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?
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.