Electric Cars & Batteries

On February 7, 2012 we heard Fisker Automotive, maker of an electric car that received $500 million in government funds (from the Department of Energy’s 2009 Advanced Technologies Vehicle Manufacturing Loan Program), was forced to lay off workers. On June 22 Fisker announced that its international expansion continues with a growing dealer network and customer delivery of their cars across Europe. On this same date Advertising Age said – the company founded in 2007 has had its share of criticism: 240 Karmas were recalled due to faulty batteries late last year (Fisker abandoned its deal for A123 batteries) and another 19 were recalled earlier this month because defective hose clamps from its suppliers. The demo Consumer Reports was driving broke down and their report prompted a number of complaints from other Fisker drivers. On the other hand, Motor Trend gave the car a mostly positive review. Roger Ormisher, director of global PR for Fisker, said “There are always critics and skeptics of any new project, especially one that’s been in the political spotlight. But this is underlining what we achieved.” Karma which is the only Fisker car on the market (they did announce that the Atlantic is expected to come out in the next couple years) has sold 1,000 units in the first quarter, tallying $100 million in sales. In February Fisker began working with eMaxx to develop marketing strategy and help the carmaker choose agencies to suit its needs. In May Fisker started working with Mono a creative agency (they expect more such relationships this year). Fisker executives as of July 2 include former executives from Ford, Volvo and Chrysler. On July 3 Fisker and Leonardo DiCaprio announced they will work together to promote Global Sustainability.

On June 24 Tesla Motors released its first electric car; it’s the fastest electric car and it goes 300 miles before needing to be recharged (estimated cost about $280 a year). Tesla tested various batteries and the only thing I could find out is that the non-toxic battery pack in the Tesla Roadster is built at Tesla’s Headquarters in Northern California and is the result of innovative systems engineering and 20 years of advances in Lithium-ion cell technology (one sight speculated that they use Panasonic [Japanese] cells). I’ve focused on the car batteries because of what happened with Ener1 and the difficulty they present to the electric vehicle.

On July 13 Statesman.com said: Plug-in electric vehicle (PEV) prices have dropped and the number of models has mushroomed over the past 18 months, but full-electric cars (FECs) still make up less than 1% of total vehicle sales. Cost and range anxiety continue to plague FECs and by extension the lithium-ion battery makers. "The technology of the lithium battery has reached a fairly mature stage," said John Goodenough, an engineering professor at the University of Texas and the godfather of lithium-ion battery technology. "But they have to get the cost down and capacity up so people can have a longer driving range." The idea that you might run out of power halfway home has pushed many people toward hybrids which are cheaper and still clean enough to salve most consumers' environmental conscience (most hybrids use a different type of battery technology). In 2011 fewer than 18,000 PEVs were sold in the US said Dave Hurst, Pike Research senior analyst; he projects about 48,000 PEVs to sell in the US this year, compared with a forecast for 13.3 million cars and light trucks overall. For FECs the battery remains the single most costly component. In April, Ford said the battery pack for the Focus costs between $12,000 and $15,000 (the car starts at around $40,000). A recent McKinsey & Company report suggested that battery costs could fall from $600 per kilowatt hour to about $200 by 2020. But to date, sales of lithium-ion batteries for FECs and other industrial applications such as large-scale electricity storage haven't produced the volumes many in the industry hoped for or expected, said Brittany Gibson, an analyst at Pike Research; making matters more difficult, the big Asian competitors such as Sony, Sanyo and Samsung are large and more diversified so they "can weather the period they're in now as they wait for a lot of commercial projects to take off." As cars such as the Nissan Leaf and the Chevrolet Volt are becoming recognizable brands, 2 of the country's top lithium-ion battery makers are teetering on the brink of insolvency. Austin-based Valence Technology Inc. (launched in 1989) announced that it had filed for Chapter 11 bankruptcy protection and was negotiating a new source of funding that would boost its working capital and allow it to continue operating. The announcement came less than a week after Massachusetts-based A123 Systems Inc. told investors that it had about 5 months of cash remaining for its operations and would move to raise more funding in the interim. Once a company works through the engineering manufacturing quality issues, it still needs a market that can buy enough battery systems to start paying off those costs. Barring that, it needs subsidies (A123 raised $378 million through an initial public offering in 2009 and hauled in a $249 million grant from the Obama administration and said it was raising $39 million to handle its pending cash crunch) or investors who have a lot of money and a long-term view which is what Valence got in California billionaire Carl Berg (chairman and the holder of about 44% of the company's stock). Valence said that the Nasdaq exchange had suspended trading of its stock and noted that it currently owes Berg and his companies $69.1 million in loans. If Valence's 23 years of experience and the size of the PEV market offer a sign of what's to come, both US battery makers will need a lot more cash and time before their income can support their expenses.