One of the unknowns in determining how much the Volt or any electric car should cost, is determining the automaker’s cost for the lithium-ion battery.

A number that has been put forth by experts in the field is $1000 per kWh installed in liquid-cooled pack. If this were true, the Volts’ pack would cost $16,000.  Bob Lutz and others are bullish on the idea that prices will drop over time as these batteries are brought to scale.

As a follow-up to some of the comments from my interview with EnerDel’s Chairman Charles Gassenheimer, I asked him how much the Th!nk pack would cost. He was actually quite open:

Do you have any follow up statement on costs of your 28 kWh Th!nk pack?
Think plans to sell the vehicle for $30 to $35 k. Approximately half that cost is the battery. If they were to lease the battery then the car could cost $15 - $17k and the leasing company would purchase the battery from EnerDel and lease it to the customer.

Thus if we do the math, it looks like EnerDel is willing to sell packs at scale for from $535 to $600 per kWh.  If Compact Power/LG and Conti/A123 are willing to give GM the same deal, then the Volt’s packs should cost from $8500 to $9600.  Of course we dont know these numbers, and EnderDel contends that they offer low prices amongst their competitors.

With SUVs fast becoming obsolete and Americans making the Europe-like shift to small cars in the face of unyieldingly high gas prices, GM has to act fast to adapt to this new marketplace.

Obviously the Chevy Volt is the key in this regard but its still 28 months away.

Per a new report GM now plans to bring its newly designed and publicly voted for Chevy Beat to the U.S. market.  This is a small car (just 32 inches longer than the Smart) in the mini class, and able to get 40 mpg. While pricing isn’t known, GM vice-char Bob Lutz has previously stated cars in this class could start out at $10,000.

Insiders also suggest GM may roll out a diminutive pickup truck similar to the Montana which is currently sold in South America.

In another remarkable clue, the report quotes an outside expert as saying "the Volt is going to have far more variations than people imagine."

Clearly there are massive internal GM shifts underway moving engineers away from building SUVs to building cars, and while the Volt sounded like a great idea when the concept wast first announced  at $60 a barrel oil, they couldn’t have predicted it would take on this importance so soon.

Source (Bloomberg )

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.

Occasionally an opinion piece is written about the Volt that comes out negative. These are unconventional pieces as the vast majority of journalistic work paints the car in a positive light.

The Wall Street Journal has just published an article by editorial board member Holman Jenkins that was particularly harsh.

The author takes note of GMs financially difficult position and CEO Wagoner’s claim that consumer automotive shifts are not transient but likely permanent.

He writes:

GM’s leaders are not nuts, and yet to pour hundreds of millions into a race to launch an electric car, the Chevy Volt, guaranteed to lose money on every unit sold, begins to seem a peculiar strategy for a company in dire liquidity straits.

He writes “at best, the Volt will be an affluent family’s third car” and contends it wont be usable by city dwellers.

He goes on to attack GM’s claim that the ICE will get 50 mpg during battery charging as “hallucinatory” and makes the “guess” that “the car will be lucky to get 15 mpg under gasoline power.”

He perceives the Volt as having limited flexibility being a 4 passenger car, and derides its environmental benefit claiming use of electricity as a fuel is akin to “playing Three Card Monte with energy inputs.”

Finally Jenkins goes on to make his main point that GM, “justif(ies) the costs and risks of the Volt as a way of changing GM’s image in the minds of consumers and politicians.”, and that “the Volt is GM’s vehicle for making a bailout of GM politically acceptable.”

What do you think?

Source (Wall Street Journal)

On July 1st, GM released its June 08 sales figures. Due to a tightening economy, consumer credit squeeze, sky-high oil prices, and plummeting truck demand it was widely expected that GM would experience a greater than 20% drop in June sales compared to the year prior.

It turns out, all the automakers but Honda and Hyundai did, with Ford dropping 28%, Chrysler dropping 38%, and Toyota dropping 21%. But to analysts’ surprise, GM’s sales did not drop as much as expected, down 18.5% for the month.  Overall it was the worst June for US auto sales in 17 years.

GM highlighted it’s building green car momentum.

Mark LaNeve GM VP of North America said "hybrid demand and availability continues to build, and we’re seeing really positive momentum with the Chevrolet Tahoe and GMC Yukon 2-mode hybrids." He also said:

"Make no mistake about this … Asian automakers do not have a monopoly on fuel efficient vehicles. We have a full lineup of vehicles — including five hybrid models — that provide industry-leading value, great fuel economy and the best warranty coverage of any full-line automaker," LaNeve added. "Every month, more and more customers are choosing our brands when shopping for a high value, fuel efficient vehicle."

If you drill into the numbers a little, it turns out that hybridization appear to be underway, albeit slowly. From GM’s press release:

GM hybrid vehicles continue to gain in popularity in the marketplace with 547 hybrid Chevrolet Tahoe and GMC Yukon 2-mode SUVs delivered. There were 295 Chevrolet Malibu, 30 Saturn Aura and 277 Vue hybrids sold in June. For the month, a total of 1,149 hybrid vehicles were delivered, with 4,376 hybrids sold so far this year.

Cobalt, Malibu, G6, Vibe, and Aura all actually had increased sales from 07 to 08 as did Suburban and Equinox.

Source (GM )

GM has yet to show us the final complete design of the production Chevy Volt, which we know will be different than the concept. GM has shown a 1/3 scale model heavily camouflaged. Above is the expert rendition of Captain Jason Cullinane of the U.S. Army who thinks he may be very close.

Here’s what Jason has to say about it:

"This all started when I sent Lyle a draft logo I designed for the GM-Volt.com website. I wanted to help and this was a way I thought I could contribute. Lyle asked me if I could flesh out one of the frames of the 1/3 size "camo" Volt that was shot in the wind tunnel so I decided to try my hand at it - and this was the result!

I researched a lot of the photos of the concept Volt from multiple angles since Mr. Lutz said that the final version would be distinctively like the concept. I also referenced the "sneak peak" shots when building the nose. I even outfitted this version with some EV1 rims - I doubt that the concept rims were very aerodynamic. This design may be have more hard edges than the final design but I am speculating where I didn’t have good data and just tried to make it look good.

I used to be a full time graphic designer (with an art and design background) and always enjoyed designing cars in school but I have been called back to service as an officer in the U.S. Army. I will be heading out to Iraq in a few months to lead my troops in combat.

I have been eagerly watching the developments of the Volt ( I check the site daily) and have started to put money away so I can afford one. I really do believe that the Volt project signals the start of a US shift away from mideast oil. I think that this will be good for us all.

I still do some freelance design projects and have even wrote, designed and published my own book, LogbookONE: The Log for Runners, Joggers and Walkers. I used to also be a competitive runner (U.S. Olympic trials 3000m Steeplechase in 1996 and was 9th in the US at the 1998 US National Track & Field Championships).

You can order LogbookONE online at www.runninghat.com (I give discounts to team orders :-))."

It’s glaringly clear that GM (and Ford and Chrysler) have rapidly slid into serious financial peril. Revenues have depended heavily on trucks and SUVs. The current oil price spike has fundamentally and profoundly shifted consumer behavior across the boards. People have abruptly stopped buying SUVs and trucks in favor of small fuel efficient cars (or no new car at all).

In the Wall Street Journal, Joseph White proposed three types of cars he feels the Big 3 should build to save themselves:

• A seven passenger family vehicle that gets 30 miles to the gallon on the highway.

• A midsize sedan that gets 40 miles to the gallon on the highway — and doesn’t cost much more than a Chevy Malibu, Ford Fusion or Toyota Camry.

• A pickup truck large enough to do real work and comes close to 30 miles per gallon on the highway.

He did not recommend an electric car, because:

"an electric car isn’t a mass market product for Detroit Three buyers, most of whom live in the heartland. The Detroit Three lost electric car fans a long time ago. They first need to regain relevancy with their customer base – people who like larger vehicles, who have families and who need to drive long distances."

Mr. White’s associate Keith Johnson on the WSJ blog paraphrases "Would GM… stand to gain more by forgoing moonshots on fantasy cars and focusing on just making more fuel-efficient cars that Americans want to buy?"

Source (Wall Street Journal )

A couple of weeks ago we heard an interview with Compact Power CEO Prabhakar Patil in which he indicated his company and LG Chem had a good chance at getting the Volt contract and that his packs were the one’s running in the prototypes. It was also indicated that LG Chem would build a U.S. production facility should they get that contract.

GM would not confirm they were close to choosing one supplier but that an announcement would be forthcoming.

A new interview with Continental’s board member Karl-Thomas Neumann was recently published.

He said "Our expectations are high and we’re confident that we made a good offer to GM."

He also indicated that if his company and battery supplier A123 Systems got the contract, Continental too would build a U.S. assembly plant.

Although I do not have definite confirmation from GM there appear to be some indications that a battery contract decision could come in August.

Source (CNN )

After GM first introduced the Chevy Volt concept in January 2007, there was a lot of ire and skepticism from the former EV-1 crowd.  Most vocal among them was Doug Korthoff who appeared in the film Who Killed the Electric Car?

Doug has since filled the web with extensive anti-GM rhetoric and used to make appearances on this site.  He and I had a chance to meet in LA last year as well, quite cordially.

In response to an article in the LA Times outlining the Big 3 automakers financial difficulties, Doug has reappeared with a letter to the editor that he copied to GM vice-chair Bob Lutz.

Doug’s letter:

"GM has been seriously looking for options for getting more fuel-efficient cars on the market quickly, because there is some question about its financial health after 2008.  Rebranding foreign cars has become more expensive as the dollar falls.  GM has proposed producing the VOLT, described as an Electric car with a range-extender, but it isn’t planned for earlier than 2011, and it depends on Lithium batteries which don’t yet exist.

There is one option GM has not considered, which would turn things around, both in image and in reality.

GM could resume production of the 1999 EV1, using Panasonic lead-acid batteries.  These were leased in Arizona in 2000, and regularly attained a range of over 100 miles on a charge.

Resumption of production would be simple; the EV1 plant is empty, the former assembly workers have been laid off and are idly drawing "jobs bank" salaries, the batteries are available off-the-shelf in any quantities over 1000, and the design is proven successful.

Production of the EV1 does not depend on an expensive product design cycle, new engineering, questionable battery testing and recalls; it’s a proven winner.

This is the GM car that fans watched over in a rain-plagued vigil for 28 days.  Here’s an example where would-be purchasers clamored for a chance to buy GM products, hoping for the faint chance that GM would sell six-year-old used versions for $25,000 cash.

Supposedly, GM is now bemoaning the lack of enthusiasm for its current products; why not re-activate the EV1 fan club, recharge the excitement of the "21st century test pilot" GM fans, and turn GM around?  Spend scarce engineering dollars on new versions of the EV1: four-passenger, pickups, serial hybrid with range-extender; but the current version could be in showrooms in six months.

If GM had re-started the EV1 line, instead of starting design work on the VOLT, the EV1 would already be generating revenue right now.

Fresh off the assembly line, these cars would sell for no less than $35,000, perhaps as much as $50,000 or more.  But the morale value would be even greater.

Revival of the EV1 would quiet GM’s critics, make GM some money, and attract new customers as well as increase floor traffic for other models.  New and improved versions of the basic Electric car, year after year, would expand GM’s footprint on the world market, leveraging scarce investment dollars, maximizing profit and leading the way forward.

And we could say once again that our cars were "made in America and fueled by American Electrons".

Is it a measure of GM’s past failure that resumption of EV1 production is not even under consideration?"

Apparently having heard enough of this Mr. Lutz in his earnest no-nonsense way decided to respond:

"The EV will not meet any current safety laws. Putting a version into production that meets regulations would put us out to ’11 or ’12. They cost us well over $80,000 to produce, and, being a two-seater, we could only sell 800 in four years. We lost over one billion dollars on that experiment.

I don’t know why you insist that lithium-ion doesn’t exist. We are getting packs from our suppliers, they test well in both hot and cold, they store the energy as claimed, we are fast-cycling them to make sure they last, we are doing high-temp, high-load testing with the cooling system shut down and are experiencing no thermal problems. Trust me, the battery will not delay the car."

Source (LA Times ) and thanks to our reader KFO18 for Doug’s letter.

Ted Miller is Ford’s senior manager of energy storage. He outlined to Bloomberg News Ford’s cautious approach to plug-in vehicles.

Balking at the idea of what GM has done with the Volt he said "if there’s going to be a true plug-in hybrid market, we’re going to be there. It’s just that that’s a huge commitment to actually go to production.”

Miller acknowledged that such a major move is costly, stating "If we’re spending significant resources on plug-in hybrids, it means we don’t have a bucket of money”, and instead notes that Ford would rather take a sit back and watch strategy perhaps adopting the technology if cars like the Volt catch on.

Using the term normally applied to a desperate last ditch football play, Miller called an aggressive approach to plug-ins a "Hail Mary", specifically saying "the Hail Mary means that we’re probably going to have to neglect a lot of other things."

With oil skyrocketing and the economy spiraling this just may be the last play.

Source (Bloomberg )