Battery Industry's Realities Disprove Influential Research Report
- The National Research Council recently issued a report predicting that plug-in vehicles will remain uneconomical without subsidies for decades. This report attracted much attention, with media concluding the growing interest could be just one more example of overblown expectations. Its message has percolated through Congress, undercutting the efforts of legislators and government agencies seeking effective rapid ways to create clean jobs, revive domestic industries, reduce dependence on foreign oil and cut greenhouse gases. Just one problem: its assumptions are deeply flawed -- and as they say, "garbage in/garbage out." How can anyone respond effectively? We've heard experts say their comments were not taken into account. One way to set the record straight is not to turn to "other studies with other viewpoints." The only thing a forecaster can't dispute is reality. Now leading battery manufacturers are beginning to come forward, reporting their real-world experience and business assumptions. Our efforts, with partners, to respond to the report, are gaining momentum! Details below.
(Shortly after it goes out on email, this posting will also be viewable at http://www.calcars.org/news-archive.html -- there you can add CalCars-News to your RSS feed.)
See our two previous postings from earlier in January, "Rebuttals to Flawed National NAS Report -- and Challenge to Battery Industry and "Plug-In Community Needs to Respond to Outdated/Biased NAS Report" at http://www.calcars.org/news-archive.html for the background to this controversy. (For your convenience, you'll find excerpts from the second posting on January 15, in which we invited battery manufacturers to respond, at the end of this posting.)
THE QUESTIONS WE ASKED BATTERY MAKERS: On January 27, we had the opportunity to ask top executives of many of the leading companies in the industry to state their views publicly at the Electric Drive Transportation Associations' battery session. Here's (roughly) what we asked:
Your presentations are reporting your real-world views on the battery business--that's very different from forecasts. As you know the National Research Council's report says that current prices for battery packs are greater than $1,000/kw-hr; will take overt 10 years to get under $400/kw-hr. CalCars has pointed out the impact of this report on the Energy Department's efforts to prioritize transportation electrification. We've suggested to your companies, publicly and privately, the need to respond. While we recognize the generally approach of keeping valuable pricing information private, released only to customers, will you be willing to draw the curtains apart a little? In particular, today, or soon, are you willing to:
* consider responding individually or joining with other companies to respond to the report?
* disclose your selling prices for battery packs, in dollars per usable kilowatt-hour, two or three years ago when you begin to have volume production, and ten years out?
FIRST TO RESPOND WAS RIC FULOP, CO-FOUNDER & MARKETINGVP OF A123 SYSTEMS: after complimenting CalCars for our continued advocacy, he said "their data is off," confirming what anyone would know who's been watching A123's presentations in the past year. It should get everyone's attention that he then confirmed that the company's selling price for packs in 2012 will be lower than the report projects a decade out. Three years from now, the company's price points will be at the levels seen in 2030 by the NRC.
CHARLES GASSENHEIMER, CHAIRMAN & CEO OF ENER1, pointed out that the projections didn't take into account strategies to take advantage of how the auto industry defines battery vehicles' "end of life." At that point they can still deliver 80% of the power they originally supplied. Unless secondary uses are factored in, the "full value" of batteries are not being counted.
SANKAR DAS GUPTA, CEO OF ELECTROVAYA, declined to engage with the specifics of the projections, instead saying "there are a lot of crazy reports out there; we can't pay attention to them all." Of course, that got a laugh -- though we take the reports seriously because of their impact on policy making as well as public understanding and expectations. He also predicted the time not too far away when, as happened with cigarettes, the broad negative impacts of fossil fueled-vehicles on, health, economics and the environment would speed our transition to plug-in vehicles.
MICHAEL ANDREW OF JOHNSON CONTROLS - SAFT also commended CalCars, and reminded the audience that it has previously said it sees pricing under $500/kwh by 2015, and going forward reaching substantially lower levels in the following years.
AND BY THE WAY, NO LITHIUM SUPPLY ISSUES: In response to a later question, A123's Ric Fulop cited the analysis by the Electrification Coalition (see our recent posting and http://www.electrificationcoalition.org ). He said there's enough lithium for two billion vehicles -- currently under one billion vehicles are on the road.
Unfortunately we don't have a session transcript -- all the more reason for journalists now to follow up, and for the National Research Council and the Department of Energy to take this new information and determine how best to integrate it into their analytical framework, conclusions and strategic recommendations.
Stay tuned for more industry responses from battery manufacturers and their automotive customers!
BACKGROUND: HERE'S SOME OF WHAT WE SAID IN OUR SECOND POSTING ON THIS SUBJECT ON JAN. 15 (AND SENT TO THE COMPANIES PRESENTING AT THE EDTA CONFERENCE)
CLOSELY-HELD INFORMATION: It's hard to get battery pack pricing data. Each battery manufacturer and automaker sees its costs as key to its competitiveness. With some batteries selling at dramatically high retail prices, manufacturer prefer to limit access to pricing forecasts for cells or packs in large volumes to potential automotive customers. And since automotive batteries are not yet mature products, price and performance continually evolve. With such competitive pressures and rapid-fire changes, researchers and even governments are often left with incomplete, inconsistent, out-of-date, or even erroneous price data.
ADVOCATES: The Electrification Coalition has taken the lead in pointing to flaws in the NRC study: find links at to its press release and fact sheet at http://www.electrificationcoalition.org/news.php . The Washington Post published EC CEO Robbie Diamond's response to its over-the-top editorial; his letter said in part, "the NRC seems to ignore these economies of scale. The NRC has done much important work over the years. In this case, however, its assumptions are badly out of line with industry and government estimates, and its conclusions -- and unfortunately, those of the Post editorial that relied on them -- suffer as well." Its reply at http://www.electrificationcoalition.org/news-response-to-nrc.php says, "The NRC study significantly overestimates current battery costs, placing them out of line with published research by DOE National Laboratories, exhaustive research by auto-industry analysts and current industry experience." It cites conclusions from its own comprehensive "Electrification Roadmap" that, "Based on current and expected industry costs, a PHEV-40 will be cost effective for consu
mers in 2015 -- without any government subsidy whatsoever."
WHERE DOES THIS LEAVE DOE, WHICH COMMISSIONED THE NRC STUDY? The Department of Energy has much data internally and from its national labs that conflicts with this report. But it has not reacted publicly even as the report's consequences circulate mostly unchallenged in the media and in Congress. Outside parties can help DOE validate its commitment to electrification and continue to sponsor research grants, loan guarantees, ARPA-E, and the US-China EV Initiative. With more data on the jobs and environmental impacts, DOE can catalyze volume purchases of both new vehicles and conversions of much of its existing military, civilian, and postal service fleet. These programs will in turn accelerate technology development and volume production -- leading to further cost reductions for batteries and other components.
WAITING IN THE WINGS: We're hoping that battery manufacturers -- the key primary source -- will weigh in over the next few weeks, along with automakers other than GM and Nissan. While citing their confidence that costs are declining, that batteries are lasting longer than ever, and that carmakers can draw down more than the 50% of the available energy used by GM's Volt, these companies have volunteered little data, though some have said privately that they are willing to respond if asked.
MOMENT OF OPPORTUNITY FOR THE BATTERY COMPANIES: our fond hope zeroes in on the very first session of the Electric Drive Transportation Association Conference in Washington. It's aptly named, "Batteries for Electric Drive Vehicles: Manufacturing Challenges and Opportunities" http://www.electricdrive.org/index.php?ht=d/sp/i/13921/pid/13921 . We urge the CEOs, founders and top executives from leading suppliers Johnson Controls-Saft Advanced Power Solutions A123 Systems, Ener1, Inc. Electrovaya, and Compact Power each to take five minutes to compare the NRC's outlook to the mid-term prospects for their batteries' performance and cost in mass production.If they do, they'll help ensure the expansion of their entire industry. They'll earn the thanks of all those working to accelerate the electrification of transportation. And you'll hear about it from us!
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Felix Kramer fkramer@...
Founder California Cars Initiative