TWO | Batteries included

After decades of static growth, the battery industry has garnered new attention as the next generation of electric vehicles (EV) inches closer to hitting the market. Last year, both Tesla Motor Co. and ZAP announced plans to release all-electric sports cars by 2008 [see “Tesla Motors reaches mass production,” sustainableindustries.com, April 2007] while auto giants, including General Motors Co. (NYSE: GM), Honda Motor Co. (NYSE: HMC) and Ford Motor Co. (NYSE: F) made strong promises to release plug-in hybrid electric (PHEV) models within two to five years. Such promises, along with the U.S. Department of Energy promising to pour $20 million into battery research and development, could further spark the battery industry in 2008.

While storage, followed closely by low cost, is a battery’s primary goal in laptop computer applications, safety takes top priority in cars. Cobalt, which is typically a component of Lithium-ion (Li-ion) batteries, caused various models of Dell, Sony and Apple laptops to catch fire in 2006.

Concerns over the safety of cobalt, coupled with the European Union’s Restriction on Hazardous- Substances directive, have led companies such as A123 Systems, Altair Nano and Saft to research alternatives to cobalt in the manufacture of Li-ion batteries. Iron-phosphate turned out to be the agent for change.

While cobalt provides for better storage capacity, ironphosphate eliminates the thermal runaway problem that causes combustion, and supports higher current, which translates to greater power. The first products to use the new generation of Li-ion batteries were power tools, laptops and other consumer electronics.

Throughout 2007, auto companies began rolling out concept vehicles with the new generation of Li-ion batteries. But is the technology at the point where car manufacturers can guarantee the battery for 150,000 miles or more? “With some, yes; with others, no,” says Malcolm Bricklin, founder and CEO of PHEV company Visionary Vehicles. He says ion batteries are ready and lithium batteries are not. While the safety issue has been adequately addressed, he says, the reliability issue has not.

GM, which has partnered with A123 Systems to provide Li-ion battery packs for its Volt plug-in, announced at the 2007 Los Angeles auto show it was closing in on mastering Li-ion technology and the Volt would be road-ready by 2010. Toyota, which is currently using a nickel-metal-hydride battery in its Prius hybrids that dates back to 2004, has not been as publicly optimistic about Li-ion batteries, recently stating safety concerns would delay its introduction of a Li-ion-powered Prius until 2011.

Bricklin points to another, more low-tech problem. “No one has built a factory capable of building the quantity necessary to bring the price of Li-ion batteries down to a point that is affordable.”

To drop prices to such a level, a battery company needs a large order from a big car company or a consortium of smaller electric car companies, Bricklin says. Visionary Vehicles is ready to make such an order in 2008, he adds, saying he believes GM will follow closely behind. Some companies are opting to address the issue by manufacturing their own batteries.

Tesla, which still uses traditional first-generation Li-ion batteries but surrounds them with a battery pack complete with elaborate monitoring systems to prevent thermal runaway, launched its own battery business, Tesla Energy Group, in 2007.

Not only will it continue to manufacture its own batteries and increase its capacity to manufacture them in greater numbers; the company plans to sell its battery packs to other electric-vehicle companies. In May 2007, Tesla inked a deal with Norwegian electric-car company Think to deliver $3 million worth of its battery packs in 2007 and another $40 million in 2008.

Li-ion’s storage issues may bring the next generation of battery innovation in the form of so-called ultra capacitors. Rob Day, a Boston-based principal with@Ventures, predicts rapid innovation in energy storage—whether in the form of batteries or fossil fuels—to continue over the next several years. Ultra capacitors, which are a coated ceramic non-battery form of energy storage, could play an important role, he says.

Researchers at the Massachusetts Institute of Technology have also discovered using carbon nanotubes in ultra capacitors could improve their storage capacity and conductivity, although the cost remains prohibitive.

EEStor, a Texas-based company currently operating in stealth mode with funding from Kleiner Perkins Caufield & Byers, is widely regarded as the front runner in the ultra capacitor space. Toronto-based EV company Zenn Motors says it plans to incorporate EEStor’s technology into its cars by 2008.

Meanwhile, former SAP executive Shai Agassi launched Project Better Place, a company working to establish a widespread grid of electric charging spots and battery exchange stations. The company raised $200 million in its first round of funding with investments from Israel Corp., Morgan Stanley, VantagePoint Venture Partners and a group of individual private investors. To build the network, Agassi says he plans to secure partnerships with car makers, technology providers, and global and local financing institutions.

---

TrendWatch 2008
The Sustainable Industries editorial team talked with dozens of industry leaders, reviewed hundred of articles, and sifted through stacks of research to bring to you, our readers, insights on what to expect from sustainable industries on the West Coast and beyond in the year ahead. Keeping reading for more insights into the year ahead!
Read more