January 31, 2011

We are pleased to publish our brochure for TREM11.

January 19, 2011

A great misconception on lithium ion batteries is that they are so expensive because of the lithium content. In reality, lithium makes up only a tiny proportion of the battery cost.

Here's why:

According to the Wall Street Journal, "Nissan will spend less than $18,000 on the battery, which would mean less than $750 per kilowatt hour, said Mark Perry, the chief product planner for Nissan North America.

"That is below an estimate of the cost of such batteries of $1,000 per kilowatt hour put out by PriceWaterhouse Coopers."

Lets use the Nissan Leaf as an example. The car carries a 24kWh battery, which costs to $18,000 produce.

According to Jon Hykawy, a researcher at Byron Capital Markets, the Nissan Leaf contains about 4kg of lithium metal, equivalent to 21kg of lithium carbonate. According to the USGS [pdf], lithium carbonate in 2009 cost $4.47 per kg. Hykawy states that the price of battery-grade lithium carbonate is actually more like $5.70 per kg.

Thus, the Nissan Leaf contains $120 of lithium carbonate. That's 0.6% of the cost of the battery.

We can generalize and use the PriceWaterhouse Coopers figure of batteries costing $1,000 per kwh. An electric vehicle requires between 1.4-1.5kg of lithium carbonate per kWh, or $8.55. Thus lithium carbonate is less than one percent of the cost of a battery.

Here's how the US Department of Energy Argonne National Laboratory puts it:

The actual lithium compound used to make cathode materials, lithium carbonate (Li2CO3), is considerably less expensive. The price history of lithium carbonate is shown in Figure 5.6. The average price reported for lithium carbonate in the United States at the end of 1999 was $4.47/kg ($2.03/lb). However, increased production in Chile and Argentina has led to a recent oversupply, and actual prices paid have been as much as 50% below the list, matching the price of only $0.90/lb from Chile and Argentina. A shutdown of the Argentine production due to process problems caused the price to rise again, but the price was still below list in early 2000 (Ober 2000). Recycled materials and sales from DOE stock put further downward pressure on prices. Large demand for batteries could eventually drive the price up. At the current list price, the lithium carbonate for the batteries in an EV like the Altra would cost about $100, and the material for an HEV battery would cost about $5.

January 6, 2011

According to Reuters, Japanese Trade Minister Akihiro Ohata wants to visit China to discuss rare earths. He said that he would travel to China "as soon as possible. In other words, I'd like to go before the regular parliament session starts (later this month)."

His request, that China keep the second-half rare earth quota at the same level as the first half of 2011, around 15,000 tonnes. In 2010, Japan imported 20,000 tonnes of rare earths.

In order to meet its needs, Japan may end up consuming most of China's rare earth exports, leaving little for the rest of the world. Thus, if Japan gets its requested quota freeze, the rest of the world may be left in the cold.

This issue will be explored further at TREM11, when we will discuss the Geopolitics of Technology Metals.

January 2, 2011

CHINA IS MORE OF AN OPPORTUNITY THAN A THREAT

by James J. Greenberger (Executive Director of the National Alliance of Advanced Technology Batteries, a not-for-profit trade association focused on the manufacture of large format advanced batteries for use in transportation and large scale energy storage applications in the United States.)

Sometime early next year, the Chinese Ministry of Industry and Information Technology is expected to release a plan to make China the world leader in “new energy technology vehicles”.  The plan has long been highly anticipated and parts of it extensively leaked.

The upshot of the plan is that the Chinese government expects to spend upwards of $15 billion over the next ten years, largely to build capacity and infrastructure for electric vehicles.  Somewhat troubling, the plan appears to require any foreign company that wants to sell into the Chinese PEV market do so through a joint venture that is at least 51% Chinese owned.

The Ministry’s plan raises two principal concerns amount U.S. companies.  The first is that if the Chinese government invests $15 billion in vehicle electrification, the U.S. will be left well behind in the race for electric vehicles.  The second is that if the Chinese government only permits majority-owned Chinese companies access to the PEV market, American companies wishing to access that market will be forced into joint ventures to which they will have to contribute, and potentially lose control of, valuable intellectual property and know-how.

The first concern is largely unfounded.  The development of vehicle electrification technology is not a race; it is a boxing match.  More important, it is a boxing match in which there is a third fighter in the ring--and the one at the moment that is winning the fight:   petroleum-fueled vehicles.  U.S. industry should welcome new investment in electrification technology from whatever quarter it comes.  America’s strategy ultimately to win the fight must rely on its traditional strengths in innovation and applied technology.

Those advantages are in no way threatened by short term Chinese investment in electric vehicle infrastructure, even if that investment is disproportionate to what the U.S. is willing and able to invest.

The second concern has greater legitimacy.  The Chinese properly understand that in order to become the world leader in electric vehicle technology it must acquire technology and technological expertise from abroad.  This, again, should pose no concern.  In today’s world technology moves easily across borders; attempts to constrain its transferability are Sisyphusian in nature.  And who would want it otherwise?

After all, technology is what we in the United States have to sell.

The issue is simply one of price.  Using the joint venture requirement to acquire more intellectual property and know-how than China would acquire if it simply bought product directly from foreign suppliers is nothing more than attempt to decrease the cost to China of acquiring the technology it seeks.  It is one of the oldest  tactics in the bazaar.  We should not be offended or scared or storm out of the bazaar in outrage, but simply recognize the tactic for what it is.

Of course, someone does have to bargain back.  Only tourists take the first offer.  In the case of the United States, that will need to be the federal government in some form.  After all, the federal government has largely funded the development of much of the technology that China would like to acquire and in our free market economy no entity other than the federal government has the necessary leverage to bargain against another government entity.

But the federal government needs to remember that trade is a good thing.  Cutting a deal in the bazaar leaves both parties better off than before.  We should not hesitate to cut deals with our new, and potentially best, trading partner, China, in the areas of PEV’s and PEV-related technology.  Just keep in mind that China has few thousand years head start on us in the tactics of the bazaar.   Let’s not be tourists.