Best Investments: The cruel realities EV range

Translate Request has too much data
Parameter name: request
Translate Request has too much data
Parameter name: request
The Cruel Realities of EV Range | Alternative Energy Stocks

« The Best Peak Oil Investments: Accell and Six Other Bicycle Stocks | Main | Why Wait For Tesla Or, A Better Place? Kandi Technologies is Already a Profitable EV & Quick Change Battery Company »

The Cruel Realities of EV Range John Petersen

An English proverb teaches us to hope for the best but plan for theworst. With the imminent introduction of a variety of plug-in vehiclesthat will begin hitting showroom floors in the next few months, the phobia du jour is range anxiety, anentirely rational terror that an EV will get you to your destination ineco-chic style but only get you home with the help of a tow-truck.Sadly, most people who extol the virtues of electric drive areincurable optimists that have little or no regard for the risksinherent in complex systems and the widely variable needs ofindividuals. The quick anddirty overview is that every plug-in owner will have to cope with rangedegradation before the new car smell fades and hisproblems will only get worse as time passes.

Nissan Motors (NSANY.PK)willsoon start delivering its battery powered Leaf, the world’s firstproduction EV. The Leaf will get its power from a 24 kWh lithium-ionbattery pack and Nissan's advertising campaign focuses on a showroomfloorrange of 100 miles. While they include the usual throw-awaywarnings that "Range will vary with driving habits, conditions, weatherand battery age," they haven't been entirely forthcoming with theinconvenient truth that battery packs start to degrade with the firstcharging cycle and the process never stops.

The following graph comes from a recent National Renewable EnergyLaboratory study that examined thelong-termeffect of local weather conditions on power degradation inlithium-ion battery packs. This particular graph has an upward slope because it's showing the percentage of power loss over 15 years. To show expected vehicle performance, the curve would need to be inverted. While the study's authors warned thattheir results were optimistic because they didn't include batterydegradation from the heat buildup that happens whenever a car is parkedin the sun, most potential buyers will find the optimistic numbersshocking enough.

9.2.10 Climate.png

In Minneapolis, an EV-100 will be an EV-90 after one year and an EV-80after five. In Phoenix it will be an EV-80 after one year and an EV-60after five. These are not minor differences to people that needdependable transportation to and from work, particularly if they planfor theworst when they make a buying decision.

Other major range penalties that potential buyers must consider include:
Cold weather penalties of 10% to20%. While heatincreases the rate of battery degradation, the widely reportedexperience of Mini-e drivers has shown that cold weather is a killer.If you live someplace where your dog's water bowl occasionally freezesover, you need to plan on an occasional 10% range reduction, but ifyour dog'swater bowl frequently freezes solid it's better to plan on a 20%reduction.Hilly terrain penalties of 5% to10%. Hilly terrain is one of those things that most driversdon't consider because logic dictates that the energy used to climb ahill will be recovered on the downhill. In reality the energy used inclimbing is far greater than the energy recovered coastingdownhill. While this reality isn’t important to drivers,cyclists quickly learn that 500 feet of elevation gain increases theenergy expended on a 60-mile ride by about 5%. While cars have betteraerodynamics than bicycles, hills are never free and the downhill wheee!is never fair payback for the uphill grind.Stop and go traffic penalties of30% to 50%. Of all the factors that impact EV range, stop andgo traffic is the biggest offender. According toNissan, the Leaf's rangewill fall by 40% in 15 mph stop-and-go-traffic at low temperatures andby 50% in 6 mph stop-and-go-traffic at moderate temperatures.When you put it all together, a three-year old EV-100 will probably actlike an EV-50 on a frosty winter's day in Minneapolis. While a foolishconsistency may be the hobgoblin of small minds, I think consumers willtend to be very cautious when it comes to choosing between dependabletransportation and an eco-chic image.

The simple solution, of course, will be bigger, better and cheaperbattery packs. According to popular media and speciouspoliticalpromises, that wondrous day is just around the corner.While I suppose anything is possible, I find it hard to ignore 30 yearsof hands-on experience with R&D companies and H.L. Mencken'swarning that "A newspaper is a device for making the ignorant moreignorant and the crazy crazier."

In August GreentechMedia reported that battery prices were plummeting, Project BetterPlace would pay $400 per kWh for lithium-ion battery packs with a 2012delivery date and IBM has plans to demonstrate a prototype lithium-airbattery pack within two years. The ecstasy was palpable, but whollyirrational.

Better Place has based its business model on leasing batteries as aservice instead of selling them as a product and even a modest level ofsuccess will give it buying power comparable to a first tierautomaker. Better Place is planning on massive government support andatleast in the U.S., the subsidies could exceed its capital costs for atime. Underthose circumstances Better Place doesn't need to sweat minor detailslike battery quality, service life and pack degradation because it cansimply discard problem packs that were bought with somebody else'smoney and continue to collect rental charges with little or no capitalinvestment. It should be a hell of a party until the governments get aclue and take away the punchbowl. The hangover, however, may be painful.

As we leave our pleasant dreams of a Better Place and awaken in thereal world, the dynamic changes rapidly. Consumers need warranties toprotect their investment and companies that write warranties need tocover their costs. While Tesla Motors (TSLA)has been able to get away with three-year battery pack warranties forits roadster, real automakers will have to provide eight to ten yearwarranties and eventually earn a normal profit on vehicle sales.So even if they start with a battery pack that costs $400 per kWh atthe battery factory, the fully loaded cost to consumers with an eighttoten year warranty and a normal markup will be closer to the $750perkWh Nissan has ascribed to the battery pack in the Leaf.

In a May2009report for the DOE, TIAX LLC pegged the current cost ofcommodity grade 18650 lithium-ion cells at $200 to $250 per kWh, whichresulted in pack costs of $400 to $700 per kWh. Despite the happy talkabout economies of scale, large format batteries are a good deal morecomplex than a giant economy-sized box of laundry detergent. While thecost of large-format automotive grade cells may eventually approach thecost of small-format commodity cells, they're not likely to get anycheaper without intervention from the commodity price fairy. By thetime you add in warranty costs and automaker's profits, end userbattery costs of $400 or even $500 per kWh are a little more than pipedream unless lithium-air or molten salt technologies make lithium-ionbatteries and the factories that make them obsolete.

We've all seen the "hope for thebest" stories about how electricity for an EV will cost theequivalent of $1.20 per gallon of gasoline. Those stories, however,assume that like butterflies batteries are free. An optimistic "hope for the best" total cost ofownership scenario looks something like this.

9.15.10 Hope.png

A more rational "plan for the worst"total cost of ownership scenario looks more like this.

9.15.10 Plan.png

I have little or no patience with battery manufacturers, automakers, politicians, journalists andquasi-religious EVangelists who create unreasonable expectations basedon hopefulscenarios instead of reasonable expectations based on likely scenarios.A Nissan Leaf may get 4 miles of range per kWh of battery capacity on asunny afternoon in Florida, but it will be lucky to get half that on awinter morning in Chicago.

EV buyers who pay a filet mignon price andend up eating pork tartar will not be happy. Their lawyers, on theother hand, will be tickled pink.

If the EV and battery industries want to avoid interminable litigationand untold reputation damage they need to get honest with theirstockholders and customers. They need to tell potential customers thatthey might get 4 miles per kWh of pack capacity on a good day, butcan't plan on getting more than 2 miles per kWh on a bad one. They needto stop comparing the fueling cost for a brand new EV with the averageeconomics of an aging automotive fleet. They need to stop dividing12,500 miles per year by 300 days and telling potential buyers that 40miles of EV range is enough when they know that customers will need atleast 80 miles of reliable range to accommodate day-to-day variationsandachieve an annual average of 12,500 miles. Instead of bafflegab claimsof pennies per mile, they need show more realistic economics based onend-user battery pack costs and reliable ranges in congested trafficand poor weather.

The realities of EV range are a bitch and I'm not the only one whoquestions whether long-range EVs can ever be cost effective. Industrialrevolutions arise from technologies that first prove their economicvalue in a free market and then seek subsidies to accelerate growth. Abusiness model that can't work without subsidies doesn't make sensebecause the punch bowl always gets taken away too early, particularlyif customers aren’t happy. The green jobs myth of the EV revolution hasalready proven to be a mirage. The cost effective and reliabletransportation mythwill be the next to crumble.

The last few weeks have been a busy time in the happy-talk press corpsas Ener1 (HEV)arranged $55million in potentially toxic debt financing to continue its plantconstruction, Valence Technologies (VLNC)trumpeted a six-yearextension of a contract with Wrightbus that may generate a three or fourmillion dollars in annual revenue, A123 Systems (AONE)announced the openingof its new battery manufacturing plant in Livonia, Michigan andCompact Power, a subsidiary of Korea's LG Chem, brokeground for its new battery manufacturing plant in Holland, Michigan.All these events gave rise to great trading opportunities, but there isa wide gulf between progress on the construction of a batterymanufacturing plant and profitable operation of that plant.

Everyprior generation of electric cars has died of congenital birth defects.While the next generation may not be stillborn, I have no confidencethat the outcome will be different. In my view these companies are notequities you want to buy and squirrel away in a safe deposit box forthe grandkids. Hope, after all, is not an investment strategy.

Disclosure: None.
Posted by John Petersen on September 14, 2010 01:31 AM | The Cruel Realities of EV Range

advertise here

Comments

What about zinc air?
On paper, it seems realistic battery/fuel cell power source.

Posted by: Martti Pitkanen

| September 22, 2010 06:18 PM

Post a comment (If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Name:

Email Address:

URL:

Remember personal info?

Comments: (you may use HTML tags for style)

Featured Companies

Search This Site
Enter your search termsWebAltEnergyStocksSubmit search form Subscribe to this Blog

Enter your email address:

Delivered by FeedBurner

Subscribe by RSS Feed