Wednesday, September 23, 2009

Lithium not ready fo primetime? More like Lithium Supply not AVAILABLE for primetime!

By now most of us have probably seen the news on Bloomberg rolling past - Toyota has decided not to go with lithium in their latest and great Prius Hybrid Car.

Does that mean we should all pack up our bags and go home? Are Lithium junior companies dead in the water at this point?

I hope after all this - you have learned to read mass-market articles with a shrewd contarian sense.

Sept. 14 (Bloomberg) -- Toyota Motor Corp., the biggest seller of hybrid autos, is sticking with nickel as the preferred battery material for most of the vehicles after three years of secretly testing Prius hatchbacks with lithium-ion packs.

Toyota last month ended road tests of 126 Priuses in the U.S., Japan and Europe that began in 2006, Jana Hartline, a company spokeswoman said in an interview. Details of the program, in which the cars’ nickel metal hydride batteries were replaced with more expensive lithium models, weren’t released.

Automakers are introducing models all or partly powered by lithium-ion batteries holding twice the energy of nickel packs. While Toyota’s lithium version performed well and gave “small” fuel-economy gains because of lighter weight, nickel is favored for conventional, mass-market hybrids for its cost, said Kazuo Tojima, the carmaker’s senior staff engineer for batteries.

Lithium’s “durability, stability and safety are assured,” the Toyota City, Japan-based company’s tests showed, Tojima said.

The tests appear to be among the most thorough done by companies planning to introduce the batteries, said Menahem Anderman, president of consulting firm Advanced Automotive Batteries in Oregon House, California.

“We now know that a lithium-ion battery can work; that’s not really the question,” he said. “Cost is critical, and we still don’t know enough about long-term durability.”

Plug-in Prius

Toyota’s American depositary receipts fell 85 cents, or 1 percent, to $83.11 at 4:15 p.m. in New York Stock Exchange composite trading. They’ve gained 27 percent this year. The shares fell 2.6 percent to 3,740 yen in Tokyo Stock Exchange trading.

Toyota has sold more than 2 million hybrid cars and light trucks worldwide since introducing the Prius in Japan in 1997, almost all using nickel. The automaker hasn’t announced plans to sell standard hybrids with lithium batteries in the U.S.

This year, Toyota will begin delivering test fleets in the U.S., Japan and Europe consisting of plug-in Priuses that can run 12 miles (19 kilometers) solely on lithium-ion battery power after charging at an electrical outlet. The car is being shown this week at the Frankfurt Motor Show.

The company also plans to sell a small electric car for urban commuters, powered solely by lithium packs, by 2012.

Nissan, Mitsubishi

Nissan Motor Co. will begin offering battery-electric Leaf compact cars next year, which the Yokohama-based company says will travel 100 miles on a fully charged lithium pack. Mitsubishi Motors Corp. is selling in Japan the i-MiEV, a 4.6 million yen ($51,000) electric minicar that also travels as far as 100 miles using only lithium-ion batteries.

Toyota doesn’t expect battery-powered cars to succeed in the mass market until 2020 because batteries are too costly and capacity limits their range.

“Electric vehicles of today are less costly than in 1990s, but if you compare them with the other vehicles out there they are still too expensive,” Executive Vice President Takeshi Uchiyamada said today at news conference at the Frankfurt show. “Unless there is a very big breakthrough in battery costs I don’t think electric vehicles can take a large market share.”

U.S. sales operations for Toyota are based in Torrance, California.

If you made a product that's so popular, a large part of your future business depended on it - would you be careful with the technology behind it? Yes.

If the same technology is dependent on limited supply that all your competitors are vying for - would you be worried? Yes.

In our humble opinions, the lithium-ion batteries tested fine.

What Toyota (and every other automotive companies) are worried about - is the fact that they cannot easily control their margins on lithium-ion batteries.

The biggest three producers (monopoly) of lithium in the world belongs to SQM, FCM, and Rockwood Holdings (Chemetall-Foote).

According to Nissan, the Nissan Leaf (a tiny new EV powered solely by electricity) will require almost 10% of the annual lithium-carbonate supply once it goes fully production.

Factor in other companies all bidding up the same supply:

- Ford

- General Motors

- Toyota

- Nissan


- Renault

...and the list goes on!

If one vehicle model at full production can take 10% of the world's lithium annual supply - how do you think the price of lithium will react? See below for in-depth analysis based on Nissan's official production figures.

Nissan's revelation that its 24kWh battery for the Leaf EV will use 4kg of lithium (metal equivalent) breaks the silence of automotive and battery suppliers over the use of much-hyped lithium. For every 500,000 Leaf-sized 24kWh lithium-ion battery powered EVs, lithium demand will be around 2,000t (metal equivalent). This equates to just under 10% of total lithium production in 2008.


Nissan's Leaf EV lithium-ion battery is rated at 24kWh, compared to 1.9kWh in the S400 Blue Hybrid, 16kWh in the Mitsubishi MiEV and Chevrolet Volt and 53kWh in the Tesla Roadster. Until now, data on consumption of lithium in the automotive batteries used in these hybrid and full electric vehicles (HEVs and EVs) has been withheld, prompting estimates from industry followers and analysts varying between a few grams to several kilograms of lthium per kWh. Nissan's revelation that its 24kWh battery, developed in collaboration with NEC, will contain 4kg of lithium (metal equivalent) allows for a more insightful analysis of future lithium demand.
Estimates on future HEV and EV production also vary widely. However, assuming production of lithium-ion battery HEV and EV powered vehicles reaches 500,000 units in 2015 (just under 1% of current worldwide automotive production) and the average vehicle has a 24kWh battery, lithium demand would reach around 2,000t (metal equivalent). This is equivalent to just under 10% of total lithium production in 2008.
Capacity utilisation in the lithium industry in 2008 was around 75%. The leading producers of lithium from brines: SQM, Chemetall and FMC, are expanding capacity (by around 5,000t metal equivalent). Lithium supplies from exisiting and expanded operations are therefore more than sufficient to meet potential demand for 500,000 lithium-ion battery powered vehicles in 2015 and could potentially meet demand for up to 2 million lithium-ion battery powered HEV and EV vehicles in that same period. This scenario excludes potential additional capacity in China, with brine producers of lithium in Tibet and Qinghai adding a further 10,000t (metal equivalent) of lithium production capacity by the early 2010s (although technical hurdles remain), and any new companies such as Galaxy Resources, Western Lithium and Canada Lithium entering the lithium market. Oversupply might be a more pressing question than lithium availability.
It remains to be seen just how quickly demand from automotive lithium-ion batteries for lithium will evolve, given that only a small number of these batteries and their associated platforms have actually been produced and tested. In the mid-term, questions on lithium supply need not be asked; instead it may well be a case of who can supply lithium the cheapest and currently that ball rests firmly in the established brine producers court - competition in the lithium market may be about to hot up!