Battery Maker Finds China Investor

china200
china200

A123 Systems, an American battery maker, has been able to lift itself from the economic doldrums when it signed a quarter of a billion dollar grant from the Department of Energy. Now, it has bolstered its finances when a Chinese auto parts maker has invested to take controlling stake of the floundering firm.

The Chinese company is the Wanxiang Group and the company is expected to infuse at least another U.S. $450 million into the battery maker. This would allow the battery manufacturer to continue in its operations of creating batteries for electric and hybrid cars. In its last financial projections, the company said it had only five months left of operating capital.

According to A123’s CEO, David Vieau, his company hopes to “do well in China, where there is a government mandated expansion of the market for electric and hybrid vehicles.” In response, Wanxiang’s CEO, Weiding Lu, said through a statement that the deal would essentially “help expand the company’s capabilities both domestically and internationally.”

The earnings report of A123 Systems illustrated the decline of the company, with reported losses for the second quarter at U.S. $82.9 million or about U.S. $.56 cents per share with a 53 percent drop in revenues to just U.S. $17 million. The cash on hand was half of the U.S. $47.7 million, down from the U.S. $113.1 million it reported available in the first quarter of 2012.

Despite such issues, A123 was able to raise about U.S. $600 million from capital venture investors and its IPO last 2009. Also back in 2009, it obtained a U.S. $2.4 billion grant from the Electric Drive Battery and Component Manufacturing Initiative.

For its part, Wanxiang is amongst the biggest private companies inChina, with annual revenue reaching more then U.S. $13 billion a year from auto parts sales to the country’s largest automakers.

Despite being positive, there is a bit of political turbulence ahead for the deal, as the election approaches and the rescue of an industry favored by the Obama administration may prove to be an issue. This, together with the Solyndra debacle, President Obama may face stiff criticism for decisions regarding billions upon billions of taxpayer dollars, especially now that it is in control of Chinese businessmen.

This issue can be avoided though as there is weak U.S. demand for electric cars, which in turn hurt the battery manufacturing industries. Two other U.S. battery makers, both also funded by the Obama administration, have filed for bankruptcy this year.

The deal between A123 Systems and Wanxiang Group is as follows, an initial U.S. $25 million immediately. Then, Wanxiang would gradually infuse a total of U.S. $465 million and in return, receive 80 percent ownership in the American battery manufacturer.

The Coda Electric Review

Electric car made from batteries
Electric car made from batteries

While the electric car market is still dominated by known brands such as Ford and Nissan, the prices for these vehicles and similar electric vehicles are pegged near the similar amounts. The power to define the market though is not limited to the Leaf and Focus Electric, as newer and cheaper electric models come to play in the electric car superhighway.

Here comes the Coda. While the average electric vehicle is able to travel a full range between seventy to eighty miles on a single full charge, depending on road conditions and driving habits, a vehicle that is able to travel to one hundred miles is a significant leap above the competition. The Coda is able to achieve it, with its newer models. The first model from the carmaker was already able to travel eighty-eight miles, a tad above the industry standard and the newer versions easily surpassed that milestone.

The Coda’s 134 horsepower motor provides ample power on the highway where it draws juice from an 870-pound battery pack. The battery array is built under the floor, enabling the vehicle to lower its center of gravity allowing for greater control on twists and turns. The lithium-iron-phosphate battery is recharged by its onboard 6.6-kilowatt charger at about twenty miles of range per hour from a 240-volt power source.

This is achieved by Coda through its frugal management of all the aspects of the vehicle. It outsourced the body and battery cells to China while other components were sourced in the United States. The car’s design is adopted from a gasoline-powered vehicle manufactured in Harbin, China for ChangAn Hafei Car Company. The knocked down parts are finally assembled in Benicia California.

The Chinese car design though was put through rigorous testing in order to comply with United States highway safety standards. Aside from this success, such compliance may open the door for Chinese made cars finding their way into the American car market in the long run.

Coda’s CEO, Philip Murtaugh has been at the helm of the company since 2011, coming from executive positions in the China market for Detroit giants General Motors and Chrysler. His initial concerns though were ventilated during the 2011 Los Angeles car show, where he said that the car’s styling may not be up to par with the American car market. He did say, “The vehicle was chosen three years ago. I came in nine months ago. We couldn’t change it.”

There are several amenities thought that are not found in the Coda that are standard in other electric car models. There’s no keyless entry, push button start, or Sport and Eco driving modes. Such sacrifices had to be made to fit a bigger battery array into the vehicle. Other amenities such as a techno start up sound or back up camera or mobile smart phone app or one touch window control is not in the Coda. It does not even have cruise control, for a vehicle with a price starting at U.S. $38,145.

Compared to the Focus Electric, which starts at U.S. $39,995 and the Leaf at U.S. $36,050, the Coda is very competitive, especially after applying the U.S. $7,500 tax credit and California rebate of U.S. $2,500.

All this was done in order to extend battery range capacity for the Coda. Its battery capacity of thirty one kilowatt hours is greater than the Leaf’s 24 Kwh or Focus Electric’s 23 Kwh. There are even plans for a 36 Kwh battery. The additional feature of the Coda is its active thermal management system that preserves range in hot or cold weather, using air to do the work in regulating temperature. There is also a program that conserves battery power when the reserves are low, allowing for slower movement to extend range efficiency.

There have been issues though, such as noise and vibration for the vehicle when driving. These include a high-pitched whine at full speed and a low deep spasmic groaning when the electric motor speeds up. The brake and accelerator pedals are built a tad too close to one another and are pushed far to the right. Legroom in the back seat is an issue, as it is sacrificed for more trunk space.

Despite the lack of frills, bells, and whistles, as well as acceptance of low ride quality, the 100-mile range capacity and dependability in consistent achievement of that range may find a market yet in the ever-expanding electric car market.

Saab Goes Electric

electricsedan
electricsedan

Saab Automobile, after years of languishing at the bottom of the automobile market, has reinvented itself. After being acquired by National Electric Vehicle Sweden, a consortium of Chinese, Japanese and Swedish shareholders, it now has plans to produce new vehicles again at its flagship factory at Trollhattan, Sweden, as early as the last quarter of 2013.

In a telephone interview, Mikael Ostlund, spokesperson for the NEVS investment group, Saab would build electric cars for the Chinese market with long range plans on international expansion, if the market demands it. He added, “The Chinese government plans to invest heavily in the infrastructure that will reinforce the market for electric vehicles.”

The focus on electric vehicle platforms is not surprising as the Chinese government has instituted aggressive sales targets for pure electric and hybrid cars. The new arrangement though is still unclear as to who would be providing the power to propel these new electric vehicles from Saab.

One of the accessory companies is battery supplier Boston-Power, lead by its founder and chairperson Christina Lampe-Onnerud, would be supplying the ePower program consisting of EV’s inspired by the 9-3 SportCombi wagon. While the initial projections would be to build seventy ePower wagons for the test fleet, there was great uncertainty as to the total number of wagons that were built before the automaker shut down operations last year.

According to Boston-Power, its 35.5 KwH lithium ion battery packs would propel the SportCombis for a range of 124 miles, fully charge in just three hours and able to accelerate from zero to sixty miles per hour in about ten seconds.

Ms. Lampe-Onnerud said in a telephone interview, “Saab is having a revival moment.” While she admitted that she has not discussed matters with the National Electric Vehicle consortium, she agreed with the assessment that focus in the EV market in China would propel the country to become the industry leader in the technology and agrees China would remain as such for some time.

In response, Ostlund did not confirm if National Electric Vehicle would utilize the previous technology of the ePower program but did say that the company was planning to use “Japanese electric vehicle technology and expertise.”

A former communications manager at Saab, Steven Rossi, warned that many of the mechanical parts that distinguished the automaker would not be useable as it transitions to the new ownership. He assessed, “It may be an acquisition of Saab but it’s really more like a ground zero start-up with some hardware included.”

The first plan of National Electric Vehicle is a battery car based on the current 9-3 model, as the company bought the design rights to the 9-3 platform as well as the PhoeniXconcept.

Ostlund declined to detail the volume of cars to be completed by 2014 but he noted that the carmaker’s flagship factory had the production capacity of 200,000 vehicles a year. What he did say though, “Production will be based on market demand.”

Taxi Fire Details Released by BYD

chinaFLAG200
chinaFLAG200

BYD, the top manufacturer of electric vehicles in China, have released the details of the crash and fire that destroyed an electric taxi, killing its three occupants in southern China last Sunday. According to the press release, any vehicle, even a gasoline powered vehicle, would have met the same fate because of the impact of the crash.

The Chinese media reported that the fire had caused shockwaves throughout the Internet in China as well as financial markets on electric cars as it revived fire safety controls for this vehicle platform.

The crash had involved a BYD e6 battery powered electric car, which was hit from the rear by a Nissan GT-R sports car. According to police reports obtained by BYD, the sports car was racing at the speed of 180 kilometers or 112 miles per hour when it rear ended the electric car from behind. As a result, the e6 spun across three lanes of traffic and then slammed into a tree, slicing the vehicle into two, from the rear bumper to the rear seats.

This theory of the crash was supported by police photos released by BYD and it supported the company’s version of the crash. The photo of the crash site showed fifteen cms or six inches in diameter without any sign of a guard rail. The Nissan for its part, hit another car on the road, causing the hit car to roll over and stopping the sports car by the side of the road.

Other reports said that driver of the Nissan was drunk and was with three women at the time. The occupants of the Nissan fled and were unhurt. The driver eventually surrendered to police authorities, admitting responsibility for the accident. There was some doubt as to the identity of the individual, as he did not seem to have been involved in the crash and may just be a fall guy for the real culprit.

According to Paul Lin, Marketing Director and Chief Spokesperson of BYD, the battery packs of the e6 are located under the rear seats and added, “We don’t know what happened – the battery pack burned or the high voltage gear burned or the fabric was lit or maybe some other reason.”

As of the moment, the police authorities have not yet handed the crash vehicle over to the company’s inspectors, thus there is still no determination as to the cause of the fire. It is also not been confirmed if the three occupants of the electric taxi had perished in the fire or died in the crash. China has been known not to be a seat belt safety advocate, thus leading many to conclude that the occupants have died in the crash.

Lin further added that no car could have withstood the impact and quipped, “Maybe a tank, maybe a truck could survive it.”

As a result of the statement, BYD’s shares went up 5.5 percent in the Hong Kong Index, closing at HK$16.08 or nearly US$2.07 after a slump of 5.9 percent last Monday following reports of the incident in Chinese media.

Rare Earth Metals from the Earth

mine
mine

In the days of the internal combustion engine, in order to make a car perform better, the solution was to install a bigger engine. Now, at the age of hybrids and electrics, the solution may be to install motors with more powerful magnets.

Up until 1980, the most powerful magnets were built from an alloy containing samarium and cobalt. This composition created issues, as samarium is among the rare earth metal elements. It is also too expensive to refine while the cobalt came from war torn areas in Africa.

In 1982, a magnet was created at General Motors from neodymium. While neodymium is also a rare earth metal, it is more common compared to cobalt and samarium. This element, when combined with iron and boron in a cheap process, resulted in very powerful magnets.

Neodymium is ideal to be material for magnet with its ability to retain a magnetic charge during driving conditions. Adding dysprosium to the neodymium-iron-boron mix then creates a high performance magnet able to perform at high temperatures.

With the electric vehicle revolution, the demand for neodymium has sharply increased not only for vehicles but also for consumer electronics such as computer hard drives and audio speaker systems. Currently, 90 percent of the world’s production of rare earth metals comes from China. Now, with very strict controls, prices per kilogram of the elements rose to U.S.$500 per kilogram in 2011.

Prices have since reduced, but the supply may be coming to an end, requiring many to seek alternatives to fuel the future. Ventures have been cropping up, in the United States and Australia to fill the demand as China slows down its very own production.

Other moves include recycling rare earth metals from used car parts, such as the nickel-metal-hydride batteries in hybrids. These used car parts contain small amounts of neodymium together with cerium and lanthanum. In another move, other companies said that the next generation of induction motors would not use rare earth magnets.

In a report from the Department of Energy dated 2011, there are five rare earth metals vital for national security as well as continuation of the clean energy industries. These include neodymium and dysprosium. In response, the advanced research agency of the U.S. Energy Department introduced the Rare Earth Alternatives in Critical Technologies program, allowing for $22 million in grant money to promising research projects.

The other options would be veering away from permanent magnet motors and going into induction motors, where a magnetic field is created to allow the motor’s shaft to rotate. This is clearly the future of rare earth metals on Earth.