Exclusive: Interview With EnerDel Chairman Charles Gassenheimer
EnerDel (Amex: HEV ) is a U.S. based lithium-ion battery maker that has recently delivered a functioning 28 kWh battery pack for automaker Th!nk, for their upcoming Th!nk City electric vehicle. I had the chance for a follow-up interview with EnerDel Chairman Charles Gassenheimer.
Its been almost a year since we last spoke, can you give us an update on EnerDel?
Things are going great. EnerDel has always prided itself on just getting the job done. There is no hype in our story, our focus is on execution. We never promise the street more than we can deliver on.
Last time you hadn’t demonstrated an HEV pack yet.
We’ve since demonstrated our HEV pack in a Prius and have sent it up to Argonne for testing. We announced publicly and without any other changes to the vehicle, just changing out from NiMh to lithium-ion we got 77.4 mpg. If you were to optimize the software in the vehicle to let it know it was lithium versus nickel, we think that there would be substantially further mpg performance. Argonne gave some theoretical numbers which would be in the triple digits.
The other thing that was very exciting is that because of the superior technology that we have they did not need to replace the air cooled systems in the Prius so they did all the tests with no cooling system. This is in stark contrast to our competitors all of whom require advanced cooling systems.
How does your pack compare to A123’s Hymotion pack?
Their pack was 5 kWh and 110 to 150 mpg. Our pack was just 1 kww. So we we’re able to get that boost in performance with a much smaller pack.
I have conviction in the standalone efficiency & excellence of EnerDel’s technology vs. peers. The acid test is in the delivery & testing of actual product. As we have stated publicly – Th!nk has our packs and has successfully integrated these into functional vehicles.
What have the packs been put through?
They have been sent for testing in Canada but we’ve also done our own testing. We’ve gotten cycle life data on the packs now for 3000 cycle which is great. The packs are showing excellent thermal performance and excellent efficiency. The pack has been integrated into a Th!nk City, which demonstrated performance metrics ahead of our expectations.
I think Th!nk has publicly announced that we’ve been able to produce a 28 kWh pack which is 110+ miles of range which is substantially superior to anything else that exist in the market today.
Is that by running the pack within a certain percentage of its capable kwh range?
The key about our technology is what you’re talking about is the available energy window. One of the great things about our technology is that we can run the pack with a much much wider available energy window than our competitors. So that the explanation of why we think our technology is superior to our competitors’ because we can run the pack in a much much wider energy availability window which means we can go up to 95.5% without any detrimental performance to our chemistry (vs. our competitors who are still tied to some of the older technologies).
You brought up the Compact Power pack which is lithium manganese versus graphite. And graphite is one of the older chemistries that we think has poor thermal performance.
That’s their anode, your cathode is lithium-manganese as well isn’t it?
We use lithium manganese versus lithium titanate anode for our HEV or high power application. And this is the one where you can really push it and open that available energy window which is why we can do so much with that 1kWh pack.
With the plugin-EV technologies were using lithium manganese versus hard carbon. And that’s the chemistry we’re using for the Think vehicle.
We have two different chemistries. We have a high-power chemistry and we have a high energy density chemistry. The high power chemistry is what we’re using for the HEV products, with the Prius, and we’re in talks with a number of customers that I can’t disclose today. For high energy density applications like plug-in hybrid and electric vehicles we’re using hard carbon and a variation of pure LMO. That’s the packs we’ve delivered to Th!nk already. And those are the packs that people are very very interested in. And by the way whether it’s a PHEV or electric vehicle there is zero difference form a pure battery perspective. Its really on the drivetrain where you have to recharge the battery on the fly which is where its more complicated. From a pure battery perspective there’s very little difference. In both cases you’re looking for a high energy density battery. So we’ve solved that problem with our battery packs for Th!nk. And remember the Th!nk city vehicle is going to be first to market. It will be on the road commercially available by the end of this year.
Not in this country though?
Actually its going to be marketed in Europe but Ray Lane who’s managing partner of Kleiner-Perkins, the large VC firm, has publicly announced that he believed there will be demand for as many as 50,000 Th!nk City vehicles in the U.S. That’s a 700 – 800 million dollar number for the batteries. Think has clearly been a great first choice partner for us, a great partner for us to scale with. There will be other companies that we partner up with going forward. But if the Th!nk City and their future Ox vehicle are big winners in both Europe and the U.S. then my problem is one of capacity and scale. I have to be able to figure out how to scale my business to meet their demands.
Most lithium-ion battery companies have some relationship with Asia, is EnerDel purely U.S. based?
Yes. We have a plant in Indianapolis where we do the cell, the module, and the battery management system and full pack integration. That is the only large scale lithium-ion automotive battery manufacturing production capacity in the United States.
Are you actually taking raw materials and producing cells in this country?
Yes we are. That’s why I emphasized the point. Both GM and Ford have been extremely public in talking about how important it is going to be to have U.S. domestic production.
The actual lithium salts you use, where are they mined from?
The first thing is the actual amount of pure lithium is quite small. That’s probably true of our competitors as well. If you look at the bill of raw materials, the amount of pure lithium is quite small. In our case we also use manganese and titanium and graphite.
Lithium is mined in parts of South America, Canada, and Tibet. Most of the raw materials we use come premixed and they come from Asia. The partnership we have with Itochu is important. Itochu is one of the largest Japanese trading houses. They’re a $100 billion corporation and the worldwide leader in raw materials and lithium ion battery manufacturing equipment. Having them be our strategic partner and 2.5% owner is a critical strategic advantage as we go to scale.
So we can’t actually mine our own lithium in the U.S.?
We cannot today but remember lithium is the 33rd most abundant material on the planet. So I don’t think there is going to be any lithium shortages any time soon. I’d think we would just have to go look for it and we really haven’t spent any time looking for it.
Other people claim there could be lithium shortages, such as the CEO of ZENN motor cars who points out EEStors potential device uses Barite which he claims is 100 times more abundant.
Everybody is talking about this being a $150 billion or $200 billion market and then going up from there. We’re obviously strategically ready to think about any scenario. We’re ready to scale and we’re ready to meet the needs of our customers.
My point is that there are some people who are experts who feel there might not be enough lithium on the planet to sustain extremely widespread use of automotive batteries.
If this market goes to a trillion dollars a year in revenues, there will be a bottleneck. One step at a time. Just like oil, until we stared drilling below the seabed we didn’t know it was there. We don’t know where all the lithium is. We know its very abundant and its even is the sea. Maybe well have to figure out how to extract lithium from seawater one day.
Besides Th!nk are you talking with the major OEMs like Ford and GM who are already building cars in large numbers?
Lyle the obvious answer is as you know there are only four companies today who are in the USABC phase II process. Those companies are EnerDel, A123, JCI/Saft and LG Chem/Compact Power. So you should assume that any major automotive company, and there’s 50 globally, all have some sort of electrification program started. You should assume that all 50 of those companies are probably in discussion with all 4 of the companies that are on that list. That’s your short list. We are in conversation at the highest levels with a number of Tier I OEMs, all of whom are looking for supply of the lithium ion battery. Its kind of funny because every single one of them has the same question which is great, lets assume we love your chemistry, can you get us scale? My obvious answer now is, no, I can’t get you scale until I build capacity.
While I’ve got probably the most capacity in the industry, I need to go out and build more capacity. I can’t ask my shareholders today for more money until I have a volume order. And their response is I can’t give you a volume order until you’ve got capacity, so we’ve got a chicken and egg problem which needs to get solved. There’s only two ways to solve that: a) the federal government gets involved, or b) the car companies kick in some money to build capacity. Clearly European and Asian companies have better balance sheets today than Detroit, but I wouldn’t count any of the Big 3 out at this point. I think the problem will get solved in 2008.
What is the capacity of your facility to produce cells right know, for example LG Chem reportedly produces 1 million cells per month?
We have capacity for 300,000 HEV packs per year which would be 12 million cells per year or 1 million cells per month, though that capacity depends on two pieces of equipment which will be arriving shortly. We’ve buttressed that capacity with additional capacity in Asia for cells.
The capacity game is going to be global.
So it seems it is inevitable that battery companies have to have some link with Asia?
I don’t know if its inevitable but it is very difficult to be in the lithium ion battery business without having some link to Asia. They are the dominant players.
Where is the Th!nk City with your pack right now?
Its in Indianapolis.
Is it street legal?
Yes it is. One think we like about Th!nk is that they used to be owned by Ford so their vehicle is crash tested. It’s the only electric vehicle today that’s been crash tested so its road ready.
So you actually drive it around?
Yes we are.
Can we see some video?
Well although Think has given us the car and we’re driving it around its still their vehicle. We provided them with the vehicle footage I can ask if they are willing to release it, but it’s not our decision alone.
Would you consider this driving a testing process, kind of like the prototype Chevy Volts?
If you were to compare where we are with Think to where GM is based on what Ive read I would say we are substantially ahead of the Volt, and we do plant to have the vehicle on the road by the end of this year.
What type of mass production numbers of these cars do you plan for by the end of 08?
That speaks more to Th!nk than us. We have to be careful about sharing confidential information. Volume data will be public soon enough. My understanding is in 09, they want volumes on the road in the thousands.
That’s in the UK in 2008 and 2009?
Yes.
I understand A123 is involved in the loop with Th!nk and GE, is there a competition between you and A123 for the Think project or do they just plan to use both of your companies?
Part of this is not my decision. Obviously its Th!nk’s decision as to who they are going to use for the vehicle. They’ve announced they want to have batteries from both. A123 has delivered something to Th!nk, although I’m not aware what it is. I understand Think has tested it and its only 19 kwh, which gives you a range of less than 70 miles, so in head to head competition our battery is better.
Other than that I have no other way to access what else will go into the decision making. I do know they have said publicly they do not want to put a battery into the vehicle unless it can go 100 miles.
In life everything is a competition. Im guessing that A123 has to deliver a pack that meets their minimum requirements first. Once they do that its probably going to be a competition but Im guessing because demand for this product is going to be so high that both of us are going to be capacity strained and they may wind up needing to use both.
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July 3rd, 2008 at 6:18 am
Is it street legal?
Yes it is. One think we like about Th!nk is that they used to be owned by Ford so their vehicle is crash tested. It’s the only electric vehicle today that’s been crash tested so its road ready.
This statement is incorrect. The Tesla Roadster has been crash tested and is road ready.
July 3rd, 2008 at 6:26 am
Lyle — Fantantastic interview, so informative on many points.
“On the road by the end of the year” and “driving one now” and “all in Indianapolis”.
Things are changing fast.
July 3rd, 2008 at 6:53 am
Great interview! What impressed me is how the battery industry is being impacted by the electrification of automobiles. The GM Volt has put a lot of pressure on other auto companies as well as the battery companies. I can see only good coming out of this competition for the consumer. Go GM!
July 3rd, 2008 at 7:00 am
Excellent! It is great to see some fellow Hoosiers at the leading edge of critical technology.
Jeff
July 3rd, 2008 at 7:10 am
Nice interview Lyle…
Great point LongCliff #1….I thought the same exact thing when I read that line….Tesla made it through the vigorous, somewhat ridiculous process of passing US regulations for putting a pure EV into production.
I dont know too much about the Th!nk City vehicle but most of my driving happens on the highway so it certainly doesnt sound like something I would be driving…..however….I’m all for selling AS MANY AS POSSIBLE in the US for the city-dwellers.
I hope their real-world testing goes well and this whole capacity issue can get resolved ASAP…three cheers for EnerDel for delivering something real and getting this EV revolution closer and closer to reality !
Anyone else think…sorry Th!nk… its ironic guys name is GASsenheimer…?
July 3rd, 2008 at 7:18 am
Maybe the best interview I have read in terms of giving you a perspective on where the auto industry is going. Here is the quote of the decade:
“You should assume that all 50 of those companies (major autommakers) are probably in discussion with all 4 of the companies that are on that list… We are in conversation at the highest levels with a number of Tier I OEMs, all of whom are looking for supply of the lithium ion battery.”
Gassenheimer was talking like a lawyer. Exteremely careful with his word choices. Extremely careful about not betraying confidential information. He is leading one of the 4, he is talking with some of the major OEMs, and probably knows who his 3 competitors are talking to as well. I now have much more doubt about whether the Volt will change the market in 2010 (100 mpg Prius by simply dropping in the Lith, viable electric Th!nks), and much less doubt that if they do NOT develop the Volt they will be placed in the dustbin of history. To me, this makes the WSJ op/ed look silly.
July 3rd, 2008 at 7:19 am
“we can run the pack in a much much wider energy availability window which means we can go up to 95.5% without any detrimental performance to our chemistry (vs. our competitors who are still tied to some of the older technologies).”
Maybe I’m a bit too cautious but the on board battery charger should be top of charge adjustable by the owner to maximize battery life. Yes, he said it will perform with a 95.5% window. Since this is a new technology and longterm real world testing is none existent it would be good to minimize stressing the battery if the daily commute will allow. A 110+ mile range would be more than needed for me, so I’d like the option to control the top charge. The “fuel gauge” could be used to determine the depth of discharge.
July 3rd, 2008 at 7:26 am
Good Interview.
July 3rd, 2008 at 7:45 am
There was much discussion about the possible limited supply of lithium. How feasible is it to recycle old batteries to recover their lithium? It seems that this would help, but not until the first generation of batteries are retired and available for recycle.
PS - Some ancillary good news with all this is that maybe we only a year or two away from getting great laptop computer batteries that let us stay untethered for a day at a time. A minor issue compared to transportation, to be sure, but a nice side benefit.
July 3rd, 2008 at 7:54 am
6 MarkinWI:
Take some of his comments with a HUGE grain of salt. He is the Chairman of a publicly traded company who is currently looking for capital to increase production capacity.
July 3rd, 2008 at 7:56 am
Very interesting. Nice interview Lyle.
The 95.5% usage is also curious, is that something to do with the Lithium graphite? Is one of the factors in usable range of a Lithium battery the thermal properties? Maybe Nasaman could answer that for me if your out there lurking? Seems like your forte. (Or anyone really, lol)
Unless I missed it, the part that would interest us the most is, “What is the estimated cost of production” for this 28kWh pack?
Th!nk seems to be a fairly “low cost” EV, I see on their site it lists the Th!nk city with the 28.3 pack. The CEO (Jan-Olaf Willums) of Th!nk is quoted as saying, “that the City will sell in the US for $15,000 - $17,000, with a Mobility Fee of $100-$200 to lease the batteries”
http://www.think.no/think/content/view/full/290
This ‘lease math’ makes it hard to discern the cost on the pack. Is it $100 or $200, $1,200 or $2,400 a year. Are they putting expected return on costs over 4 years? 6? Where is the break even point? Where does the pack become profitable? Does it really cost 17K to produce this little car, or is there battery pack costing inside this price?
Just as a “guess-ti-mate,” pretending that I was building the cost structure and pricing. I would say there is a couple grand costing of the pack in the 17K and $200 a month over 4 years to become positive on the battery.
48months x $200 +$2,000 = $11,600
Would be curious to know what others thinks, what is your guess?
July 3rd, 2008 at 8:17 am
Lyle, thank you for all the work you do. I know you probably love it, but thanks just the same.
There is a good article on examiner.com about EESTOR. I can’t vouch for technical accuracy, but if the basis of the article is true, EEStor might not be total vaporware, and it would make sense to license the technology to the OEM’s who are doing hybrids. All of them.
Just like the ICE for the volt can be small because the battery drives the wheels, EESTOR’s capacitor allows the battery to be smaller, because of the capacitor’s ability to handle quick charge/discharge. They use the example of a flash in a camera, which uses a capacitor for the burst of the flash. For those of you in the business, it’s elemental; for me, it was not so obvious that EESTOR’s device does not have to do everything a battery does to be useful or groundbreaking.
July 3rd, 2008 at 8:44 am
Actually its going to be marketed in Europe but Ray Lane who’s managing partner of Kleiner-Perkins, the large VC firm, has publicly announced that he believed there will be demand for as many as 50,000 Th!nk City vehicles in the U.S. That’s a 700 – 800 million dollar number for the batteries.
700 000 000 / 50 000 = 14000
800 000 000 / 50 000 = 16000
So the cost of such a battery at volumes 50000 is 14 000 to 16 000 $ ?
Isnt that a little too much?
July 3rd, 2008 at 8:50 am
Morgan@#10 - You could very well be right. But this guy doesn’t feel like the EESTOR guy to me. Yeah, he claims his stuff is way better than his competitiors. But his would be the third company that we know of who has delivered a lithium battery pack to an OEM. Put yourself in the shoes of any OEM. $4 gal. gas. Sales off 20% across the industry. You either already have one or more hybrids in the lineup(Ford/Mercury, Toyota, GM), in the planning stages (Nissan, etc.) or you know that your competitors do. You have to be looking at this to get in the game. Gassenheimer’s claims as I quoted them do not seem far-fetched at all.
July 3rd, 2008 at 8:54 am
#13 Kaido
Nice. I totally missed the 700-800 million as a direct reference to the 50K. So they are paying around $500/kWh.
That still about 80 bucks more than I thought, but not still too shabby for a little (relatively speaking) start-up company. I had them at 2K + $200/mth for 4 years…guess they are figuring payback at 5 years? That would make a even $14,000.
$2,000 + 60months x $200 = $14,000
Logical conclusion 16kWh x 500 = $8,000 max for Volt pack?
July 3rd, 2008 at 9:15 am
I didn’t realize that EnerDel might have a superior product. Now I wonder how good Lithium Technology Corporation’s batteries are compared to those on that “short list”. Currently, they hold the speed record for electric motorbike drag-racing, and they’ve demonstrated their Apollo racing car at various events.
July 3rd, 2008 at 9:18 am
Great interview, Lyle with valuable information. One more step toward the age of the electron.
Here’s the EnerDel page about their technology:
http://enerdel.com/content/view/32/75/
Here’s the EnerDel safety page with a puncture test video:
http://enerdel.com/content/view/104/87#safety/
July 3rd, 2008 at 9:20 am
Thank you Lyle, great interview.
Statik #15, it seems we slowly converge toward Nasaman’s cost estimates …
July 3rd, 2008 at 9:20 am
Off topic:
“The Volt is going to have far more variations than people imagine,”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayOBVrTWkn0E&refer=home
July 3rd, 2008 at 9:21 am
I believe that electric autos will be like computers. The technology will be changing this industry at a very rapid pace. I hope GM has taken this into consideration when they decided to build the VOLT.
It seems imperative that they have the VOLT on the market and in the hands of the consumer ASAP !! The competition is going to be fierce and soon.
God Bless America.
Tom
July 3rd, 2008 at 9:22 am
By the way;
How are Lithium-Ion batteries like Ice Cream?
They both come in many different “flavors” and can be made with many different formulas.
July 3rd, 2008 at 9:37 am
#19, Big P,
The E-flex platform was intended to be versatile - the range extender can be gas / ethanol, diesel or fuel cell (I like to throw in compressed air for good measure).
The battery pack can be a mix of batteries and capacitors, with varying amounts of total storage capacity - 20, 40, 60, 100, 150, 200, etc.
The motors can either be installed with a transaxel, a transmission or both for 4 wheel drive. Motors can be located in the wheel hubs for 2 or 4 wheel drive.
The battery pack and motor(s) can be scaled for small vehicles or large industrial vehicles. These variations are endless - mix and match, plug and play.
July 3rd, 2008 at 10:12 am
Forget all the Hollywood stars and the sports stars … whatever individual or company that comes up with an inexpensive, safe, high energy density, high power, quick recharging battery ought to be the SUPERSTARS of the business world … stadium filling rock stars. The President should give them a medal of honor or something. Seriously.
That’s how BADLY we need to kick our addiction to this damn product called gasoline. I would MUCH rather give my transportaion dollars to companies like EnerDel, A123, LGChem or some other energy storage company … even if it is more expensive at first.
It sounds like the battery technology SHOULD get more and more inexpensive once the initial R&D expenses are covered and the big battery factories get built. The battery industry is about to get VERY large in the next 10 years. It’s time to unwind the oil based economy and gear up for the electrified transportation economy. I can’t wait for the day when the sight of a car running on an IC engine is a rare sight … a nostaglia kind of thing … kind of like we think of horses and buggies today.
July 3rd, 2008 at 10:14 am
Here is yet another interview with insanely high MPG claims to raise readers’ eyebrows.
I find all this rhetoric around 77, 110, 150, and higher MPG figures pretty invalid… when you have a car that is powered by a battery in addition to the ICE, it’s too easy to exaggerate fuel economy figures. If the Volt has a 40-mile range in battery power alone, and you drive it 40.001 miles, the Volt can have 1000+ MPG rating.
“Wow, that’s amazing!” say the ignorant masses.
Government fuel economy ratings will definitely be needing an overhaul once battery-powered cars start hitting the streets.
July 3rd, 2008 at 10:14 am
Let’s make Volt price breakdown:
Battery max $ 8000
Chassis, transmission, steering, interior max $ 10 000
Electrical gearing $ 5000 (????)
Range extension package $ 5000 (????)
Research and development $ 2000 (300 000 cars per annum payback of 1 bln. (?????) Investment within two years)
Sales tag $ 3000
Total: $ 33 000
Am I realistic on budget estimate?
July 3rd, 2008 at 10:21 am
A lot of people here are all crazy “GO US!!!!!!!” patriots, so I thought I’d point out a contradiction I noticed:
“Most lithium-ion battery companies have some relationship with Asia, is EnerDel purely U.S. based?
Yes. We have a plant in Indianapolis where we do the cell, the module, and the battery management system and full pack integration. That is the only large scale lithium-ion automotive battery manufacturing production capacity in the United States.”
So he says they do all their production in the US.
Then..
“We’ve buttressed that capacity with additional capacity in Asia for cells.”
He says that they have increased their production abilities by using asian manufacturing.
July 3rd, 2008 at 10:38 am
14 Mark:
Yeah, he claims his stuff is way better than his competitiors
^^^
That is what I was taking a salt grain with. The MPG claims and the chest puffing
The curious thing to me, and admittedly now that I have started up work again I don’t have time to track the market much, but with as much promise and OEM publicity the battery field is getting it should be garnering venture capital hand over fist to build extra capacity.
July 3rd, 2008 at 10:39 am
Sorry to be off topic (well maybe not really), but I have worked my way through the first 147 pages of “Maximum Bob”. It is really one of Elmore Leonard’s better efforts IMHO, and I have read a few.
I thought about giving you a thumbnail update on the doings of “Maximum Bob”, but decided it would take a lot of the fun out of it for anyone who cares to read it.
I winder if the person, or persons, who hung this nickname on Mr. Lutz had read it? Probably, I think. If so, it’s an interesting commentary on Mr. Lutz’s persona. Come to think of it, I wonder if he has read it?
July 3rd, 2008 at 10:40 am
“Clearly European and Asian companies have better balance sheets today than Detroit, but I would count any of the Big 3 out at this point. I think the problem will get solved in 2008.”
Is this a typo? Did he mean, “…..but I wouldn’t count any of the Big 3 out…”?
July 3rd, 2008 at 10:41 am
If GM has an open door policy on battery suppliers, I wonder why EnerDel is not in the game for the E-Flex.
Companies like this would be great at end of life of the vehicle when we hit 2020. Just replace the battery back. They will probably be vastly cheaper and more able. Then you are good to go indefinitely, until all the plastc parts on the car disintegrate.
July 3rd, 2008 at 10:49 am
#11 - Statik
I think that should be 15,000 to 17,000 British pounds not dollars. I used your link to go to their home page and they mentioned 14,000 pounds for the Th!nk City. That’s $28,000.
July 3rd, 2008 at 10:55 am
Kaido, you beat me to it doing the math. $16k for their 28kwh packs comes out to $571/kwh
However it does highlight something… when comparing one companies pack’s against anothers…. one really needs to be comparing actual usable capacity, not raw capacity…..
So actual cost for the EnerDel 28kwh pack is 28kwh * 95% = 26.6kwh. Divide that into $16k and it’s $601/kwh.
The Volt’s battery only has usable capacity of 50% or 8kwh. So the pack for the Volt should cost no more than 8kwh * $601/kwh = $4,808 max that GM should pay for the packs.
No need for a cooling system with their chemistry should also keep costs down and one less thing that can fail.
July 3rd, 2008 at 10:59 am
Bob Lutz … electric car rock star? He might be in 2010 when the Volt comes out. The electrification of the guitar was pretty revolutionary back in the 1950s when it came out. Bob Lutz is going to be one of the main guys who electrifies the automobile. He might go down in history like Les Paul who created those famous Gibson guitars.
http://www.gibson.com/en-us/Divisions/Gibson%20USA/Products/LesPaul/Standard/
Maybe they can have a big rock band play for the crowd in 2010 at a big auto show when the Volt is about to go into production. Electric cars and electric guitars. Sounds cool to me.
July 3rd, 2008 at 11:00 am
Darius-
I’m wondering the same thing. I’ve asked elsewhere why pessimists such as Statik get numbers like $45K, to which I’ve seen no reply.
I think an easier and potentially better analysis involves taking the price of a similar GM car on the lot, plus and minus the differences.
Comparable GM car: chevy malibu $16K
+$0 replace the ICE with efficient e-rev generator
+$5K for electric motor
+$10K for LiFePO4 batteries (my guess for 2010)
+$2K control system
+$3K regenerative braking
========
$35K
This, of course assumes they won’t roll in the additional costs of R&D and tooling in with the manufacturing costs of the car, which I think is fair because the government will step in to make it happen after GM declares bankruptcy just before they roll it out.
July 3rd, 2008 at 11:04 am
Great and interesting interview.
I’m doubting the Th!nk City will be a hit. Having lived in NYC one of the great benefits of a car is that it allows you to get out of the city. In the city there is good public transport. It has the same issues as the Smart. The Xo is a different story.
#25 canehdian
I don’t think you have a point. The issue isn’t that the entire car will be a USA product. Everyone recognizes the global nature of the world we live in. The “GO USA” sentiment relates to the technology and to the fact that the USA needs to be independent of the Middle East. When last I checked, unlike our “friends” in Saudi Arabia, Asian countries aren’t using profits to fund radical Islamic madrassas in Pakistan.
July 3rd, 2008 at 11:06 am
Interesting change in the auto biz model that seems to be developing–one of the biggest remaining in-house competitive advantages (ICEs) is being transferred to outsiders (electric storage). What are the implications? E.g., do automobiles become increasingly commoditized? (as every automaker has access to the same part). If so, how do the automakers differentiate themselves?
July 3rd, 2008 at 11:07 am
GM stock today is up for a change, and out of single digits, up 4.2% to $10.40.
Just noticed how low their market cap is… according to yahoo finance it’s $5.8B(illion), I don’t know if that’s based off yesterdays close or is real time w/the stock quote. In any case, that’s below Ford’s $10B, and both are miles below Toyota’s $145B or Honda’s $122B. Not that Toyota or Honda would want to do it, but they could afford to buy with stock.
July 3rd, 2008 at 11:32 am
davea0511, actually I think $5k for the electric motor is on the high side… especially at wholesale. And you may be a little bit low for the control system… I think it’s going to be more complex than the ones used in a pure BEV to be able to handle integration with the generator.
I also think $10k for the battery pack is high…. even assuming $500/kwh for the raw 16kwh capacity, that’s $8k…. but I think it will be even less than that for GM.
Some more minor things that will increase price over the malibu…. the AC compressor needs it’s own motor as there is no accessory belt off an always running ICE. There also is no waste heat off an ICE for providing heat so what replaces the heating core and hoses could be a little more expensive. I’m assuming LED lighting, if not for headlights, at least for brake and running lights, and I imagine those are more expensive. GM also keeps mentioning they need to design a new low power use sound system in order to keep that 40+ mile BEV only range/charge, and if so, that could add more to the cost.
I’m also hoping the Volt uses the special paint job that reflects a lot more sun light and heat, reducing the load on the AC, as well as more insulation around the cabin, to also reduce the load on the heating and cooling. Both of these also add some.
Lots of little things can add up fast.
July 3rd, 2008 at 11:39 am
DonC @ 34
There are a lot of mid sized cities with little public transport. The TH!nk City I imagine is geared towards those markets, not the big cities like NY, or LA.
But, you have a great point about one of the purposes for a car. To get away!! I agree that the Th!nk cars will still be just a niche car. Too small to really do much getting away in.
The Volt, on the other hand, With its limitless range and nice size, makes it the perfect car to get the in town electric mileage, and still be able to pack up and hop in for a long weekend trip with the family. No need for more than one car. The Volt will not be a niche vehicle, and I think that is the point driving its developmental decisions.
July 3rd, 2008 at 11:42 am
#30 d burgdorff
“I think that should be 15,000 to 17,000 British pounds not dollars. I used your link to go to their home page and they mentioned 14,000 pounds for the Th!nk City. That’s $28,000.”
I think you are refering to the costing section, that reads like this:
“The MSRP has not been finalized in the US however it is estimated the TH!NK city will go on sale in Europe at around $31,388 USD. In addition, TH!NK will offer a “mobility pack” to consumers for about $314 USD per month that will cover leasing the battery pack, car insurance and electricity. ”
Right now they are taking orders in Europe, specifically starting in Norway (dunno why), then into the rest of UK in 2009. Problem with starting in Norway and some other Europeon countries, is the fee on a new car, which (at least for Norway) is approximately 30-50% of a new car.
Linky to Norweigian fee article:
http://www.dagbladet.no/dinside/2005/01/11/419932.html
Here is the link I got the $15,000-$17,000 + $200 fee from:
http://money.cnn.com/magazines/business2/business2_archive/2007/08/01/100138830/index.htm
The battery is by far the most expensive component of the City, which will list for about $34,000 in Norway. Take the battery out of the equation, and Willums says he can sell the car for about $15,000 to $17,000 in the United States, with a “mobility fee” of $100 to $200 a month that might also include services like insurance and wireless Internet access.
July 3rd, 2008 at 12:08 pm
MetrologyFirst, while some use a car to “get away”, most cars are used for every day commuting to work #1, and #2 to run local errands.
A pure BEV for most buyers of them won’t be their only car. The BEV will be their primary every day car for commuting/errands, and their other car for when you need to exceed the BEV’s range/charge (weekend get a ways, etc). Eventually I think a more significant number of folks, as they see their friends/family with BEV’s, will get used to the idea, and may actually get a BEV as their one and only vehicle, and if they need to “get away” will rent a long range vehicle (be it a Volt or parallel hybrids or traditional ICE), or even possibly borrow a friend or relatives car who would probably love to drive your BEV around while you’re gone.
July 3rd, 2008 at 12:09 pm
#33 Davea0511
“Darius- I’m wondering the same thing. I’ve asked elsewhere why pessimists such as Statik get numbers like $45K, to which I’ve seen no reply. I think an easier and potentially better analysis involves taking the price of a similar GM car on the lot, plus and minus the differences.”
Hey! Pessimists like me? Ok, you got me, I’m a pessimist.
Where do ‘we’ get it? Nothing too fancy to explain, maybe thats why you don’t see it being ‘fleshed’ out or debated much. Price is from direct quotes from Lutz saying it will be north of 40K.
Side note on your math:
You have the base off of a Chevy Mailbu @$16.000. A Mailbu base-base model starts at $20,550…for another couple months, then with GM’s across the board 3.5% price increase it will be $21,300 in the fall. So your estimate, by your own math is north of 40K, and you can’t negotiate big dollars off the hot cars.
(Margin on Mailbu line is 22%, (as per Q&A after annual meeting), that is on the average sale, margin on base is probably about 10% (see Hummer article))
Side note: People expect more than a ‘base Malibu’ when they see or sit in a new Volt–there would be choas here if the Volt was revealed to be anything similar to the Malibu
July 3rd, 2008 at 12:20 pm
#24 Darius,
The Volt is based on the Chevy Cobalt platform. The Cobalt has a sticker base price of $15K. That includes everything on your list except the battery ($8K) and electrical gearing ($5K). This would correspond to a budget estimate of $28K.
I don’t really know how much the Volt is costing GM, but I do suspect that GM is inflating the price right now in order to get the U.S. government to give larger rebates for the Volt.
July 3rd, 2008 at 12:22 pm
MetrologyFirst@34
I agree with your point about mass transit. I’d take it a bit further and say that with the exception of a few cities in the NE most US cities have virtually no public transport.
The Th!nk City just seems like a bad match for the US situation. Small cars like the City are great for parking in cities like NY where parking is an issue. However, if you’re in a city like this you don’t want two cars, and the City is too small for weekend getaways.
In other cities from LA to Nashville to Houston parking isn’t so much of an issue and therefore the small size isn’t an advantage per se. Plus you end up driving on expressways even for “local” trips so you’d like a car that worked better for this.
So yes, the VOLT is a perfect fit for the US situation, much like the Prius and the Civic Hybrid. I think this was Bob Lutz’s point about the EV-1 not being a realistic alternative — people want/need a slightly larger car than a two seater. With different driving styles you might get a different result. The Prius killed the Honda Insight in the USA but I believe the Insight outsold the Prius in Japan.
This is why I believe the Th!nk Xo, as a larger car, would be a much better car for NA. Most families have more than one car, so as long as the vehihcle works for limited highway driving, I can see it finding a place in many garages as the “local” car. (The VOLT of course has few limitations other than the fact it’s not a SUV).
July 3rd, 2008 at 12:28 pm
Unfortunately, good batteries or not, the Think (nor any battery only EV) simply not a viable alternative to our ICEs. It’s obvious that htese companies are building battery-onlyies because that’s all they are capable of building. Atthe end of the day, a car has to be able to transport you anywwhere you want to go at any time you want to
go. Everything else is niche and of limited uselfullness. It’s fine for well heeled folk who have a garage and want to greenwash their image using it for local runs and commutes. It’s transparently not a full service vehicle. At least not with its current batteries.
July 3rd, 2008 at 12:33 pm
There is a bit of a chicken and egg problem with electric vehicles. There wasn’t much of a market for batteries because they weren’t that good. Batteries were not good, because there wasn’t sufficient R&D. There wasn’t sufficient R&D because there wasn’t a big enough market.
What got the research off the ground was the market for cell phones and laptops, which led to a revolution in power tools. And now, the possibility of electric vehicles.
It seems to me that battery technology is maturing rapidly, and there are a lot of innovations (metal halo-phosphate anodes, sodium-ion batteries, nanowire cathodes, etc. ) that may eventually make their way into commercial products.
GM’s timing, I think, is impeccable. The future will see more and more electrification of the transportation sector.
Of course, the other side of the equation is electrical supply. There are a lot of interesting developments there, too, particularly in the innovations in nuclear energy. I’m hoping to see some more activity in the design and manufacturing of the Thorium powered Molten Salt Reactor .
This reactor has the potential to be safer and more efficient that standard light water reactors, more proliferation resistant, and with a 1/1000 of the waste stream for the same power level. What’s more, the design has the potential to produce output waste that decays to background radiation levels in 300 years. For more details, see wikipedia’s entry on the subject.
July 3rd, 2008 at 12:34 pm
That Th!nk Ox is really cute and functional
July 3rd, 2008 at 12:36 pm
#44, kent beuchert.
Yup. You nailed it. Just a niche. There isn’t one city in my state that has a mass transit system as good as NYC. I also don’t know anyone that just stays in the city they live in. Which means they have to leave town. And this country (USA) simply cannot compete with the Mass Transit system of the UK. (which I used constantly when I had to work there). So Th!nk City is just a small niche here at least.
But while we are talking about niches, the Volt will also be one if it is priced too high.
July 3rd, 2008 at 12:39 pm
Outstanding interview, Lyle. Your journalistic chops have improved markedly.
So the difference between EnerDel’s energy-dense cell and CPI is hard carbon vs. graphite (soft carbon?) anodes with essentially the same manganese cathode. And the difference between their power-dense cell and AltairNano is manganese vs. cobalt cathodes with essentially the same titanate anode.
I wonder if anyone is going to try the corresponding LiFePO4 variations (with hard carbon and titanate anodes). It seems like the advanced lithium-ion universe is beginning to take shape from the chemistry perspective. Once the ideal energy and power chemistries are established, gains will most likely come primarily through applying nanotechnology to the mechanical structure of the electrodes.
July 3rd, 2008 at 12:41 pm
#24, #33
What you have estimated is the production cost, per car, as about $34K. If one assumes a sale price of $45K, then the margin on the car is 100*(45-34)/45= 24% Comparing that to “traditional” margins of 20% for small cars up to 40% for luxury cars, it is closer to the small car margin. The 24% margin is reasonable, even on the low side. It has to cover a myriad of real costs at GM and the dealership. At 24% margin the Volt program will not be profitable over all for GM or its dealers until higher volumes are reached in the 2nd or maybe 3rd year.
In any event, everything is consistent with the numbers you gave.
July 3rd, 2008 at 1:07 pm
#39 Statik:
I believe that Think is a Norwegian company. Also, I believe that Mr. Willums is Norwegian. Sorry if I’m restating the obvious.
July 3rd, 2008 at 1:10 pm
#49 RB,
The production cost of the Toyota Prius was probably over $30K in it’s first year, but Toyota sold them for much less. I think negative margins are fairly typical for initial runs of new car models.
What matters for profitability is the production cost after volume has ramped. Production costs go down significantly with higher volume. Volume ramps faster when you start with negative margins. So negative margins initially will help profitability in the long run.
The problem for GM is that they don’t appear to be in a good financial position to support this typical model. So I suspect GM is angling for the U.S. government to help with plug-in/EV rebates. This way, GM can start off with slightly positive margins, and not lose too much money, but have a fairly low cost to the consumer after the rebate.
July 3rd, 2008 at 1:20 pm
#50 noel park
“#39 Statik: I believe that Think is a Norwegian company. Also, I believe that Mr. Willums is Norwegian. Sorry if I’m restating the obvious.”
I don’ t it is too obvious, I was kind of thinking along those lines as well, what with his name being “Jan Olaf Willums” lol.
July 3rd, 2008 at 1:41 pm
Having a EnerDel Lithium-ion battery would save manufacturing cost since it doesn’t require a cooling system.
July 3rd, 2008 at 1:54 pm
kent, regarding your argument that BEV’s are not “full service vehicles” and just won’t do for the American public….
…. that’s exactly been the marketing that convinced Americans that they needed big SUV’s…. that folks need to buy a vehicle that will do everything…. capable of going off road, towing, plowing, carrying 8 passengers, etc. Of course that doesn’t meet reality most of the times, it’s a rare time when I see a big SUV with more than 2 in it, and most of the time it’s just the driver.
I haven’t driven over 110 miles in a day in over a year, so a 110 mile range/charge BEV is awesome. I’d probably keep my by then 10 year old Volvo w/not much market value left for the rare times the BEV wouldn’t cut it.
The biggest challenge is getting over people’s mind sets like you mention. A big part of it is folks are so used to the ICE model. I’m guessing (and hope) 99% of folks don’t fill up every day but maybe once, or twice max, a week with liquid fuels. So folks may feel that “plugging in” every day is a similiar hassle. But “plugging in” is something you do at home, it’s less hassle than possibly going out of your way to find that gas station with the best price, possibly waiting for a pump to free up, inserting your credit card and waiting for authorization (or going inside to “pre pay” for cash customers), waiting (and holding as up here more and more stations are removing the clips from the pump handle that let you start fueling and wait til it fills up when it auto stops) for it to fill up, waiting for the receipt to print (I know some folks don’t have them printed, but I do to keep track). To “plug in” is easier, park car, plug-in takes seconds, enter home, and next time you go to use it, unplug and drive.
At 110 miles/charge that’s 40,000 miles/year you could drive, all 100% gas free. And emissions free (unlike “hydrogen” even if it was not a hoax).
Now of course a (plug-in) BEV has the same problem as a plug-in hybrid (like the series hybrid Volt)… you need to live where you have access to a “plug”. That may mean both any plug-in is “niche” market as I don’t know which percentage of Americans live where they could plug-in.
That said, now of course the biggest factors in whether a BEV or a plug-in hybrid is the right choice for a given individual or family are going to be price and actual daily range needed….
…. if someone’s daily commute is under 40 miles round trip, and the Volt is close to the same (or less) than a comparable BEV with 40 miles or more range, then the Volt likely is the better choice. For example, the BEV w/110 mile range you are possibly paying for battery capacity that you don’t need.
If however the Th!nk is sold w/out the battery at half the price of the Volt ($20k vs. $40k for the Volt), and the battery lease is as low as someone mentioned above, ie. $100/month, then I’d definitely go with the Th!nk. Assuming of course at that point those were the two choices. A plug-in Prius with 20 mile battery only range priced around $27k may be more tempting (5 years of leasing the Th!nk’s battery, again assuming the very optimistic $100/month, is $6k).
And don’t forget the extreme long shot EEStor w/their ultracaps. On the remote chance they deliver that would completely change the game. Just the quick charge capability (not at home as we’ve previously discussed, but at suitably equiped quick charge stations) alone makes it’s per charge range practically a non-issue. On top of that, the price/kwh and size and weight of an EEStor device could make 200+ miles/charge range very possible. But if it sounds too good to be true….. but it’s a nice dream.
July 3rd, 2008 at 2:07 pm
#35, Big Picture,
You hit the nail right on the head. The ICE was the single greatest barrier to entry into the automarket, and many smaller automakers often bought ICE’s (and transmissions) from the majors.
Now, motors and simple reduction gears are within reach of most potential automakers, and batteries are the only “difficult” commodity. Fortunately, there are countless battery manufacturers in Asia, and many innovative firms in the US, which could license new tech.
This is why I fear most for Ford and Chrysler - they’ve not made any announcements, other than admitting they are a couple years behind, and trotting out concept vehicles. I really think companies like Th!nk, Tesla, Fisker and Aptera are going to displace much of the domestic automakers sales in the future, if the Ford and Chrysler don’t do something soon. Ford will likely license or buy from one of these firms, and Chrysler will be bought by Nissan.
July 3rd, 2008 at 2:17 pm
GM’s approach with the Volt is sound. They are not developing a niche car. They want for you to take your everyday driver in your garage now and replace it with a Volt. You lose no capability, range, roominess (for the most part), warrantee, and get in return cheaper fuel bills, reduced environmental impact and no tethering to the price of oil and gas. LOTS of options! Not to mention you get a GREAT looking car to boot (hopefully)! You can have your cake and eat it too. I think this is the best way to make electric propulsion mainstream.
All other reasonably priced electric offerings have some restrictions, be it size, range, or manufacturer support. These cars are niche offerings. And that’s OK! We need those as well. We have always had them. Its just that the lines get blurred by the media and the buyers.
I would argue that the SUV’s and pickups were intended as niche vehicles as well. The fact that the owners morphed them into daily drivers is not the manufacturers fault. Hopefully this gas frenzy will put them back into niche vehicle status where they belong. Until the electric SUVs and pickups come along. E-Flex will change that game permenantly also.
July 3rd, 2008 at 2:22 pm
Gary #23
““ If the Volt has a 40-mile range in battery power alone, and you drive it 40.001 miles, the Volt can have 1000+ MPG rating.
Wow, that’s amazing!” say the ignorant masses.”
I disagree. It is going to happen that a lot of people buy the volt and rarely if ever use the ICE engine. Calculate the MPG on THAT! Dismissing the fact that the 82% of the people that own a volt will get ridiculously high mpg of gasoline such as 300, 500, 10,000 mpg is exactly what makes the volt such a big leap over what the prius of today has to offer.
July 3rd, 2008 at 2:26 pm
delete this… misread a post.
July 3rd, 2008 at 2:26 pm
#51 Dave G
You make a good point about car companies sometimes having a very low or even negative margin, at first, between sales price and costs of production. With GM’s current financial situation, I wonder if that is possible for them.
If it is, then I think the Volt is an ideal candidate for GM, as was the Prius for Toyota. If the Volt works, the volume is sure to go up and the unit costs to go down.
July 3rd, 2008 at 2:32 pm
I am ready to see some of those electric cars on the road. Maybe we get to see them by this time next year in the U.S. It should prove to be a great little car for city commuting and short distance driving. I believe it will do really good everywhere. It can’t happen fast enough for me.
All I have to say is: Go GM and Go, Go, Go Volt.
And one other thing. I hope all of you have a great 4th of July and weekend where ever you are. Tomorrow you all can be Americans and celebrate our 4th with us. For you “real” Americans, “Remember The Red, White and Blue”.
God speed to all.
July 3rd, 2008 at 2:40 pm
Jeff M @ 54
The financial argument will not be the deciding factor for MOST people. It will matter, definitely, but most people will take it into account along with the usual other things that drive car purchases today. Like it or not, utility, quality, comfort, STYLE, brand, fuel cost, experience, future use, environmental impact; all important things people consider. Now, we all may place different levels of importance on these things, but you can not discount them and only make a financial argument. Except for a VERY tiny portion of the public, of course.
If so, why would ANYONE be driving anything but a $13K Hyundai or Aveo? The roads are full of 100’s of different cars and styles. That alone, should dispel the myth of the financial argument’s ultimate importance when buying a car.
History simply doesn’t support it. Even for commuters, let alone families.
July 3rd, 2008 at 2:51 pm
#56 Jason,
Times of big change are very interesting. I’m wondering, in the medium and long run, how the automaker competitive landscape will unfold due to this change in the power delivery system. Now: gas is a commodity; ICEs much less so. Then: electricity supply is a commodity; the storage of it probably will be (huge economies of scale will be needed to displace gas/ICE system; an automaker who wishes to either become their own electric storage supplier or obtain a captive supply may have a big problem with cost); the motors probably will be; the control systems (software, say) probably will be. How would an automaker get a prospective customer to buy their vehicle versus a competitor’s? Probably same as today, but with this one less differentiating factor. Maybe this accelerates the move to contract manufacturing, like the consumer electronics biz. I’ve long thought, e.g., that Chrysler’s best use would be as a design house–farm out the manufacturing. iJeep?
July 3rd, 2008 at 3:13 pm
Apparently Toyoto doesn’t agree witt you Big PIcture. They are building their own plants. GM will purchase batteries… toyota will build their own.
July 3rd, 2008 at 3:20 pm
BigPicture @ 62 That’s a great question.
One word: STYLE
Your arguement is exactly why I think that car design and style in the future will take on renewed significance for most people. Thats why I have been beating that drum for a while now. Electric propulsion will almost put “fuel mileage” or fuel cost issues in the ground. Largely irrelevant. Environmental issues will be largely marginalized. Cars can be less optimized, since the “design penalty” for non-egg designs will have a much smaller impact on total fuel costs than now. Cars can be STYLED again. Experience will be new for everyone. The E-Flex revolution can finally be the great equalizer and dispel the “quality gap” arguments with foreign manufacturers. Everyone almost starts fresh.
Luxuries and style, two things GM does really well, IMO, may drive sales then.
Again, I think a well-styled Volt will do more to improve GM’s E-Flex advantage in the future than the absolute effeciency or electric range of the car. That is what has Toyota worried, IMO.
July 3rd, 2008 at 3:21 pm
You can say that Gassenheimer sounds more “up front,” but there’s one crucial difference between him and the EESTOR guy:
“We’ve since demonstrated our HEV pack in a Prius and have sent it up to Argonne for testing.”
Once EESTOR gets as far as submitting a real pack to a Government lab for testing, their cred will skyrocket; and failing that, it’s claims deserve much skepticism.
Murray (#5):
“Anyone else think…sorry Th!nk… its ironic guys name is GASsenheimer…?”
I’m still trying to get over “PosaWATz.”
“delete this… misread a post.”
YOU CAN DO THAT ?!!!!