GM seeks to Lower Lithium Battery Prices by Investing in Envia Systems

GM seeks to Lower Lithium Battery Prices by Investing in Envia Systems

Chevy VOLTBy John Addison (2/22/11)

General Motors with its Chevrolet Volt currently has the lead of Nissan, Ford, and others in delivering electric cars. The Volt is the first of many models in GM’s future.  The Voltec Propulsion System will be at the heart of a new GM crossover plug-hybrid SUV, the Opel Ampera in Europe, and probably a pure battery-electric car. Critical to GM’s competitive success will be reducing the cost, size, and weight of lithium battery packs.

To advance its lithium batteries, GM Ventures invested $7 million in Newark, Calif.-based Envia Systems to provide GM’s battery engineering team with access to advanced lithium-ion cathode technology that delivers higher cell energy density and lower cost. In a separate agreement, GM has secured the right to use Envia’s advanced cathode material for future GM electrically driven vehicles.

“Skeptics have suggested it would probably be many years before lithium-ion batteries with significantly lower cost and higher capability are available, potentially limiting sales of electric vehicles for the foreseeable future,” said Jon Lauckner, president of GM Ventures. “In fact, our announcement today demonstrates that major improvements are already on the horizon.”

Other participating investors in Envia are Asahi Kasei and Asahi Glass; as well as current investors Bay Partners, Redpoint and Panagea Ventures. The funding of the investor group totaled $17 million.

“With our high-capacity manganese rich cathode material, Envia is addressing two key issues in the next generation battery cells – higher capability and lower cost,” said Atul Kapadia, founding investor, chairman and CEO of Envia Systems. “We believe our battery materials have taken the technology lead that will help lower price points and unlock the market potential for our customers.”

Envia’s advanced cathode technology uses inexpensive materials that store more energy per unit of mass than current cathode materials. Since the cathode is a key driver for the overall battery cost, the more energy the cathode delivers, the lower the battery cost because fewer cells are needed.

“Our test results on small-format cells show that Envia’s high-capacity composite cathode material can increase the energy density of lithium-ion cells by up to one-third, at an equivalent level of reliability, safety and durability,” said Micky Bly, GM executive director for Electrical and Battery Systems. “We estimate this improvement in cell energy density and less expensive material will drive a substantial reduction in cell cost, leading to lower cost battery packs like the one in the Chevy Volt. Envia’s cathode technology also will offer benefits for other devices and applications where low-cost, high-energy density storage solutions are needed.”

U.S. Energy Secretary Steven Chu stated, “We are once again seeing the benefits for the American people that come with federal investments in science and  technology, originally developed at the Department of Energy’s Argonne National Laboratory, is making its way into the market. By supporting American innovation, commercialization and manufacturing, this partnership is helping to boost U.S. competitiveness and create the jobs of the future.”

Not participating in the Envia investment is LG Chem, the current supplier for the Volt with its manganese spinel lithium-polymer prismatic batteries. Intense competition continues between LG Chem, Panasonic, Sanyo, Samsung-Bosch, NEC-Nissan, GS Yuasa, BYD, EnerDel, and dozens of other major innovators. Competition is intense to lower lithium pack prices down from $1,000/kW 3-years ago to about $500/kW today to $250/kW by 2020. GM and Envia just made the competition hotter and the sale of millions of electric cars more feasible.

Will the Electric Car Kill General Motors?

Will the Electric Car Kill General Motors?

e-cooter

By John Addison (December 29, 2006)

A recent movie and several books asked the question “Who killed the electric car?” then answered GM. Indeed, the major auto makers successfully defeated California’s attempt to mandate that 10% of car sales be electric vehicles (EV). GM retrieved the EV1 at the end of their lease periods and crushed almost all. Yet, GM and other auto makers have continued to pour billions into electric motors, advanced batteries, hybrid-electric propulsion, and electric vehicles where hydrogen fuel cells supply electricity to electric motors.

The more relevant question is this, “Will electric vehicles kill General Motors?” Most people on the planet cannot afford gasoline powered cars. Increasingly they can save $200 for an electric scooter. Over 30 million people drive electric vehicles.Jonathan Weinert reports on the exploding popularity of e-bikes in China.

As incomes increase, early adopters in China, India and other emerging nations will upgrade to new generations of light electric vehicles (LEV). Most of these vehicles will have 3 or 4 wheels and carry increasing numbers of passengers and loads. One is the three-wheeler made by Shandong Jindalu Vehicle Company in a joint venture with U.S. Zap Motors. The Xebra can reach 40 mph with a range of 40 miles. One model includes a solar panel roof for recharging the batteries. The small car is a four door sedan. Because of its drivetrain in the U.S. it is classified as a 3-wheel motorcycle.

Another of these vehicles is a new Chinese 4kW electric all terrain vehicle (ATV) that Zap will distribute in the U.S. The vehicle will have two electric wheel motors. China is developing several EVs that will be far less expensive than anything GM builds in the USA. China’s research and development group has developed a hydrogen fuel cell vehicle named Spring Light 3 with a go to market target price of $5,000.

In the U.S., there is slow development of a network of hydrogen fueling stations. There is a massive investment in gasoline stations. The oil industry exerts tremendous political power in the United States. China, however, does not have a massive investment in gasoline stations. China does have a significant network of natural gas stations where onsite reformation of hydrogen can be added. In fact, China will transport millions of 2008 Olympic visitors in buses and taxis running on hydrogen blended with natural gas.

Established market leaders commonly ignore or sarcastically dismiss low-cost and under-powered alternatives to their market leading products. The low cost 3-wheel Xebra appears to be a zero threat to the luxury Cadillac’s that General Motors executives drive. Initially, downloaded music in MP3 players had poor sound quality and was illegal. Now the music industry is transformed as people listen to high-quality music downloaded to their iPods and smartphones.

IBM was so dominant with mainframe computers that it suffered years of anti-trust litigation. Digital Computers sold far less powerful, but cheaper, mini-computers to labs. IBM ignored the threat of the mini-computer until the information technology industry had shifted to networked minis. Continual innovation and dropping prices of chips and networking brought another revolution with PCs replacing mini-computers. Digital did not learn from its own disruptive success and dismissed PCs as useless. Digital was later bought by Compaq, the very company that disrupted the minicomputer success. PCs are now under attack by the Internet. Microsoft is watching Google very carefully.

Just as a body’s immune system will try to reject a newly transplanted heart, successful organizations reject disruptive change. The phenomenon is so common that business schools now require the reading of Clayton Christensen’s The Innovator’s Dilemma and Geoffrey Moore’s Crossing the Chasm. Let us hope that the executives of GM are re-reading these classics. Reading my book Revenue Rocket is also recommended.

The interiors of vehicles are becoming electronic in everything from displays to entertainment systems to GPS guidance. Under the hood, it is the same story. Mechanical parts are being replaced by electronic components. In hybrid vehicles, electric motors are doing more; the companion gasoline engines are getting smaller. In the future vehicles will be primarily electronic. Internal combustion engines will be retired. Small vehicles not requiring long-range will get their power from the electric grid. Vehicles requiring more range or carrying heavier loads will be electric vehicles with hydrogen fuel cells.

Some at GM get this. GM’s CEO Rick Wagoner has stated plans to lead in plug-in hybrids, when battery technology meets its quality standards. The vehicle will use a big 3.6L engine.

GM is currently putting 100 hydrogen fuel cell Equinoxes on the road. A couple of weeks ago, I drove this exciting vehicle on surface streets and on the freeway. It is a powerful car that many would want to own. The R&D people at GM have an exciting vision that includes advanced batteries; regenerative braking; a thin “skateboard” platform common to multiple vehicles; drive-by-wire replacement of mechanical links to pedals and steering wheel; and electric motors. GM plans to start selling its next generation fuel cell vehicle by 2011.

GM is also involved in successful joint ventures in China. GM has done well in China in its joint venture with Shanghai Automotive Industry Corp. These joint ventures also have the risk of developing future competitors as seen when Shanghai Automotive recently unveiled its own brand luxury car. GM has a Chinese fuel cell vehicle development. Will the heart transplant take? Or will the patient’s antibodies reject the needed organ? In 2005, GM reported a loss of over $10 billion. Its global market share has shrunk to 13%. Thanks to its pension obligations, labor contracts and overhead, it cannot make a small car at a profit. It focuses on large SUVs and large trucks with gas guzzling engines in hopes of making money. The bulk of the corporate momentum is not in future electric vehicles but in big vehicles with engines.

While major GM competitors may not be planning on a low cost EV for the global market, they are planning on small fuel-efficient low cost vehicles. Toyota will be building a small car in China for the global market including the United States. DaimlerChrysler has signed a letter of intent with China’s Chery Automobile Co. that will allow the auto maker to build small cars in China to be sold throughout the world, including the U.S.

Toyota, riding on the success of hybrids and more fuel-efficient vehicles, is overtaking GM’s position as #1 market share leader globally. It threatens to beat GM to market with a plug-in hybrid. Within three years, Nissan Motor Co. plans to develop and market subcompact electric cars powered by self-developed lithium-ion batteries.
Honda wowed visitors at the LA Auto Show with its 350-mile range hydrogen fuel-cell Concept FCX, which it will start leasing to consumers and business in 2008. When Honda started selling motor scooters in the U.S. in 1959, GM could not have anticipated Honda’s future success in cars. Now as the global market shifts towards electric vehicles, Honda is also one of the leader’s in selling e-bikes in Asia. Is it déjà vu all over again?

In the sea of change that is beginning, tsunamis are racing to crash on America’s shores. One is Asian production of vehicles with electric drive systems. Another is the disappearance of cheap oil. Another is global demand for affordable vehicles. We will see how skillfully GM navigates in a perfect storm.