Batteries Now, Fuel Cells Later?

The news this morning: although we are enthusiastic about today’s battery–powered EVs, the fuel-cell-powered vehicle will be an important part of the mix in the future.  (http://www.greencarcongress.com/2009/04/h2fcv-20090423.html).  

Many in the media seem to accept that EVs will be powered by either the current dominant technology (the Nickel Metal Hydride or NiMH battery), or the myriad variety of Lithium-ion batteries that are being designed and flogged in Asia, Europe, and North America.  But not every early winner finishes a winner.  Ask the Mets or the Cubs about that.

The Lithium-ion industry is grabbing the largest share of battery or batterylike stimulus dollars.  The Watertown, MA-based privately held and venture-backed A123 Systems (http://www.a123systems.com/)  has applied for $1.84 billion in subsidies, and the New York-based but Indianapolis-centered company, Ener1 Inc (Nasdaq:HEV, http://www.ener1.com), has applied for $480 millon, and was recently advanced to the finalist stage by the feds.  That’s all well and good — if the li-ion battery is not a mirage shimmering on the automotive horizon. 

There are some issues with li-ion batteries, and they are no secret.  The most well-known issue is that some of them have exploded, taking transporting aircraft and people’s laps down with them.  EVERY li-ion battery maker says they have fixed that problem.  Nobody wants to drive a car whose powertrain might blow up, after all.  Also li-ion batteries can have problems starting in cold temperatures (which is why li-ion vehicles still have a lead-acid battery for starter purposes). 

But if you look around, there are other technologies that “coulda been a contender” (with apologies to Marlon Brando) — and may yet be.  Perhaps the most obvious is the lineal descendent of the battery in the car you drive now — the “good old” lead-acid battery.  But wait! 

There are several companies that are modernizing the lead-acid battery, many of them working within the auspices of the US-based Advanced Lead-Acid Battery Consortium (http://www.alabc.org/)  .  That would include the R&D-stage Firefly (http://www.fireflyenergy.com/),  and Axion Power* (EBB: AXPW, http://www.axionpower.com) , which recently snared a deal with one of the world’s largest battery companies, Alpharetta, GA-based Exide Technologies (Nasdaq: XIDE, http://www.exide.com).  Both companies use forms of the element carbon to revolutionize and improve the performance of batteries.  It’s hard to tell a lot about Firefly batteries because they haven’t been sold commercially, but Axion batteries, branded as PbC(r) batteries, are the heart and soul of the Exide distribution deal, and are also being used in demonstration projects by widely diverse groups including NYSERDA and an industry consortium designing and building solar-powered charging stations for electric vehicles.  Axion has also been the recipient of DOD and DOE research funds, as well as industry grants to test and develop their proprietary technology, which basically replaces half the lead in a battery with nanocarbon that is analagous to the substance that is in your Brita water filter.

There are other tortoise-like technologies bringing up the rear behind the hare-like li-ion companies.  Some are pretty exotic — steam-powered assists, or devices that pump up gasoline efficiency by adding platinum, or urea, or even hydrogen additives.

Then there are the fuel cells, as mentioned at the top of this article.  The biggest problem with fuel cells is that few of them actually work well enough to be manufactured in quantity.  One assumes that will change.  The second biggest problem with fuel cells is that they are NOT batteries; they actually generate “new” electricity on the spot, rather than regurgitating “old” electricity that they have stored.  Other than that distinction (and it is important), they BEHAVE a lot like batteries.

Toyota Fuel-cell vehicle (today)

For reality’s sake, there ARE fuel-cell vehicles operating today, just not in production quantities.  Read this from carlist.com: http://www.carlist.com/autonews/2004/toyota_fchv.html.   And in this picture you can see how the innards of a fuel-cell-car look (http://www.sfgate.com/cgi-bin/object/article?o=0&f=/c/a/2007/01/02/FUELCELL.TMP):

Mercedes Fuel-cell car cutaway

And lest we be accused of favoritism, there is this from GM and SAIC — both as American as apple pie: http://www.autobloggreen.com/2009/04/21/saic-to-use-gm-fuel-cell-propulsion-system-in-new-experimental-v

GM-SAIC Fuel-cell prototype

The problem to be surmounted is that only one company has ever managed to make portable (as opposed to the gigantic, truck-sized fuel cells that are called “stationary”) fuel cells in production quantities:  Medis Technologies (Nasdaq: MDTL, http://www.medistechnologies.com). Medis pumped out 250,000 of their hand-held fuel cells last fall, and now says it is in the process of upsizing the product and moving its production back to the US from Ireland, no doubt with stimulus funding on its agenda.  They also are eyeing military applications here and abroad (http://www.defencetalk.com/fuel-cell-power-technology-for-the-italian-military-17532/)

This article is already too long to go into the reasons WHY Medis fuel cells can be built in quantity and others can’t.  Suffice it to say here that they use a heretical technology employing sodium borohydride (http://en.wikipedia.org/wiki/Sodium_borohydride), where everyone else uses hydrogen, in most cases generated by breaking down natural gas.  The former works well; the latter is more orthodox and does not work well (and might explode — Remember the Hindenburg!).

As for stationary fuel cells, they seem to be chugging along.  FuelCell Energy Inc (Nasdaq: FCEL, http://www.fuelcellenergy.com) announced a new deal with the USAF: http://finance.yahoo.com/news/FuelCell-Energy-Power-Plant-pz-14856468.html.

*Allen & Caron client

Army EV Program to Save Carbon, Bucks — and Boost a Chrysler Division

Talk about killing two birds with one stone!  The US Army announced on Monday that it will replace up to 28,000 gas-powered cars and trams with EVs at Army installations all over the world.  The silent, emission-free vehicles that will lead the parade will be supplied by GEM (Global Electric Motorcar), a division of Chrysler (http://www.gemcar.com/models/details.asp?MID=7&ID=310).  The are officially called NEVs, for Neighborhood Electric Vehicles, because they are not highway-worthy, with a cruising speed of only 25mph.  We are going to need a program to tell the EVs pretty soon.  Anyway, these are not only NEVs, but BEVs and PEVs.  The story was reported Monday by Candace Lombardi of CNET News (http://news.cnet.com/8301-17912_3-10140994-72.html?part=rss&subj=news&tag=2547-1_3-0-20).

GEM will be supplying these car-lings in several models, and the first few delivered included small flatbed pickup-type trucks with a payload capacity of half a ton, as well as 4-passenger “sedans.”   Unlike the fancier, highway cruising EVs that were introduced in the Detroit Auto Show starting today, the GEM vehicles do not use exotic batteries.  No lithium-ion, no NiMH, et al.  The power is much humbler and, well, democratic.

GEM eL, with 6 12-volt lead-acid batteries

The standard issue for these vehicles is the traditional flooded electrolyte battery (read lead-acid), with a 30-mile range on a single charge.  The vehicles are priced at $9,000 and $14,000, and all they need for a recharge is an extension cord with a 3-pronged plug.  One of the principal reasons for the adoption of this type of souped-up golf cart is the ease of implementation.  No hydrogen pumps, no complicated recycling, since we already recycle 95+% of lead-acid batteries with a completeness that makes them environmentally invisible.

It couldn’t hoit, as they say, that these vehicles will come from Chrysler, whose CEO kowtowed in Washington recently along with the CEOs of two other vehicle companies from Michigan.  There will be 800 of these little puppies bought this year, and 1,600 each in 2010 and 2011.   As I read it, that is probably a $50 million contract, tidy piece of change in the EV world, where a POSSIBLE contract with a Norwegian firm in the same range was enough to boost a lithium-ion battery company to a mega-market-cap in 2008, and another lithium-ion battery company nearly completed a huge IPO on the same evidence.  PS: the Norwegian firm is gasping for financing and not likely to be a battery buyer any time soon, even if bankruptcy can be avoided.

Look to the well-established lead-acid and advanced lead-acid battery industry in the US to power EVs like these.  That means companies like East Penn (http://www.eastpenn-deka.com/) and EnerSys (http://www.enersysinc.com/);  and innovators like Axion Power (http://www.axionpower.com) and possibly the pre-product Caterpillar spinoff, Firefly Energy (http://www.fireflyenergy.com/).    The best place to look for information may be the Advanced Lead Acid Battery Consortium website at http://www.alabc.org.

If Th!nk Electric Goes Under, What Other Companies Can Get Swamped?

Word is out that Norway’s Th!nk Electric — one of the only functional electric-car companies in the world — is on the ropes.  Th!nk began as an experiment underwritten by Ford, was spun out on its own, got financed, and looked at least potentially viable.  Then of course the stuff has hit the fan recently.  Autobloggreen is reporting now that in spite of bravado, the cars may not ship, and that Th!nk will not get help from the Norwegian government, which is taking a stern view of bailouts in general.  http://www.autobloggreen.com/2008/12/15/thinks-request-for-help-going-unanswered-not-all-orders-guaran/

OK, that’s as may be.  These things happen to young experimental companies — it is why you get a risk discount when you invest, and why you get a risk premium when they do well.  But in the case of Th!nk, since they have been a constituency of one for lithium ion batteries in electric vehicles so far, the ripples of a collapse would come much closer to home, so to speak.  Th!nk has relationships with the two lithium ion batterymakers who dominate the forming US market for li-ion car batteries: A123 (http://www.a123systems.com) and Ener1 (http://www.ener1.com) , or EnerDel (http://www.ener1.com/capabilities/lithium-ion/default.aspx) , which is their brand and divisional moniker for such batteries).   And what is more, although both Ener1 and A123 have other relationships with users of smaller batteries (non-transport) and some other transport-related development contracts, neither one has another real production supply contract with any other car company. 

A123 is one of many IPOs that disappeared into the fog this fall and has shown no signs of being completed.  And Ener1 has been one of the best-performing alt-energy stocks on the US market this year (Amex:HEV), though it was hit hard today, possibly as a sign that the market is not amused by the impending problems at Th!nk.

If both li-ion car battery companies were to hit hard times, that would leave the auto industry with 3 options: (1) the NiMH batteries that Toyota has been using to dominate the HEV industry to date; (2) Li-ion batteries that are being “developed” by in-house teams or JV teams such as the recently announced Daimler alliance with Evonik (http://www.autobloggreen.com/2008/12/14/daimler-to-bring-lithium-batteries-in-house-through-jv-with-evon/); or (3) none of the above.

If the choice falls on “none of the above,” the default winner will likely be the ultracapacitor-plus-lead batteries being developed by companies like the PbC batteries being developed by Axion Power International (http://www.axionpower.com) of New Castle, PA, or competing designs not yet ready for release or manufacturing by Firefly (http://www.fireflyenergy.com), a Caterpillar scion company.