Category Archives: Electric Vehicles

Crowded Lithium-ion Battery Market Sends Ener1 (and Others) Out to Sea, Yielding Bargains in its Wake

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Lithium-ion (Li-ion) car and grid storage battery manufacturer Ener1 declared bankruptcy in January after massive debt and limited revenues became too much of a burden for the fledgling company (client registration required) to shoulder. This event should come as no surprise to investors or the industry. Ener1 has been in the headlines several times over the last six months due to its failed investment in Think and its December 2011 delisting from the Nasdaq exchange (client registration required). This bankruptcy adds to the woes (client registration required) of the U.S. Department of Energy, which had provided Ener1 with a $118.5 million matching grant in August 2009. This recent news reiterates the fact that companies touting government support as a major feather in their cap may be enticing investors with false wares. In these cases, government funding provides just enough capital for a company to prove its technical viability despite failing commercially, teeing it up at a bargain price to larger players and investors in the market, much like Beacon Power’s recent fire sale to private equity firm Rockland Capital.

 Ener1 is not the only company struggling within the crowded Li-ion battery space. On January 11, 2012, Altairnano Nanotechnologies (client registration required) was again warned by Nasdaq to get its share price above $1 or it will also be delisted from the exchange. Li-ion batteries must compete not only with each other, but also with the negative press that pounces on the slightest safety slipup (client registration required), including the Chevy Volt that caught fire (client registration required), and the evacuation at the new Saft battery manufacturing plant in Florida. As with many maturing industries, there will be many failures before a few winners emerge. Amidst a pending oversupply of Li-ion batteries and intense competition from low cost manufacturers in China, readers should be wary of Li-ion battery suppliers without a clear competitive advantage or a proven foothold in the market. Also, watch for Chinese companies blessed with deep pockets, government support, and no aversion to low margins. Many are eager to acquire valuable IP and assets from recently broke or struggling companies in order to rid themselves of the low-quality stigma attached to Chinese Li-ion batteries. Case in point: Boston Power’s recent move to China (client registration required).

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Micro- and Mild Hybrids Power a $6.9 Billion Market for Energy Storage

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The market for micro-hybrid and mild-hybrid vehicles is on track to grow nearly eightfold to 39 million vehicles in 2017, driving a $6.9 billion market for energy storage devices. Unlike full hybrids, micro-hybrids Mild hybrids improve fuel efficiency by assisting the engine.

Automakers largely remain committed to advanced lead-acid batteries as the primary solution of choice for micro-hybrids, which draw on the battery only to power start-stop systems or cabin electronics. But their preference depends very much on regional issues as well as the manufacturer’s strategy.

As this week’s graphic shows, the overall storage market for micro-hybrids, including replacements, will grow from under $1 billion in 2011, to $6.9 billion in 2017, a CAGR of 48%. Most of this growth will be powered by sales of two lead-acid battery classes: absorbed glass mat (AGM) and enhanced flooded (EFB) devices.

AGM battery technology will lead the pack, with 46% annual growth reaching $3.9 billion in 2017. Europe’s preference for AGM batteries a favorable view of the technology among U.S. automakers will drive most of the growth. In contrast, Japanese automakers largely prefer EFB technology, and will help fuel significant growth through 2017, when it will reach $2.1 billion.

Supercapacitors have attracted interest for their superior power density, something that neither AGM nor EFB batteries deliver as well. As both PSA and Mazda implement the technology in their vehicles, the market will expand from $16.9 million in 2011 to $287 million in 2017, a CAGR of 60%.

Meanwhile, Li-ion will carve out a niche in mild hybrids, growing from near zero to reach nearly $570 million in 2017, capturing a 47% market share among plug-in vehicles.

Source: Lux Research report “Every Last Drop: Micro- And Mild Hybrids Drive a Huge Market for Fuel-Efficient Vehicles.”

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The Lux Top 10

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During the fourth quarter of 2011, Lux Research analysts profiled 262 companies across 12 different emerging technology domains in the fourth quarter of 2011.Here are the 10 they thought were the most compelling. Some, such as Proterro, stand out for their disruptive potential. Others, such as Diamon-Fusion, made the grade with well-executed business strategies. The competition for a Top 10 spot will only get hotter as we expand our portfolio of coverage domains to include Energy Electronics and a broadened green buildings portfolio.

1. Diamon-Fusion International – Positive – Advanced Materials

With its transparent silicone film used to coat silica-based substrates, Diamon-Fusion is one of the few startups in the protective coatings space with a strong track record in both technology and business execution.

2. Proterro – Wait-and-see – Bio-based Materials and Components

Proterro is commercializing a strain of photosynthetic organism that produces sugars at levels ten times more productive than sugarcane and in a configuration that could deliver the holy grail of “five cent” sugars (i.e. five cents per pound). But it will need funding and downstream partners to scale its potentially breakthrough technology beyond a lab prototype.

3. Topell Energy – Positive – Alternative Fuels

Working with German utility RWE, Topell Energy scaled its first commercial torrefaction facility in 2011 to convert wood waste into bio-coal pellets. Topell is a leader in the torrefaction space and is positioned to capitalize on healthy incentives in the EU for coal/bio-coal co-firing.

4. Spirae: Wait-and-see – Smart Grid

With the growing grid penetration of renewable energy sources and the inherent difficulty in managing their fluctuating inputs, Spirae could be in a prime position to support utility infrastructure with its comprehensive control and management system – if it can prove its concept on a large scale and secure long-term utility contracts.

5. eIQ Energy – Positive – Solar Systems

One of the few DC/DC optimizer companies staying with stand-alone hardware, eiQ partners with engineering, procurement, and construction companies that can realize its technology’s value in the strong commercial market segment.

6. Pervasive Displays – Wait-and-see – Printed Electronics

Using a technology honed for the One Laptop Per Child Program, Pervasive Displays produces low-power electrophoretic display modules that target application developers for warehouse signage and electronic shelf labels. While Pervasive has power advantages from its control functions, it will need to drive its costs down to compete with more established competitors and access a broader market.

7. Kurion – Positive – Water

A high-risk but high-profit U.S. nuclear contamination control company that rapidly scaled to clean up the Japanese Fukushima radioactive cooling water problem. The work generated massive windfall profits when no one else on the planet was prepared to deal with the problem.

8. Hycrete – Wait-and-see – Green Buildings

Hycrete’s water barrier technology improves the durability of concrete infrastructure at prices significantly cheaper than the incumbent membrane-based approach. But it will need to establish partnerships with well-known infrastructure or chemical companies in order to gain market access in the conservative infrastructure segment.

 

9. Citic Guoan MGL – Wait-and-see – China Innovation, Electric Vehicles

In the sea of Chinese lithium-ion battery developers, state-owned MGL stands out for its traction in China’s electric and hybrid-electric bus market. Its strong government relationships could provide ready channels to market for would-be foreign technology partners. But competition with other domestic firms such as China Aviation Lithium Battery Corporation (CALB) will be fierce.

10. Ablynx – Wait-and-see – Formulation and Delivery

Ablynx engineers its “nanobodies” – therapeutic proteins derived from antibodies in camel blood – to specifically deliver small molecule drugs to a target site. Despite stiff competition in the saturated antibody field and a multitude of emerging targeting strategies (such as DNA aptamers), Ablynx has snagged more than its share of heavyweight partners (Boehringer Ingelheim, Merck Serono, Norvartis, Pfizer), and is generating tens of millions in revenue to assist in its own healthy development pipeline.

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The hydrogen economy – necessary and sufficient for fuel cell adoption?

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The U.S. Department of Energy (DOE) has already stated its skepticism* towards hydrogen fuel cells. So it isn’t surprising that a recent DOE funding round for hydrogen storage technologies totaled a meager $7 million.

It is no secret that fuel cells have failed to make a large impact in the transportation and stationary power generation markets. Despite a long list of subsidies and incentives, they are gaining little traction beyond the uninterruptable power supply (UPS) and telecommunication markets (see the June 2011 Lux Research report Off-grid: A Modest Meal for Starving Storage Developers*).

Even within these markets, pure hydrogen fuel cells are passed-over in favor of fuel cells powered by natural gas, methane or other fuels that are more readily available than H2. The “hydrogen economy,” or the ubiquitous infrastructure for generation, transport, storage and distribution of hydrogen for transport and stationary power, seeks to overcome the issue of fuel scarcity and obscurity. This has many technology developers wondering whether addressing the availability of hydrogen, would prompt fuel cell growth in all markets?

In order to answer the question, we must look at the single greatest barrier to fuel cell adoption – prohibitive capital costs. Without a hydrogen economy, a hydrogen fuel cell requires ancillary hardware including a fuel reformer or hydrolysis unit, as well as a water pretreatment unit if a region lacks access to clean water. Theoretically, a hydrogen economy would eliminate the need for this ancillary equipment, and thereby bring the capital cost for hydrogen fuel cells down between $4/W to $7/W. These lower price points put hydrogen fuel cells on par with natural gas and methane fuel cells. But these prices still require subsidies and incentives to make fuel cells cost competitive with other generation technologies in transportation and stationary power. Lux analysis indicates that fuel cells need to reach prices below $2/W at the system-level in order to attain stable growth in the stationary power markets.

So, while the hydrogen economy is necessary to enable success of the hydrogen fuel cell in transportation and stationary markets, it is not sufficient on its own to ensure stable market growth. In order for hydrogen power and hydrogen fuel cells to prove themselves in the market, clients must continue fundamental work on all nodes along the hydrogen economy and the fuel cell itself; including hydrogen generation*, hydrogen storage, and fuel cell catalysts*.

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China’s crackdown on lead-acid batteries continues

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Recent reports indicate that the Chinese government has followed through on its promise* to crack down on pollution stemming from lead-acid battery production and recycling. The sector has been blamed for multiple instances of lead poisoning across the country. In August, China had reportedly shuttered 583 entities involved with either lead-acid production, assembly, or recycling, and temporarily closed another 1,015 for inspection and upgrading. As a result, over 80% of China’s lead-acid production has gone inactive. Further, the clampdown hasn’t been limited to small producers: The government forced Johnson Controls’ Shanghai factory to temporarily close after reports* of elevated blood lead levels arose from neighboring towns.

China’s Ministry of Industry and Information Technology has proposed phasing out all plants producing/processing less than 30,000 tons of lead per year by 2013, and limiting the construction recycling plants to those with capacity to process over 50,000 tons per year. These developments will have a significant impact on China’s massive electric bike market, where lead acid is the battery of choice (see the report, “Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market“)*.

The incredible number of permanent and temporary shutdown could streamline the complex and fragmented lead-acid battery market, and increase the cost of manufacturing as lead-acid producers and handlers quickly adjust to more stringent restrictions on manufacturing and recycling – or else disappear completely. Furthermore, it will accelerate the pace at which e-bikes transition over to Li-ion*, as aggressive expansion of Li-ion manufacturing around the globe makes the batteries more competitive on cost and benefits. As a result, those wishing to enter the e-bike market for lead acid may find a simpler, albeit more strict, environment, while those interested in the Li-ion chain have an opportunity to find a place in the market.

* Client registration required.

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The Lux Top 10: Q3′ 11

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In the third quarter of 2011, Lux Research analysts profiled 286 companies in 11 different emerging technology sectors. Here are the 10 they thought were the most compelling. Some are already enjoying great commercial success, and should continue to do so. Others are promising upstarts that could yet fail but have the potential to achieve great things. Let us know your thoughts and watch this space for the next quarter’s results.

1. Semprius – Positive – Solar systems

If the company can maintain high yields in automated mass manufacturing, it will have the market’s most attractive high-concentration PV module.

2. Qingdao Institute of Bio-energy and Bioprocess Technology, Chinese Academy of Sciences – Positive – China Innovation, Alternative Fuels

With multinationals such as Boeing and Shell undertaking joint research partnerships, Qingdao has emerged as a leading Chinese institute in alternative fuel technologies.

3. Ice Energy – Positive – Green Buildings

As a complete solution provider of ice-based thermal storage systems for peak-demand load shifting, Ice Energy has secured valuable channels to market via partnerships with Trane and Carrier.

4. Oxis Energy – Wait and See – Electric Vehicles

Although still too early in development to declare success, next-generation energy storage solutions are potentially disruptive in the transportation market, and UK-based Oxis Energy could be one of the first to reach market with its lithium-sulfur battery.

5. Aerogen Therapeutics – Strong Positive – Targeted Delivery

Aerogen is targeting both health and consumer applications, as well as the medical device market, with a versatile electronic micropump technology that aerosolizes liquid drug formulations.

6. Modumetal – Strong positive – Advanced Materials

This leading developer of electroplated metal coatings has shown great savvy in procuring high-profile customers and partners across the aerospace/defense, automotive, and oil and gas industries, despite long development lead times.

7. Sensus – Strong Positive – Smart Grid

A dominating player in the North American advanced metering infrastructure market that spans the entire value chain.

8. Breivoll Inspection Technologies – Wait-and-see – Water

Technology adoption in the $20 billion water infrastructure repair market is notoriously slow, but is inspiring innovations from the likes of Breivoll, which has developed a nondestructive metal water pipe profiling to locate and fix water system weak points before they cause blowouts.

9. E-Ink – Strong Positive – Printed Electronics

Having captured most of the market for e-reader displays with its electrophoretic film technology, E-Ink is looking to other applications as the leisure e-reader market saturates.

10. Avantium – Positive – Bio-based Materials and Components

With its novel furanic platform, Avantium is pushing towards the polyester markets and fanning the flames of the drop-in versus novel chemical debate.

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Ranking Li-ion battery developers on the Lux Innovation Grid

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Li-ion batteries are the technology of choice for the first generation of all-electric and plug-in hybrid electric vehicles, and the subsequent hype has attracted an increasing number of competitors to an already crowded market. Soon, it will be impossible for all of these companies to survive, making strong partnerships a necessity. This week’s graphic illustrates how developers of Li-ion batteries compare on the Lux Innovation Grid, helping to identify which will make the strongest potential partners as the electric vehicle market matures.

LG Chem Power clearly leads the pack, standing out even amidst its competition in the graphic’s Dominant Quadrant. A subsidiary of LG Chemical, LG Chem owes its strong technical value to its high-energy lithium-manganese-spinel-based cells and strong cycle life, both of which come at costs that are among the most competitive in the market. Its multitude of supply partnerships with the likes of GM, Eaton, and Ford, however, justify the company’s strong business execution score.

Significant enhancements in specific energy and a commensurate reduction in cell costhas garnered Envia Systems the attention of major investors including GM, Asahi Glass, and Asahi Kasei. Yet serious competition remains for Envia in cathode materials, including two major corporations in BASF and Toda Kogyo licensing the same Argonne National Laboratory technology that Envia’s materials are based on.

China is home to a number of top contenders, thanks to the Chinese government’s desire to keep the electric vehicle value chain inside China’s borders (Client registration required.). But batteries from China BAK, BYD, and China Aviation Lithium Battery (CALB) are undifferentiated technologically, and may not share the quality of cells manufactured outside of China.

Source: Lux Research report “Using Partnerships to Stay Afloat in the Electric Vehicle Storm.”

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BMW pushes the envelope

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BMW generated a good deal of industry buzz when it recently unveiled its futuristic i-Series concept cars: the i3, a battery electric vehicle (BEV), and the i8, a plug-in hybrid electric vehicle (PHEV). Both cars seat four passengers, but the i3 is designed for city driving, while the i8 is more of a high-performance luxury vehicle. The vehicles are constructed largely of carbon-fiber-reinforced plastic (CFRP), which is incorporated into BMW’s “LifeDrive” design system. The i3 is expected to launch in 2013, with the i8 coming the following year.

This move is not BMW’s first foray into the electric vehicle market – the company has already produced over 1,000 ActiveE and 600 Mini E electric vehicles – but it is by far a larger and more significant project. BMW plans to invest around €400 million in the production of the i3 by 2013, focusing on a production plant in Leipzig, Germany. Electric drivetrain developer AC Propulsion has been supplying BMW with Li-ion batteries and drivetrains for the Mini E line, which is seen as a precursor to the i3. Still, no official announcement has been made regarding the Li-ion supplier for either model.

The degree to which BMW becomes more involved in Li-ion batteries will be a key indicator of the potential for more traditional supply relationships in the growing EV market, where automakers have increasingly integrated battery technologies with the aim of capturing maximum value in the supply chain. If BMW goes the route of Ford, which sources drivetrains from Manga for its Ford Focus Electric, it could provide hope to suppliers left out in the cold by automakers like GM that source batteries and conduct drivetrain integration themselves. Furthermore, BMW can lessen the risk it faces in the event that the market for all-electric vehicles does not take off. (See the report, “Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market.”)*

BMW has prepared itself for the massive amount of CFRP required for this bold undertaking. Back in 2009, BMW formed a €90 million joint venture with SGL Group in Washington state (U.S.) for the production of CFRP. SGL has also recently completed construction of an additional carbon-fiber plant in Germany.* SGL currently has an annual production capacity of roughly 8,500 metric tons of carbon fiber. Automakers are always looking at light-weighting to reduce fuel consumption. In this case, the reduction of weight also saves money by allowing BMW to use smaller battery packs than would be required by heavier vehicles.

There are a number of other forward-thinking initiatives being launched by BMW as part of its campaign, but the carbon fiber chassis may make or break the i-Series. There have been significant barriers in the adoption of composites in the automotive industry (See the report “Chasing Cars: Can Composites Catch Up to Steel?.”). But if BMW’s launch is successful it could prove the economic feasibility of incorporating CFRP into production automobiles, ushering in a new era of automobile manufacturing.

* Client registration required.

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Johnson Controls looks to break with Saft

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Last week, Johnson Controls (JCI) filed a petition to dissolve its joint venture with the French battery-maker Saft, which is opposing the proposed breakup. According to a Saft press release, JCI would like to expand the markets for JCI-Saft beyond the originally planned automotive applications, while Saft would prefer the JV not encroach on areas “where Saft is already strongly positioned and enjoys a rapid development.” The JV has found some traction in the automotive market, including agreements to supply batteries to both Ford and Daimler, and both sides indicated that the recent events will not compromise current supply and development relationships.

The dissolution of JCI-Saft would significantly shakeup the intensely competitive electric-vehicle battery market. While governmental support has primed an aggressive build-out for lithium-ion (Li-ion) batteries destined for electric vehicles, growth has been slow and the number of players grabbing firm supply contracts are few and far between (see the report: Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market – client registration required). LG Chem has emerged as a clear front-runner, while other substantial suppliers like SB LiMotive and JCI-Saft have found more limited success. Trailing the pack are emerging suppliers such as A123 and Ener1 (see also the May 11, 2011 LREVJ – client registration required) which have taken major financial hits due to overly aggressive estimates regarding their electric-vehicle businesses. JCI likely surveyed the landscape and saw that it would be wise to target applications outside of the automotive realm to find more market opportunities for the JV’s Li-ion batteries.

While the consequences of the falling-out remain to be seen, this scenario shows that both parties don’t view the automotive market as the strong growth opportunity that likely drove the original partnership. JCI realizes that it has already missed out on the opportunity to take the initial front-runner position for automotive applications, while Saft appears not to value the automotive market as a big enough opportunity to risk exposing its utility business to JCI via JCI-Saft, where it could be forced to cannibalize existing business.

Additionally, virtually all the major Li-ion producers have recognized that applications outside of automotive will be crucial to justify the major build-out of capacity – with grid storage the most common target. Examples include A123 and Altair Nanotechnologies, both of which made rapid shifts to grid applications once their automotive efforts slowed. While grid storage could be a significant area of growth for Li-ion (see the report: Grid Storage – Islands of Opportunity in a Sea of Failure – client registration required), it remains nearly as uncertain as the automotive market, as the U.S. Federal Energy Regulatory Commission (FERC) still has not determined how energy storage for the grid will be regulated. FERC is considering a pay-for-performance framework in the regulation market, which could potentially place a premium value on Li-ion batteries’ ability to balance supply and demand (frequency regulation). A final determination, however, is not due until sometime in 2012. In the meantime, battery-makers must place bets in both automotive and grid storage knowing that each holds as much peril as promise.

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China moving to keep electric vehicle value chain inside its own borders

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On April 1, China’s Development and Reform Commission released a draft of guidelines for foreign investments that limits foreign capital to 50% of any investment in certain electric vehicle component technologies. The draft defines different components, as well as required performance metrics for any manufacturer wishing to supply the Chinese market with vehicle components, including high-energy-density batteries (over 110 Wh/kg and 2,000 cycles), cathode materials (capacity greater than 150 mAh/g, with over 2,000 cycles before 80% capacity), and battery separators (thickness from 15 to 40 microns with 40% to 60% porosity). The draft also covers battery management, motors, fuel cells, and power electronics, as well as other technologies used in internal-combustion-engine (ICE)-powered vehicles, such as electric power steering and start-stop systems.

It is common for China’s government commissions to draft regulations for different industries, and to send them out for feedback from and possible amendment by both foreign and local corporations most likely to be impacted. In this case, the strict conditions laid down by the Chinese government sends a clear message to foreign corporations that China will move aggressively to protect its domestic manufacturers, and that major amendments are unlikely. If enacted, the policy will force foreign companies to form joint ventures with China-based companies, and likely rely on China-based manufacturing capabilities in order to serve the Chinese market. Already, there is protest abroad, with U.S. Senators Carl Levin and Debbie Stabenow urging the U.S. government to fight the proposed requirements, citing the fact that many U.S. manufacturers will be forced to share proprietary technologies with Chinese partners.

The drafted regulations not only threaten foreign participation in the electric vehicle market; they may extend to the market for conventional vehicles as well. Whether these new regulations would take precedence over previous standards remains an open question. If so, it would potentially impact the entire supply chain for ICE-powered vehicles, which made up the bulk of the 18 million vehicles sold in China in 2010. Though we remain conservative regarding electric vehicle adoption, (see the report “Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market,” client registration required) China may be able to overcome the obstacle of cost in certain segments using aggressive policies, such as that mandating the implementation of electric buses in multiple Chinese cities. Regardless of the size of the future market, foreign players will quickly find that the Chinese government is intent on giving its own corporations the upper hand.

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