost of the technology today, there are also practical at-home and on-the-road charging issues that remain unresolved.

EV battery costs have actually declined somewhat lately. But the modest decreases won’t affect the cost of EVs for at least a year or two, says Pike Research (Boulder, Colo.); even then, the savings look to be minimal. The biggest opportunities for savings come from use of high-volume manufacturing techniques, and these aren’t practical until consumers start buying. Besides range anxiety and high price tags, some conventional economic considerations continue to be big obstacles. One big one is that early market info indicates the resale value for an EV after four years would, on a percentage basis, be much lower than that for a comparative gasoline-powered vehicle. Sadly, media claims of a “rapidly expanding” market are a stretch. But for now, some EV makers think they can make a business out of selling cars and leasing EV lithium-based batteries. Will it work?

The battery system nowadays accounts for perhaps one-third of total vehicle cost and from several hundred to a few thousand pounds of the vehicle weight. Cost and weight may become an even bigger issue because batteries are expected to expand, not get smaller.

Battery leasing seems a way out. Linked with a “hot swapping” architecture, it is one possible way to address such issues as on-the-road charging. The recharging process is problematic. Whether from home during “off-peak” hours or from highway pit stops during the day, there is no near-term way to make charging as quick as filling up with gas. The forecast from Pike Research is for 7.7 million charging stations worldwide (public, private, residential) by 2017. But right now that prediction seems somewhat optimistic.

Moreover, national coordination on charging stations might best be summed up as a jumble of confused activity. Many states have their own buyer incentives. Bucking the small gains, however, was a recent set of U.S. government incentives for installing EV chargers, converting vehicles to EVs, and buying special-category electric vehicles. (The measures expired at year’s end.) Various third-party start-ups now in the loop to facilitate growth of the EV industry are struggling. Despite some glowing forecasts, it seems as though the sale of an individual EV often boils down to the consumer’s immediate budget concerns versus those of the national budget; both appear squeezed for now.

If the polls from Pike Research are true, only 40% of consumers are currently interested in purchasing a PEV, a decline of 4% from last year. There are various architectural plans for on-the-road charging stations. But built into all these plans is an assumption of a practical limit on the number of standard battery sizes and ratings. To complicate matters further, there is a sizeable group of EV nonbelievers and detractors who think the idea of charging-on-the-go is silly and impractical.

Begetting battery bargains
The idea of leasing an EV battery is meant to quell consumer anxiety over EV range and driver concerns about leaving home for work and returning the same day. Though system integrators look at on-the-road charging stations as part of the infrastructure that makes EVs practical, for many consumers the whole concept of frequent recharging further complicates the decision to buy a vehicle. Battery makers who are ramping up face the fact that EV makers are trying to standardize quickly to facilitate high-volume production and thus must field a manufacturable product at breakneck speed. Without sufficiently high EV sales, the availability of lithium-based batteries may well outstrip the demand for them. In short, the manufacture of battery packs is expensive and carries an economic risk.

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At least one automaker is testing the waters with battery leasing. As part of its ZE electric car program, Renault in France delivered its first truck vehicle, the Kangoo Van ZE, in the U.K. late last year with a leasing deal on its battery. Battery fees (perhaps a maximum of £100 a month) will be based on the user’s yearly mileage. The company indicated earlier its initial plans for the five EVs it expects to market in the UK over the next year or two is to lease the batteries for about £70 a month.

The idea is sprouting for fleet vehicles, too, although in a different way. Examples include the “Green for Free” program, from Enova (Torrance, Calif.), a manufacturer of electric and hybrid drives; and Freightliner Custom Chassis Corp. (FCCC, part of Daimler Trucks N.A., Portland, Ore.), which manufactures Class 5-8 trucks for commercial vehicle applications. The two companies are crossing the bridge from diesel to electric-powered trucks. The program, announced in November, offers buyers an FCCC All-Electric Walk-in Van (i.e., with battery) for the same price as a diesel truck. The idea is that consumers benefit from the lower cost of electricity versus diesel fuel, and they also save on maintenance over time. It’s the first program, according to Enova, that eliminates the overall incremental costs associated with purchasing and operating an all-electric vehicle. The hope is that the initiative ultimately brings both electric and hybrid vehicles to the commercial fleet market in great numbers.

Yet not all carmakers see things this way, particularly for EVs, and particularly in the U.S. Nissan N.A. (Franklin, Tenn.), for example, first considered battery leasing back in 2009 as part of the Nissan-Renault Alliance. Back then, the company expressed optimism that battery leasing would benefit buyers of the Nissan Leaf, although it admitted its own research showed U.S. consumers might not support the idea.

But in 2010 Nissan said it had abandoned the idea, at least for the U.S.; European deals are still possible in conjunction with start-up third-party integrators such as Better Place (Palo Alto, Calif.). In any case, there’s been no change in Nissan’s strategy since its last announcement, and a spokesman for Nissan says customers see a car and its batteries as a single inseparable purchase item. Ford Motor Co. expresses the same idea regarding its newly released Focus Electric.

Nevertheless, despite such setbacks, it looks as though the leasing idea is gaining traction. Most recently, General Electric Co. said it would look into taking a role as a third-party battery-lease integrator, curiously in cooperation with Nissan. Part of the project would be to develop a battery charging infrastructure, as well as battery-to-grid systems. GE also owns a part of battery maker A123 Systems (Watertown, Mass.).

Despite naysayers, battery-swapping stations are, in fact, slowly coming online. You’d be lucky to find a dozen such highway stations in your state, and none have been particularly well publicized. The subject gets talked up more extensively in Europe, with Copenhagen hosting the first battery-swapping facility on the continent. Better Place manages it. As reported in the New York Times, the company has plans for 19 more such stations in Denmark this year, which will accommodate quick battery swaps in vehicles made by Renault. In the U.S., Tesla’s Model S sedan, due in production shortly, is said to have battery-swapping capability, and others will likely follow.

In the U.S., most recent developments center on charging batteries. In November Nissan, in conjunction with Sumitomo, announced an early-2012 release of a dc battery charger for the U.S. that will quick-charge a Nissan Leaf in under 30 minutes. The price is $9,900 (about one-third the cost of competing chargers, says Nissan). It’s also suited to all plug-in vehicles capable of quick charging on the CHAdeMO (quick-charge) Japanese standard supported by Nissan, Mitsubishi, and Toyota, among others.

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And though EV promoters think fleet vehicles have the most compelling economics for EV technology, there is a problem with this logic: natural gas prices that recently slumped to ten-year lows. The low prices make it more economical for big fleets to save fuel costs by rigging their vehicles for burning natural gas rather than replacing them with PHEV or EV versions. President Obama’s recent visit to a Las Vegas UPS facility running natural gas-powered trucks put this approach in the headlines .

Towards phosphates
Battery technology itself shines on amid occasional flare-ups about battery safety and vehicle fires. While most drivers don’t consciously worry about fires from accidents in gasoline-fueled vehicles, the idea seems to take on scary dimensions when it concerns a new technology. Current generations of EVs will mostly use lithium-ion cells, and there are signs that lithium-phosphate technology will get more attention as a way to deal with the flammability issue of lithium-oxide batteries as well as to bring longer life (EE&T, March/April 2011).

With the recent battery fire during a crash-test of the Chevy Volt fresh on their minds, designers may be changing gears in a hurry. Indeed, Chevy’s Spark, due out next year, reportedly will be using a lithium-phosphate battery supplied by A123 Systems. Early indications are that more battery makers and commercial fleet manufacturers have gone or will be going that way soon. Beyond safety considerations, there’s also the issue of total lifetime performance. “If I were a lithium-oxide salesman, I’d say we can offer you 15 to 20% more run time than a lithium phosphate,” said Bob Kanode, CEO of Valence Technology Inc., a leader in the phosphate technology. “Is that true? Yes. But the whole truth is lithium-ion oxide begins to fade quickly. On day one they may have 15 to 20% more capacity. But in six months to a year of continuous operation, they’ve dropped below the line of phosphate and will continue to decline. Phosphate is stable over a very long life.”

The company is also the sole supplier to Electric Vehicles International (EVI, Stockton, Calif.), which manufactures electric vans and trucks. In August, EVI announced a 100-truck contract with United Parcel Service. These trucks are said to have a 90-mile range.

Indeed, fleet vehicles like those that UPS fields look like a good test bed for EVs likely to last longer than their original batteries. “A lot of people don’t know those trucks run for 20 to 25 years,” says Kanode. “And over that time, major systems are changed out several times -- diesel engines, brakes, and anything else you can imagine. But the body of the truck is well built to avoid corrosion. In this wear-out-and-replace business model, their metrics predict they would replace their first battery systems in 11 years, and again at 21 years. Lithium-oxide in this duty cycle (every day, up to 16 hours) wouldn’t last 10 years, but phosphate will.” These major factors will help make for a savings of $550,000 per truck over the 25 years, says Kanode.

Things to come
Beyond batteries, there is a lot of activity in devising the infrastructure needed to support charging stations. Pike Research expects Asian manufacturers to take an early lead in developing vehicle-to-grid charging systems. The firm also expects to see a host of wireless suppliers and equipment manufacturers new to the automotive industry make an initial thrust into both EV charger and telematics systems. These advanced schemes will fold battery monitoring chores into the communications functions such as traffic monitoring and weather forecasts that vehicular communication systems now handle.

Looking towards the next generation of battery systems, there are a slew of efforts in the lab driven by relatively unknown groups still in the “venture capital phase.” Some of the action points towards promising but largely untapped areas of battery technology for EVs. However, indications are that lithium and nickel-metal hydride should be the chemistries of choice for the near future. Other chemistries look to be several decades into the future.

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A snapshot of the more relevant activity includes the Battery 500 Project at IBM’s Almaden research facility in San Jose, Calif. Researchers there are developing a lithium-air battery designed for EVs with a 500-mile range. Lithium-air, while a technology of interest since the 1970s, hasn’t been a serious EV contender for a number of reasons. But beyond its promise of high energy-density, the new battery’s success will apparently hinge heavily on the capabilities of its new electrolyte, which IBM has thus far not disclosed. Prototypes are expected next year, but how far the battery gets is anyone’s guess --- commercial manufacturing isn’t expected until 2020, by which time the EV landscape will likely be dramatically different.

Further afield, MIT is developing a flow-battery characterized by an anode and cathode that are particles in a liquid. Researchers there have hopes the architecture can be made to accommodate most any battery chemistry. The battery’s unique structure, with physically separate charge and discharge areas, is a major factor in improving its efficiency, researchers say.

Similarly, there are high hopes for research from Nissan aimed at developing a fast-charger that does its job in 10 minutes. Commercialization is expected to take 10 years or more. EE&T

Green VERSU$ green

The U.S. Dept. of Energy (DoE) has a fairly optimistic outlook on R&D battery work as outlined in its November 2011 overview. But strategic advances in battery technology may not be in the bag even for the long term (10 years).

The DoE’s forecast in November for a factor-of-two-to-three increase in power and energy density from most likely lithium-ion based batteries by 2020 seems reasonable. But its hope that manufacturers can reduce battery costs by at least 60% appears somewhat optimistic. That’s because battery makers will be stuck in a low-volume market for awhile. Estimates are for an annual battery production capacity of 10M kW-hr by 2015 that will power 1 million EVs. Yet overall, industry’s applications for research funding from various DoE entities exceed $190M this year just for transportation batteries. That’s about double the amount awarded for each of the last two years.

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