A panel of battery manufacturers at the recent Advanced Battery Value Chain explored opportunities here and abroad, as well as the potential impact of U.S. economic stimulus funding. The panel included representatives from several companies that had recently received stimulus money, including lead-acid battery maker Axion Power, Li-ion battery and electric-vehicle maker Electrovaya, and Li-ion battery and pack developer Compact Power.
In response to a question of what it will take to make electric vehicles happen, Axion’s Edward Buiel replied that he strongly felt legislation is what will make the difference.
Axion’s lead-acid technology targets “start-stop” applications in which batteries merely serve to a hybrid’s acceleration as it begins to roll. Typically aimed at micro-hybrid vehicles, the technology has potential in the European market where new legislation mandates CO2 emissions from vehicles must be under 130 g/km by 2012. Otherwise, car makers face a very stiff penalty of €95/g CO2/km for each vehicle sold that doesn’t meet the standard.
Buiel said that if the U.S. does not institute a similar penalty, all the stimulus money going to battery manufacturing and electric vehicles will be worthless. He added that Axion’s advanced lead-acid batteries can help improve fuel efficiency by up to 30% in higher performance vehicles like BMWs, which currently emit between 150 and 180 g/km of CO2.
Sinking money into building domestic manufacturing capacity alone won’t be enough to overcome the cost hurdles preventing adoption of electric vehicles. Adding carbon prices in the U.S. won’t be enough to move the needle for next-generation plug-in hybrid electric vehicles (PHEVs) and all-electric vehicles (EVs). Imposing the equivalent of $50/ton of CO2 would effectively raise the price per barrel of oil ($/bbl) by only $20.
Based on our research, however, prices need to skyrocket from around $75/bbl today to around $200/bbl before they significantly impact sales of PHEVs and EVs (see Unplugging the Hype around Electric Vehicles: client registration required). Micro-hybrids are another story, and sales of these vehicles may indeed be spurred by a carbon tax.
Stimulus funding and Chinese competition
Needless to say, the topic of U.S.-China competition in battery manufacturing also came up during the discussion. Panel member Sankar Das Gupta, CEO of Electrovaya, argued that Li-ion cells can be cost effectively manufactured in North America through a high degree of automation. The caveat is high production volumes. U.S. stimulus funding can help companies overcome the capital investment hurdle.
Buiel indicated he expects high quality and advanced lead acid batteries will continue to be built in North America for a long time. The reason is because the U.S. traditionally has more advanced production technology and the manufacturing of lead acid batteries requires more highly skilled labor. Consequently, lead-acid players in North America are less threatened by Chinese competitors than their Li-ion counterparts, like Electrovaya.
Firms focusing on lead-acid technology, he added, will likely get a boost from the European market, where micro-hybrids are more popular than PHEVs in the foreseeable future. However, this advantage figures less prominently in the U.S. and Asia, where the focus is squarely on PHEVs and all-electric vehicles powered by Li-ion batteries.
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