Saturday, July 31, 2010

How do we make the Volt cheaper?

Two quick notes on things that happened this week. The first represents the present; the second (hopefully) the future.

Chevy Volt pricing:

Its $41,000. No surprise there. There is a tax rebate that gets this down to $33,500. The leasing option seems cheaper, but seems limited to 12,000 miles a year. I drive 18,000 a year and I rent (which means no charging at home for me). I will not be in line for one anytime soon.

The Nissan Leaf is $33,000 before rebates and $25,500 after. This seems so much more manageable, but its only a 100 miles range. You win some, you lose some. What we need is a cheaper battery.

Which leads me to…

A discussion of the future of the battery:

Those who follow this blog know that most of us at LBNL work as part of a large program called the Batteries For Advanced Transportation Technologies. The Program is funded by the US DOE and has researchers from all over North America. It’s the top battery people from Universities, National Labs, and companies. The team reads like the who’s who of the battery world. The goal of the Program is to perform the research needed to discover and make the next-generation batteries.

This week on Tuesday, all of us met for a day at LBNL to discuss the future of batteries. We discussed ways to make higher energy, lower-cost materials, methods to make the battery last longer, and the challenges with moving to new batteries that promise significantly higher energy density compared to today’s batteries. Below is a photograph that we took at lunch.

I will try to tag the picture at some point.


Sunday, July 25, 2010

If you build it, will they come?

Many of you have probably come across the piece by Andy Grove titled “How to Make an American Job Before It's Too Late” that was published in Bloomberg. In the article, the former president of Intel argues that losing low-end commodity jobs from the US is a long-term problem. He uses batteries as an example.

In the battery space, all manufacturing of lithium-ion batteries happens in China, Korea, and Japan. Since the mid 90’s when it was becoming clear that lithium-ion was going to be a dominant force in the rechargeable battery market, several US companies have tried to enter the market by setting up plants in the US. None made it big. Some went under; others went back to their core business; still others survived (and continue to do so) on small government projects.

An article written by Ralph Brodd examines this issue in detail. The article is a bit dated, but is interesting reading. Ralph concludes that there are many complicated factors that come into play. Some of these involve the difficulty in penetrating OEM markets (that were all in Japan) for US companies and the fact that lower profit margins were sustainable in East Asia. Interesting he also notes that labor costs are not as significant in this “outsourcing” trend as some claim. I suppose if you automate you can depend on robots not to ask for a minimal wage irrespective of the geography!

Long story short, by the turn of the century, the battery community had accepted the fact that there was no real Li-ion manufacturing in the US. However, most of the community also believed that innovation in batteries happens in the US, and manufacturing (read “low end jobs”) was dominated by Asia.

There are very good reasons to believe that. The materials that power your laptop and cell phone batteries were discovered in the US. Some of the materials that may end up powering your plug-in hybrids and your electric cars were discovered in the US. Ergo... the US leads in the “high value” innovation; Asia does all the “low end” manufacturing.

Andy Grove had come to LBNL last Fall and during a discussion on battery research, he asked what the rest of the world was doing. I answered (echoing the popular belief) to the effect that Asia (read China, but also Korea and Japan) leads manufacturing and the US leads innovation. He cautioned that this was exactly what the semiconductor folks thought, but in time, they started to realize that Asia was starting to do more than just low-end stuff. And he cautioned that the realization might come too late.

What he was talking about was already happening in batteries; it’s just that I was not paying attention. Japan was always a powerhouse in battery R&D (with the Korean’s not far behind), but the last few years are showing that the Chinese are doing just fine, thank you. The number of papers coming from China is increasing and there is a lot more research activity than even a decade ago.

In effect, it is possible to outsource not just “low-end” jobs, but even “high value” R&D. Certainly the last decade has shown that industries ranging from software to pharma are outsourcing their research to China and India.

One could argue that quantity does not imply quality, and impact of papers from the US tends to high compared to most of the world, especially the developing world. But I would argue that as each year goes by, you can expect to see the quality and the impact improve. With money comes equipment, personnel to hire, ability to travel to conferences, and the ability to collaborate with the best and the brightest the world over. And despite the recession, China has continued to grow. If you are looking for money, China is the place to be.

If the manufacturing is in Asia, the talent is in Asia, and the funding is in Asia one can logically assume that future breakthroughs will happen in Asia.

The question then becomes: How does the US get back on the driver seat?

The US DOE decided that one way to do that was to bootstrap the development of a battery industry in the US by providing stimulus money to build factories. A few different companies got funded as part of this effort. These companies will be ramping up manufacturing of vehicle batteries in the coming years and slowly but steadily, the US will ramp up battery manufacturing for next-gen cars. Over the last week, the government issued a report on the impact of all this funding and their expectation of battery performance and cost over the next 5 years. The report, predictably, paints a rather optimistic future.

However, there a couple of problems to worry about. For one, the batteries that are being made have to be sold (Sounds obvious, but I think its worth reminding ourselves of this). For this to happen, there has to be a market for plug-in and electric cars. And as we pointed out these cars will be expensive because of the battery cost. Mass manufacturing will decrease the cost, but for mass manufacturing you need someone to buy these batteries and so you have a chicken and egg problem. And even the decreased cost will still make these cars expensive.

Moreover, most (if not all) of these companies are essentially using the money to build a building, and buying equipment from China, Japan, and Korea to make batteries pretty much exactly as they have been made in Asia except that they are doing it on US soil. Even the chemistry for the anode, cathode, and electrolyte that are being used for are not really unique.

Its not clear is there will be any unique intellectual property that will come out of this. Maybe in time, IP will come, but in the short term there will be little that is different from the batteries made in Asia. These will be expensive batteries with no clear technology advantage over the Asian rivals, but made in the US of A.

But the funding will create jobs, reduce battery costs, allow us to start the process of innovation and IP generation, and provide a pathway for the wonderful research in the Universities and National Labs to reach the marketplace. In the long run, all this can only help.

But in the short run, it is not clear which markets these companies will sell their batteries to and how they will stay in business long enough for all these benefits to occur. I believe that a vibrant PHEV or EV marketplace is key, but it’s not clear how one should enable this. None of the solutions are easy (e.g., a gas tax). But does appear that without incentives, it will hard to jumpstart an electric economy. We may be forced to make these hard choices.

This would be the “If you build it, they will come” route.

Instead of going this route, one could try to do something radically different; generate IP; use this IP to manufacture in the US, and leapfrog Asia. Leapfrogging in batteries is not easy (I suppose by its very definition leapfrogging is not easy!) and as I have noted, Moore’s law is like Murphy’s law for battery folks (we cringe at the mention of both). But one can imagine a new material or a new way of assembling a battery coming along that makes the existing methods obsolete and makes the US the leader in manufacturing as well as research.

There are a few governmental programs that are aiming to do just that. And certainly the whole of Sand Hill Road (which would be the street in Menlo Park that houses many of the Venture Capital firms in the SF Bay Area) is looking to see if they can find the next big startup with the winning idea. Only time will tell if the numerous startups and projects that are attempting to do something radical will end up being truly disruptive. And as I mentioned in my post on David vs. Goliath (or Tesla vs. Toyota), succeeding in the battery space can be hard.

In the meantime, all of you can do your part to keep the battery economy moving. Pay the $40K or $100K (depending on your affordability) and buy a Chevy Volt or a Tesla Roadster. This may mean selling your home, but, as the last few years has taught us, home ownership is overrated anyway.


Wednesday, July 14, 2010

Have Solar Panel. Need Batteries.

I'm on vacation in the east coast of the US for the week and the sun has been relentless. I can only hope to have clouds and maybe a shower or two to cool things down.

But mention clouds and the solar photovoltaic folks start to go berserk. Apparently solar panels have a hard time being of any use when there is no sun! An hour of clouds and your power generation tanks. Two days of rain can make dependance on renewable electricity seem like a return to the dark ages.

Enter batteries. Why not store the electricity during the times we generate it and use it in the night/when there are clouds etc? Sounds like a great idea, but the problem is... you guessed it... those batteries!

Anyway, long story short there are some batteries (different from vehicle batteries) that have the hope of being very useful for these sort of renewable storage applications. We are talking about MWh of storage (the M is for mega, so... big). There are a lot of batteries that are needed for this application, but the cost of these batteries is a problem and so is the lifetime. A third problem is that the energy efficiency of these batteries is not that great (maybe 50-70%). When someone tells you that the energy efficiency is 50% it means that you use twice the energy to charge the battery than you get on discharge. So 50% of your solar panels are a waste (great for the solar panel maker. Bad for the customer).

ARPA-E, the new kid on the DOE block, came up with a solicitation looking for ideas to fix these problems. This week, they announced a bunch of awards for some interesting new technologies that promise to solve these problems. One of the awards went to your faithfully (that would be me) along with two of my colleagues from LBNL- Vince Battaglia and Adam Weber. For the project we assembled a team consisting of Robert Bosch, DuPont, and 3M. We also had Proton Energy has a partner to help with some designs. Its an amazing team that beings together knowledge of electrochemistry, catalysts, membranes, and balance of plants to work on a battery called a "flow battery".

I will try to expand on what we proposed in the near future. If we (and any of the others funded) are successful, then we can get a step closer to having a more efficient grid. Click here for the list of awardees.

Till now, my blog has concentrated on vehicle batteries. I think its time I expanded into grid electricity. This is another big problem and something that needs attention.

In the meantime, for all your solar enthusiasts that complain about your batteries. Hold on... hold on. Give us a few years and we hope to have something for you.


Monday, July 5, 2010

A 200 mile EV or a 13 mile PHEV? You choose.

The big news of the week (after Brazil loss in the World Cup and the iPhone 4 antenna issues, I suppose) is the IPO of Tesla . With a IPO price set at $17 per share, Tesla saw its shares increase to $30 at some point. On Friday, it was back down to $19.2 a share, but I think we can all conclude that this was a successful IPO. The company got some much-needed cash and the early investors cashed out. The 1st week run reminds me of another greentech "success" story- A123 Systems.

A lot has been said by various analysts on the problems with Tesla (e.g., They have not yet made money and have no chance of making money for the next 3 years), but I think the IPO shows that its possible for a small company to compete with existing players. The same can be said for A123.

Just because a company has a successful IPO does not mean that it is really successful. Tesla has a lot of problems to deal with, chief among them the fact that their cars are a tad bit expensive. Similarly, A123 continues to bleed cash and competition is increasing. Its not clear when one should consider a startup to be successful. Is it when they start becoming profitable, or is it enough if the investors, founders, and early employees make money?

Anyone who has worked at a startup knows that its a roller-coaster ride. Its not the proverbial "two steps forward, one step back". Its more like "ten steps forward, nine steps back". Everything seems magnified. A million things have to come together to be successful. Often times one has to change direction (remember that A123 was not a LiFePO4 company when they began) and this can be hard to do. Suffice to say, start-ups are not for the faint of heart. For all the guys who went through this ride, getting to an IPO will probably be considered an amazing success (well... I suppose 6 months from IPO would be a more accurate date because that is when you can sell).

For the rest, being profitable may be the criteria for success. Obviously this is no easy task. A lot has been said about the ability of a Tesla to take on, say, a Toyota (or a Tata, depending on the market) or a A123 to take on, say, a Sanyo (or a BYD). All these are valid questions and make for interesting speculation. But I think the approach taken by Tesla and that by Toyota exemplify the differences between a start-up versus a traditional giant.

We all know Tesla's approach well. They want to commercialize a pure EV with a 200 mile range. They buy laptop batteries with energy approaching 180 Wh/kg and make battery packs with energy approaching 150 Wh/kg with a total energy of 56 kWh for the pack. Assuming that their car design gets them ~250 Wh for every mile*, they are pretty much using all the energy of the battery with very little guard-banding (meaning, they use close to 90-100% of the battery capacity).

Contrast this with the news that Toyota is coming out with a Prius PHEV using a Li-ion battery. Total driving range on the battery-13 miles! Toyota argues that most commutes are less than 10 miles, but a look at the battery specs is revealing.

It appears that the Toyota battery pack is ~330 pounds and has a energy of 5.2 kWh which means that the gravimetric energy of the pack is ~35 Wh/kg! I can only assume that this is useable energy (meaning the battery will have more energy but only 35 Wh/kg is used)

Granted that Toyota would want a battery that lasts 7-10 years and so unlike Tesla, they probably are using a battery that has a lower energy than 150 Wh/kg for the pack. But one would have to think that they are atleast using something that should be greater than 100 Wh/kg. Which means that Toyota is really only using 35% of the total battery capacity (at best). Talk about guard banding!

Just so we are all on the same page, you can get 35 Wh/kg from a Ni-MH battery. One is left wondering why Toyota would want to use a Li-ion battery with such a low State Of Charge (SOC) range of operation. One can only speculate, but it would logical to think that this is one way to get the life to be better. They will operate at a lower voltage and not allow the SOC to swing too much (remember the battery rules: don't charge them too high, don't swing them too wide...).

Moreover, if the battery is only charged to a partial SOC, then if there is a safety incident (leading to, what is referred to in the industry, as a spontaneous disassembly. For the normal person, this could be called an explosion) then the lower state of charge helps decrease the impact of the incident.

All this makes sense, but what is telling is that Toyota is being very very safe in their move to a Li-ion from a Ni-MH cell (by starting with a battery that is comparable). One wonders if this is more a PR move to tell the world that Toyota is moving to the latest and greatest battery, rather than using these batteries to actually get more performance.

Compare this to Tesla which is buying laptop Li-ion batteries (which are typically the highest energy density battery you can get your hands on) and trying to squeeze as much from them as possible. One is going for incremental, the other revolutionary, one prefers an appliance-like vehicle, the other a "sexy" ride, one could be considered boring, while the other could be considered a bit brash. No prizes for guessing which one is which.

Its easy to see Toyota's point of view. All you have to do is open the newspaper (I use "open" to mean clicking on a web link) to see their recent trouble with, this time, the Lexus brand. Toyota is got to be thinking that the last thing they need is a battery-related issue. Better to be safe and boring than sexy and sorry, I suppose. They cannot afford another recall.

This difference between a startup and an established player probably resonates across all areas, not just batteries. Remember Amazon in the late 90's taking on the big box retailers, or any of the open source softwares (Firefox or Linux) taking on Microsoft.

The only difference: If you screw up your internet software all that happens if your browser crashes or worse, you are infected with a virus. If you screw up your car, things can be a little bit dicey!

Time (next 3-5 years) will tell if these newer kids on the block will succeed in being profitable. Personally, I'm keeping my fingers crossed.


Disclaimer: I don't own shares in Tesla, A123, or Toyota (as far as I know. My retirement plan is a complete mystery to me). As a matter of fact I make it a policy of not investing in greentech. My instincts tells me that they are a good buy, but I have a policy of doing the opposite of my instincts so...

* The previous version read "250 miles for each Wh". Its actually 250 Wh for each mile.