All Charged Up

The Technology isn't Perfected, Mass-Production Questions persist and no one seems quite sure how to make money on them, but lithium-ion batteries are on their way just the same.

That the contest has become a global one couldn't be clearer than at the recent “1st International Conference on Advanced Lithium Batteries for Automobile Applications” held in Argonne, IL, organized by the U.S. Department of Energy and its Argonne National Laboratory.

More than 400 attendees representing suppliers, auto makers, universities and investment firms from around the country and as far away as Finland and France, South Korea, China and Japan, packed an auditorium to discuss the latest developments, test programs and market outlook for Li-ion battery technology.

As Jiqiang Wang of the Tianjin Institute of Power Source says in detailing where China stands, “Li-ion batteries are hot, hot, hot.”

General Motors Corp., once blamed in a film documentary for killing the electric car, may have triggered the latest frenzy to revive the EV with its Li-ion-powered Chevrolet Volt concept unveiled in production form in September and headed for the U.S. market in 2010. But it is far from alone, and leadership in the field remains up for grabs. Consider:

Early indications are the bulk of the technology and manufacturing infrastructure for Li-ion could wind up in Asia, much like today's capacity for nickel-metal-hydride batteries, and that has some in the U.S. — including researchers at Argonne — concerned.

“It's a big problem for the CIA,” the DOE's Tien Duong tells Ward's, alluding to the potential national security issues if future military vehicles are designed to run on electricity and most of the battery capacity remains housed outside the U.S.

Duong says that while the U.S. is keeping pace on Li-ion research and development, it is “strongly behind” in manufacturing.

“But the U.S. can win (the race). There's nothing special about Panasonic making batteries,” he says, pointing to Japanese supplier Matsushita Battery Industrial Co. Ltd. that controls a big chunk of the NiMH market.

“Cobasys (LLC) is making (NiMH) batteries in Springboro, OH,” he points out. “If we want to do it, all we have to do is agree to do it.”

However, some say there's little movement in that direction so far.

The U.S. government is vowing to make Li-ion a priority, with a $38 million research program set for 2009 and additional proposals for more projects circulating in Washington, including a $1 billion package to back core battery development.

Says Argonne National Laboratory Deputy Director Eric D. Isaacs: “Li-ion will be the center of activity at Argonne for years to come.”

Some U.S. capacity already exists. EnerDel, a former JV between Ener1 and Delphi Corp. and now wholly owned by Ener1, is setting up capacity for Li-ion production in Indianapolis, but it is unclear whether the supplier will emerge as a big player.

Massachusetts-based A123 Systems Inc. is one of two suppliers in the running for the GM Volt contract, but it is widely expected to source the battery cells from planned plants in China or Korea.

Johnson Controls-Saft Advanced Power Solutions LLC also is in the hunt for Li-ion business, but while it is housing cell research at its headquarters in Milwaukee, it is planning to set up manufacturing in China, which the company predicts will be the source of 40% of industry-wide Li-ion battery production in 10 years.

JC-Saft CEO MaryAnn Wright recently called on the U.S. to get more competitive in the Li-ion field by backing OE-supplier-university consortiums to establish Li-ion standards, offering consumers tax rebates for purchasing advanced-technology vehicles and doing whatever it takes to cultivate a manufacturing infrastructure.

“Domestic OEs and suppliers have to act as partners, not competitors,” she told a recent conference. “You see it in Japan, where they work together to get the fundamentals down, then compete.”

Canada-based Electrovaya Inc. is establishing capacity near Toronto, but the supplier also is planning production in India and Norway through JVs.

Compact Power, the U.S. arm of Korea's LG Chemical, will center cell production outside the U.S. But if it beats out A123 for the Chevrolet Volt contract, it will set up capacity in the U.S. for the battery packs, themselves, CEO Prabhakar Patil says, adding all the debate over national security is overblown.

In addition to capacity, technology issues remain. Li-ion batteries have been known to catch fire in computer laptops, but new compounds combining lithium with iron-phosphate, manganese and titanium and more durable ceramic-coated separators appear to have developers well along the path to solving what they ominously refer to as thermal runaway.

Patil insists safety issues are resolved. His company has designed what it calls the “Safety Reinforcement Separator,” which one executive says “keeps the (battery's) cathode from bumping into its anode.”

Real-world, long-term durability will remain a question until auto makers get vehicles out of the lab and onto the road in significant numbers — and for years not just months. GM is targeting Volt battery life at 10 years/150,000 miles (241,000 km), a bogey required by some state regulations. The DOE says a lifespan of 15 years and performance capability down to -22° F (-30° C) will be necessary for Li-ion to see widespread application.

Battery developers contend they are well on their way to achieving this and even going beyond, but so far there is little real-world data.

The DOE's Duong says the only way to move forward is to put vehicles on the road and perfect the technology over time.

“It will be like it was with the first-generation Prius,” he says, pointing to Toyota's Hybrid Synergy Drive that got less complicated, more compact and less expensive in subsequent generations.

Less certain is whether and how cost issues can be surmounted. Researchers at the Argonne conference repeatedly deflect questions about whether outlays will decline as volumes rise. The DOE says current cost is close to $1,000/kWh, meaning the batteries in the Volt would run roughly $16,000. The agency says that price tag will have to come down to a third of today's levels if the technology is to gain any real traction.

But even developers can't seem to agree what the true cost is.

Li-ion costs about $0.30/Wh when it comes to consumer electronics, but translating that into automotive applications is difficult, Patil says.

For one thing, it won't be possible to discharge vehicle batteries down to zero as in a laptop computer, so only about 70% of the power packed in an EV typically will be available for use. In addition, vehicle batteries will be considered spent once they've permanently used up only 20% of their power. Then there is the expensive battery management system required for EVs but not consumer electronics, bumping up costs another 40% or so.

Some suggest auto makers ultimately may lease battery packs to customers or buy them back so they can be resold for other applications once they no longer have enough power for vehicle use — further complicating the industry's cost calculation.

And unlike in cell phones and laptops, vehicle Li-ion batteries will be expected to last 10 years or more — not just two to three — in harsh environments.

“(EVs) will be more expensive than people expect,” AutoNation Inc. CEO Mike Jackson reportedly told attendees of September's Reuters Autos Summit in Detroit. “They will be more expensive to make than the manufacturers can really afford, meaning initially they're going to have to limit the volumes.”

For its part, the DOE plans to “deemphasize its HEV work and, beyond 2010, focus on lowering Li-ion cost,” says Duong. “Cost and abuse tolerance need to be improved.”

Manufacturing also is a big question mark. Whether the batteries can be produced reliably in high volume is unproven, and profitability for those that do remains uncertain.

“It's the kind of thing that's three to five years away, moving from the pilot plant to the real high volumes,” say Phil Gott, director of automotive consulting at Global Insight Inc. “What a computer company typically wants is for you to make 20 consecutive batches of batteries without a glitch in your production process.”

And availability of lithium, itself, is either plentiful or a concern, depending on who is asked.

“With the current known reserves of lithium we'll run out fairly quickly if high-volume automotive production ramps up,” Gott says. “But that's the same situation we were in with oil at the turn of the last century. People were saying by 1925 we were going to run out of petroleum.”

But even assuming raw material, technology and manufacturing issues are resolved, it remains unclear whether buyers will bite.

Despite all the hurdles, forecasts are bullish.

Market analysts Lux Research predicts by 2012 Li-ion will account for 46% of the EV battery market, and Compact Power's Patil says most HEVs will begin the switch from NiMH to Li-ion as of 2010.

Global Insight projects there will be volume production of Li-ion EVs by 2015, with some models produced in runs as high as 100,000 units per year and global demand reaching 500,000-800,000 vehicles annually. That's on top of what could be an equal number of Li-ion HEVs, PHEVs and extended-range vehicles such as the Volt, says Gott, a forecast he calls conservative.

Whatever the ultimate numbers are, one thing appears clear. Whether or not the batteries work as designed, meet buyers' requirements, turn a profit for the industry and eliminate U.S. dependence on foreign energy supplies, Li-ion is about to have its day.

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