Clarifying my position on lithium ion batteries

The limits of today’s electric car technology 18

Recently,  there has been some blog chatter about my comments on the future of lithium ion batteries—my goal here is to clarify my stance.

I do believe that these batteries have been over-hyped in terms of technology available today. However, little focus was given to my statement that Khosla Ventures is backing the technology because the “lithium-ion markets are here today. We’re investing because there are great markets.”

So what kinds of technology are we investing in? I think the traditional approach to lithium ion battery making, such as A123, is going to be competing in an overheated, nearly-commoditized market and will probably not (I guess never say never!) get down the cost curve in the next 5 years. (Longer-term forecasts are futile because so-called experts can make anything they want up—we all know long term we will be on fusion power.)

A number of incremental improvements are underway, but they will at best offer a 2X improvement in price performance. A123 may be a best-in-class battery, but it lost out in the GM Volt race to the LGChem battery, which at the pack level delivers less than 50 KWhr/kg. (Actually, 8KWhr deliverable power, since the battery is cycled to less than 50%  of nominal capacity, and a 182kg pack weight, including all the safety systems!) At the pack level, per usable KWh, the costs per KWh including safety systems and packaging are far higher than the $1000/KWhr bandied about and the $250/KWhr that will make batteries truly competitive—and many of these system-level costs will be difficult to reduce without radical changes in the battery cell design and manufacturing approach.

Indeed,  the manufacturing processes used for Li batteries for automobiles are quickly becoming mature. They represent improvements, but not radical changes, to techniques used in batteries for consumer electronics. We cannot expect significant increases in performance absent fundamentally new approaches. One thing to look at is the closeness in performance among many electrochemistries—it is precisely because the battery cells are made in much the same way. This generation of cells will address perhaps 10% of the cars by 2020,  according to some believable forecast—not insignificant, but not profound, either. Plenty of billion-dollar market caps can be built within this 10%.

Two fundamental problems limit the cost trajectory of these traditional batteries. First, liquid, flammable electrolytes and their related problems cause large “safety” tradeoffs. Hence our investment in Seeo, which is taking a high-risk (mostly because it is so novel)  approach to solid electrolytes. They have made far more progress than I would have expected.

Second,  the actual capacities of existing battery cells are still fall far below their theoretical values, for the active materials in widespread use (Mn and PO4-based cathodes). That tells us that in order to get to the theoretical values, we need to execute higher-risk, but higher-payoff, cell designs and manufacturing technologies which unlock their full potential and reduce the cost of production. This is what Sakti3 is trying to do with solid-state batteries, with good success.

Selecting manufacturing processes that have been used successfully in lab-scale demonstration, in pursuit of “world’s best,” will not work for automotive markets. What is needed is scalable, low-cost manufacturing technology. Without that, the role of lithium ion batteries as a meaningful tool of carbon reduction will remain fairly limited (though market caps will continue to be high, especially after the A123 IPO, which is expected soon).

These are the types of approaches that have the potential to truly be disruptive and address the markets that really affect overall carbon emissions of cars, especially in emerging economies. Even more disruptive approaches that we have not invested in today may be on the horizon. If EESTOR-like approaches work (I am somewhat skeptical of this particular company, though I believe new science similar to that proposed in its patents is possible), then so much the better. But there is very little visibility today on these radical approaches. I would say these are in the domain of a hope and a prayer.

New manufacturing technologies and chemistries hold out more hope than the traditional style of lithium battery. Of course even the existing players like A123 will not stop where they are, and some of them will try innovative, maybe radically innovative approaches. Even the old lead-acid battery suppliers like Firefly and other lead acid battery makers are making a play to reach electric-car specifications.

What appears more predictable is that traditional bulk cell approaches are not likely to yield the cost equations to make for rapid penetration.  If they are successful, it is more likely because oil went to $200 per barrel than any “performance” on the part of these batteries.  $200 oil is a different ballgame that may make even cruder lithium ion batteries viable economically.

The key problem is, costs have to come down, or oil prices have to shoot up, for most traditional battery ventures to make big winners of entrepreneurs and their investors.  But new technical approaches that change the cost and safety equation (with significant new technology risk) will make the battery technologies competitive even if oil prices stay below $100/barrel. That is what we look for in investments—more technical risk now, less market risk later, and bigger breakthroughs for society. We are dealing with much harder science and technology, so we will see much higher rate of failure, but the wins will be bigger.

We will likely ship a billion new cars worldwide in the next 15 or so years. The key question is not whether hybrid or EV cars/batteries will be successful financially (they probably will), but rather what it will take to get 80% of these billion cars to be low-carbon cars. The most important thing to remember is economic gravity: the cheapest thing ends up winning. Our hope is to win that battle over the long term,  because it will take these breakthroughs to change the overall carbon trajectory for passenger cars.

With electric cars, there is yet another major risk: in the foreseeable term,  China/India and even the US will be “plugging into a lump of coal” for years to come. And though renewable electricity from wind and solar is a good goal for these cars, it will likely be much more costly (about 5X higher currently in India where a new coal plant costs 4c/KWh), so economic gravity again dictates high-carbon electricity to power these expensive electric cars. Another breakthrough is needed there.

Back in 1990, everybody assumed the digital world would be interactive TV ... before the Internet came from left field, from an unlikely instigator: the web browser. Right now, it’s too early to tell what the instigator will be for energy.  In the interim, I see plenty of money to be made in both batteries and biofuels, but it will take more than current biofuels and current batteries to make the car world low-carbon. It will require a Black Swan of automotive propulsion.

Khosla is a technology innovator and venture capitalist based in Silicon Valley.

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  1. Delay And Deny's avatar

    Delay And Deny Posted 11:07 am
    09 Aug 2009

    The Battery Car is the biggest sham being foisted upon people in history.The fact that it's yet another "overleveraged" technology, inviting the Big Money players like Warren Buffet should be enough to sound the alarms.  The fact that Chu (aka Dr. No H2) and Obama have to pump so much money into the thing is a clue that it's a wash.Batteries are heavy technology.   They weight the same empty or full.   You have to cart around batteries all the time, unlike a fuel that is used up as you go.  Batteries are loved by electric utilities.   The idea of having an energy leaky Lithium battery the size of a mattress drawing energy 8 hours a night (when solar is useless) warms their hearts.I went to the Hydrogen Road Show in Seattle this summer.   Fuel cell cars are here.  Even though Chu banned H2 from his mix, KIA, Toyota and private industry are pushing ahead.   The one thing that Government should do is build the Hydrogen Highway.   Governor Schwarzegger is doing this, despite Obama and his cronies trying to kill the Hydrogen car.Americans are being shortchanged and mislead by plugins, hybrids and battery technology.As you say, the technology, which is barely useful for portable laptops, has not changed in decades.It still hasn't changed, but the answer seems to be, well, just put more of them inside a car!Folly. Pure and simple folly. 

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    1. Spence's avatar

      Spence Posted 1:33 pm
      09 Aug 2009

      Glad to see our very own hydrogen hackjob back in the comments. At least after a solid spanking recently, he's dropped the lie that electric cars run off a coal-powered grid produce more pollution then those burning gasoline from crude, but he's still trotting out the old "solar is useless at night" chestnut, despite a generous recent schooling. Oh, and what's this, a brand new fantastic piece of fiction?As you say, the technology, which is barely useful for portable laptops, has not changed in decades.Funny, since I'm typing this on a portable laptop, as, I guess, are the majority of Grist writers and commenters. And guess what? The practical battery life of laptops is leaps and bounds ahead of where it used to be. indeed, laptops are a great example of how incremental change, in both battery technology and in energy-saving hardware, constantly improves and makes more usable a technology, and a silver bullet, or "black swan", are still nothing more then a pipe dream.Ya know, I don't have any objection to hydrogen as a technology. It's just that the shrill shills who dish lame talking points for it have pretty much convinced me that it's a non starter. After all, it's always the adulterous pastor who preaches the loudest sermon.

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    2. been Posted 4:04 pm
      10 Aug 2009

      People will likely always have to buy hydrogen from some corporate supplied gas stations, batteries I can buy once and have them at my house and charge them for free with a personal rooftop wind turbine or solar panels, and maybe even sell off my excess energy too.

      'Delay & deny', do you work for an energy company or something? It always seemed obvious to me that hydrogen was just an attempt by the energy companies to keep selling us something to run our cars, instead of allowing individuals to become more energy independent and figure out there is really not much need for them.  

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    3. patrickS Posted 2:44 pm
      11 Aug 2009

      The truth is that BOTH hydrogen fuel cells and batteries are valuable.  Anyone who's supporting only one technology by itself is missing at least half of the picture.  They're complimentary electricity-based technologies which work well on the same vehicle.  Let's embrace them both and take a giant step forward together instead of continuing to feed this backwards-stepping vitriolfest.

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    4. Grant Millin, EarthSyncHub.com Posted 2:59 pm
      11 Aug 2009

      Right now H2 comes from natural gas in most cases. However, there is no
      cleaner or more versatile fuel than hydrogen. Opportunity fuels like
      sewage treatment gas converted to H2 are being tested by DOE. Both
      stationary and mobile fuel cells can be powered this way. At the sames
      time microturbines and reciprocating engines can use opportunity fuels,
      but not as efficiently as fuel cells working in such capacities today.
      Thus, energy sources that are right now thought of as 'garbage' can be
      part of the Hydrogen Infrastructure vision.

      It costs something to manufacture and power any energy system. The question is whether
      the criticisms of fuel cells are based on science and 2009-2015 level
      technologies.

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  2. Ken Johnson's avatar

    Ken Johnson Posted 3:08 pm
    09 Aug 2009

    "The key problem is, costs have to come down, or oil prices have to shoot up, ..." Or the gov't has to institute effective regulatory incentives. California's "aggressive" vehicle emission reg's (which will be matched by new federal rules) were designed to have a maximum compliance cost of 84 cents per gallon (in 2004 dollars -- 96 cents/gal today), based on lifecycle fuel savings. A simple system of long-term, low-interest loans for low-GHG vehicles, capitalized by refundable fees on high-GHG vehicles, could fully internalize lifecycle fuel costs in vehicle price differences. At current fuel prices ($2.90/gal in CA) the incentive would be 3X that of existing regulatory standards. No caps, no standards, no gov't subsidy or tax or "wealth transfer" between vehicle owners or manufacturers; just a financing incentive. 

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  3. sunflower's avatar

    sunflower Posted 8:34 am
    10 Aug 2009

    Thanks VK, we learned something new here. There are problems with $200/bbl creating markets due to the risks of double dip recessions or worse. Unfortunately, global economics trump ethics. Carbon sources of electricity will need to be eclipsed by low-cost low-carbon alternatives at scale or we are all in serious trouble. Risk capital for risky ideas is spot on. Visibility will attract more inventors and innovators. We all need more creative people working on this.

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  4. evlover Posted 9:32 am
    10 Aug 2009

    What about NiMH batteries. Why is Obama not giving any funding to them? Why is no one talking about them? They have been powering the Rav4-EVs for hundreds of thousands of miles. They've been proven in millions of technologies. The biggest problem with them is that their patent is owned by Chevron, but the lawsuit with Toyota stated that they could begin being used in the second half of 2010. As soon as Toyota can use them again, they are (see: the Toyota iQ). What's the hype over Li-ion, and why is everyone sweeping NiMH under the carpet? To learn more about NiMH batteries, their history, and to read a powerful introduction to electric cars in general, I recommend checking out the book "Two Cents Per Mile" by Nevres Cefo, which you can learn more about at http://www.twocentspermile.com

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  5. neosapiens's avatar

    neosapiens Posted 11:30 am
    10 Aug 2009

    D&D also missed the fact that the cost curves for battery-electric, hybrid and plug-in hybrid cars are all way cheaper than fuel-cell cars and have trajectories that suggest that they'll stay way ahead of fuel cell designs in the forseeable future.  As batteries improve, the performance and cost of hybrids and plug-in hybrids will keep getting better, and the economic cross-over point where full battery-electric cars are cheaper to own and operate (since they are much simpler in design than ICE and hybrid cars) isn't really that far down the road.  It's not the lack of fueling stations that is preventing the roll-out of fuel-cell cars (although it will be a problem), but major breakthroughs are needed in the cost of the fuel cells, storage and fuel production.    I happen to really like my plug-in hybrid Prius and I'm looking forward to seeing Toyota come out with a mass-market version of it.   I really don't think plug-ins or BEVs are vaporware.  Perhaps they've  been over-hyped a bit, but they do exist and they are coming to market, and they work.

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  6. neosapiens's avatar

    neosapiens Posted 11:42 am
    10 Aug 2009

    And, to D&D: the Li-ion battery in my car is the size of a pillow, not a mattress.  And it's a great advantage that I can charge it at night at off-peak rates when the power company is happy to have someone drawing power.  And, it's true that the battery system was over-hyped: I don't get 100MPG all the time. I only get it while the charge lasts (about 30 miles), so my car is only averaging 73MPG overall.  If could charge at work, I'd get closer to 90MPG as an average.  I still have to gas up every 2 or 3 weeks.   And it's also true that the battery system that will be practical in the marketplace will probably start out at half the capacity of the one I've got, since the cost is higher than what most people can afford.   It really isn't that far away from being practical.   It's pretty easy to imagine mainstream hybrid and PHEV cars getting 70 to 80 MPG a year or two from now.

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  7. dcashdan Posted 11:32 pm
    10 Aug 2009

    the big issue - as you say is how will we fuel these "electric" cars - we believe that is THE issue...we also believe that the answer - even if not popular - is nuclear energy...and we believe that if you look very carefully at Sec. Chu you will find a path that is leading to this administration making a very hard push in that direction over the next 12 to 18 months - all the small steps are falling into place...please look at our post(s) on this topic at www.theclimatecommunity.com would like your input - thanks

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    1. been Posted 1:54 am
      11 Aug 2009

      DCASHDAN - How? Personally owned rooftop wind turbines and solar panels. I'm an advocate for nuclear energy and I wish this administration or the last one would of made a big push for nuclear energy, regrettably I don't think we will see such a push, unless gas prices double... and that happening for a second time in two years is likely to scare consumers into looking for ways to generate their own power, and no longer be dependent on those who can't provide it at a low and consistent price.

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    2. Spence's avatar

      Spence Posted 9:08 am
      11 Aug 2009

      Dude, do you have a mouse in your pocket, or is that the royal we? Before you push uranium, come on out here to New Mexico, and we can go on a lovely tour of area uranium mines. BTW, uranium is not a renewable resource. It is, however, in its enriched form, deadly, polluting, and very, very dangerous for a very, very long time. I know I've said it before, but there is a reason no nuclear powerplant can buy insurance on the free market. The market considers it too risky. So should we.   

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  8. neosapiens's avatar

    neosapiens Posted 9:47 am
    11 Aug 2009

    BEEN:  Please read Amory Lovin's article, "Forget Nuclear" and his book "Small is Profitable".   Massive, central power plants aren't really the best thing, and there are lots of more efficient and more profitable solutions than building nuclear plants.   It's entirely possible that we'll end up with some new nuclear plants, but I hope that we don't lock ourselves into a big commitment to costly old technology when we're right in the middle of an innovation boom and there's so much low-hanging fruit in the areas of efficiency and distributed power generation.

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  9. Calisteve Posted 2:27 pm
    11 Aug 2009

    PHEVs, BEVs and FCVs are all coming to market, and the market is big enough to support all of them. As with any new technology, the costs for batteries and fuel cells will come down. Kromer and Heywood at MIT did a great study about the costs of technologies over time. ("Electric Powertrains" on this page http://web.mit.edu/sloan-auto-lab/research/beforeh2/reports.htm) Currently, fuel cells are on the path to meet 2015 cost targets.FCVs have sufficient fuel storage now for 400-mile range and H2 production has been cost effective and safe for more than 50 years. As with renewable electricity and cellulosic ethanol, more H2 needs to come from cleaner sources, like solar or wind electrolysis and biogas. Stations and buildings across the world are already making their own H2 from those sources, as well as using hydrogen that's a waste product from pulp mills and chemical manufacturing.

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  10. Doc Watts Posted 4:22 pm
    11 Aug 2009

    I'm curious how you account for the electricity in a plug-in hybrid.  When somebody like Neosapiens says that he gets "100 mpg" how much of that is electricity, and not counted in the equation?  I mean, my bicycle gets infinite miles per gallon.  Do the math!  Toyota is on record saying that batteries will not provide a replacement for our current automobiles, but that hydrogen fuel cells will.  A lot of this has to do with carrying around hundreds of pounds of batteries even when they are discharged and nothing but dead weight.  Battery vehicles are great, for what they can do.  Hydrogen fuel cell vehicles are great, for what they can do.  The most promising technology appears, to me, to be a battery fuel cell hybrid vehicle like what Toyota is working on.  Toyota (and Honda) brought us gas-electric hybrids.  Hydrogen-electric hybrids are just the next step.  

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  11. neosapiens's avatar

    neosapiens Posted 4:31 pm
    11 Aug 2009

    The MPG meter in my Prius only shows the miles per gallon of gasoline used.  The electricity isn't counted by the meter. Yes, it does cost something, but solar panels pushing power out to the grid during the day, the power I get back at night is fully offset carbon-wise, and even for people who don't have solar electricity, the power at night is baseload and the emissions would be there whether the power is used or not.  I'm simply swapping some petroleum for off-peak electric power.

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  12. BlackbirdHighway Posted 2:54 pm
    14 Aug 2009

    Bull. My electric car is plugged into a "lump" of solar panels, not coal.Hey Vinod, where can I buy those magic panels for my roof that turn sunshine into gasoline?

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