Excerpts from Interview With LG Chem CEO

JUN 2 2015 BY MARK KANE 40

Chevrolet Bolt

Chevrolet Bolt

ChargedEVs recently published an interview with LG Chem Power’s CEO Dr. Prabhakar Patil.

LG Chem recently disclosed they are looking to sell large format, 300 mile/80 kWh to 120 kWh batteries to OEMs.

LG Chem in several years has attracted the most carmakers to use their batteries, hence the question about their success. LG Chem said that the key is in chemicals, the materials and in the roots of the company.

Charged: What’s your secret? How has LG Chem been able to secure so many contracts with big automakers?

Dr. Prabhakar Patil: We are the only battery company that’s chemicals- and materials-based. Most of the others are electronics companies that have gone into the battery space. The critical factor for batteries is materials. Getting to cost competitiveness is not just a question of scale or reduction in material costs, it’s also about improving the characteristics of the materials. That’s what we do well, and at the same time, we have the economies of scale.”

Parent company in Korea – LG Chem – has over 400 engineers working on batteries.

Dr. Prabhakar Patil said also that they are moving forward step by step, which is well illustrated by the Chevy Volt example, which almost every year got a slightly improved battery.

The second reason is scale and attractive prices for carmakers. Big numbers stand at: “over 50 million cells on the road in more than 300,000 vehicles.”

Should we expect new chemistry beyond lithium? According to LG Chem, probably not.  Instead, LG Chem is focusing on improving lithium-ion batteries:

Charged: How much time do you spend thinking about the next-generation battery technology, beyond lithium?

Dr. Patil: Not very much. The reason is pretty simple – it’s basic chemistry. Lithium is the third-lightest element, and the lightest metal.

The only thing that’s lighter is hydrogen, but as a gas it’s very difficult to work with because you cannot move it around. You lose a lot of it if you try to pipe it. If you try to use it as a liquid you lose a lot of the energy advantage. And helium is inert.

So, lithium is the next best thing for batteries and it will remain lithium in some form for a long time. There could be a future in lithium-metal batteries, like you hear some people talking about, or some other variant. Lithium is very effective in terms of being energy-efficient both from a volume and a mass basis.

Right now, there is a lot of focus on improving the cathode, because that’s sort of the limiting factor. But as you improve the cathode, the anode sooner or later will become the problem, and that’s why people are looking at the silicon type of anode. These improvements will continue to happen, and they won’t be in one huge step. There will be enough smaller steps added together that when you stand back, you will see a large reduction in costs.”

Moving costs down is one of the priority.

Charged: At some point, driving out costs will come down to finding more efficient ways to get the raw materials, correct? How far away are we from that point?

Dr. Patil: Yes, but we’re not quite there. There are still more engineering improvements that can be made. Not as much in manufacturing, because if you look at the cost structure of cells, somewhere around 60% of costs are related to material costs. That’s material costs for the cell manufacturer as purchased material. Some of that is driven by economies of scale and by the performance characteristics of the material.

I think there is quite a bit to be gained in terms of reducing the net material costs, while getting the same performance out of the cell, through better engineering, customizing of the materials, tweaking their properties and so forth.”

You’ll find several more questions and answers in the source article linked below.

Source: Chargedevs.com

Categories: Battery Tech, General

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40 Comments on "Excerpts from Interview With LG Chem CEO"

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Speculawyer

80KWH to 120KWH? Damn. They are looking to go bigger than Tesla. Then again, their goal is to sell as many cells as possible.

Tesla is the only carmaker with decent recharging network though. I don’t see who is going to buy those batteries without licensing Supercharger access from Tesla.

Lensman

We may well need 120 kWh battery packs for vehicles which are larger and/or carry cargo, such as SUVs and pickups. In fact, 120 kWh might look a bit small for a pickup in a few years.

It’s going to be interesting to see how the lower cost of LG Chem’s battery cells (and possibly similar cells from its competitors) advances the EV revolution. Nominally “200 mile” (probably 150-160 real-world miles) compact cars may be just the start!

Lausbub

If Tesla can build up a supercharger network, why shouldn’t others be also able to do something similar? Maybe with even more power capability?

Lensman

As always with legacy auto makers, the pertinent question is not “can they or can’t they?”, but rather “why in the world would they want to?”

Automobile manufacturers whose bottom line depends on selling gas guzzlers are not going to do anything to make EVs into real competitors of their top selling lines of automobiles. At least, they won’t until EVs have a significant portion of the market share. Until that time, any legacy auto maker is going to see a compelling EV as primarily cutting into sales of their own top sellers. And they will be correct in perceiving the situation that way.

The same sort of thing always happens during a disruptive tech revolution. This is why Kodak went bankrupt after the digital camera revolution, and it’s why Blackberry went bankrupt as the smart phone revolution advanced. (Blackberry is like Toyota with its Prius; taking the lead with first generation of the new tech, but failing to keep up when a new player came along with the next generation tech. With Blackberry it was Apple; with Toyota it’s Tesla.)

CDAVIS

@Lensman,
+1
well said

Three Electrics

I’d further add that mainstream automakers do not want a proprietary charging solution like Tesla’s: it makes no sense to have multiple, incompatible charging networks. And if the chargers are compatible, no manufacturer is incented to spend more than their competitors.

You might as well ask why auto manufacturers don’t build out their own gas stations: it just makes no sense. They’re better off as a shared resource for everyone, not locked to one vendor.

JakeY

They can if they are willing to ditch their current standards, which limit them to 100kW max (500V@200A) max, more like 80kW max once you factor in typical ~400V charging voltage.

They also need to invest money into securing exclusive spaces in locations people can kill ~20-60 minutes of time easily (not just dealerships), and actually paying for all the installation, electricity, and maintenance costs (so far the most they have done is provide a free charger).

There is no automaker so far other than Tesla that is willing to invest in that way.

Lensman

And perhaps the reason no legacy auto maker is willing to invest the money to build out an EV charging system to rival the SuperChargers is because for every auto maker except Tesla (and maybe BYD), EVs aren’t really a money maker. There have been reasonable arguments over whether the Volt is an overall money maker or loser for GM. Plus, a Nissan exec said during the first year of Leaf production that their plan was to make a profit starting in the third year of production… and then they had to slash the price, so the profitability of the Leaf is debatable, too.

Note that for Tesla, the SuperCharger system helps promote sales of automobiles, and so increases their profits. Given the number of Internet posts about SuperChargers, I’ say it helps a lot. For other auto makers, who don’t actually make much (if any) profit selling EVs, the motive just isn’t there.

Tech01x

Using their upcoming NMC chemistry, it is likely that a 120 kWh battery pack would have to weigh 1,500 to 1,900 lbs. The cells alone would be about 1,150 lbs without the pack structure. The Model S battery pack (cells + cooling + structure) is currently 1,200 lbs, going into a vehicle that weighs 4,500 to 4,900 lbs.

A 120 kWh battery pack using their 2016/2017 cell chemistry would be extremely heavy – probably not for even large sedans.

Lensman

Yes, and you’ll note that so far as we know, nobody has yet taken them up on their offer of 80 – 120 kWh battery packs. If and when some automobile manufacturer does, it will likely be for a vehicle larger and heavier than a large sedan. The potential market segment would include SUVs, minivans, and pickup trucks; maybe even small delivery vans. Heck, if someone makes an EV version of one of those oversized “macho” pickups, it will probably use a pack even bigger than 120 kWh.

Scott Franco

Like a F-150 aluminum pickup…. hummmm.

Dave

Interesting trivia… the P85D is heavier than the base model F-150

Bonaire

Very viable cars don’t need 120kWh onboard. Nor 80kWh. Or even 50kWh for that matter. Aren’t Volt drivers getting 80% of their miles done with under 17 kWh onboard? It may be that 30 kWh is the right size for smaller cars – and if you want long distance, also get an EREV CUV or SUV eventually. I don’t think we need to have strictly a battery-only future. More DCFC chargers allow for lower range “need”. If Tesla installed SuperChargers every 50 miles, most would be happy with 40 kWh on board. Drive for 150 miles and recharge in 45 minutes. Not everyone is road-tripping nationally. And if so, allow for a second larger battery to be installed for the trip.

kdawg

Maybe once the market of plug-ins get’s to a decent value (say 5% or 10%) instead of the less than 1% it is now, more 3rd parties will step in to sell electricity in a Supercharger-like fashion.

Not only do we need the whole plug-in market to increase, but specifically BEVs that have DCFC.

kdawg

(and yes, I know this leads into the whole chicken/egg debate)

Lensman
I wish this article had included more of the original, or even the full text. Here’s the part that I find most interesting: * * * * * Charged: Most of the automakers appear to be relying on suppliers to manufacture cells, but Tesla and Nissan have taken a much more hands-on approach. What do you think of their strategies? Dr. Patil: It’s a difference of histories, to some extent. Nissan was actually one of the first companies to work with Li-ion. So, they have had a lot of internal capability. Many people don’t remember, but Nissan had hybrid programs back in the 1990s. They did a limited production that used lithium-ion batteries that were internally developed. So, there was a lot of internal capability in place. However, I think it ultimately comes down to costs, and that’s why you see the statements from executives saying, “even with internal capability, if someone can deliver a more cost-effective solution, by all means, we’ll go there.” Tesla has a somewhat different philosophy. They’re a much more vertically integrated company. But there again, it’ll depend on the cost-effectiveness of trying to do it all in-house versus trying to get it from the outside.… Read more »
Anthony Fiti

One of the things that seemed “off” to me in this question and answer is that Tesla isn’t doing it alone. Tesla’s Gigafactory is different in that Tesla owns the factory, employes the staff, and operates the facility, but the manufacturing equipment is still owned by Panasonic (thus why they have to kick in money to invest in the GF too). Tesla is risk sharing with Panasonic, and are presumably paying Panasonic a per cell or kWh royalty (or possibly a minimum payment on the equipment) on the cells that pass QA and go into a battery pack. Panasonic will continue to use the money for R&D, to pay off capex, etc., but are freed from the burden of manufacturing the cells, managing staff, etc.

I see this as a great way to setup the division of labor between Tesla and Panasonic. Panasonic invests the manufacturing equipment, and continues R&D to make the products better, while Tesla manages the factory to ensure that the quality stays high, the right products get made in the quantity needed for their demand (of both cars and grid storage), and they both work to bring costs down.

Mike I

I don’t have any inside information, but I think we will eventually learn that Panasonic will be employing the people running their equipment. Tesla will be managing the facility and they will have production people assembling packs.

Lensman

I don’t have any inside info either, but Tesla has said that Panasonic is responsible for the cell production “side” of the Gigafactory. So it does seem very likely that, as you say, Panasonic will be responsible for hiring on that “side”.

But I don’t think this is an equal partnership. Tesla is obviously fully committed to building out the GigaFactory; Panasonic is very publicly foot-dragging on investing the amount of money Tesla wants them to. Looks like Tesla is going to wind up investing most of the money to build out the Gigafactory, and will be the primary partner, with Panasonic a junior partner.

Bottom line: Tesla has to “bet the farm” on making the GigaFactory a success. Tesla has to, if it wants to continue to expand production at a fast pace. Panasonic does not have to make an all-or-nothing gamble, and can continue to be a profitable corporation without the GigaFactory. After all, Panasonic makes a lot more than just batteries, and they have other customers for their batteries too.

pjwood1

…and all the while GM and LG Chem get to focus on their respective specialties. This article affirms that it isn’t about the “40,000ft R&D”, and that its coming down to more marginal economies.

I don’t understand how Model 3 will be anything but tricky for Tesla to pull off. The other OEMs, with LG Chem, can mark them….if they want to. I won’t be surprised if their choice amounts to capitalizing on the greatest risk Tesla takes. Where they fire their best shot, precisely when Tesla needs cost recovery the most. Maybe the SC network will be the final differentiator that carries the day.

Bonaire

Panasonic will also write hedges into their contracts within the GF. For instance today – their battery contract through 2017 is something like 1.8 or more billion cells. But if Telsa does not buy that minimum order, they pay a certain fee to Panasonic. Panasonic would not get involved with the GF without a strong knowledge that Tesla is going to buy the cells at certain volume dictated by contract with kick-out clauses and other things that protect their interests.

If Battery making was “easy” then Tesla could do it entirely alone. It seems they need to involve Panasonic here at least for GF #1. If #1 works out, then maybe #2 will be Tesla only?

Lensman

Reading thru the full text of the original article makes me more certain than ever that the only real “breakthrough” here is lower cost, and not significantly increased specific energy aka energy density (ED). However, the original article does have something about increased DoD (Depth of Discharge), which might have the same effect as a mild increase in ED.

I’m fairly certain that LG Chem doesn’t have the approx. 200% improvement in ED that many commenting on previous articles on the subject were hoping for.

evnow

Here is an interesting discussion on youtube – with Patil & Sasry. I don’t remember an article here on this.

Patil mentions two big things. Compared to ’11 Volt next gen battery will be
– 40% more dense
– Half the price

We can work out all kinds of things using these two parameters. For eg. knowing that ’11 Volt costed $500/kWh (and packing is 30% of battery cost), a 55 kWh battery for Bolt would cost $20k.

Lensman

If we take as a rule of thumb that li-ion batteries have been improving in energy density (ED) at 8% per year (that’s at best an average, at worst a ballpark figure, so it’s not an exact figure) then the expected ED increase from 2011 to 2017 would be 39.36%… almost exactly the 40% improvement cited. So again, there doesn’t seem to be any breakthru in ED from LG Chem.

Bonaire

I would hope LG Chem is working to get the Li-S (Lithium-Sulfer) batteries to work out. That is where the next level of higher-density and lower-cost will come.

Ocean Railroader

In the scheme of things for now a 20% to 30% raise in battery density would be what is needed for now.

I don’t expect batteries with three or four times the energy density of existing lithium batteries to come out in the next ten years for now.

CDAVIS

Tesla’s view on making batteries (in partnership with Panasonic…for now) is that batteries are a component of energy generation, storage, & distribution all of which Tesla wants to control.

So will LG Chem remain specialized (focused) on the “chemistry” of batteries or do they plan to themselves vertically integrate into the energy business…for example put up a supercharger network?

I’m thinking where Tesla is heading in the broader energy space will end up serving as a very wide moat around Tesla Cars. If LG Chem puts out a 20% more efficient battery than Tesla how does that stack up against Tesla offering consumers a national supercharger network?

Tesla wants to do more than compete against ICE cars, they intend to directly compete for being the vendor of providing the fuel (ions) that power the cars.

Lensman
Tesla has a strong motive to build out a SuperCharger network, not only to reduce range anxiety by its customers, but also to promote sales. Given the large amount of online comments and discussion about the SuperCharger system, I’d say Tesla’s attempt to use the system to promote car sales, as a form of indirect advertising, has been a resounding success. LG Chem has no such motive. In fact, most other EV makers don’t have that strong of a motive to do so, because in general they don’t make much (if any) profit on selling EVs. So in general, I don’t expect to see any for-profit company other than Tesla build out a national or international network of EV chargers with the business model of paying an up-front fee for lifetime access. If and when we start seeing for-profit companies build out fast-charge (or super-fast-charge) stations, they will be pay per use, just as some publicly accessible EV chargers are now. That said, BMW has announced plans to build charging stations in China (link below), so there is at least one exception to that rule. Of course, as noted in the article, the motive there is to make up for… Read more »
Bonaire

For Tesla, Supercharging is effectively their “advertising” budget. Without the SC network, the cars are still just as good. But then the longer distance range anxiety and chargeability for certain apartment and condo owners is lost. Using J-1772 networks would mean longer overnight charging while on the road. CHAdeMO would work and isn’t all that bad, actually, but is talked-down about by those who have experience with SCs.

CDAVIS

@Lensman & @ Bonaire,
Agreed that Tesla SC network serves as a nice perk for Tesla owners & great marketing billboard for Tesla selling cars.

But it’s much more than that…by a long shot…

For example…going back to the LG Chem topic thread…what if Tesla Giga gets into the business of selling Tesla battery-pack-systems to other car manufactures which included into those Tesla battery-pack-systems access to the Tesla SC network? How does a LG Chem compete with that?

Bonaire

Depends on need. For instance, I would need at least two specific locations of superchargers to make a BEV actually work for me. Today, with the Volt – I can go anywhere, anytime without a need for a tether to any charging network at all (except fast-charging at gas stations using gasoilne). I find that extremely valuable. When Tesla does have SuperChargers every 30-50 miles, the idea that they can sell batteries to others and offer DCFC in abundance may work out. Today, “fast charging” an EREV is everywhere due to the gas station network. Mindsets say that it “has to be” either ICE or BEV. I say, what about EREV? I think people can do that but it takes extra brainpower to think that EREV is a good choice for them. I think it will extremely important in the CUV and SUV arena when vehicles finally get to be sold with plug-in options. I doubt you can make a BEV version of an SUV viable – but an EREV version? Definitely.

Bonaire

And it appears LG Chem can compete just fine. Apparently, right now, they have batteries in 300,000 vehicles on the road. If you are going to compare with Tesla, be careful. LG Chem also has the largest Grid Storage installation in the US with Southern California Edison, so they are in that business as well.

Scott Franco
This is a complete waste of time. The EV offerings right now are stuck at 25KWH batteries. We seem to be moving to 50KWH batteries, but it is still 2 years in the future (and note that Tesla will go DOWN to that number). At 50KWH, 150 to 200 miles are possible, and aside from simple lies, I’d be willing to bet that steel cars with 50KWH batteries get a real 150 miles, and aluminum cars will get 200. There is only going to be one such car, the Tesla model 3. Past that, we need to work on costs. We don’t need 120KWH batteries. We need better chargers and infrastructure. L2 chargers are a tiny percentage of charge for a 50KWH battery when it comes to charging at a local store. The L2 public charger network is already obsolete. 50WH chargers are better, but a 50KW charger does not enable the possibility of intercity travel in a 50KWH battery car. Tesla alone knew that and did something about it. The coming 50KWH cars have handicapped themselves from day one. And a 120KWH car isn’t going to help with long distance travel if a 50KW charger is how you get… Read more »
evnow

Forget Al – even carbon fiber cars won’t get EPA 200 miles out of 50 kWh. BTW, Model 3 won’t be all aluminum.

JakeY

The i3 gets 81 miles EPA out of 18.8kWh usable (22kWh pack). Presumably you can squeeze 215 miles out of 50kWh usable, or 50kWh is the nameplate rating, then 93% usable (46.5kWh usable will get you to 200 miles EPA).

So not impossible, but tougher. I suspect given Tesla has one of the lowest $/kWh costs and highest kWh/kg ratings, it makes more sense for them to add a little more battery than focus a lot of extreme weight reduction (and skinny tires like i3 to reduce rolling resistance).

kdawg

And the Spark EV gets 82 miles out of a 21kWh pack. I don’t know how much of it they are using, but I’m guessing less than the i3.

kdawg

I thought this part was interesting.

—–

Charged: LG Chem’s Michigan plant is said to be operating at about 25 to 30% of capacity. Do you see that increasing soon?

Dr. Patil: Today our cells are produced in both Korea and the US. The challenge is the overall capacity – you have to do a balancing act in terms of the demand versus the capacity you have.

The good part is that we have now demonstrated that you can make cells as cost-effectively in the US as you can make them in Korea. There is always a US manufacturing issue people talk about, that you can’t really do cost-effective, or efficient, manufacturing in the US. But that’s kind of a myth that we have disproven with data. Recently, we’ve shown that you can make cells here or in Korea and not have a concern related to yield, cost efficiency, quality, etc. So now it simply becomes a matter of what is the best way for us to use the capacity that’s in place.

JakeY

This probably has to do with labor costs not being as big as a factor for this industry than others (in same article it says material costs alone make up 60%).

Also, he is comparing to South Korea (with presumably higher labor rates), not countries like China. Similarly Tesla will be comparing to Japan for Panasonic cells, and not China.

kdawg

And not having to ship a heavy, temperature controlled product 1/2 way around the world saves money too.

Pete

Some times i worry about Tesla, what if LG puts better battery on the market, cheaper and more capacitiy. I think that would not be good for gigafactory, perhaps than Tesla need completly new machines and thats expensive. So hope Tesla can simply react on the progress that LG is making.