Ener1 Sees Hybrid Battery Costs Halving
US: September 1, 2008
LOS ANGELES - Ener1 Inc will be able to cut the cost of batteries for hybrid
electric vehicles by 50 percent once its lithium-ion technology amasses
scale, Chief Executive Charles Gassenheimer said on Friday.
The company, which has yet to sign a supply agreement with a major auto
manufacturer, also said it expects to secure two new battery development
deals by the end of this year. Those could eventually turn into
mass-production agreements.
Ener1's lithium-ion battery unit, EnerDel, is supplying batteries to
Norway's Think Global for the Think City all-electric vehicle, to be sold in
Europe later this year.
Existing hybrid cars, including Toyota Motor Corp's Prius, use nickel-metal
hydride batteries. Lithium-ion technology, however, is seen as key by
automakers and suppliers to extend the electric-only range of hybrids. The
Tesla Roadster electric sports car, which is in initial production, and
General Motors Corp's Chevrolet Volt plug-in hybrid, due to be released in
2010, both depend on lithium-ion.
In a phone interview, Ener1's Gassenheimer said that assuming the price of
oil stays at about US$100 a barrel, a 50 percent drop in battery costs means
owners of premium-priced hybrids would break even on their investment after
less than two years of ownership, versus seven or eight years currently.
"We can cut the cost of the battery by 50 percent and I believe that can be
passed onto the consumer," Gassenheimer said. "I also believe that we can
bring down the break-even to under two years, which would obviously be very
favorable because that would be within the three-year lease that is a
popular choice for American purchasers of automobiles."
Gassenheimer said for costs to come down by half, production of lithium-ion
batteries would have to be in the hundreds of thousands.
"We need to see a meaningful up-tick," he said. "But the important point of
this here is the demand side of this equation doesn't seem to be the
problem."
Demand, he said, is "off the charts" in Europe and Asia.
"The amount of activity from US auto manufacturers is low, but rising," he
added.
Ener1 this month acquired the stake of EnerDel it did not already own from
bankrupt auto parts maker Delphi Corp. Ener1 is looking for a new joint
venture partner, Gassenheimer said, though he was happy to wait until the
right partner comes along.
In the meantime, EnerDel is in talks with more than 24 auto makers and
suppliers and aims to secure two new development contracts by the end of the
year.
"I'm targeting substantially bigger car companies than a company like Think
for the two development contracts," Gassenheimer said.
A development contract would come before a major supply agreement, he said,
and could potentially lead to finding a new joint venture partner.
"It seems to be logical to date for a while before we get married," he said.
"I don't need to do a deal tomorrow."
With two more contracts, Ener1 aims to start bringing in cash in two years.
"It is our desire and hope to make that turn to free cash flow positive in
2010," Gassenheimer said.
Ener1 shares were down 3 cents at US$7.44 in afternoon trade on the American
Stock Exchange. (Editing by Braden Reddall)
Story by Nichola Groom
REUTERS NEWS SERVICE
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