LG Chem: Will Be “Number One Player” For Batteries As Industry Moves Out Of Their Way

3 years ago by Jay Cole 111

Renault Inks Battery Deal With LG Chem Earlier This Year

Renault Inks Battery Deal With LG Chem Earlier This Year

Given the recent news that LG Chem looks to displace some of Nissan’s in house AESC battery production for future electric vehicles, the prediction from LG battery boss Gweon Yeong-su that his company will lead the world in EV battery production seems almost a foregone conclusion.

“In 2016, when the spread of electric vehicles begins in earnest, we will become well-established as the world’s No.1 player.”

"Reports" Say A 200 Mile EV Based On The Sonic Is Coming From GM in 2016 With LG Chem Batteries

“Reports” Say A 200 Mile EV Based On The Sonic Is Coming From GM in 2016 With LG Chem Batteries

It should be noted that in 2016, LG Chem’s new “200 mile battery” will find its way inside at least one all-electric vehicle (most likely from GM). And if the rumor du jour on Nissan’s partial (or eventual complete) switch to LG pans out, the next gen Nissan LEAF that is currently headed to production in the second half of 2016 could put the South Korean battery maker over the top.

Currently, Panasonic is still the number one manufacturer of lithium automotive batteries thanks to the huge packs (60/85 kWh) found inside the Tesla Model S.

Our estimated tally for total plug-in sales worldwide by automaker (through July):

  1. Nissan – 33,525
  2. Mitsubishi – 22,977
  3. Tesla – 16,500
  4. General Motors – 14,220
  5. Ford – 13,648

If LG Chem does indeed convert some (or all) of Nissan, plus adds a 200 mile EV to General Motor‘s stable, plus continues to expand other OEM contracts (current and future) already in place (Ford, Renault, Volvo, Daimler, VW (Audi),  SAIC Motor Corp, Qoros, etc.), the race for first will be a cake-walk.

With Nissan on board as a client, our own unofficial tab puts LG Chem batteries in 23 different brands by 2016.

LG Chem Signs Agreement To New Battery Facility In China In July

LG Chem Signs Agreement To New Battery Facility In China In July (via Nikkei)

Nikkei also reports that LG Chem is getting into Chinese production in a big way – as on July 2, LG signed an agreement with the city of Nanjing with plans to build another new plant to manufacture lithium-ion batteries for EVs.

Past this expansion, LG’s Chemical division is actually profitable today … even more than its long standing electronics wing.

For 2013 LG Chem had an operating profit of 1.7 trillion won ($1.66 billion) in 2013, about 30% higher than electronics…on half the sales.

We should note more than half of that 1.66 billion profit still comes from petrochemical products, but LG says the battery business is the future driver of profits.

 

What can we take away from LG Chem’s seemingly unstoppable dominance in the segment?

The fact that LG Chem can not only produce a lot of cells, but it can do so cheaply enough for other OEMs to abandon their own programs (Renault, Daimler, Nissan), while still turning a big profit at the same time.

But what does it mean for the consumer?

It means that no one OEM will hold the silver bullet of inexpensive long range EVs, that anyone who has the vision to build a plug-in vehicle and compete in this segment can.  On the other side of that coin, one battery provider may control the future – and that is a little scary too.

What about Tesla and its Gigafactory?  Plans for an inexpensive Model 3?

It is clear that LG Chem has found the ‘secret sauce’ for making automotive-specific lithium batteries.  But what about Tesla’s recently announced Gigafactory in Nevada?

The issue at hand for Tesla now is that LG Chem has a proven, profitable model now for suppling batteries; and Tesla as of yet does not.  The question is can Panasonic and Tesla go halvsies on a $5 billion dollar plant and surpass LG’s costing despite the apparent failure of all others to do so?

Perhaps they can; but Musk and company have to be real nervous today, at least a lot more nervous when they imagined up future plans for building their own cells locally several years ago as other major OEMs did.   The move from selling $100,000 – 265 mile cars to $40,000 (ish) – 200 mile cars is a huge jump by itself.

Ultimately, only time will tell.

Also of interest:  Based on the success and access of LG’s battery production, the electronics division is hoping to be profitable by next year with its new car parts division focusing on the “next-generation eco-friendly vehicles, including EVs, plug-in hybrids and fuel cell vehicles.”

Nikkei

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111 responses to "LG Chem: Will Be “Number One Player” For Batteries As Industry Moves Out Of Their Way"

  1. DaveMart says:

    EV Insider’s very own George Bower did an excellent precis of Argonne laboratory’s study of battery chemistries, and noted:

    ‘The combustion rates are given in degrees C/ minute. This would be how fast the fire gets hot right after ignition. Tesla Roadster has the highest combustion rate at 350 degrees C/minute followed by the Model S chemistry at 275 degrees C/min. While Model S is an improvement over the Roadster it is still orders of magnitude higher than the Volts LMO chemistry at 2.5 degrees C/min. NMC chemistry is quite a bit better than the Tesla S with a combustion rate of 50 degrees C/min.’

    http://insideevs.com/argonne-computer-model-and-the-implications-for-the-3rd-generation-tesla/

    This seems to mean that NMC chemistry is more suitable for home solar.

    The Panasonic/Tesla batteries have great energy density, important in cars, but not in homes.

    Their volatility can be managed, but that costs money, and for home solar, why bother when there are more stable chemistries about?

    It appears that LG will have the volume to counteract the supposed cost advantages of high volume production in the Tesla factory.

    For cars too, why bother sticking together 18650 batteries when LG can provide a pouch or prismatic at acceptable cost and energy density, as it seems they will be able to?

    Other car manufacturers, including those who have intimate knowledge of the Tesla battery pack construction, such as Toyota and Mercedes, did not fancy adopting it and preferred to wait for different format cells.

    1. Ambulator says:

      LG Chem still looks to be substantially behind Panasonic in specific energy, although we won’t know for sure until the specifications of the cells are released. It would help if LG cells need minimal cooling.

      1. DaveMart says:

        I’m assuming that the LG Chem packs are the ones used in the Audi’s and so on being tested.

        They appear to have something approaching the energy density in the current Panasonic’s in the Tesla S, although they may fall somewhat short of that and it is quite possible that Panasonic will manage to up the voltage of their cells a bit and stay some way ahead.

        The best energy density is not the critical thing though, at least short of major breakthroughs.
        The question is not whether the LG Chem cells beat the Panasonic’s for energy density, but whether they are ‘good enough’.
        If they have a cost and ease of engineering advantage, those are the critical factors.

        One of the big draws for the likes of VW though is likely the way better power of these cells compared to the Panasonics making them suitable for PHEV’s

        They should be able to make the Audi A3 Sportsback and umpteen more models to come capable of around Volt-like AER.

        That means that this sort of car could do most running around on electricity, but have an installed base in the US of around 100,000 PHEV ‘superchargers!’ 😉

        1. pjwood says:

          VW “should” do a lot, but high energy cells are only useful to them because they barely use any. More cells=More power, but in VW’s head “it’s more weight, so let’s not”. Have I got the logic right?

          1. DaveMart says:

            I’m not sure what you are looking at.
            For their PHEVs VW/Audi specify a ~10kwh pack, which gives around 22 miles on the EPA.

            The new packs should give them something like the present Volt’s EV range, in the same space and weight.

            They may possibly continue to offer the smaller pack size as it is big enough for many, especially in Europe.

            They basically seem to have liked the Volt so much that they built one themselves, but that will only be plain when better energy density batteries get here.

            There is no doubt that the design allows for it though.

            1. Brian says:

              “They basically seem to have liked the Volt so much that they built one themselves”

              Not exactly. The Volt has more than a longer electric range – it has a full performance EV driving experience. VW’s PHEVs, from my understanding, utilize both the gas engine and the electric motor for full performance. The EV-drive “purists” frown on that because somehow it’s ok to burn gas to go further, but not faster.

              The performance enthusiast in me loves what VW did. Their PHEVs can be driven electrically, but can also put a lot more power to the wheels than a Volt can, creating a more exciting drive.

              1. DaveMart says:

                Brian, you seem to have rather missed my point.
                I am saying that the Audi A3 PHEV etc will about match the AER of the Volt, but only with the anticipated new generation of more energy dense batteries, not now.

                So I argue that they have built the cars looking down the road a couple of years, and duplicating the present Volt at that point, not now.

                All the VW group plug ins will be fully user selectable for drive mode – they have to be, to comply with European and Chinese regulations as low emission cars.

                So you can tell the car to stay in EV mode, and it will.

                1. DaveMart says:

                  The EV only mode should be fine for around town, which is what it is for, given the great low speed torque of electric motors.

                  You can still keep it in electric mode up to 82mph though, and just kick your foot down and call in the ICE if you want to overtake fast.

                2. Brian says:

                  I did not miss your point, in fact I agree with you. It seems that in terms of electric range, they will be able to match the Volt with the next gen batteries.

                  Rather I think you missed my point – that their cars are not just a copy of the Volt. In some ways (and somebody will likely chew me out for saying this), VW’s PHEVs are actually superior to the Volt.

                  I personally love the idea of being able to drive conservatively when I want to, staying in electric mode even on the highway, but then having lots of raw power when I’m on more open roads, like driving through the mountains. Now that is “electric when you want it, gas when you need … no want … it”.

                  1. ClarksonCote says:

                    *Chews out Brian*

                    I’m not sure of the VW specs, but my Volt is plenty powerful for me. I’d rather have the option to burn gas and accelerate faster than being forced to have the engine turn on.

                    I don’t see the point of using the engine really though. A car can be purpose built to have plenty of torque without the use of a motor to help it accelerate.

                    The Volt is an example of that. If you want more torque, well get another EV. But you don’t hear people say “boy I wish they’d put an engine in a Tesla so I could get more performance!”

                    1. Brian says:

                      I knew you wouldn’t let me down, Cote! The Tesla is kind of a different story here – they have a huge battery, which can provide much more power than the battery in the Volt. Sure, making a powerful electric motor is relatively easy, but like range, it’s all about the battery.

                      I used to drive an S2000 (in my pre-fatherhood life), and frankly I really miss having a performance car. What I wouldn’t give for a GTE-like car that can give me great performance when I get the itch, but for the most part can do my commute / local driving as 100% electric. The Volt is fun, but it’s not in the same class of performance.

                      And yes, I know about the Audi e-tron, but I doubt I can justify the extra $2000-$3000 per ring for the emblem!

                    2. ClarksonCote says:

                      Well, I bet you could get 170kW of power out of the Volt instead of the 110kW they designed to, with the 2014 battery that is a 10C rate, and standard off the shelf LiIon batteries can handle a 10C discharge rate for roughly 10 seconds.

                    3. Brian says:

                      170kW is 228HP.

                      Let’s look at the 2013 Toyota Camry, simply because it was the best-selling car in 2013. It comes with three engines – 173HP, 178HP I-4s and a 268HP V6. I don’t know the breakdown, but I assume that the V6 was at least somewhat popular. That’s a 95HP (71kW) increase in power, which many people paid extra for.

                      Now let’s look at your propose Volt. It has 228HP, which puts it between the I-4 and the V6 Camry. But you have a range extender on board as well. Let’s say that range extender is good for 50kW (67HP). If you could couple the two engines together properly, you would have 220kW (295HP). Yes, I know it’s not purely additive, there are complex power/rpm curves to consider, but the point is that you have extra power so why can’t you use it if you want to?

                      I know the purists like you and Dr. Ken will never agree with me, but please at least try to see my point.

                  2. DaveMart says:

                    Yep, I misunderstood what you were saying all right!

                    Personally I think there is a lot to be said for ditching ~70kwh of batteries from a decent range EV, and using petrol where you need to go on a run.

                    For those who can afford it, the A3 Sportsback PHEV, the first of the breed in the US, sounds like a great drive too.

                    1. Brian says:

                      Indeed. I’m coming to terms with the fact that 70kWh of batteries is expensive! When 16kWh can do 80% of the job of 85kWh, the cost is hard to justify. I fall in the crowd that can afford to stretch to a $40k car. But that’s about my limit. As much as I want to ditch gas completely, a short-range BEV plus PHEV would suit me just fine for the next decade or so.

                    2. DaveMart says:

                      You should be well under budget with the A3 then.
                      It is coming in at 37,900 Euros, and VAT and exchange rates about cancel each other out, and that is without incentives:
                      http://www.greencarreports.com/news/1092855_2015-audi-a3-sportback-e-tron-plug-in-hybrid-on-sale-this-winter–in-germany

                      Extras like a wheel in each corner usually cost quite a lot extra for Audi, so you should be about right on your budget.

                      That should knock about 7,000 miles a year off of your petrol budget, more if you can find somewhere to conveniently charge regularly away from home.

                      I wouldn’t worry about the BEV versus PHEV thing.

                      I used to aim for perfection, then I got married.

                    3. Brian says:

                      I just checked Audi’s website, and I was a little surprised to find that the base A3 starts at $29,900 USD. It is possible to option it up to $43,900 of course. I just assumed that the A3 e-tron would be priced similar to the BMW i3 or Mercedes ED in the US. It still could be, of course. That’s a pretty penny for a car.

                      I used to buy the car that I wanted, then I got married 😉

            2. Dr. Kenneth Noisewater says:

              10kWh capacity is inadequate for LiIon batteries, since their max draw is what, 8-10C? And that’s pushing it.

              Short of a new chemistry, 6-7C from Volt’s 16kWh is IMO the minimum that should be acceptable for a modern EREV. GM set the benchmark, and it’s sad watching all the others flop around as they fail to reach it. It’s been 4+ years since that launch, and only BMW has really stepped up to surpass it.

              I’d like to see GM push the benchmark out even further, but given the backsliding that’s been their public face in the last few years, I’m not holding my breath. It’s like GM pulled the automotive state of the art from 2020 and released it into the marketplace in 2011. And Tesla pulled back from 2025. Kind of what the S-class Benz used to do with features: the luxobarge got all the new goodies 10+ years before they filtered down into mass-market midrange cars.

        2. Mint says:

          You’re right that density just has to be “good enough” for EVs, and that cost is the determining factor.

          But a commentor on InsideEVs who worked on batteries said that NMC uses more expensive materials than NCA. This document supports that assertion:
          http://multimedia.3m.com/mws/mediawebserver?mwsId=SSSSSuH8gc7nZxtUo8mxN8_1evUqe17zHvTSevTSeSSSSSS–

          Cobalt seems to be the most expensive of these metals at around $33/kg. NCA needs 0.15 mole Co per mole Li, while NMC (high density & lifetime formulations) seems to need 0.33 mole Co or more per mole Li. So maybe Tesla has a small raw material cost advantage.

          An interesting battle for sure.

          1. GeorgeS says:

            Tesla S battery also has Ni and Co just like NMC.

            http://i1198.photobucket.com/albums/aa454/bowergs/Slide3_zpsabe8f0c4.jpg

            Even though the ingredients in the NCA Tesla cathode is a bit more expensive than LMO (Volt) the pack cost is slightly less than LMO due to higher energy density.

            http://i1198.photobucket.com/albums/aa454/bowergs/Slide9_zps283e734c.jpg

            1. GeorgeS says:

              Edit:
              Even though the ingredients in the NMC cathode is a bit more expensive than LMO (Volt) the pack cost is slightly less than LMO due to higher energy density.

    2. Mark H says:

      I want argue the chemistry, but it is never good news to see competition dwindle. After $100/kWh is reached, it will not affect the the growth of the industry as much but, we are a long way from $100/kWh. $200/kWh appears to be just around the corner, that is unless the lack of competition fails to produce that outcome. At $200/kWh, the falling price of gas even stops being an issue.

    3. GeorgeS says:

      @David

      Thx for the mention.

      Here’s the article for anyone wanting to read it again:

      http://insideevs.com/argonne-computer-model-and-the-implications-for-the-3rd-generation-tesla/

      That article and the Argonne study have turned out to be fairly predictive of what is actually happening.

      -NMC selected as go forward chemistry

      -fewer cells linked in parallel. (larger cell format than 18650).

      I’ll have to go get a link but I do believe that we have fairly decisive info that Tesla will go to a larger format than 18550.

      The Argonne paper calculated a 17% cost reduction for that change.

      I wonder if the prismatic cells will also go to a larger format?

      It wouldn’t surprise me to see a thicker cell be introduced by LG for the next gen battery.

      1. DaveMart says:

        It was Navigant that claimed that Tesla was likely to go to 22700:

        ‘Now, Musk says he will cut costs further by building a “gigafactory,” a gigantic plant that will at once double the global production of lithium-ion batteries. That scale, he reckons, will shave another 30% off the cost per kWh. He also plans to add one-third more energy volume per battery by using larger cylindricals, known as 22700s, according to Navigant. Thus, Musk expects his battery costs to drop to $175 per kWh by 2017, making that same 60 kWh battery $10,500.’

        http://thepresslist.com.au/technology/the-story-of-elon-musk-and-gms-race-to-build-the-first-mass-market-electric-car/

        1. GeorgeS says:

          Good input.

          22700 is the new size

  2. ClarksonCote says:

    Any idea what this may mean for the battery manufacturing facility in Michigan, and whether or not it will ramp up to increase production?

    1. DaveMart says:

      LG Chem’s business model is to build near identical factories near to where the demand is, rather than centralise into a ‘Gigafactory’.

      Since transport costs internally in the US are unlikely to be huge, even though batteries need refrigeration, it would seem sensible to produce in Michigan for the rest of the US.

      They are in partnership with GM there though, and any deal with Nissan may mean that they are asked to make use of the Tennessee facility that they have there.

      So it is down I would think mainly to inter-corporate wrangling rather than technical issues.

      1. Josh says:

        I don’t see the difference. The gigaFactory is scaled to match the potential output of the Fremont car factory. Tesla then plans to expand production (cars and batteries) to EU and Asia in a similar fashion. Produce in the region after the market is established.

        1. DaveMart says:

          There probably is little practical difference.
          That is not what the hype would have us believe though, which is full of talk of unmatchable economies of scale due to centralisation.

          I like a lot of Tesla’s engineering, but their hype and that of their advocates gets on my nerves.

          In a new industry it is not unusual to see large increases in scale, the proposed gigafactory is pretty much par for the course, although the plan seems to be to keep the production in NA as long as possible, when I think that modular build in China at least as well as NA is a better plan, and two semi-GFs better than one GF.

          Its presented that way however for promotional purposes, and may have nothing in particular to do with the way they actually intend expanding.

          1. Josh says:

            Matching battery supply to the scale of their current factory seems like the best idea to me. They are still a small company. Keeping stuff close to their core engineering team is important. Why globalize production while still learning to scale it up?

            Some of the hype is required to do the fundraising. On the other hand, it will be the second largest factory of any kind in North America, so it isn’t a stretch to call it a really big factory.

          2. Mint says:

            A $5 billion factory is most definitely not “par for the course”, especially for new industries.

            The big auto makers, which have far bigger production volumes than Tesla, build factories that all cost less than $2B.

            The reason nobody else is building such big battery factories is not some strategic cost decision. It’s because they don’t think EVs will sell that much. LG Chem isn’t going to build a factory bigger than the orders it gets from GM, Nissan, etc.

            Yes, there are economies of scale to be had at the gigafactory size. Nissan produces batteries in Tennessee and elsewhere, but they all get cathodes shipped from Japan. Obviously, electrodes made from smaller production lines in each of its battery factories would be more expensive.

            This is true for many sub-processes in battery manufacturing. Consider nickel, whose greatest use by far is for stainless steel. That’s usually fine with <80% purity, which you get from smelting, but other applications need it more pure. So then some company takes smelted nickel and further purifies it to 95%+ for many applications. Maybe another company takes that and purifies it further to 99.9%+, and sells to electrode makers and many other buyers. You have shipping, overhead, and profit at each level.

            At gigafactory volumes, however, you could probably take smelted Ni and Co and purify them, further purify them, and create electrode powder/slurry all under one roof, with no sales overhead (only customer is yourself), limited profit (each partner gets a small slice), and no shipping cost.

            1. DaveMart says:

              Yeah, but the gigafactory is not starting out as a gigafactory, but is to be built in stages.
              Pretty much like LG building more modules at the same site if the demand it there.

              There is nothing new here, just a hyped up press release to raise funds on the stock market.

              Of course, that is Musk’s job, to try to stir up excitement, and parts of what he and Tesla does are indeed exciting.

              If you are performing an evaluation though, it has to be examined with a sceptical eye.

              1. Mint says:

                I highly doubt the Gigafactory will be built in modular units that can operate independently. You’re making stupid assumptions.

                Some parts of the factory will have many repeating units. But other parts will have only a couple, others still will have only one.

                They’ll start off with a factory similar to Panasonic’s, shipping in materials that have undergone a lot of processing from chemical plant (e.g. electrode powder, electrolyte), and then when volume is high enough they’ll bring those in house.

                1. DaveMart says:

                  I did not claim that the Gigafactory would be called modular, but that it was pretty similar to the way LG build their factories which are modular in intent as it is to start out with one heck of a lot less capacity than it is supposed to finally have, presumably by having one production line instead of several.

                  So please read and consider comments properly before pronouncing them stupid.

                  The GF will not start out as a GF at all, that is just a fancy name to raise capital and indicate ambitions to rapidly expand, which may or may not come off.

                  There is not much practical difference between that and the way LG does things, which is to buy enough space for several units and build them one at a time as demand builds up.

                  1. DaveMart says:

                    LG as production expands would of course put in units to service all their modules with any bits which they needed in common just like Tesla.

                    That is how production engineering was done 40 years ago and how it is done now by every manufacturer, with continual review of which parts of production it is sensible to bring in house or on site.

                    There is nothing new about this, just a fancy name,

        2. pjwood says:

          We”re w/in the year of industry-wide 1.5gwh per quarter, and TSLA is shooting for 12.5 (50/yr). That’s a lot to pack-up, no matter how it gets used.

      2. GeorgeS says:

        @David

        I think your call on the multiple sites doing identical cells is probably a good one.

        Even though the giga factory is huge I think we will see the build out come in smaller chunks which tends to say that the processing (manufacturing) equipment is just replicated in larger numbers rather than larger scale…..but of course we really don’t know. We would have to see the machinery to be sure.

        1. Mint says:

          Some parts will be replicated in many chunks, but other parts – especially chemical processes – will be most economical when produced in few or even single machines.

          What Tesla will do at first is buy higher level input materials as opposed to raw metals/ores. As sales go up, suppliers will get enough volume to warrant locating inside the factory.

          That’s what I’ve gathered from public info.

          1. GeorgeS says:

            Room to grow. Just like Freemont.

          2. DaveMart says:

            That is exactly what LG would naturally do as production build up.
            It is what every manufacturer does, not just Tesla.

          3. DaveMart says:

            Just to run through why the Gigafactory is a fancy new name for a concept which goes back at least a couple of hundred years.

            There has always been a tension between centralising and decentralising production, and every company on earth runs through on a regular basis what bits it should bring in house, or on site, and which bits to outsource.

            It is what I was doing 40 years ago, what Henry Ford did a hundred years ago, and what the British Navy did 200 years ago in building its ships.

            A new industry gives the opportunity to build, at least in the US, on greenfield sites where as much production as is sensible to do so can be brought on site.

            There is no way it will be sensible to bring everything on site, as for example aluminium used in the production of the body is used for a lot of other things too, and is produced in huge volume where power is really cheap from hydro etc.

            Similarly and just to take one example, tires are mass produced at other locations by specialist manufacturers.

            There is also the inherent susceptibility to disruptive events from single site production to consider.

            The pattern for the US auto industry for decades has been to decentralise more and more.

            A lot of that was down to the Unions, which got far better terms for their workers, so that is was a lot cheaper and reduced the likelihood of strikes stopping all production to outsource.

            The decline of the Unions means that big green field sites on the Henry Ford model are now an option, but they certainly won’t centralise all inputs, and are inherently less flexible and more vulnerable to disruption than more distributed models.

            So the idea that Musk has come up with some brand new idea that the car industry was too dumb to figure out does not hold any water at all.

            Its new marketing in very old bottles.

            I bet the Romans had numerous debates on centralisation versus decentralisation of production, and the right balance between them is an ever changing one.

  3. Dave K. says:

    Davemart is correct, the best cell for an 85kwhr Tesla can be very different than for a 7kwhr PHEV. Both must be able to propel the car by itself so the PHEV requires ~10X the power density! Energy density is far more important for the Tesla as it’s carrying a much larger pack. LG is really on a roll and has the resources to back this move up, I just hope their chemistry is as good as it looks.

    1. David Murray says:

      It probably doesn’t need 10x the power density because a PHEV like the C-Max Energi does not accelerate like a Tesla. As long as you are okay with a 0-60 time of 15 seconds when driving on electric only (which is more or less the case with the Energi cars) then power density can be roughly the same or maybe just a little higher.

      1. Brian says:

        Exactly. Plus a properly designed PHEV (like the Energis, GTE, e-tron, etc) can use the gasoline engine for better acceleration.

        1. Dr. Kenneth Noisewater says:

          Vehicles that need a gas engine for full performance are subpar IMO, the electric motor should be able to handle all speed and acceleration while the range extender is sized to the mean energy required for highway speed + a margin for extended climbs.

          1. Brian says:

            Well, we will have to agree to disagree. I don’t think you and I will ever see eye-to-eye regarding EREV/PHEV technology (especially when you’re pointing that pistol at my face 😉 )

            1. ClarksonCote says:

              Haha! I have to agree with Ken here too. I don’t understand the necessity of letting the engine directly power the wheels.

              “More power, more power” seems kind of silly to me. If more power is to be achieved, size the primary battery and traction motor accordingly.

              If we’re to move away from gas and ICE vehicles, the engine should be a range extender, not a crutch for additional power.

            2. ClarksonCote says:

              The average “well-designed” PHEV that you describe above uses NO gasoline for something like 10% of their trips, whereas the Volt uses NO gasoline for more like 80% of its trips. (Referring to individual trips).

              I would hardly call PHEV’s that use gasoline for the majority of their driving a “well-designed” PHEV.

              1. Brian says:

                References please? I recall reading somewhere that the Ford Energis were getting on average >60% of their miles in electric mode. Not as high as the Volt, but hardly the 10% that you claim.

                1. ClarksonCote says:

                  http://gm-volt.com/2014/09/18/new-volt-will-have-powertrain-performance-thats-better-in-every-way/

                  “He said also 81 percent of [Volt] “trips” involve no engine start at all – a meaningful thing especially to California.

                  The U.S. Department of energy actually got that last tidbit about trips, and so was able to check other cars. Plug-in Priii, Ford Energis and, PHEVs in general only had 10 percent no engine start on trips.”

                  (Pasted in the wrong spot the first time)

              2. Brian says:

                Ford claims that Energi drivers are driving 60% gas free* miles. I don’t think number of trips matters, what matters is number of miles. For instance, if I drive 200 5-mile trips (e.g. my commute), and 2 500-mile trips (e.g. a trip to see family for Thanksgiving / Christmas) in a year, if the former are all electric and the latter all gas, I drove 50% of my miles and 99% of my trips on electricity. The first number tells a more complete story.

                *I must caveat this with the fact that Ford considers regen-sourced miles as electric whereas Chevy does not. Therefore, the Ford hybrids also drive some percentage of their miles “gas free”. This bugs the heck out of me because it’s not really gas free, it’s just recaptured energy that came from gasoline. Therefore, despite the headline, the Energi’s 60% electric is NOT “just the the Volt”‘s 60%.

                http://www.greencarreports.com/news/1086009_ford-plug-in-drivers-do-60-of-miles-on-electricity-just-like-volt

                1. ClarksonCote says:

                  The fact that Ford counts all regen miles as electric completely invalidates that statistic. It biases their numbers higher by roughly 50%.

                  And my statement of “trips” is different than electric miles and for good reason. If I said electric miles, the Volt would easily win out of all the plug-in hybrids since it has the most mileage (well, except maybe the BMW i3 REx version, but that vehicle completely goes against your “more power from the engine” dogma).

                2. ClarksonCote says:

                  So here’s the source for the Volt. Turns out I was wrong in that I was being too conservative; 90% of all trips use only battery power.

                  http://usfinancepost.com/general-motor-found-chevrolet-volt-owners-prefer-driving-on-electricity-20659.html
                  “The most revealing aspect of the report is that 90 percent of all trips end up consuming only battery power without relying on traditional fuel.”

                  The source for other plug-in hybrids is much harder to find, because their engines do come on much more frequently. In other words, it’s something they don’t care to advertise.

                3. ClarksonCote says:

                  I found a source!

                  “He said also 81 percent of [Volt] “trips” involve no engine start at all – a meaningful thing especially to California.

                  The U.S. Department of energy actually got that last tidbit about trips, and so was able to check other cars. Plug-in Priii, Ford Energis and, PHEVs in general only had 10 percent no engine start on trips.

                  http://gm-volt.com/2014/09/18/new-volt-will-have-powertrain-performance-thats-better-in-every-way/

                  1. Brian says:

                    Thanks for the link – a very interesting stat. Hard to know for sure the nature of those trips, but still telling.

                    This debate has gotten very far away from my original comments. The stat actually seems to confirm my comment that a PHEV is not as demanding on the battery as an EREV, and therefore does not require the extra power density that was originally stated. This is because the gasoline engine kicks in and helps out. In the PiP in particular, this is necessary for anything more than a crawl. In the E-Tron, this is supposedly done for a more powerful/exciting experience.

            3. Brian says:

              It is obvious to me that I am not being clear here.

              The Volt is an EREV. Audi/Ford are making PHEVs. In my mind, the Volt and the e-tron are great examples of the difference between and EREV (Volt) and PHEV (e-trom). The former is an electric (drive-train) car that has a gasoline engine to generate electricity. The latter is a hybrid, which gets power to the wheels from both engine and motor. The plug-in hybrid gets a boost from the grid for higher efficiency and performance. I have described my position in much greater detail in other threads, and can sometimes take it for granted.

              I hope the Volt enthusiasts realize that I am NOT saying that the e-tron is – overall – superior to the Volt. I am just saying that there are measures by which the e-tron IS superior, such as acceleration. This is due to using both motor and engine to accelerate.

              1. ClarksonCote says:

                Most vehicles are superior to another in some form, so usually to call a vehicle superior to another in a broad stroke is to be focusing on the whole of the offering, not a particular singular statistic.

                I swear, people must read our conversations and either laugh out loud or shake their heads in disbelief.

                1. Brian says:

                  I specifically stated that the PHEVs are superior in some ways (or can be). What I was referring to (but didn’t explicitly say) is potential acceleration. The e-tron is faster than the Volt because it is a PHEV architecture, not an EREV one.

                  And yes, we have many a “spirited” disagreement on this site.

                  1. Josh says:

                    “And yes, we have many a “spirited” disagreement on this site.”

                    That is why I am here. A thoughtful debate helps me re-examine my opinions and expand the information I know.

                    1. ClarksonCote says:

                      You are the exception to the norm Josh. I feel like most people are stubborn and argumentative in their line of thinking.

                      Despite the apparent war between Brian and I, we actually also try to do the same as you. 🙂

                2. Rick says:

                  Clarkson, I mostly wrinkle my forehead in confusion. 🙂

          2. Raymondjram says:

            I agree. No EV would need a gas engine to assist in acceleration. BTW, who need a 0-to-60 time of less than six seconds in normal traffic or on a highway? We are adddicted to horsepower (an obsolete term, too) due to gas engines, but in practical terms we need to slow down and use our energy to extend the EV range, not to out accelerate other vehicles. The public highway was never a “race track” and never should be. Electric motors can give enough torque to accelerate by themselves. The range extender is just that: to extend the range when the battery charge is exhausted.

    2. Mint says:

      I think this factor will go away in a few years when supercapacitors get better. You need <0.5kWh to get even a 2 ton car from 0 to 85 mph.

      We only need 25Wh/kg and $2000/kWh to make that option practical for a performance PHEV, and we're pretty much there already.

      1. Dr. Kenneth Noisewater says:

        kWh/l though?

        1. Raymondjram says:

          Think of the supercapacitors as the high speed Level 1 cache RAM in a microprocessor. They take up chip estate but allows the CPU to run common instructions at its internal clock, versus external gigabyte RAM that needs the CPu to wait until the data is ready to read.

          The supercapacitors take up space but allow high current values that no regular battery cell can supply. As for my experience, I replace a lead-acid battery with supercaps for my emergency power generator, which only needs power to start. The capacitors weigh only 12 ounces, versus 6 pounds for the original battery. in an EV the supercapacitors can be part of the body and chassis structure, and help save weight over the equivalent battery capacity.

          1. Phr3d says:

            EXcellent analogy (cache) as capacitors are superior for short-term watt delivery and recharge. (simplification, of course) capacitor provides power for standstill to 1mph and regens first (see also inertia wheels). Been around forever so, as always, I find myself asking “what am I missing?” when I wonder why this isn’t standard from day 1 regarding EV.

  4. Leptoquark says:

    I think what’s really interesting about this is that I don’t think LG Chem would be consolidating like this were it not for the Gigafactory. They must see that as a serious threat/challenge, and they want to preserve their “turf”.

    In the end, it’s a case of market forces driving competition; an age-old tale.

  5. IDK says:

    LG working on 200 mile pack, while Tesla is working on 500 and 1000 miles packs. It appears Tesla/Panasonic are still way ahead of LG.

    1. David Murray says:

      I wouldn’t say that.. Those are entirely different markets within the EV business. Tesla achieves those longer ranges by simply adding more cells until the battery is huge. LG is looking to supply cars with much smaller battery packs.

      Keep in mind Tesla packs are only good for 500 cycles. Fortunately the packs are so large the customers won’t by cycling them much. LG cells can do thousands of cycles, making them much better suited to PHEV and cheaper EV use.

      1. IDK says:

        You’re a little off. Do a search on the Tesla 1000 mile pack. Lots of info out there. In addition, Elon just mentioned some tweaks to future (Model X?) packs (think cells)and design. LG appears to be good to, however until they produce a 200 mile range pack in a production car, they don’t have anything yet.

      2. Jouni Valkonen says:

        Actually, Tesla’s batteries are good for 3000 cycles with about 10 % range degradation. See laboratory test data:

        ‘Development of High power and Long life Lithium secondary batteries’
        http://ma.ecsdl.org/content/MA2011-02/17/1282.full.pdf

        However, keep in mind that the calendar life will be dominant factor in battery degradation and therefore Tesla expects that batteries are good for 8 to 12 years more or less indifferently how they are used.

        Tesla’s batteries have higher energy density, therefore there is needed about equal amount of cells for 300 mile battery what it takes for LG to have 200 mile battery. Therefore cost is approximately same, because higher energy density means also lower price per kWh, as less cells and less cooling and less packing is needed.

        1. Mint says:

          Tesla is guaranteeing the packs for 8 years. You can be pretty damn sure they’re expecting only a few percent to need replacing by then, or they wouldn’t offer such a long warranty.

          1. ItsNotAboutTheMoney says:

            Tesla doesn’t warranty against normal degradation for time and usage. They guarantee that the pack won’t fail. However, the signs are good on the degradation so far.

  6. DaveMart says:

    Has anyone got any idea whose battery Toyota uses for their PIP?

    Jay said:

    ‘Under the same amendment that put out all the recent BMW i3 REx discussion on what defines a BEVx – and white stickers, is also a change to “what is a PHEV” in relation to ZEV regs. Basically, the upcoming next gen has to be rated at least 10 miles (thru 2018) or it is out.

    So we can pencil in at least 10 miles of EV range for the next gen Prius PHV for sure. One would imagine as they are being forced to comply, they would likely take the opportunity to go a bit past the threshold/give themselves some pad. Probably 15 miles AER is a reasonable ‘minimum’ assumption.’

    http://insideevs.com/plug-in-prius-setting-the-record-straight/

    So it appears that to qualify Toyota will have to up the AER considerably.
    LG look like the best bet for batteries to enable this in the same package size.

    If Toyota currently use their own batteries they aren’t going to like that.

    1. David Murray says:

      I was under the impression Toyota used Panasonic batteries both for the NiMh hybrids and for the Li-Ion batteries in the PiP.

      1. kdawg says:

        You can go to the “Battery Supplier” tab of kdawg.com to get a (somewhat outdated now) chart of where everyone is getting their batteries from. According to my chart, Toyota is using Panasonic.

        I think once the next round of EVs come out, I’ll update my graphic.

        1. DaveMart says:

          Many thanks.
          Great resource!

      2. ItsNotAboutTheMoney says:

        Toyota uses Panasonic for lithium and, er, Toyota for NiMH. Toyota’s lithium supplier was Sanyo. But Panasonic bought Sanyo. Toyota went halvsies on the NiMH production with Panasonic, but as part of the Panasonic-Sanyo merger/takeover, Panasonic had to give up virtually all their interest in the NiMH.

    2. Stimpacker says:

      I do hope Toyota will put in more than 10 battery miles in their next PiP. It’s quite a joke (and quite annoying) to see PiP hogging charge stations for hours.

      1. Raymondjram says:

        If those stations charged (pun intended) for a cost per hour, those PiPs will spend more money just parked there than the gasoline they supposively will save.

  7. kdawg says:

    My back of napkin math shows (for the US), LG has 1.24 million kWh of battery out there, driving around the country. While Tesla has about double that, at 2.43 million kWh.

    1. Bonaire says:

      And interestingly, LG has more ev drivers on the road even with the lower kWh volume.

  8. Josh says:

    But what does it mean for the consumer?

    I worry that LG owning all of the production of automotive grade batteries would erase any hope of $100 / kWh at the pack level. They would be in too strong of a position defending their profit margins. It would probably look like a PHEV future, with a few (expensive) exceptions.

    Plans for an inexpensive Model 3?

    No car currently using an LG battery shows a cost / performance advantage over Tesla today. LG is only supplying the cells, so it is still up to a manufacturer to build the pack and vehicle. Vehicle/pack design is the area where Tesla has been ahead of others in the EV space, more so than purchasing cells from Panasonic.

    1. DaveMart says:

      A heck of a lot of the ‘Tesla lead’ is also down to taking much lower gross margins than are typical for a car of that price.

      The likes of Mercedes don’t say so, but it seems that typically gross margins at the $80k mark are in the region of 40%.

      Tesla has around 25%.

      That is fine as long as the momentum keeps up, and Tesla is the new ever-growing flavour of the moment.

      Musk is spinning plates to keep it going though, and the music may stop.

      That is not as critical as it sounds, as it is incredibly tough to take on the established car industry, as the almost universal record of failure for the last 60 years for any car company not a national champion such as Proton shows.

      So they have to hype to raise the funds, but it is a high risk game, and Tesla shares discount everything including the second coming, which is reckoned to be the advent of Musk.

      They are a small company producing luxury cars on thin margins for that class of car, and trying to raise huge amounts of capital to expand production by ten times, whilst halving prices into a sector with even lower gross profit margins.

      If anything slips they will be in big, big trouble.

      1. Josh says:

        AFAIK, Porche leads the luxury automakers with gross margins @ ~30%. Tesla has made comments on continuing to improve to get to that level. I think it is possible with Model S/X, but not once Model 3 is being built. I don’t have any specific data on class by class profit margin.

        I think you are responding to my other comment, as far as fundraising. Tesla raised $2 billion for the GigaFactory on very favorable terms. That is just good business. All of their R&D (Model X included), production, sales/service, and SuperCharger expansion is being funded with Model S revenue. Their current gross margins are significant, $213 million in Q2.

        The TSLA price is based on their past execution and the potential size of their market. They are priced into the future now, but that is normal for tech companies (not auto companies). FB is valued at 6 times TSLA. TSLA is not the riskiest investment in the market by any means.

        I see their auto business ending up at a similar level to BMW 10 years in the future. If they have other businesses, like stationary storage, they might be worth an extra premium.

        1. DaveMart says:

          The last time they reported their margins separately from the VW group Porsche had 50% margins.

          Musk last year had ambitions to match their profit margins, but at some indefinite time after producing the Model X:
          http://www.bloomberg.com/news/2013-06-05/musk-says-tesla-s-gross-margin-can-approach-porsche-over-time-.html

          Typical margins in the $35k bracket are more like 10% than even the present 25%, but present share prices appear to foresee margins staying at least as high as they are at present!

          1. TomArt says:

            Musk stated over and over and over that their goal was to beat Porsche’s gross margins. Musk quoted Porsche’s gross margins to be around 25% to 30%. A few earnings calls ago, the Model S production was reported as achieving 27% gross margin.

            1. DaveMart says:

              Musk says all sorts of things.
              However it is clear that Porsche’s gross margins the last time they were reported separately were 50%.

              1. Rob Stark says:

                Now that Porsche is in the business of rebranding VW cars and technology it can get those 50% margins.

                But eventually consumers will catch on they are not getting the premium ultra technology they are paying for in their lines outside of the 911 and supercars.

                1. Rob Stark says:

                  The Model S has also exposed how MB,Porsche,Audi et al abuse their Asian customers by charging massive premiums over what they charge in the US and Europe.

                  A combination of anti-trust action plus Tesla competition will erode those margins as well.

                  1. DaveMart says:

                    That is the low volume, high margin business for you.
                    Over the last 100 years or so Porsche has seen off plenty of competitors who thought that they could do better.
                    We will see how the latest one does.

                    1. Phr3d says:

                      @DaveMart – I understand your issues with Elon, but he is on record for quite a long time saying that MS margins were obviously lower than acceptable at the front end, but that through production efficiencies they would reach (a fair comparison, IMHO) Porche’s margins. Your statement is the first that -I’ve- read that his comparison is So far off, any idea (attempting to put aside your Musk-ish issues) Why the numbers would be so different and not get beaten-to-a-writhing-pulp by TSLA haters?

              2. Jouni Valkonen says:

                Porsche is getting their high crossmargins from financial assets. Not from selling cars.

              3. Josh says:

                I can’t find a breakout of gross margins at Porsche, all I could find was this operating profit of 18%. http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2014/03/Y_2013_e.bin.html/binarystorageitem/file/GB+2013_e.pdf
                Any chance you have a link to Porsche financials? It is a good point of comparison for Tesla.

                I don’t think Tesla will strive for 50% GM on Model S/X. They will just add more technology in at the 30% GM region, if they can get it up that high.

                $35k for Model 3 will only be the starting price. I would expect the Average Selling Price to be in the range $50k with ~20% GM.

                1. DaveMart says:

                  I think Musk was absolutely correct in saying that he is aiming for around 30% gross margin.

                  All of the big luxury car makers are part of a larger group though, and they don’t break out their costs.

                  BMW had gross profit margins of 20.79% in 2013:
                  http://markets.ft.com/research/Markets/Tearsheets/Financials?s=BMWX:GER

                  However their average sale price would be way cheaper than Tesla’s, and margins decrease drastically as cars get cheaper.

                  I doubt they are much above 10% or so at the price point that Tesla is aiming to hit for the Model III, so whether Musk hits 30% for the Model S or not gross profits let alone net will be difficult to come by.

                  1. DaveMart says:

                    To turn Musk’s arguments about volume lowering prices being king for competitiveness around, let’s have a look at the E-Golf, which hits his projected price point for the Model III very neatly.

                    So at about the time of the release of the Model III, let’s assume that VW have access to an LG pack able to give ~200 miles of EV range.

                    Since LG will offer its batteries to all comers, including many other VW models and those from other manufacturers, then it seems at least as likely that the battery pack in the E-Golf will be in as high volume as for the Model III, and hence according to Musk’s volume/cost arguments equally cheap.

                    On just about every other component which make up the car, from the seats to the body, the commonality with vast production of other Golf and associated models from the VW group, if Musk’s volume arguments are true, are massively in favour of VW.

                    Without the benefit of a far better battery pack, if LG can indeed match the Panasonic’s in the Tesla S, I can see no competitive advantage for Tesla.

                    1. Josh says:

                      One advantage would be guaranteed supply of batteries. If WV, GM, and Nissan all release a 200 mile EV the same year, who gets priority on battery supply?

                    2. ItsNotAboutTheMoney says:

                      That is correct: the key word is if.

                      I don’t think it’s a coincidence that everybody’s talking about a 200 mile car and signing a deal with LG Chem, because I bet that LG Chem is making sure that manufacturers have a program to develop longer range cars if they want decent pricing. Because I’m sure that LG Chem sees the same huge potential market that Tesla and Panasonic can see, and Tesla’s aggression will have forced them to be aggressive as well.

  9. TomArt says:

    There was an article just recently on this site that stated Tesla’s next generation cells will still be cylindrical, just slightly larger than the 18650 form factor. I do not foresee Tesla going to larger form factors specifically because of cooling efficiency and fire containment – things Musk has been harping on for several years now.

  10. Jouni Valkonen says:

    200 mile range is not enough for LG. Must have 300 mile range, in order to be competitive against ICE cars. Tesla is already best selling 300 mile ranged batteries and is racing to improve the range up to 500 miles. When we have available battery options from 300 miles to 500 miles, then we are starting to talk seriously on electric car revolution.

    LG Chem is however correct in one point. The EV market explosion will happen around 2016 or in late 2015. But the initiator will be Tesla-Panasonic alliance.

    1. protomech says:

      Model 3 is also targeting the 200 mile range.

      200 miles is “enough” for me, provided it can accept the same 100+ kW quick charge rates. Maybe it is enough for most consumers.

      1. Jouni Valkonen says:

        Model S is also 200 mile car, but by far the most popular option is 85 kWh battery or 300 mile range. Same with Model 3.

        200 miles is maybe enough for you, but it will not be good enough for the 80 % of Tesla’s customers.

        And most importantly it is probable that 200 mile base version does not have supercharger access as default. It is probably offered as default only for 300+ mile versions as larger batteries can tolerate fast charging better.

        And charging extra from options will probably be the Tesla’s strategy also with Model 3, because it is very good selling strategy for high demand products. There is some economic theory behind.

        1. Josh says:

          I agree that SuperCharging won’t be standard on the base Model 3, but it will be an option on the base battery pack. Musk has stated that every vehicle Tesla makes will be SuperCharger capable (but maybe not activated ala Model S 60 kWh).

        2. Savage J says:

          The larger point is that at THIS stage of the game, EV manufacturer’s are not so much competing for each others client base as much as they are trying to capture traditional ICE customers. That’s the whole point of this revolution and having said that, 200 mile range will cause more than enough disruption without having to bother about siphoning off other EV brand customers. Heck 180 miles and the game has changed in my opinion!

        3. ItsNotAboutTheMoney says:

          People will always want more range and faster charging, but we’re talking about the next step being at a much lower price with a more price-sensitive market. These LG Chem MOU cars could be compact 200 mile NEDC, while Tesla’s looking at 200 mile EPA mid-size, with higher performance available.

        4. Phr3d says:

          Heartily disagree – it seems you are basing this upon current MS sales, and I would argue that anyone paying well in excess of $60k for a sedan is Not price shopping. The only issue that I have seen/heard regarding the ‘price’ of a Tesla is Not opting for the P85, as the 85 provides more that I need or have experienced and I don’t Like/want the options that the ‘P’ model offers.
          The III, and even the X will have an entirely different customer, and cost Will come into play with Every sale IMHO (I suspect a Lot of MX will be ‘strippers’).
          MS = I’ve got a spare $80k lying about and That is one quality car with benefits, sold.
          X and ||| = I want this car for My reasons, can I afford the extra $ for the high range, let alone High Priced options
          a situation that MS has not experienced.

    2. Bonaire says:

      200 mile range is huge. That 2 is very important. i only need 150 but marketing people all want the 2. Mainly for mindshare and utility. But fairly few people drive more than 200 miles on a daily basis.

      1. Raymondjram says:

        That is very true. GM deducted that most drivers do less than 40 miles in one trip, so they designed the Volt with a 40 mile EV range, although it does give more. I believe that it is the issue of not wanting to stop and recharge often, so a larger battery is like a bigger fuel tank – one fillup a week or so.

  11. Surya says:

    If LG Chem can make 30% more profits on half the volume of it’s parent company, that means there is quite some room for dropping the price, but as long as the most important people involved are making a killing, that isn’t going to happen.
    LG improving it’s position might not be positive in that regard.
    But if Tesla pulls off their plans, a price reduction will occur.
    Here’s hoping.

  12. ItsNotAboutTheMoney says:

    Jay,

    Your profitability comment is comparing apples with bags of oranges. Panasonic’s battery division is profitable thanks to Tesla’s large purchases. Tesla might not be paper-profitable, but how are other manufacturers’ plug-ins doing?

    1. Raymondjram says:

      tesla Motors may be Panasonic’s biggest battery clinet, but not the only one. Many portable tool and laptop manufacturers use Panasonic’s cells in their battery packs. As an example, I replaced the bad 18 VDC pack of a friend’s HP laptop. I opened the pack and found six Panasonmic cells, with two of them open, but I recovered the other four cells and using them in my LED flashlight.