Mon, 05 May 2008
Go Long On Lithium


Everyone wants his laptop, or smart phone, to run a week between recharges. Of course while playing a hi-def movie or surfing the Net, respectively.

Verizon Communications (nyse: VZ) would like its cell towers to run at least a day, instead of minutes, during power outages. The military would like its slick but power-hungry communications and surveillance systems to run all night, whether on dismounted soldiers or stealthy armored vehicles.

Welcome to the electric-centric, digitally accelerated world of rechargeable batteries, from Segways and wheelchairs to data centers and cable networks, portable medical equipment and power tools.

New to the wish list and the nascent market that is driving investor infatuation with certain batteries companies is a plug-in hybrid-electric car that can drive all day without resorting to gasoline.

U.S. roads are nearly entirely oil-fueled, while petroleum energizes less than 5% of the U.S. electric grid. The electricity used by a single residential refrigerator is adequate to keep a hybrid running in electric-only mode every day for the average commuter--reverting to gasoline only for the weekend trip. Tantalizing.

Things have changed fast. It was as recently as 2004 that major automakers pooh-poohed plug-in hybrids, as I discovered when Forbes' ever-vigilant fact checkers contacted several major automakers because I had noted with a co-author in a 2003 Forbes article on hybrid-drive electronics that one grid kilowatt-hour can displace a pint of gasoline if used to charge a hybrid's batteries. Maybe so, automakers said, but plug-in-hybrids weren't part of their plan. That was then. Now, plug-in hybrids are common in their product road maps.

An overriding impediment remains: finding batteries good enough and cheap enough to store serious quantities of electricity. Your iPhone sips electrons by the milli-watt-hour; your hybrid Prius devours by the kilo-watt-hour--energy worlds separated by many orders of magnitude.

Affordably storing large quantities of electricity has long been the domain of the 150-year-old workhorse lead chemistry. But lead, while cheap, is, well, heavy and thus stores relatively little energy when counted in kilowatt-hours per pound, a critical measure for portable applications.

Put the same weight of lead batteries in your laptop, instead of lithium, and the computer wheezes to a stop in 30 minutes, your cellphone in an hour. Or try using the heavy lead battery in your car to drive, and you'd get a few miles, at most, before needing recharge. Lead, even though cheap, is an obvious non-tarter for the new world. The hot ticket is lithium battery chemistry, first commercialized in 1991 and offering a 400% gain in energy stored per pound.

New technologies and players are now poised to continue to drive down costs and create a new class of large-format lithium batteries, following and building on the same trend that has already occurred in small format (laptop, phone) batteries. For this, you can thank information revolutionaries like Nokia (nyse: NOK) and Apple (nasdaq: AAPL) for pulling battery technology out of the 19th century,

First, though, a necessary reality check. In order to drive 200 miles on just kilowatt-hours, your electric fuel tank needs 100 kWh, and every fill-up costs about $70 with today's technology when you count amortized battery capital costs. The electricity itself is just $10 of that; almost free compared with the cost of the battery. Here's the rub: You can drive 200 miles in an SUV for $40 of gasoline even at today's prices. Batteries have a ways to go, but lithium probably has the best shot at these economics.

The focus on lithium is no accident. There are a plenty of options in the periodic table of electrically active, and thus useful, elements for making some form of glop that can store an electric charge, including aluminum, magnesium, nickel, iron, zinc, cadmium, vanadium, carbon, silver, sodium and mercury. But it is lithium that has emerged as the dominant approach that can meet the various tightly intertwined features high-energy batteries must accommodate.

General Motors (nyse: GM), among numerous others, recently announced that its second generation of hybrids will switch to lithium battery chemistry. The timing of this switch was presciently forecast by GM's engineering director for hybrid powertrain systems, who said in December 2004 that it would be about three to five years before lithium batteries would become suitable for hybrid vehicles.

But lithium chemistry's exceptionally high energy density presents a unique challenge in its propensity for the reactions to become a little too enthusiastic. A few years ago, dramatic YouTube videos of a few events of self-immolating lithium laptop batteries demonstrated what engineers quaintly call "thermal runaway."

Truth is, having so few failures out of hundreds of millions of such very energetic batteries is a testament to a remarkable feat of engineering reliability, but still intolerable in our risk-averse world. Nervous, Sony (nyse: SNE), Dell (nasdaq: DELL), Panasonic and Apple all recalled millions of lithium batteries in 2006. Automakers are even more nervous.