AND 
BREAKING: Has LG Chem/Compact Power Been Chosen to Supply the Chevy Volt Battery Pack?
Those who have been following the Chevy Volt story closely with us know that GM has been testing prototype lithium-ion batteries from two different suppliers, LG Chem and A123 Systems. Those batteries are in packs created by their respective partners, Compact Power and Continental Automotive.
The awarding of these initial contracts was first announced exactly one year ago (see post).
We were told then, that it would take one year of testing for GM to be able to choose one of the teams. That that announcement was supposed to have been this month.
In the interim we had heard that it might be possible for GM to utilize both suppliers for production, but a winner of the horse race could still be possible.
In GM vice-chair Bob Lutz’ most recent interview he dropped the bombshell that despite getting packs from both suppliers, only one teams pack is being utilized in 3 or 4 running mules.
Lutz said “we feel that at this point we have a lower risk with the one company.” So which company is it?
The Guardian just reported “an LG Chem unit is ready to supply next-generation batteries to the Chevy Volt.”
In the article, CPI CEO Prabhakar Patil said that their third generation liquid cooled pack has just been delivered and is working as planned. He also said Korean LG Chem has a plant in Korea ready to go and would build one in Detroit if they get awarded the battery contract. He said “our confidence level has just grown.”
The article indicates some lucky focus group folks will get to see the production Chevy Volt fiberglass model this weekend.
Patil mentioned that his company and GM were still discussing the idea of leasing the batteries to Volt owners to lower cost.
But in the newest bombshell, Patil let it slip that a CPI pack is powering the mule that Lutz just drove.
If that is true, since Lutz said GM is only testing one teams packs, then we might have our answer.
Source (Guardian)
118 Responses to “BREAKING: Has LG Chem/Compact Power Been Chosen to Supply the Chevy Volt Battery Pack?”
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June 6th, 2008 at 8:35 pm
Congratulations to them. Nice work.
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June 6th, 2008 at 8:38 pm
I was sort of hoping it would have been A123, but I’m glad things are moving along.
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June 6th, 2008 at 8:52 pm
I find this shocking because the hype has always been with the A123 System battery. In any case, I hope GM truly gets the better one of the two and that price will not dictate which one they use. If the A123 battery is a close second, the competitors will grab it.
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June 6th, 2008 at 8:55 pm
I’m surprised it is not A123
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June 6th, 2008 at 9:04 pm
The question I have is: If CPI does get the contract, will they be able to sell the cells to other parties? Or will their only customer be GM?
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June 6th, 2008 at 9:15 pm
I read the entire article and posted the link in the previous thread but it got stuck in moderation.
I’m not sure that this contest can be called right now. If the author’s information is correct, then the test mules are using the CPI pack and they’ve probably won. Lutz did say that they were testing 3 mules and I know that CPI has delivered at least that many packs.
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June 6th, 2008 at 9:15 pm
Lutz takes delivery of electric scooter and talks about his Volt test drive:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080606/AUTO01/806060442/1148/rss25
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June 6th, 2008 at 9:21 pm
Looks like my earlier guess, based of a negative characteristic of the LG battery architecture was wrong. Now I’ll suggest that the manufacturing prowess of LG, world’s largest electronics company,
the probable lower cost estimate for their batteries based on that prowess plus their battery’s reported lower cost components, together perhaps with their offering to lease the batteries themselves and lower their cost by selling them to utilities at
the end of their useful lifespan in the Volt did the trick. Maybe I’m right this time. At least it sounds plausible.
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June 6th, 2008 at 9:32 pm
All we hear about is A123..seems like the media’s favorite. Anyhow, good deduction Lyle!
Regardless who is awarded the contract, the pack producers better get crackin’. There hasn’t been that size Li-ion pack in the numbers we’re talking about ever produced by any manufacturer. Building the car is nothing for GM…the pack however, is a new venture and could throw the entire project off line.
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June 6th, 2008 at 9:58 pm
ok i am soooo stoked for the volt to be released. i cant wait to start saving all that money on fuel. like DAMN.
<3 Scottie
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June 6th, 2008 at 10:05 pm
Personally, those who have read my blog entries in the past know I’m retired military. My views are tough on the subsidies we do to foreign nations at our American taxypayer expense, military costs included. I recall A123 was going to make their battery packs in China, so hearing LG Chem will make these in Detroit – ABSOLUTELY WONDERFUL!!!!
CHEVY VOLT American-made, American-FUELED.
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June 6th, 2008 at 10:09 pm
The Compact Power/LG website has announced they have won the Volt battery contract.
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June 6th, 2008 at 10:14 pm
Count me in the numbers of the surprised many it is not A123. I wonder what really lead to this decision, if it is in fact true. A123 would seem to be the proven commodity.
I wonder if it has something to do with A123 jumping the gun and putting out the Hymotion Prius Lithium pack, I did feel at the time it felt like A123 was showing up GM a bit. Kind of a, “we don’t need to jump through hoops for you, just to now find out you are only needing 10,000 odd batteries into a car thats now 3 years off”
Or maybe LG Chem just has a good battery and offered a better price to be exclusive.
Regardless, if GM has chosen and committed to LG Chem it is terrific news, (not the part about only one supplier for such a vital component—that blows), but for the fact that GM has given an actual production contract. I believe, if I am not mistaken, it is the first given. Perhaps that was job one when they got the ‘official nod/funding’ from the board.
If true, this is the first thread in a very, very long time that actually contains real, external, proof is in the pudding news.
And by my estimation, this is the very first thing that GM has delivered on it’s promise when it comes to the Volt. They said, “Here are the two guys that will be competing for the contract. Go make it, bring it to us, we will test it…and in a year, we will give out the contract.” (although I see no reference in that article about the 1 year timeline, I’ll go out on a limb and trust you on it Lyle)
I can give credit where it is due. It doesn’t hurt me at all to say this, “Good job GM” I look forward to saying at least once or twice more. Hehe.
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June 6th, 2008 at 10:18 pm
Here is the official release from LG Chem:
http://www.compactpower.com/Documents/cpi_gm_development_program.pdf
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June 6th, 2008 at 10:21 pm
Rats, I was rooting for A123. Oh well…let the best battery win I guess!! I am surprised though, because A123 is thoroughly impressive to me, I had a hard time imagining that anyone else could beat them. I guess it’s good that there are multiple promising Li-Ion technologies out there! Though I suspect supply issues are a big reason for GM choosing LG Chem/CPI. We heard that both “brands” of pack were meeting or exceeding expectations, so manufacturing capacity could be a major factor here.
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June 6th, 2008 at 10:23 pm
I wonder if A123 didn’t show too much arrogance and hubris by waiting to deliver their battery pack on the last possible day promised. By the time A123 delivered, LG Chem had already delivered a new design based on the knowledge gained from their first delivery.
Stringing your customer along, and making them march to your drum, leaves a bad taste in a customer’s mouth. A123, having worked hard to coordinate and support a number of Prius conversion shops, finally admitted that they would rather supply GM than work so hard to support multiple Prius conversion shops – it seems they got religion too late. Serves them right.
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June 6th, 2008 at 10:26 pm
Of interest in that release:
A) Still state the Volt has a 640 mile range (probably they just behind…that doesn’t concern them)
B)12 month development program, final step is stated as: In-car integration and testing…therefore no production version Volt in the ‘very near future’ as Wags said at annual conference and casts doubt on Lutz’s claim to have several hundred on the road in spring of ‘09 (I’m not saying it’s impossible…but realistically, probably not)
It will be very interesting to see the development of the assembly plant. If you know anything about Lithium-Ion batteries, you know it’s a tricky thing to mass produce and also have uniform quality and consistancy…and is very labor intensive.
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June 6th, 2008 at 10:29 pm
Hang on a sec. That announcement doesn’t say “we’ve been chosen to build the batteries for the Volt” it says “we’ve been chosen by General Motors Corp. to develop a lithium-ion battery system for the carmaker’s innovative E-Flex propulsion system” I’m not so sure that’s exactly the same thing. “Develop” isn’t the same as “build” given that they’ve already developed a battery for the Volt.
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June 6th, 2008 at 10:30 pm
A123 held patents on several of the critical battery aspects. Perhaps that proved too much future price control by A123 for GM to risk. LG seems a cleaner, less complicated choice, let alone the supply lines will flow from a depreciating dollar (plant in Detroit) versus a channel with an appreciating currency, the Yuan (thus cost increase). The Volt hopefully is a very long term solution along with the spread of the E-REV to other models.
In the end, a winner was picked and again, the Volt Nation is a step closer to energy independence from foreign oil.
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June 6th, 2008 at 10:37 pm
Wait a minute, that press release is dated June 5, 2007. LG may be producing the final battery pack for the Volt, but that press release appears to be unrelated. Unless they got the year wrong and it was supposed to be dated June 5, 2008.
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June 6th, 2008 at 10:42 pm
Jake #19
I read one that said roughly the same dated today on the Forbes site. No link because moderation has already snagged a few today.
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June 6th, 2008 at 10:45 pm
>> Patil mentioned that his company and GM were
>> still discussing the idea of leasing the batteries
>> to Volt owners to lower cost.
UGH… Say it isn’t so.
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June 6th, 2008 at 10:48 pm
#17 Jake, it sure looks like an old press release to me. The first paragraph says “the Chevy Volt concept car shown earlier this
year.” That’d be January 2007.
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June 6th, 2008 at 11:03 pm
Sure seems like bad information IS getting in here.
Take Care
Arch
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June 6th, 2008 at 11:18 pm
Did I just see “Chevy Volt fiberglass model” ?
I want that one, in Metallic Gold, please. My own electric mini-Corvette, sweet ! No rust, no fuss. Low center of gravity, always on instant torque – what’s not to like ? And NO glass roof, please ! Thanks, Bob.
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June 6th, 2008 at 11:20 pm
http://www.forbes.com/reuters/feeds/reuters/2008/06/06/2008-06-06T234015Z_01_N06433312_RTRIDST_0_LGCHEM-VOLT-INTERVIEW.html
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June 7th, 2008 at 3:14 am
Yeah it does look like an old release.
640 miles? I thought that 12 gallon tank was reduced to somewhere btwn 6 & 8 (meaning 340-440 miles).
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June 7th, 2008 at 3:15 am
How is leasing the battery going to be cheaper than buying it in the car? Wheather you pay one car note or two, if the sum of the 2 is the same as the 1st, it is not cheaper.
Especially if that is how they plan on getting to $30K.
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June 7th, 2008 at 5:41 am
I believe the press release is also a year old, not only based on the date, but based on the following quote from Denise Gray:
“This technology is developing rapidly,” said Denise Gray, GM director of hybrid energy storage devices. “This contract is an opportunity to deeply understand the differing battery technologies before making a production decision.”
So to me, this relates to the competing contracts that were awarded to both LG Chem and A123.
To me, the key message was provided by Lutz in his recent video interview regarding the Volt mule test drive; he stated that there was less risk with one of the suppliers.
Whether this risk is technical, supply oriented, or production based, we don’t yet know. If LG Chem truly has the production contract, again, it could be due to their manufacturing capabilities.
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June 7th, 2008 at 6:26 am
After reading all the responses, I’ve come to believe that no one has been publicly chosen, yet.
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June 7th, 2008 at 6:42 am
I’m surprised that GM would stand for a supplier announcing a contract instead of GM doing it themselves or having a simultaneous press release.
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June 7th, 2008 at 6:46 am
I was counting on using the battery at the end of the 10 years to convert my grid tie system to off grid. I would be very unhappy about leasing it. I wanna keep it.
Statik you evil basta$d, you nearly had me with your 2007 announcement.
I guess the race is on for Version two of the Volt then.
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June 7th, 2008 at 6:49 am
Hold the phone #24. Lyle’s original post is still sound. Just because Statik accidentially gave us a release that is nearly 1 year too old, and to the day, does not change Lyle’s good leg work.
As usual, I agree with everything jbfalaska has written. If LG is willing to build a Detroit plant to complement the Korean plant, I’m all for it. Detroit for 1/2 the batteries and Ohio for the car assembly would be a great start. Now if we there were just a bunch of workers who know how to build cars somewhere in say, Janesville, WI, we could have two Volt plants to go with two LG plants.
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June 7th, 2008 at 6:59 am
If both companies met the specs, no choice should be necessary. Use both…
The battery pack maunfacturer should be listed on the window sticker. The GM customer should be made very aware of the battery manufacturer; so in the long term, the praise/blame can be directed to the proper organization. In 15 years, the general public will know where to place their confidence.
Tires and 12 volt car batteries are not considered an auto assembler part…and the VOLT battery pack should not be either.
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June 7th, 2008 at 7:23 am
Yupe, that is the wrong press release. I search engined it for the last 48 hours, I saw the June 5th and assumed it was new. Please disregard and move on, lol.
I thought it was odd the first two steps seemed like they were already done…the integration step seemed like the part they were to be working on now.
I’ll attempt to post current news when it comes out. Sigh. Sorry about the confusion.
I hope everything is still the same and GM has indeed made a decision.
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June 7th, 2008 at 8:21 am
The press release from the Compact Power Site is from when they and A123 were chosen to compete, 1 year ago. It has nothing to do with today’s news.
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June 7th, 2008 at 9:45 am
I don’t like the idea of leasing the battery either. But based on this article I might consider it. Lets try an example.
If the battery cost $10000, and the sum of the lease over 10 years $8000 that would save $2000 and spread the cost of the battery over the 10 year span or $800 per year. If the residual value of the battery (12KWH?) is still $2-4000 then we both win.
After 10 years I should be able to upgrade the pack to current 2020 technology and maybe get 32KWH for $5000 and buy that outright or 16KWH for $3000. (All prices are examples and treat them as relative to whatever the real cost turns out to be)
I would never lease a new car. It like renting and your stuck probably leasing another new car when the lease is over. I have two cars, I drive, ‘86 CJ-7 and ‘87 Honda CRX. I don’t like to spend money year after year on a car. (My wife likes new cars. ‘07 Toyota Sequoia, I’m screwed there).
I don’t like leases but if the terms are right I might consider it. If the cost of the lease exceeds the cost of the battery-residual value+reasonable profit. Forget it. Right now the Volt is the first car I would ever consider buying new (for myself)
Right now I can either buy a car or lease it. I should have the same choice on the battery if I buy the car. I believe the majority of Americans don’t like getting strung along on endless payments.
Don’t Blow it GM.
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June 7th, 2008 at 11:09 am
Leasing basically means the “owner” can’t buy the car. Not a good omen. Possibly leasing should be considered if the price is low enough or it makes the warranty better, but it has a negative feeling.
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June 7th, 2008 at 11:11 am
Aww man , i thought that it really was going to be a123 , we cant really decide that it is not them until bob lutz officially comes out and makes a statement. I personally want it to be a n all american company to help create jobs for the american people and keep out economy going . After all it is an american company
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June 7th, 2008 at 11:20 am
Does this mean “exclusive” supplier? Maybe they are sticking with one for now. Who knows.
I with the anti-leasing group. EV-1 was a fiasco mostly because of the lease. I would hate for the Volt to go down the same road. I do think times are different today though.
Question. At the end of life (assuming I don’t have to lease the battery), can I use the battery in my house for energy storage? For instance, collect energy from the sun and store it in the battery to use at night.
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June 7th, 2008 at 11:21 am
Lyle, I’m surprised you haven’t started a new thread on two major news stories related to this… oil at a new all time high after climbing by a historic one day amount (and by the largest 1 day percentage since 2000)…. and that the Senate climate bill (one that may have put in place a carbon tax and trade system, and may be the bill with the tax credits for plug-ins?) was tabled til next year (not that it would have passed the Bush admin’s veto pen).
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June 7th, 2008 at 11:36 am
Raschiid #40
I have the same comments as yours. You were faster than me.
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June 7th, 2008 at 11:38 am
#16 Jason,
” wonder if A123 didn’t show too much arrogance and hubris”
Is it arrogance and hubris if they were simply unable to build a pack sooner and just rushed out whatever they managed to put together?
Take note that for all of Hymotion’s Prius talk, they are just taking orders with the hopes that they can deliver in November 2008.
This doesn’t instill a lot of confidence.
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June 7th, 2008 at 11:46 am
Just because GM says they’ve been using one pack doesn’t mean that they’re not still considering using the other. He said that the pack that they are using is currently the best choice, but perhaps the other company is perfecting their pack. If GM wants to, they should consider using both packs in consideration of their production target.
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June 7th, 2008 at 11:58 am
I guess my guess GM was going with AI23 in the last thread, not only had a 50% chance of being right, its seems it had a 100% chance of being wrong.
Since the battery power is lower than A123, and energy density is about the same, cost must be the driver. Go Volt.
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June 7th, 2008 at 12:47 pm
#8 kent beuchert:
I like your ideas on the possible advantges of leasing, and selling the batteries to power companies when they are past their car capabilities. I think that PG&E in CA was experimenting with old Prius batteries, so I guess that kind of thinking is actually going on.
Your thought that LG’s evident willingness to lease the batteries themselves might have been a big selling point makes a lot of sense to me. They take the warranty risk of battery problems directly instead of putting it on GM. It would certainly weigh heavily with me.
#22 Mike-o-Matic:
I share your distaste for leasing. I have never leased a car, and have no wish to. We keep them and run them until there is nothing left. On the other hand, with a technology as unproven as these batteries, I could possibly see doing it if the numbers made sense. Maybe it could be a good way to spread the risk back to the manufacturer and/or GM. Buy the car – lease the battery.
#15 Jake:
“…let the best battery win I guess!!”
Right. Let’s get on with it.
#32 NZDavid:
I don’t want the old battery. If they can show me that the lease idea works financially, I’m open to it.
#37 Sheltonjr:
Right. Whatever works.
#38 RB:
I think they’re talking about leasing the battery, but not necessarily the whole car. I think that your comment about making the warranty better is dead on. That would be the biggest argument I could see for the leasing idea.
#40 Rashiid Amul:
I recall that the reason for leasing the EV1 was partly the same reason that they are talking about leasing the batteries for the Volt. The risk of warranty problems was thought to be pretty high so many (most?) customers were actually afraid to take on that risk. And GM wanted the flexibility to just take them off the road if they proved to be too unreliable.
Also, the cost to manufacture them was so high that no one would have bought one for a price that even broke even. The whole thing was hugely subsidized by the manufacturers to comply with the CA ZEV mandate. They had to do it to sell cars in CA, but they lost their a***s on every unit. So, when they got CARB to drop the ZEV rule, they just walked away.
Granted, Toyota had a lot better PR sense when they decided not to crush all of their electrics. But I doubt myself that very many people would have bought orphan EV1s for $50-60,000, which at least what GM would have had to charge to come anywhere near covering their costs.
Awesome comments guys. I have seen a lot of blogs with really nasty comments galore, and intense flaming back and forth. This is about as high quality and professional as it gets, IMHO.
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June 7th, 2008 at 12:51 pm
Recent news reports suggest GM may be considering buying Cobasys. A potential second source for LiO battery production?
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June 7th, 2008 at 1:16 pm
Statik,
What’re your thoughts about the possibility of having to lease the battery?
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June 7th, 2008 at 1:22 pm
#47 Srschrier
http://gm-volt.com/2008/06/06/gm-may-acquire-hybrid-battery-supplier-cobasys/
Other news:
Union did stop production this morning for about 3 hours of car and truck plants,
“workers have blocked a road leading GM Canada’s headquarters in Oshawa, about 40 miles (60 km) east of Toronto, preventing office workers from getting to their jobs.”
CAW spokesman Keith Osborne said the convoy lasted about three hours and involved about 250 cars. (forcing a temporary shutdown).
http://www.reuters.com/article/marketsNews/idCAN0740270620080607?rpc=44&pageNumber=1&virtualBrandChannel=0
“General Motors experienced a little bit of heartburn today,” said Canadian Auto Workers Local 222 president Chris Buckley. “That’s nothing compared to what 2,600 of my members feel every day right now. It’s a lot more than heartburn.”
“union leaders were planning to meet later on Saturday to decide on “phase 3″ of the protests. He declined to be more specific.” Buckly conitnued, “Just wait and see,”
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June 7th, 2008 at 1:37 pm
Does anyone know what products LG Chem batteries have been used in? I know that A123 has made, probably, millions of batteries for Black and Decker/DeWalt. I thought their demonstrated ability to mass produce batteries would virtually guarantee that they would be the chosen supplier for the Volt.
Bob’s comment sure makes it sounds like CPI/LG Chem has a significant advantage over A123/Conti.
Is the LG Chem chemistry similarily “safe” as the A123 chemistry? Something in the back of my mind makes me think that their main safety emphasis was on the cell separator materials, but I could be mistaken.
I wonder if GM will still contract with A123 on a development basis or perhaps place orders for 2nd or 3rd year of production with them. It seems wise to have multiple suppliers, and it seems like A123 will be well-funded for a very long time — particular when they go public, which is rumored.
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June 7th, 2008 at 1:40 pm
I’m largely against leasing the battery because it seems crazy to shell out $20-$30g for a car and still only own 1/2 of it.
However, it may be the case that battery technology/production capacity increases so dramatically over the next 5 years that at the end of a 3 year lease a 16kwh battery might be almost worthless….kinda like a 8mg SD Card. If the batteries are indeed worth much less than predicted, then the consumer would save a bundle by leasing and might have the option of installing a 32kwh battery at the end of the lease for a reasonable price.
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June 7th, 2008 at 1:41 pm
#48 Tag
What’re your thoughts about the possibility of having to lease the battery?
I can’t speak for the masses, but I will definitly, 100% NOT buy the car. When it comes down to it, I’m a fiscal kind of guy. I have to own the things I pay for.
And I can’t stand getting ripped off. 999 times out of 1000 a lease is a rip-off, a lease is a fancy term for ‘cash grab’. I’ve never seen a deal where you can either A) buy it or B) lease it and ‘B’ was the smart choice.
I buy my cars in cash, I don’t ‘rent’ my hot water tank or my digital receiver or my high speed modem. I don’t pay for electricity, I’d rather pay a one time shot for solar power, etc. etc.
I’m so neurotic about credit and fees, etc. I only carry cash. I have never used my interact (ATM) card for any purchase . I only keep money in a chequing account that also pays me interest. Bank fee in the account I put money it? Get real. (I’ve probably had to switch banks 5 times in the last 10 years).
I haven’t even used my credit cards in a decade (I had to back then, no money, lol)…I only use them for things like security deposits at hotels.
If you have the cash, I don’t understand leases at all. Much the same as I have no idea why people put up with condo fees. 150K for the condo, then $500 a month? For what, your in a concrete box! Drives me insane!
Phew, you got me all worked up with that question, hehe. Guess you know what I think. (=
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June 7th, 2008 at 1:46 pm
#49 Statik:
Egads! Well if worst comes to worst maybe I can convert my S-10 to a “plug-in hybrid”. What was that outfit making some kind of kits that somebody brought up here a while ago?
Maybe we can all network somehow and help each other with our backyard conversions. Have you ever seen pictures of the car the Norwegians converted to run on charcoal during WWII? They had a little wood stove mounted on the bumper that cooked it into methane, or something. Desperate time call for desperate measures, LOL.
I’m trying to keep a positive attitude here man, but it’s not easy.
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June 7th, 2008 at 1:50 pm
Statik@52
Ok, but what do your REALLY think? (lol). Deeeep breath, “The sun is warm, the grass is green”. Relaaaaax. (G)
OK, how should I word this…..
All emotion aside, what’s your advice regarding leasing the Volt’s battery for a normal person?
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June 7th, 2008 at 1:54 pm
#53 noel park
Sweetness!
Nothing like a little afternoon backyard project. I’ll fire up the BBQ. Think of all the batteries who could jam into the box of your S-10! Actually, if I had the time it would probably be a pretty entertaining project. My young son is eating up all my quality ‘alone/project/tool’ time, lol. Another year until he’s in school…another year…thats what I keep telling myself.
We could probably get like a 300 mile range out of that badboy!
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June 7th, 2008 at 1:57 pm
#51 Dan:
I agree.
#52 Statik:
I hear you.
A local radio guy, John Retsek, got a question about the professionalism of car salesmen. He said, “The guy with the red polyester sportcoat and the plaid pants isn’t gone, he just moved to the leasing office.” I have always seen car leases as sort of like sub-prime mortgages. It’s what you do when you desperately want the car, but you can’t really afford it. APR of WHAT?
I’m just saying that, in this highly unusual and somewhat risky situation, I might consider it. I think that we are smart enough to know a ripoff when we see one. If so – see ya later.
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June 7th, 2008 at 2:25 pm
The electric powered radio control folks have been using every sort of battery and at this time the longest lasting, safest battery is the A123. It accepts charge and discharges faster than anything else. It is inherently safe and will not get into a self feeding runaway fire.
The first time one of these cars with a laptop battery crashes and goes up in a ball of flames will be the final curtain call for GM. The lawyers will have a feeding frenzy.
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June 7th, 2008 at 2:28 pm
#54 Tag
“All emotion aside, what’s your advice regarding leasing the Volt’s battery for a normal person?”
I would tell anyone I don’t hate or wish death on to NOT lease. I think it is a good habit for any person to not get involved in these situations.
If it is a choice between A) no lease and B) No Volt, and you just have to have it…then B) Get the Volt, suck up the lease I guess.
End of the day you have to live your life…and if the Volt is the thing that will give you that much more enjoyment then do it. However, I would suggest that under this scenario it is a ‘pleasure’ purchase and not a necessity. So go for it. Standard of living and all that.
However, if you are buying the Volt with the thought ‘it will save me money in the long run’ I would say run for the hills if it’s ‘lease only’
GM/’the business world’ knows that most people dont do the the math. Everyone talks about having the Volt long enough to pay for itself/or ‘getting a new battery’ when it dies in 10 years…
$35,000+$250 lease (over 10 years) = $65,000
Everyone is always saying how the Li-Ion technology is getting cheaper and cheaper rapidly. And if it’s $300ish/kwh now..or 5K for the pack, I’d rather ‘take my chances’ and just give them the 5K up front.
Just my opinion though.
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June 7th, 2008 at 2:57 pm
#46 Noel Park
I agree with your point of view.
The battery pack may be a high risk item for both GM and the battery manufacturer. Remember, not everyone will be using the Volt in warmer states like CA and FL. With temperatures below zero Farenheit (-18 C), snow, freezing rain, and other cold weather events, this service may take its toll on the batteries.
With a battery lease, the service and responsibility for the battery lies with GM. If the battery pack fails, or has sub-par performance, just exchange it for free for a new one. This arrangement saves the Volt owner from large financial exposure to battery pack problems.
I see two major issues with a lease. First, it must be fair. If the battery lease payment is $200 per month, over 10 years this would equate to $24,000! Certainly not fair, and certainly not justifiable from an economic perspective for many drivers.
Second problem with leasing is the issue of CONTROL. Without a battery pack, the Volt will not operate (even though you have the ICE, it needs the battery pack as a buffer). Therefore, the lease must be written to provide security to the owner, and GM cannot arbitrarily repossess the battery pack (without providing a replacement).
I believe that if the TERMS AND CONDITIONS of a battery lease are properly stated, the lease of the battery pack could actually be the best situation at this time. Then, as stated by others, in the future you could purchase your old battery pack, or perhaps replace it with a better battery pack in the future at a lower price. With the rapid advances in battery technology that are likely over the next 10 years, this could be an excellent way to isolate yourself from exposure to rapid battery value depreciation.
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June 7th, 2008 at 3:07 pm
#59 BillR
You have some good thoughts there. Especially the part about having a Volt with no battery, lol.
I will say this, for those who are not comfortable with owning a unproven technology. Let’s have GM have a ‘lease option,’ for them…that way it is OUR choice. Let the customer know the risks and then they can make the decision.
My ‘fur’ gets up when someone is selling you something they tell you how fabulous it is, how bulletproof, how it wil be the best thing you ever buy…then once they get the cash out of you they say, “would you like extended warranty with that, it’s a good idea”
To me if there is catastrophic/hazard failure on the battery, GM would be forced to take the packs back and replace them at their own cost…so why would I pay for this security?
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June 7th, 2008 at 3:25 pm
Statik@58
Thanks. I didn’t want to state an opinion so as not to become a “contaminating variable”. On this issue we’re of like mind (did I say that out loud?). What I have, I own. We did borrow some to buy our home, but that was necessary at the time. All clear now.
Having only leasing as the option for the car OR the battery would be one of the VERY few deal killers for me with the Volt. I’ll wait until I can buy a Volt intact..
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June 7th, 2008 at 3:33 pm
/screenshot
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June 7th, 2008 at 3:41 pm
Statik@62
What does “/screenshot” mean?
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June 7th, 2008 at 3:47 pm
Means I’m taking a picture of the screen with us agreeing to save for posterity’s sake.
/humor explained…tres drole
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June 7th, 2008 at 3:56 pm
Statik@64
I figured it was either that, or you posted a pic of your face looking very, very troubled.
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June 7th, 2008 at 4:08 pm
51 Dan & 59 BillR
Good thoughts on Li-ion EV battery pack leasing. I too think that initial advancements will be rapid in this technology application. And that a replacement battery lease guarantee would be critical for a purchased first generation E-REV dependant on it.
BillR: If the outright purchase price for the battery price is a $10k option, what would you think a fair cumulative cost for a leased battery pack over its lifetime would be? What is the typical % increase for a leased car over its purchase price? How much of an increase should be allowed for amortizing the risk of unproven technology over the battery lease population?
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June 7th, 2008 at 4:12 pm
Len #57
“The first time one of these cars with a laptop battery crashes and goes up in a ball of flames will be the final curtain call for GM. The lawyers will have a feeding frenzy.”
*** **** *****
GM is not using laptop batteries. Both A123 and CPI’s chemistry is much more advanced albeit slightly less potent. Tesla is using a much older cobalt chemistry in the Roadster and this would be a much bigger concern for them. yet it hasn’t stopped them from selling the Roadster, which is made for speed.
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June 7th, 2008 at 4:34 pm
ABC news on 6/3 had a segment describing the GM plant closings and the AFS Trinity tech (ultracaps+battery+gas). They claim 40 miles AER and if you use combined gas and Electric (selectable) a 0-60 in under 7 secs. In a Saturn vue size vehicle that’s pretty impressing.
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June 7th, 2008 at 4:34 pm
impressive
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June 7th, 2008 at 4:51 pm
Tag
I’m guessing that even driving an EV with an 8.5-9 sec 0-60 is going to be impressive due to the nature of the acceleration. It’s always been the case with ICEs that torque heavy engines feel faster than horsepower turned engines. This is especially so under moderate acceleration.
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June 7th, 2008 at 4:58 pm
Grizzly,
Absolutely! I’m really anxious to see what “instant torque” feels like!
T
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June 7th, 2008 at 5:33 pm
Feels like……Victory!
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June 7th, 2008 at 6:10 pm
CPI statement claims they have won the contract.
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June 7th, 2008 at 6:17 pm
I have not had time to read all of the above post on the battery supplier thread, but I am not in favor of leasing the battery for the Volt. I assume GM wants to sell you the Volt, but you have to sign a lease for the battery. I guess proof is in the pudding, in this case, how the deal is set-up. Maybe it would reduce cost and remove some of the service life issues from the battery. GM would not have the same liability issues either. Just not enough information at this junction.
I know all of you have made some outstanding comments on this subject and I can’t wait to find time to read through all of them. Bear with me if my comments show my lack of knowledge by not reading all of the post before commenting. It Saturday afternoon and I have been working in the heat all day (around 95 with very high humidity – its Mississippi, after all) and I am ready to shower and take a rest. Catch you guys later.
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June 7th, 2008 at 6:43 pm
Lyle noted “The article indicates some lucky focus group folks will get to see the production Chevy Volt fiberglass model this weekend.”
I wonder if anyone from this blog is in a focus group.
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June 7th, 2008 at 7:33 pm
I’ve heard leasing described as an excuse for people to live beyond their means by driving cars that are more expensive than they could normally afford. This same expert said that leasing was often financially unwise. I don’t know how much this advice would apply to leasing the Volt’s battery pack, but it makes me nervous. If the Volt is beyond some people’s price range, maybe they would be better off waiting for generation 2 or 3 so they can buy it outright. That’s probably what I would do.
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June 7th, 2008 at 7:37 pm
OT: Waitlist
How do i know what number i am on the waitlist. it wasn’t mentioned in my confirmation email…
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June 7th, 2008 at 7:40 pm
Well this whole lease thing is interesting. I had my own consulting company for over 25 years. I always leased equipment because it was a direct wright off on taxes. Now that I am retired I can not see any benefit to a lease. Now on the flip side of that if GM is going to get LG to do the lease it would cover their butt if there is a battery problem. LG would have to stand behind their product not GM. Its all an interesting game. We will have to see where it all ends up.
Take Care
Arch
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June 7th, 2008 at 7:55 pm
doobie@77
I’ve posted the same question without getting an answer. I’m very curious, but there must be SOME way.
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June 7th, 2008 at 8:00 pm
#66 mein green
I will confess that I haven’t put a great deal of thought into the pricing for a battery lease, but #37 Sheltonjr mentioned that for a supposed $10k battery pack, maybe the payments should equate to $8000 over 10 years or about $67 per month. This still leaves GM with ownership of the battery pack after 10 years.
I’m sure there would still need to be a mileage calculation as well. GM would not want to lease the battery for standard rates if someone drove 50,000 miles per year, and would use up the battery life in 3 years.
Based on the average 15,000 miles per year used by the EPA, and $4.00 per gallon for gasoline, a sedan like the Malibu would consume 600 gallons anually, based on an average 25 mpg. Fuel cost would be $2400.
If all 15,000 miles were from electricity for the Volt, and electric rates are $0.15 as in my locale, the Volt’s annual fuel cost ($.03 per mile) would be $450. So the owner’s annual savings would be $2400 – 450 – (12)(67) = $1150.
This might represent a fair lease plan, but of course, we don’t know the base cost (no battery included) of the Volt yet, as compared to other competitive vehicles. This could have an impact on the overall economics.
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June 7th, 2008 at 8:19 pm
#79 BillR — Another possibility is that GM will treat the battery as they treat the tires — delivered with the car, but the lease or warranty is with the battery company, not with GM. Mileage related valuation is likely, as you point out, for the battery too. As for the lease, maybe it should be lower cost but with an indefinite term — an incentive for longevity.
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June 7th, 2008 at 8:19 pm
Doobie and Tagamet,
I asked Lyle if there was a link to see what my number was on the waiting list. His response, and I quote was, “No, I have them in chrono order in my database.”
He needs a web developer who knows something called wordpress to help him with the web site. If I were to do it, I would have to rewrite everything because I don’t speak PHP, but only ASP. I would volunteer to help him but if I only had the time. With work, school, and Little League coaching, trust me I’m swamped.
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June 7th, 2008 at 8:23 pm
I’ve thought about the battery lease. It sounds like a bad idea. I’ll pass on it. I put 32,000 miles a year on my car. That gives me a 4.6 year usage for the battery pack. No one will want to sell me a lease.
Actually, now that I think about it, the Volt doesn’t sound like a good purchase for me to make. After 4.6 years, I will have to buy a new battery pack. That could be pricey.
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June 7th, 2008 at 8:30 pm
#82 Rashid — or maybe you are the kind of customer who will benefit the most, because lots of miles may equal lots of savings as compared to using gas. After all, we don’t yet know what any of the costs will be — we’re just having fun guessing, in the meantime.
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June 7th, 2008 at 8:33 pm
Rashiid Amul – You might not have to buy a new pack after 4.6 years…it’s not like the pack will self destruct after 150,000.00 miles. It could last 10 years for you, you might just have to be satisfied with 25 or 30 miles all-electric range.
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June 7th, 2008 at 8:39 pm
Jake #84, I see your point. 25-30 miles is better than nothing and certainly 10 years will work out fine. We’ll see as time goes on.
RB #83, Agreed. It is fun and yet somewhat frustrating. But meanwhile, I keep saving for the Volt. So either I will buy it, or have a lot of cash put aside for something else.
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June 7th, 2008 at 9:19 pm
Rashid @ 81
Thanks! That helps a lot.
It sounds like you have your time management priorities perfect.
Be well,
T
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June 7th, 2008 at 9:26 pm
How much is a compact car with an electric drive chain and no transmission worth?
A fully loaded, fully functional, automatic transmission, AC and all, Chevy Aveo is $15K and a Cobalt is $20K.
If GM plans to do the car and battery seperate, the car should be priced no higher (fully loaded, of course) no more than $20K if the battery is $10K (~$167/mo 5 yrs). Or some sum where the two reach $30 K. If GM plans on charging 25K for the car and $15K (~$250/mo for 5 yrs) for the battery, forget it!
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June 7th, 2008 at 9:26 pm
Another element that’s unknown is the price of a gallon of gas in 13 years! (10 with the Volt and 3 waiting for it – SIGH).
IF, and that’s a BIG IF, the gas continues at the recent rate upward………
Never mind. I don’t want to think of it.
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June 7th, 2008 at 9:35 pm
Jes #87
I see your point, and it’s been made before, but the comparison isn’t valid. Most new cars have development costs far less than the volt, because they’re standard ICE vehicles, and they share so much in engineering, development, and parts from the bin with what’s already on the road. This is not the case with the Volt.
However, I agree that $45K is way too much. That’s why I don’t entertain the notion of getting one of the first out. I suspect that there will be plenty of people across the country for whom that’s a drop in the bucket, and they’ll help lower my cost.
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June 7th, 2008 at 9:47 pm
Rashiid #85
“But meanwhile, I keep saving for the Volt. So either I will buy it, or have a lot of cash put aside for something else.”
*** **** **** ****
Rashiid,
That’ll be two of us, I don’t like car payments/leases either! However, don’t be discouraged by the initial release price of the Volt. Maximum Bob has already reluctantly admitted that it’ll be high, but I”m confident it’ll come down.
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June 7th, 2008 at 10:06 pm
If we have to lease the battery, can we choose not to lease the battery? Can we lease/buy a battery from another manufacturer? Can we lease a smaller battery?
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June 7th, 2008 at 10:12 pm
I doubt it….it’s not like there’s a lot of options out there and the Volt’s battery is going to be pretty unique in terms of its physical shape, cooling system and connections to the car’s brain.
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June 7th, 2008 at 10:37 pm
In time I’m sure after market options will allow it. But I’d bet it’s a few years out.
When it does happen you will see more “power dense” cells and optional electric motors for more power if you so desire.
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June 8th, 2008 at 12:59 am
Only 10k people will get the first Volts in 2010/2011. Maybe another 60k people will get Volts in 2011/2012. I probably won’t get one until 2012/2013. If battery leasing is part of the deal, maybe after-marketers will be ready with a less expensive battery for me. I’d be happy with a 20-mile AER.
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June 8th, 2008 at 2:30 am
Rashiid Amul keep in mind that 5 years after you purchase your volt you just might be wanting to upgrade the battery to those new fangled ones that give more range at only $500 per pop.
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June 8th, 2008 at 5:43 am
I did some searching last night, and I believe that it is highly likely that both LG Chem and A123 will get battery contracts. However, only one company may get the contract for the Volt.
My feeling is that GM will continue to intorduce other E-Flex vehicles, both in North America and in Europe. They will probably need more than one battery supplier. Therefore, the Volt’s contrtact may go to one supplier, but the next E-Flex vehicle may go to another. See this attached article:
http://www.autoobserver.com/2008/04/gm-says-40-miles-doable-but-the-business-of-chevy-volt-battery-just-beginning.html
So maybe a Cadillac Provoq with an ICE may be coming, and perhaps a luxury vehicle like a Buick.
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June 8th, 2008 at 7:39 am
I will not purchase the volt if the batteries are leased.
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June 8th, 2008 at 8:33 am
Only 2 manufacturers for an essential, most expensive part (and never used in a large volume production vehicle) for a vehicle is risky business. Having 1 supplier doubles the risk.
However, a worst case scenerio still exists…the battery supplier(s) are unable to supply the battery packs for any reason. GM’s only recourse would be to purchase the battery supplier(s) since finding another supplier is out of the question. Leasing does not solve this one.
The electrical battery industry needs to mature to reduce this risk. In general like the ICE, electrical batteries are not patented to one or two companies. Yet it appears that the tech required for a VOLT battery pack is controlled by these 2 suppliers.
Major safety issues could be even worse, but per the reports, safety and performance issues are not a concern.
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June 8th, 2008 at 10:13 am
BillR
Excellent article.
Thanks!
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June 8th, 2008 at 12:38 pm
GM were still discussing the idea of leasing the batteries to Volt owners to lower cost.
That smacks of the EV-1 program….What GM giveith they takes back and leaves you with a shell and no power
What is GM going to do, sell you a gas cap for 30K then lease you what makes it run?????
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June 8th, 2008 at 12:51 pm
#99 Jeff
The large format battery market has many participants that are feverishly developing solutions for EVs. After all, 31 companies competed for the Volt battery development contract. The market is immense and will not go unfilled. For example, in 2010, China will manufacture over 30 million electric 2-wheel bicycles (E2Ws), each with about 1/2 kWh of battery storage. Most will use lead acid but increasingly more (15% or so now) using NiMH or Li-ion. The lack of a recycling infrastructure in China for lead will increase the pressure to move to NiMH and Li-ion.
An annual production of 30 million E2Ws would require an aggregate of 15 million kWhs of batteries. An annual production of 100,000 Volts require an aggregate of only 1.6 million kWhs of batteries.
Here’s a company that Continental, A123’s Volt battery partner, thinks so highly of that it took a 16% equity position and signed an exclusive deal for the development of lithium-ion batteries for the EV market.
http://www.greencarcongress.com/2008/06/continental-tak.html
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June 8th, 2008 at 2:20 pm
#99 Jeff
Do you know the Stock Symbols for the two companies that make the LG Chem and A123? They seem difficult to find.
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June 8th, 2008 at 6:47 pm
A123 isn’t a publicly traded company I don’t think. No idea about LG Chem. Anyone???
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June 8th, 2008 at 7:00 pm
#97 BillR — Thank you for the excellent link. Five different battery suppliers — amazing.
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June 8th, 2008 at 7:17 pm
gotta have 2 suppliers:
1) so you don’t run into supply problems a la Cobasys
2) competition drives down prices and can increase innovation paid for by the supplier
Even if LG gets all the volt orders, A123 is in with the Saturn plug-in Vue project right now and like someone mentioned they can compete for the next E-Flex vehicle.
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June 8th, 2008 at 8:40 pm
#97 BillR – Your link helped crystalize what might happen. They had been bringing the 2 along and even hinting that both may be used but I didn’t think that would happen for gen 1 Volt only. Once they put packs in the mules, it makes sense to concentrate on one supplier. At this point, they have to start fine tuning control algorithms, AER profile, etc. It would be a lot of duplicate work to do this for 2 packs for the same car and drivetrain. Up until now, I had thought for sure A123 would get the contract, but this article brings up another possibility for GM’s strategy. I do believe that they do favor the A123 cells; but given the market and their major shift in corporate strategy to more fuel efficiency, it wouldn’t be surprising if they are planning on a second EREV to be produced in conjunction with or around the same time as the Volt. My guess…yes GUESS…is that the plug-in Vue will become an EREV as Nasaman has been lobbying for or they will produce the Provoq. If this is the case, it would make sense that GM would choose LG Chem/CPI for the Volt and A123/Conti for the CUV EREV. A123 has superior power but would be hard pressed to meet the production goals of both vehicles, additionally it is better to spread the risk across the 2 suppliers for 2 vehicles. If one has major issues downstream, it would be a lot easier to recover with the other if they are in development for the other verhicle.
To summarize: LG Chem/CPI for the Volt and A123/Conti for the CUV EREV (Provoq and/or Vue).
As excited as I am about the Volt, a CUV is an even better value proposition for an EREV.
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June 8th, 2008 at 8:51 pm
Koz #106
As long as the LG chemistry is safe, and the batt meets the specs they are probably-as far as 2010 is concerned-the better company to reliably meet the production schedule. I agree with all those who think that perhaps GM will use both suppliers in parallel for the proliferation of E-flex, but the push is on right now for 2010 release.
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June 8th, 2008 at 8:52 pm
“To summarize: LG Chem/CPI …”
Should have been “To summarize my GUESS: LG Chem/CPI…”
Where is the EDIT button everybody is praising?
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June 8th, 2008 at 9:07 pm
Grizzly,
I don’t necessarily disagree since LG is a behemoth compared to A123, but Conti is just as large is comparison to CPI. A123 does have proven production and their chemistry is proven in the market, plus GE and other deep pockets are investers. I don’t think they will have problems meeting the production and GM folks at Voltnation expressed extreme confidence this would not be an issue.
Either way, were just speculating at this point and time will tell.
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June 8th, 2008 at 9:31 pm
Koz #109
The difference is Raw Materials (RM), and nothing better to halt or threaten production than this. I’ve stated before that cells produced in S. Korea can be counted on much more than China. Sorry, but the facts are what they are. So when I hear Lutz say “there is less risk with one company” I can’t help but think that this is exactly what we’re talking about for the initial release. Note he didn’t say less risk with “one pack” or “one chemistry”, he said “one company”.
Regardless, GM will make the RIGHT decisions and the Volt will be a success!
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June 8th, 2008 at 10:34 pm
I’m not sure that A123’s lateness to deliver the battery is as much an indicator of problems with their management or battery technology as it is a result of the fact that they started the project with Cobasys. Probably seemed a good idea since Cobasys had so many ties with GM. However, something clearly went wrong and A123 wound up with Continental. I speculate Cobasys probably proved unable to do the job in a quality manner, seeing as how they’ve had so much trouble doing NiMH battery packs for which they own all the technology.
I would imagine that alone would make GM kind of nervous.
As for leasing… I’ve said it before, I’ll say it again, there is no way in Hades I’ll lease an electric car from GM!! But the battery… Hmmm… I might be willing to lease the battery…
Having leases people can get out of will be necessary if there’s going to be a market for alternate batteries.
Things to consider:
Being able to get out of the lease. I know there’s going to be at least one other vendor who knows how to make the battery pack which might be willing to sell them to the public!
Will GM publish the interface specification for the battery pack? If they truly want to just sell the cars and make the batteries standard items like, well, car batteries, then that would be a good indicator of their intentions.
And there’d better be a purchase option at the end of the lease.
If that is true, then you can just add the total lease cost to the cost of the car and there’s your real price for the car, it’s not really a big deal in that case.
I guess it all depends on the terms of that lease.
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June 8th, 2008 at 11:26 pm
“Ready to supply” is not the same as “we have received a PO”, but anyway LG Chem is higher on the news. FWIW
http://in.reuters.com/article/oilRpt/idINSEO17955220080609
http://in.reuters.com/money/quotes/quote?symbol=051910.KS
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June 9th, 2008 at 12:34 am
Yes, first year Volt will be between $40-$43k, with 10,000 already sold. Almost nobody on this forum will be buying one. THE LIST is already set for the first year. The second year, when volume kicks in, price should be lower. The big unknown is how much DEALER MARKUP will GM allow ???
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June 9th, 2008 at 1:00 am
I still think that it is going to be A123. Their Partner Continental AG has stated work on a battery / ultracap unit. Combined with the recent hints of GM looking at using ultracaps it makes me think that the Volt will have them….
“Maxwell announced last month that Continental AG, one of the world’s leading automotive electronics and mechatronics suppliers, has designed BOOSTCAP ultracapacitors into a major automaker’s electrical system stabilization system that is expected to go into full-scale production in the second half of 2009 for a 2010 model. Last year, the company announced
ultracapacitor supply relationships with Valeo, another leading global Tier 1 automotive supplier, and Mercedes Car Group, for their respective hybrid auto development programs.”
http://www.maxwell.com/news-events/release.asp?PRID=263
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June 9th, 2008 at 4:28 am
LG Chem is mostly owned by an investment bank I believe.
Hard to know who owns the balance.
LG?
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June 9th, 2008 at 5:46 am
I doubt it’s been awarded, ready to suppy, is not the same as, we have an order.
LG Chem was up 3.5% overnight, on the speculation of the news.
http://in.reuters.com/money/quotes/quote?symbol=051910.KS
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June 9th, 2008 at 10:49 am
Leon@113
I agree that the for at least first few years, the Volt will “sell out”. I’d love to know, however, about “THE LIST” you mention.
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