Batteries Included -- For A Shocking Price

The cost of a battery for an electric car is over $15,000. Such a huge price is guaranteed to harm sales of new electric vehicles and promises to end the possibility of a secondary market for used electric vehicles.

Worse, it appears GM is banking on the success of electric vehicles -- its Chevy Volt -- to finance its recovery from bankruptcy. But it's far more likely GM will head into a Chapter 22 -- a second bankruptcy -- due to it's unreasonable expectations for the success of its electric car.

High Battery Cost Curbs Electric Cars

Unlike Other Devices, Power Packs May Not Enjoy Major Economies of Scale By

MIKE RAMSEY

The push to get electric cars on the road is backed by governments and auto makers around the world, but they face a big hurdle: the stubbornly high cost of the giant battery packs, which can account for half the cost of an electric vehicle.

Both the industry and government are betting that a quick takeoff in electric-car sales will drive down the battery prices. But a number of scientists and automotive engineers believe cost reductions will be hard to come by.

Unlike with tires or toasters, battery packs aren't likely to enjoy traditional economies of scale as their makers ramp up production, the scientists and engineers say.

These experts say increased production of batteries means the price of the key metals used in their manufacture will remain steady—or maybe even rise—at least in the short term. They also say the price of the electronic parts used in battery packs as well as the enclosures that house the batteries aren't likely to decline appreciably.

The U.S. Department of Energy has set a goal of bringing down car-battery costs by 70% from last year's price by 2014.

Jay Whitacre, a battery researcher and technology policy analyst at Carnegie Mellon University, said in an interview the government's goals "are aggressive and worth striving for, but they are not attainable in the next three to five years." He predicted "it will be a decade at least" before that price reduction is reached.

Current industry estimates say the battery pack in the all-electric Nissan Leaf compact car coming out in December costs Nissan Motor Co. about $15,600.

That cost will make it difficult for the Leaf, which is priced at $33,000, to turn a profit. And it also may make the Leaf a tough sell, since even with federal tax breaks of $7,500, the car will cost almost twice the $13,520 starting price of the similar-size Nissan Versa hatchback.

Nissan won't comment on the price of the battery packs, except to say that the first versions of the Leaf won't make money. Only later, when the company begins mass-producing the battery units in 2013, will the car be profitable, according to Nissan.

The Japanese company believes it can cut battery costs through manufacturing scale. It is building a plant in Smyrna, Tenn., that will have the capacity to assemble up to 200,000 packs a year.

Other proponents of electric vehicles agree that battery costs will fall as production ramps up. "They will come down by a factor of two, if not more, in the next five years," said David Vieau, chief executive officer of A123 Systems of Watertown, Mass., a battery maker that recently opened a plant in Livonia, Mich.

Alex Molinaroli, president of Johnson Controls Inc.'s battery division, is confident it can reduce the cost of producing batteries by 50% in the next five years, though the company won't say what today's cost is. The cost reduction by one of the world's biggest car-battery makers will mostly come from efficient factory management, cutting waste and other management-related expenses, not from any fundamental improvement of battery technology, he said.

But researchers such as Mr. Whitacre, the National Academies of Science and even some car makers aren't convinced, mainly because more than 30% of the cost of the batteries comes from metals such as nickel, manganese and cobalt. (Lithium makes up only a small portion of the metals in the batteries.)

Prices for these metals, which are set on commodities markets, aren't expected to fall with increasing battery production—and may even rise as demand grows, according to a study by the Academies of Science released earlier this year and engineers familiar with battery production.

Lithium-ion battery cells already are mass produced for computers and cellphones and the costs of the batteries fell 35% from 2000 through 2008—but they haven't gone down much more in recent years, according to the Academies of Science study.

The Academies and Toyota Motor Corp. have publicly said they don't think the Department of Energy goals are achievable and that cost reductions are likely to be far lower. It likely will be 20 years before costs fall 50%—not the three or so years the DOE projects for an even greater reduction—according to an Academies council studying battery costs. The council was made up of nearly a dozen researchers in the battery field.

"Economies of scale are often cited as a factor that can drive down costs, but hundreds of millions to billions of ... [battery] cells already are being produced in optimized factories. Building more factories is unlikely to have a great impact on costs," the Academies report said.

The report added that the cost of the battery-pack enclosure that holds the cells is a major portion of the total battery-pack cost, and isn't likely to come down much.

In addition, battery packs include electronic sensors and controls that regulate the voltage moving through and the heat being generated by the cells. Since those electronics already are mass-produced commodities, their prices may not fall much with higher production, the study said.

Lastly, the labor involved in assembling battery packs is expensive because employees need to be more highly trained than traditional factory staff because they work in a high-voltage environment. That means labor costs are unlikely to drop, said a senior executive at one battery manufacturer.

When car makers began using nickel-metal hydride batteries, an older technology, in their early hybrid vehicles, the cost of the packs fell only 11% from 2000 to 2006 and has seen little change since, according to the Academies study.

Toyota executives, including Takeshi Uchiyamada, global chief of engineering, say their experience with nickel-metal hydride batteries makes them skeptical that the prices of lithium ion battery pack prices will fall substantially.

"The cost reductions aren't attainable even in the next 10 years," said Menahem Anderman, principal of Total Battery Consulting Inc., a California-based battery research firm. "We still don't know how much it will cost to make sure the batteries meet reliability, safety and durability standards. And now we are trying to reduce costs, which automatically affect those first three things."

GM Cruze -- Built to Lose

GM is "testing" another electric vehicle. This time, in South Korea. In other words, a place far from US automotive journalists who will rarely get near this vehicle. The Cruze will serve as a useful PR tool until it's no longer necessary to pretend that electric cars are about to arrive.

The Cruze experiment will continue until its safe for GM to say that electric-car batteries are still years from commercial viability.Then, the Cruze experiment can shift to the back burner where it will stay until our next Einstein has the flash of insight that leads to the development of a battery that packs the energy density and recharge speed to make it a winner.

General Motors to test battery-powered models of its Cruze in South Korea

September 18, 2010

NEW YORK (AP) -- General Motors says it will launch a test fleet of electric cars in South Korea as it continues to develop battery-powered models of its Chevrolet Cruze.

The automaker will begin the project at the end of October. It is working with LG Electronics on the project.

The Cruze EV demo fleet will be GM's first compact sedan electric vehicles to hit the road and will be powered by batteries from LG Chemical and propulsion systems from LG Electronics.

The demo fleet in South Korea will consist of Chevrolet Cruzes and GM Daewoo Lacetti Premieres. GM currently markets the vehicle under the local brand in South Korea. The project is aimed at providing data on customer acceptance and battery range.

GM says there's no plan to sell an electric Cruze in the U.S.

By testing an all-electric Cruze that has no gas engine, it's clear that GM is developing a fully electric compact.

"There's no plan to put an electric Cruze in the U.S. market," spokesman Rob Peterson said. "As battery technology matures and that (charging) infrastructure increases as well, battery-electric vehicles could hold a great deal of potential."

GM executives have said repeatedly that the power system from the rechargeable electric Chevrolet Volt will be used in more models.

The Volt can go about 40 miles on battery power, and after that, a small gas engine kicks in to generate power for the car.

Dead Volt -- Electric Edsel

Government Motors a.k.a. GM says it will introduce the Chevy Volt in November. Pardon us if we do not hold our breath. The company plans to build 10,000 the first year, which may well be the last year. Yeah, sure, the first 10,000 will sell. They'll sell because speculators want to buy them and store them in garages till the middle of the century, then sell them to collectors.

How will things go? Straight to the Automobile Graveyard. A car that goes 40 miles and then stops? Oh yeah, it has an on-board generator that can recharge the battery while you wait, if you don't mind waiting a couple of hours. Or, it seems you can run the generator while you're driving, which is similar to actually powering the car with the gasoline engine that is running the generator.

And sell it for $41,000. Can't miss. It's a sure thing. A big winner.


GM sets $41,000 price for electric Chevy Volt

Tue Jul 27, 2010

* GM to offer $350/month lease in select markets

* Volt priced slightly higher than GM had telegraphed

* Net price will be closer to $33,500 after tax credit (Adds details on presidential visit, IPO, Tesla)

DETROIT, July 27 (Reuters) - General Motors on Tuesday set a price of $41,000 for its electric Chevrolet Volt -- $8,000 more than its nearest competitor, the Nissan Leaf.

GM GM.UL said on Tuesday it has begun taking orders for the Volt and would offer a $350 per month lease option for the much-anticipated vehicle as it launches in a handful of U.S. markets starting with California.

The biggest question surrounding the Volt has been its price and profitability given the cost of the lithium-ion battery pack supplied by Korea's LG Chem (051910.KS) and the hundreds of millions of dollars that GM devoted to the project over the past four years.

"Every day we've been asked a single question: How much will it cost?" said GM marketing chief Joel Ewanick on a conference call to announce the pricing.

GM executives, including former Vice Chairman Bob Lutz, had previously indicated the Volt would be priced near $40,000.

By setting a higher price and restricting Volt production, the automaker -- now majority-owned by the U.S. government -- has taken steps to limit its losses on the plug-in vehicle.

The long-awaited announcement on pricing for the Volt comes three days before President Barack Obama is scheduled to visit the Detroit-are plant where the vehicle will be built.

GM is expected to file for an initial public offering as soon as August that would allow the government to reduce its 61-percent stake in the automaker.

GM launched the Volt development project four years ago, in part to shake an association with gas-guzzling trucks and to show it could compete with the likes of Toyota Motor Corp (7203.T) (TM.N) on hybrid technology.

With a price of $41,000, the Volt will cost as much as some luxury vehicles. The top-selling Cadillac CTS has a price starting at $35,165.

"You have to expect you're going to pay a premium for this kind of technology," said Erich Merkle, an auto analyst and consultant at Autoconomy.com.

But the $350 lease payment on the Volt also makes it competitive with the upcoming Leaf, which has a lease offer of $349 per month.

U.S. taxpayers who buy a Volt will qualify for a federal tax credit of $7,500. Some states, such as California, are offering additional tax incentives.

GM: BUY A VOLT, BUY A "REAL CAR"

Ewanick said GM marketing would portray the Volt "as a real car," attempting to draw a sharp distinction from pure electric vehicles like the Leaf, which lack a backup source of power once the battery is spent. "People don't want to be stranded on the way home from work," he said.

The Volt is designed to be recharged overnight for about 40 miles of electric driving, depending on driving conditions. The car will also have a small gas engine expected to give the vehicle a total range of about 340 miles.

Nissan Motor Co's (7201.T) battery-powered Leaf claims a driving range of 100 miles (161 kilometers). It has a U.S. retail price of $32,780.

Tesla Motors (TSLA.O), a Silicon Valley start-up that went public in June, has the only highway-ready electric car now on U.S. roads with the $109,000 Roadster.

About 600 Chevy dealers in California, Michigan, Washington, D.C., Texas and New York will sell the initial limited production run. GM expects to produce 10,000 Volts for the 2011 model year and about 30,000 for 2012.

Jesse Toprak, an analyst at industry-tracking Web site TrueCar, said the Volt will sell out, leaving GM with the challenge of managing a waiting list.

In the meantime, he said, the Volt gives GM the chance to win over better-educated and wealthier car shoppers in markets like California who would never have considered a Chevy.

"The Volt is a halo car for GM, and it's real importance is in bringing people into showrooms," he said.

Ewanick said it was uncertain how quickly GM could bring down the price of the Volt in future model years, saying that depends on still-uncertain reductions in battery costs.

"There's a lot of technology that has to happen for us to lower prices," he said.

Electric Cars -- Dead Batteries

Some day a battery genius will be born. Maybe he already walks among us. But he has yet to do for batteries what Einstein did for Relativity. However, one day the battery genius will have his moment of insight one of the world's most difficult technical problems will succumb. Till then, hapless consumers are stuck with wildly expensive vehicles that will fail like the Edsel.

When the owner of the hot Tesla decides to zip around some mountain roads on a hot rainy night he will learn that after turning on his air conditioner, headlights, stereo and windshield wipers his battery will discharge in a hurry.

Nevertheless, Tesla claims the car will go 245 miles on a single charge. Nonsense. Obvioulsy it will go farthest on a flat road while moving at a very low speed while the stereo, wipers and air conditioner are off. Why buy a $110,000 Tesla if you have to drive like an old lady?

Electric Cars: All Charged Up, but Still Stuck in First Gear

Nissan's electric-powered Leaf, scheduled to be in showrooms in December, has attracted 16,000 advance orders.

Electric-car fever is rising again.

Battery-powered-sports-car maker Tesla Motors Inc. just launched one of the hottest initial public offerings in years. Nissan Motor Co.'s electric Leaf is generating buzz ahead of its scheduled December debut and has 16,000 advance orders. President Barack Obama plans to visit an electric car battery factory in Michigan Thursday to promote the government's $2.4 billion program of grants to subsidize development of electric-vehicle technology.

Tesla Motors

Tesla Motors has sold about 1,000 of its electric Roadsters since it debuted in 2008.
And of course, the catastrophic Gulf oil spill is reviving anxiety over the national addiction to oil.

So, it's all systems go for a future in which most of our driving doesn't depend on fossil fuels, right?

Not so fast.

To appreciate the obstacles standing in the way of the electric-car dream, you don't need to talk to electric-vehicle skeptics or hybrid haters. Instead, you can listen to the people who believe in electric vehicles, and are investing in those beliefs.

Proponents of the technology will tell you that anyone buying an electric vehicle will want to know at least two things: How far can I drive before I have to recharge? And, where can I go to recharge when I am on the road, far from home?

Companies acknowledge that clear answers to those questions aren't yet available—and may not be until a good while after the coming flock of electric cars has hit showrooms.

Tesla Motors

Tesla Motors says its Roadster can be driven 245 miles before needing to be recharged.

Tesla Motors outlines as part of its public-offering documents a lengthy recitation of risks to its business. It's sobering reading for electric-vehicle enthusiasts. One of the concerns Tesla raises is that the Environmental Protection Agency is looking at new ways to measure how far electric cars can go before they need to be recharged. The aim is to make the advertised range figures better reflect how people drive their cars in the real world. Some of the new test methods the EPA is considering could require electric-vehicle companies to reduce the advertised range of their vehicles by as much as 30%.

The EPA won't comment on its rule-making. Tesla currently tells people who buy its $101,500 Roadsters that they can expect to drive as many as 245 miles between charges, a figure company officials say is based on existing EPA tests. (Their reasoning is explained here: www.teslamotors.com/blog/roadster-efficiency-and-range.) Tesla has sold about 1,000 Roadsters since 2008.

Nissan has told prospective buyers of the Leaf that they can expect to drive up to 100 miles on a charge. "Up to" is a critical qualifier in the electric-vehicle business, given how cold temperatures, speed, the power drain from air conditioners and other factors can cut into battery life.

If electric-vehicle marketers are forced to scale back their advertised range figures, it could diminish the number of potential buyers. But large numbers of customers getting stuck by the side of the road with a dead battery because they believed exaggerated range claims would be worse.

The best solution would be a consistent, easy-to-understand federal standard that produces range figures that correspond with real-world experience. That could take a while for the EPA and industry to develop. So consumers who jump to buy a Tesla, Leaf or other electric models coming in the next couple of years will likely have to make purchase decisions without the comfort of a clear federal standard.

Then there's the "where-to-charge" issue.

That's a top-of-mind issue for Shai Agassi, a former software executive who founded Better Place, a Palo Alto, Calif., company that is best known for developing a system for rapidly swapping the batteries out of specially designed electric vehicles so that motorists can drive with fresh batteries while the old ones recharge. The system is designed to eliminate the need for vehicle owners on long trips to wait for hours while their batteries charge up.

Better Place also plans to offer recharging stations for electric vehicles that aren't designed for the battery-swapping system. The company earlier this year secured a $350 million fresh round of funding from an investor group led by HSBC Holdings PLC. The company has charging stations in Israel and Denmark and in October 2008 announced a deal to build charging stations in Australia. The company also has agreements with Renault SA and Chinese auto maker Chery Automobile to develop cars that can use the company's battery-swapping systems.

In the U.S., Better Place plans to develop a charging network in Hawaii. It also has announced a plan to develop a $1 billion network of charging stations in California. A company spokeswoman says the first of the charge stations could be up and running later this year.

Mr. Agassi says it would cost between $5 billion and $10 billion to outfit the major travel corridors of the U.S. with Better Place charging and battery-swap stations. That's the equivalent of "one week's worth of gasoline," he says.

So why isn't he doing it? Because when he talks to investors about bankrolling a big play in the U.S., they tell him, "let's do Holland," he says. That's because gasoline in the home of the World Cup runner-up team is two to three times the price in the U.S., which makes the electric alternative more attractive.

"The only way to get off oil is with a system that's cheaper than gasoline, and more convenient than gasoline," he says. "I can't raise the investment in the U.S. to put this (Better Place) on the ground."

Auto makers have called on the government to make it easier for utilities and others to build public charging stations. A bill proposed by Sen. Byron Dorgan (D., N.D.) and others proposes spending $10 billion in federal money to boost electric-vehicle adoption, including offering subsidies for public charging stations and $2,000 tax credits for people who install in-home charging systems.

In the current political climate, it's not clear Congress will agree to spend taxpayers' money to make it easier for electric-vehicle early adopters to charge their rides.

Dead Batteries

Electric-carmakers need cash today, tax credits to spur sales next year and every year thereafter and battery technology that makes electric cars perform like gasoline-powered vehicles.

Obama says he wants to hit taxpayers on this issue. Tax credits and other subsidies are part of his plan. Immediate cash is another matter. If GM, Ford and Chrysler are to get little from the Economic Stimulus plans whipped around these days, it's tough to cut makers of electric cars a slice of the pie.

Then there is the chief question: Why would someone buy a $40,000 Chevy Volt when a a dozen cars with internal-combustion engines sell for less than half the price?

Electric cars are not simple alternatives to gasoline-powered cars. If equivalent electric and internal-combustion models were available for roughly the same price, a real market would develop. But we are years from that point. Today, electric vehicles offer only a psychological advantage that matters to some people. But most car buyers do not care.

Who would pay $40,000 for a car with limited operating capabilities when lots of great all-around gasoline-powered vehicles are available for half as much? Furthermore, if the government pushes the public to accept electric vehicles, the prices of gasoline-powered cars will ease down, making them a better deal for anyone who considers the long-term cost of ownership.

There are 250 million internal-combustion vehicles registered in the US today. Consumers love their cars and they are not ready to switch to vehicles offering less for more money. Would more than a handful spend larger sums than they've ever spent on a car if the new high-priced model requires a lot of behavior modification to accomodate its limitations? No.

Personal computers stayed mainly in the hands of hobbyists, engineers, scientists and technology lovers until better software made them useful to millions of buyers. The Graphical User Interface did the trick. But the biggest accelerant was the Internet, a thing apart from the computers themselves.

Is there a similar advance ahead for electric vehicles? No. But if there were, it would appear as a battery that held a charge equal to the energy found in a tank of gas.

Or, perhaps, like gasoline, a universal battery pack might emerge. Every car can accept gas from any gas station in the country. Possibly the electric carmakers can create a universal battery pack that can be stocked at Recharging Stations and switched in minutes. Pull out the discharged pack, and drop in a fresh one. An operation that can be completed in a minute or two. But that means pricing the service for more than the cost of plugging in the car at home.

On the other hand, for anyone who barbeques on a gas grill, the consumer behavior is already in place. When the propane tank on the grill is empty, the barbeque chef takes the empty tank to Home Depot and exchanges it for a full one. Unfortunately, I doubt this idea will fly. That means we need batteries that hold a lot of energy. But those batteries are decades away from reality. In fact, given our understanding of chemistry and physics, we may never see batteries capable of powering electric vehicles like their internal-combustion alternatives.


Electric-Car Makers Struggle

Companies Face Similar Problems as Detroit Auto Makers -- And Some Others

The heads of the struggling Detroit auto makers aren't the only car makers looking for help from Washington. The electric vehicle industry has its hands out, too.

If anything, representatives of the electric and electrified vehicle business jumped ahead of the "legacy" auto industry in the transportation bailout queue that formed in the nation's capital last week.

The Future of Electric Vehicles

The electric-vehicle industry positions itself as the future of personal transportation. President-elect Barack Obama is now the industry's highest ranking advocate. He's said he wants to see one million plug-in vehicles by 2015, as part of his broader goal to end U.S. dependence on Mideast oil.


The credit crunch and the economic slump are slamming the crop of electric-vehicle companies that sprung up in recent years, fueled in part by Silicon Valley venture-capital money.

Tesla Motors LLC, once the darling of the green car movement, is now scrambling to stay afloat and is asking for a $400 million loan from the same $25 billion federal Energy Department program that Detroit's car makers are looking to tap in their own fight for survival.

Tesla is now taking some flak for seeking handouts from taxpayers, most of whom could never afford its current product, a racy electric sports car that starts at more than $100,000. Detroit's chiefs might say: Welcome to our world.

The electric-vehicle industry's need for government assistance doesn't stop with subsidized loans. Mr. Wynne says the government's existing tax credits for purchases of electrified vehicles – meaning all-electric and gas-electric hybrids – should be expanded. Currently the credits, which range from $2,500 for a plug-in hybrid vehicle with a four kilowatt per hour battery pack to as much as $7,500 for an electric vehicle weighing under 10,000 pounds.

The U.S. should also do more to promote development of advanced vehicle batteries. After access to capital, batteries are one of the biggest anxieties among U.S.-based electric and hybrid vehicle manufacturers – from the Detroit Three down to the smallest Silicon Valley EV upstart. Right now, there's no company producing advanced automotive batteries suitable for electric vehicles or hybrids in the U.S.

To the extent that such batteries are made in volume anywhere, it's in Japan, Korea or elsewhere in Asia.

Finally, U.S. electric-vehicle makers are hoping that the government can be not just the financier of last resort, but also a customer. "The federal government owns 600,000 vehicles," Mr. Wynne says. The government should be a buyer for electric vehicles – not just cars, but commercial vehicles.


Established auto makers, including Toyota, GM, Chrysler, Nissan Motor Co., all are talking about plans to field significant numbers of partially electric or fully electric vehicles over the next several years.

Not so long ago, the electric-vehicle industry's moment seemed to have arrived, after nearly a century of frustration and failure. Soaring oil prices, technology advances and the enthusiasm of deep pocketed investors appeared to be coming together to overcome the obstacles that have relegated electric vehicles to the auto market's sidelines since the days of Thomas Edison.

Now, oil prices have crashed, clouding the economic case for switching to expensive battery-boosted cars.