TOKYO (Nikkei)--Japanese lithium-ion battery manufacturers and their parts suppliers face a tough choice, as competition for supremacy in these promising markets is heating up with their South Korean and other rivals.
Morita Chemical Industries built an electrolyte plant in China's Jiangsu Province in 2004.
The companies must exploit economies of scale by expanding overseas -- especially China -- if they hope to meet the challenges posed by South Korean rivals, who are intent on winning the fight by significantly underselling them. But going abroad also entails the risk of technological leaks. As such, they will have to think long and hard about which operations to take overseas and which to leave in Japan.
Tamotsu Tanaka, president of Tanaka Chemical Corp. (4080), was asked by a major South Korean battery maker more than a year ago to build a new plant in that country. He was offered such incentives as a free factory site, a tax break and cheap electric power bills.
Tanaka Chemical has the technology to produce a high-performance positive electrode at low cost without using much rare-earth metal. Thanks to the production technology, the company has a 15% share of the global market for positive electrodes.
After careful consideration, Tanaka decided to build the new factory in Fukui, where the company is headquartered. He concluded that the firm could remain competitive in the global market if it boosted manufacturing efficiency at its domestic factories.
Japan #1...for now
A li-ion battery, which is used to power hybrid and electric cars, among other things, is made up of four key components: a positive electrode material, a negative electrode material, an electrode separator and an electrolytic solution. Japanese firms currently dominate the markets for all four components.
Hitachi Chemical Co. (4217), for example, boasts a 40% market share for negative electrode materials, while Asahi Kasei Corp. (3407) has a 45% share for separators. Many Japanese firms are also ranked second or thereabouts in the market-share rankings for these components.
What accounts for the success of Japanese suppliers of these components? The li-ion battery was brought to market for the first time by Sony Corp. (6758) in 1991. It is typical of a product whose performance changes radically depending on slight variations in and combinations of their components.
Japanese battery makers have worked jointly with their parts suppliers for a long time to seek the best materials for these components and the optimal production technology through trial and error. This is something that South Korean firms cannot imitate because of that country's smaller industrial base and significantly fewer number of parts suppliers.
Low-cost threat
For this reason, they adopt a different strategy to challenge Japanese supremacy in the li-ion battery market. LG Chem Ltd., for example, has begun producing a positive electrode material and separators in-house, exploiting technology it has developed as a chemical company. It is also considering in-house production of a negative electrode material and an electrolytic solution. The South Korean company wants to use vertical integration in its battery production to reduce costs.
LG Chem conceded in the past that it was 10 years behind Japanese rivals in automotive-use rechargeable batteries, but it has begun to win large orders from major U.S. and European automakers.
This clearly shows that the technological gap between Japanese and South Korean firms is narrowing. What will determine the outcome of this competition going forward could very well come down to what the companies do in China, now the world's largest auto market.
Morita Chemical Industries Co. in 2004 launched Chinese production of an electrolyte, a solute dissolved in a solvent to make an electrolytic solution, raising concern among its Japanese rivals that the move could lead to technological leaks. For a long time, three Japanese firms, including Osaka-based Morita Chemical, had a near-monopoly on the market for this li-on battery component, which is difficult to manufacture. But a growing number of newcomers are launching operations in both South Korea and China.
Successful combo
Morita Chemical now controls 60-70% of China's electrolyte market, thanks to a combination of high product quality and low production costs made possible by using local labor and materials. Its Chinese factory is equipped with locally made machinery and is run by a local managerial staff of around 20, with the single exception of one Japanese manager. The firm plans to sharply boost production at that factory by 2013, when a significant number of electric cars are expected to hit roads.
LG Chem has signed a contract to supply li-ion batteries to China's Changan Automobile Group, with an eye toward speeding up efforts to trim battery production costs.
"Japanese suppliers also will have to begin local production sooner or later," said a senior analyst at Nomura Securities Financial & Economic Research Center.
Central Glass Co. (4044) will by June 2012 begin producing an electrolyte at a joint venture set up in China with a local partner. But it will, in principle, mix the electrolyte with a solvent to produce the electrolytic solution in Japan, a process that requires advanced know-how.
Japanese li-ion battery makers and their suppliers have no choice but to expand into China, given that auto demand is expected to keep surging there for the foreseeable future. But they must do so in ways that will not hurt their competitiveness with local and other overseas rivals.
* Russian Billionaire Ventures Into Hybrid Cars
Morita Chemical Industries built an electrolyte plant in China's Jiangsu Province in 2004.
The companies must exploit economies of scale by expanding overseas -- especially China -- if they hope to meet the challenges posed by South Korean rivals, who are intent on winning the fight by significantly underselling them. But going abroad also entails the risk of technological leaks. As such, they will have to think long and hard about which operations to take overseas and which to leave in Japan.
Tamotsu Tanaka, president of Tanaka Chemical Corp. (4080), was asked by a major South Korean battery maker more than a year ago to build a new plant in that country. He was offered such incentives as a free factory site, a tax break and cheap electric power bills.
Tanaka Chemical has the technology to produce a high-performance positive electrode at low cost without using much rare-earth metal. Thanks to the production technology, the company has a 15% share of the global market for positive electrodes.
After careful consideration, Tanaka decided to build the new factory in Fukui, where the company is headquartered. He concluded that the firm could remain competitive in the global market if it boosted manufacturing efficiency at its domestic factories.
Japan #1...for now
A li-ion battery, which is used to power hybrid and electric cars, among other things, is made up of four key components: a positive electrode material, a negative electrode material, an electrode separator and an electrolytic solution. Japanese firms currently dominate the markets for all four components.
Hitachi Chemical Co. (4217), for example, boasts a 40% market share for negative electrode materials, while Asahi Kasei Corp. (3407) has a 45% share for separators. Many Japanese firms are also ranked second or thereabouts in the market-share rankings for these components.
What accounts for the success of Japanese suppliers of these components? The li-ion battery was brought to market for the first time by Sony Corp. (6758) in 1991. It is typical of a product whose performance changes radically depending on slight variations in and combinations of their components.
Japanese battery makers have worked jointly with their parts suppliers for a long time to seek the best materials for these components and the optimal production technology through trial and error. This is something that South Korean firms cannot imitate because of that country's smaller industrial base and significantly fewer number of parts suppliers.
Low-cost threat
For this reason, they adopt a different strategy to challenge Japanese supremacy in the li-ion battery market. LG Chem Ltd., for example, has begun producing a positive electrode material and separators in-house, exploiting technology it has developed as a chemical company. It is also considering in-house production of a negative electrode material and an electrolytic solution. The South Korean company wants to use vertical integration in its battery production to reduce costs.
LG Chem conceded in the past that it was 10 years behind Japanese rivals in automotive-use rechargeable batteries, but it has begun to win large orders from major U.S. and European automakers.
This clearly shows that the technological gap between Japanese and South Korean firms is narrowing. What will determine the outcome of this competition going forward could very well come down to what the companies do in China, now the world's largest auto market.
Morita Chemical Industries Co. in 2004 launched Chinese production of an electrolyte, a solute dissolved in a solvent to make an electrolytic solution, raising concern among its Japanese rivals that the move could lead to technological leaks. For a long time, three Japanese firms, including Osaka-based Morita Chemical, had a near-monopoly on the market for this li-on battery component, which is difficult to manufacture. But a growing number of newcomers are launching operations in both South Korea and China.
Successful combo
Morita Chemical now controls 60-70% of China's electrolyte market, thanks to a combination of high product quality and low production costs made possible by using local labor and materials. Its Chinese factory is equipped with locally made machinery and is run by a local managerial staff of around 20, with the single exception of one Japanese manager. The firm plans to sharply boost production at that factory by 2013, when a significant number of electric cars are expected to hit roads.
LG Chem has signed a contract to supply li-ion batteries to China's Changan Automobile Group, with an eye toward speeding up efforts to trim battery production costs.
"Japanese suppliers also will have to begin local production sooner or later," said a senior analyst at Nomura Securities Financial & Economic Research Center.
Central Glass Co. (4044) will by June 2012 begin producing an electrolyte at a joint venture set up in China with a local partner. But it will, in principle, mix the electrolyte with a solvent to produce the electrolytic solution in Japan, a process that requires advanced know-how.
Japanese li-ion battery makers and their suppliers have no choice but to expand into China, given that auto demand is expected to keep surging there for the foreseeable future. But they must do so in ways that will not hurt their competitiveness with local and other overseas rivals.
* Russian Billionaire Ventures Into Hybrid Cars
MOSCOW (Dow Jones)--As if trying to turn around the New Jersey Nets basketball team weren't enough, Russian billionaire Mikhail Prokhorov is now taking on another seemingly impossible task: building a $10,000 hybrid car with international appeal - in Russia.
While the world's major auto makers have spent years and billions of dollars on hybrids and electric cars, Mr. Prokhorov is spending 150 million euros ($198.4 million) to combine a gasoline engine and an electric motor inside a noisy package resembling a large, clunky toy car. Nearly all the components will be from Russia or the former Soviet Union, Mr. Prokhorov said Monday at the unveiling of the car's prototype in Moscow.
Even the name of the car, the e-mobile, is off the beaten track. It incorporates a Cyrillic letter with no English equivalent. Pronounced "yo," it suggests something obscene to the Russian ear. A spokesman said, "We have no problems with that - everyone interprets it as he pleases."
Mr. Prokhorov said he intends to "break the stereotype saying Russia can't produce good cars," even though an executive needed three attempts to successfully start the prototype car with a mobile phone using a remote-start feature.
Mr. Prokhorov, Russia's second-richest man according to Forbes, bought 80% of the New Jersey Nets and a 45% stake in the basketball team's soon-to-be-built arena in Brooklyn, N.Y., for $200 million in 2009. Mr. Prokhorov holds large stakes in Russian aluminum producer United Co. Rusal PLC and gold producer OAO Polyus Gold.
Mr. Prokhorov's hope is that by 2012 Russia will produce 10,000 cars in the "yo" series, a relatively small amount equal to about 0.5% of Russia's 2010 new car sales. The e-mobile business, a joint venture between Mr. Prokhorov's Onexim holding company and St. Petersburg truck producer Yarovit, seeks to break even three years after the launch of production.
Beyond Russia, the venture will seek to sell the car in Europe and already has its eyes on the necessary European Union regulations the company will have to comply with. It may also produce cars in Europe, according to the venture's chief executive Andrei Biryukov.
For all its novelty, however, the e-mobile will only reach speeds of 130 kilometers an hour (81 miles an hour), limiting its appeal for some drivers. Fuel efficiency is aimed at 3.5 liters per 100 kilometers, or 67 miles per gallon. That tops the 51 mpg city-mileage estimate of the Toyota (7203) Prius V hybrid.
* FT: Hybrid Car Sales Struggle To Hit 1mn
By John Reed in London
Sales of hybrid cars will total less than 1m this year and account for barely 2 per cent of the world passenger-vehicle market, a leading industry consultancy has predicted.
JD Power and Associates estimates sales of the cars, which are driven by batteries over short distances and a combustion engine over longer ones, will reach 934,000 this year, up from 728,000 in 2009, the industry's worst year in decades.
About half of the market's growth this year will have come from Japan, where hybrids enjoyed generous tax incentives that lapsed in September. JD Power's estimates are for passenger cars only, and do not include commercial vehicles.
"Most of the global growth was in Japan, where they've massively pushed hybrids," said Al Bedwell, JD Power analyst.
In the US, traditionally one of the most receptive markets for hybrids, JD Power forecasts their total sales will reach 315,000 this year, up 8 per cent from 292,000 in 2009, but less than the roughly 12 per cent by which the overall car market will grow.
Industry analysts say that many car buyers - notably in America, where petrol prices have settled recently - are reluctant to pay the price premium that hybrids command, and are choosing fuel-efficient conventional cars instead.
"There have been so many small, efficient gas-engine cars launched in the last year, that in pure dollars and cents terms it doesn't make sense to buy a hybrid any more," said Jesse Toprak, vice-president for industry trends with Truecar.com, a US car buying website. "You have to drive it for 10 years just to make up the premium you pay over a gas engine."
The modest sales projections highlight the extent to which many consumers are reluctant to pay more for new-technology cars, even if they promise lower emissions or fuel costs.
The world's big carmakers have collectively invested billions of dollars to develop hybrids and forthcoming electric cars, which like hybrids will sell at a premium, even after government sweeteners.
Toyota (7203), which accounts for about two-thirds of hybrid sales, is thought to have invested most in the technology. Supported by tax incentives, the Prius is now Japan's top-selling car.
Hybrids have been slower to catch on in Europe, where there are many competing low-emission petrol and diesel cars. JD Power predicts hybrids' sales will reach 107,000 units this year, or 0.7 per cent of the European market, up from 74,000 last year.
* VW Impatient With Suzuki Over Slow Progress
FRANKFURT (Nikkei)--A year after Suzuki Motor Corp. (7269) and Volkswagen AG agreed on a capital and business tie-up, the track record of their partnership remains devoid of significant accomplishment.
VW Chairman Piech, left, is reportedly irked at the slow progress of his firm's alliance with Suzuki.
The time frames in which the automakers are trying to extract benefits from the alliance apparently differ.
The lack of tangible results comes despite top VW and Suzuki officials -- including Ferdinand Piech, chairman of VW's supervisory board, Martin Winterkorn, chairman of the company's management board, and Suzuki Chairman and CEO Osamu Suzuki -- travelling frequently between Japan and Germany and the carmakers increasingly sharing information.
Piech is showing more impatience with what he sees as the glacial pace of progress in their efforts to work out a specific plan for cooperation.
VW's partnership with Suzuki is a key element of the German automaker's strategy for achieving its goal of becoming the world's top carmaker in 2018 with annual global sales of 10 million vehicles.
One reason for this is Suzuki's huge presence in India. The German manufacturer's sales in India are about a 30th of Suzuki's. VW also lags behind South Korea's Hyundai Motor Co. and India's Tata Motors Ltd. in this crucial emerging market.
VW stands to gain great cost benefits from cooperation with Suzuki through steps like platform sharing.
China is another important market in terms of which VW badly wants help from its Japanese partner. Although VW is the largest player in China's red-hot auto market, the German company apparently believes much of any demand growth in the coming years will be in the segment of small low-price cars as car ownership will rise rapidly in rural areas.
VW seems to regard Suzuki's technological ability to manufacture efficient 660cc engines as a potentially powerful tool for ensuring continued sales growth in China.
Under pressure
Suzuki CEO Osamu Suzuki is in no rush to reap gains from the VW partnership.
VW is also feeling the heat from its rebounding U.S. and Japanese rivals.
General Motors Co., which is jockeying with VW for top spot in China, recently returned to the stock market with an initial public offering that raised some 23.1 billion dollars at the end of November.
GM has gained the financial muscle to power its renewed growth, posing a serious threat to VW in China, now the German carmaker's largest market.
Toyota Motor Corp. (7203) is recovering after taking damage from a series of recalls and is stepping up its offensive to claim global leadership in environmentally friendly vehicle technology.
VW's management is also under pressure from shareholders.
During a shareholders meeting at the end of April, Winterkorn promised cooperation with Suzuki on small and hybrid vehicles.
Given VW's 1.7 billion euro investment to acquire a 19.9% stake in Suzuki, the management must bring home the bacon by next spring's shareholders meeting if it wants to avoid harsh criticism.
Taking its time
In sharp contrast, Suzuki seems to be in no rush to reap a payoff from the alliance.
"We did not team up with VW for quick gains," said a senior Suzuki executive.
What Suzuki most wants from its tie-up with VW is the sharing of components, but that is closely linked to the development of new cars.
"It will inevitably take time for the two companies to develop a new plan (for collaboration) while both pursue their own medium-term product plans," said Yasuhito Harayama, a senior managing executive officer at Suzuki in charge of promoting the partnership.
CEO Suzuki has predicted it will take two to three years for the tie-up to produce tangible results.
The Japanese carmaker's attitude probably reflects the company's growing confidence in its environmental technology.
Suzuki has made great strides in developing its own plug-in hybrid. The vehicle, based on Suzuki's best-selling Swift subcompact, will run on a combination of an electric motor powered by a lithium-ion battery and a 660cc engine fueled by gasoline.
Suzuki created the plug-in hybrid, whose power train is similar to that of GM's Chevy Volt, on its own. This achievement has made Suzuki engineers more confident about the company's technological prowess.
That said, Suzuki is hardly making light of its alliance with VW.
Suzuki has no significant overseas presence outside India, where it controls half the market. The company is well aware that it cannot hope to ensure future growth unless it makes inroads in other expanding markets in such areas as Latin America and non-Japanese Asia.
Support from VW, which has a global supply network, will be a major boon to Suzuki's efforts to expand its overseas operations. The competitiveness of Suzuki's environmental technology in markets rapidly becoming crowded with offerings from most major carmakers remains untested.
In this respect, too, Suzuki is likely to benefit greatly from the German company's enormous technological and financial resources.
* TOKYO (Nikkei)--Japanese manufacturers strongly oppose extending the Kyoto Protocol beyond 2012, but international pressure may cause Tokyo to cave in and agree to the step.
A JFE Steel plant in Chiba Prefecture: Major steelmakers are concerned about being at a competitive disadvantage against rivals in China and other countries that are free from CO2-reduction obligations.
Japanese firms argue that extending the framework to reduce greenhouse gas emissions -- debate over which is entering the final stage at the ongoing U.N. climate change conference in Cancun, Mexico -- will force them to compete with Chinese and U.S. rivals on an uneven playing field.
Running a green business pushes up costs, so the companies are keeping a close eye on the outcome of the discussion at the 16th Conference of the Parties to the U.N. Framework Convention on Climate Change, or COP16.
Playing by different rules
In 2008, 29.4 billion tons of carbon dioxide were emitted globally. China was the largest CO2 emitter, accounting for 22% of total emissions, followed by the U.S. at 19%. Japan, the fourth-biggest emitter, maintains that the Kyoto pact, to which China and the U.S. do not belong, is unfair and does little to lower global CO2 emissions.
"If the protocol is extended, the unacceptable situation we are currently in will be prolonged," said an angry Takashi Sekita, vice president of major steelmaker JFE Steel Corp.
While Baosteel Group Corp. of China and Posco of South Korea, among other foreign rivals, are not subject to the Kyoto Protocol, JFE and Nippon Steel Corp. (5401), Japan's top steelmaker, are. That means the Japanese firms are forced to spend a lot of money buying emission rights and taking energy-saving measures.
Even for Japanese manufacturers, the government has promised the international community that Japan will cut greenhouse gases by 25% from the 1990 level by 2020. It costs Japan 476 dollars to reduce a ton of CO2. China has set a voluntary target of slashing CO2 by 40-45% from the 2005 level, but one estimate puts the cost of achieving the target at just 0-3 dollars.
If Japan accepts the proposal to extend the protocol, the government will likely put three ideas under discussion into practice in an effort to meet the 25% reduction target: promoting domestic trading of emission rights, requiring power companies to buy all renewable energy generated in Japan, and introducing a climate change, or environment, tax.
One more headache
In addition to the low economic growth, the high corporate tax and the yen's appreciation that are dragging on companies, "massive environmental costs are now being added," Masahiro Sakane, vice chairman of the Japan Business Federation, or Nippon Keidanren, and chairman of Komatsu Ltd. (6301), said at a symposium in Tokyo in mid-November. "It is as if the government is trying to encourage businesses to leave Japan."
The Environment Ministry on Dec. 6 proposed imposing CO2 emission caps on individual companies as part of the domestic emission rights trading system. Under the proposal, if a manufacturer's emissions exceed the upper limit, it must buy emission rights equivalent to the excess portion. According to the ministry's scenario, the industrial sector needs to cut emissions by 18-22% from the 1990 level if Japan is to achieve the 25% reduction.
Meanwhile, a trade group representing electronics companies that make green products, such as energy-efficient electric home appliances, storage batteries and solar power panels, estimates that growing demand for these products will ironically drive up the companies' CO2 emissions to 24.39 million tons in 2020, up 120% from 1990.
"How does the government think we can increase the supply of energy-saving products while reducing emissions from our plants?" said an official at Panasonic Corp. (6752).
Who's benefiting?
Second-tier steelmakers using electric furnaces, which consume a huge amount of electricity, are threatened by the proposed system to have power utilities buy all the renewable energy that is produced, because the system will allow power suppliers to transfer the purchase costs to customers. The Japan Iron and Steel Federation predicts that such a system would wipe out 13-42% of electric furnace steelmakers' average pretax profit of 3,800 yen per ton of crude steel.
Even companies expected to benefit from the system do not wholly welcome it. Said an official at a solar cell maker: "The hefty use of costly electricity generated by renewable energy will push up the production costs for solar cells. We have unofficially lodged a complaint with the government that the system will lead to unprofitability at solar cell manufacturers."
Higher taxes
As for the environment tax, the government plans to introduce it in fiscal 2011. Oil and coal taxes will be hiked by 50%, with the increased portion to be defined as an "environment tax."
The tax rate for crude oil will be lifted by 39% from the current 2.04 yen per liter. As a result, oil and coal taxes paid by oil wholesalers will rise by about 160 billion yen from last year's roughly 400 billion yen. With three of the top five oil distributors suffering net losses in fiscal 2009, the sector would not be able to absorb the increased tax burden without help, said an official at the Petroleum Association of Japan.
* The Hidden Cost of Going Green
By ANNA PRIOR
As the manager and producer of a traveling vaudeville show, Amy Warnke was driving constantly, running up huge gas bills and leaving a Sasquatch-size carbon footprint. So buying a hybrid—in her case, a 2007 Saturn Vue—was almost a no-brainer. And it felt like a solution to her highway woes, until the day the battery died. A body shop near her New Jersey home couldn't keep the car running; neither could two different dealerships. "Apparently, you have to be a mechanical neuro surgeon to figure out where the battery is on a hybrid," says the 32-year-old Warnke. A spokesperson for General Motors, which owns the now-discontinued Saturn brand, says it stands by the quality of its products, and points out that some of Warnke's repair problems are covered by her warranty. But she's still flabbergasted by her final bill: more than $1,300. And that's not counting the cost and inconvenience of having her car in the shop—for what turned out to be three months.
Even in tight-wallet times, a surprising number of consumers have shown they're willing to pay a premium for environmentally friendly products. Hybrid cars have more than doubled their market share in the U.S. since 2005. And spending on energy-related home-remodeling projects has been resilient, despite the housing downturn; it totaled $49 billion in 2009, up 29 percent since 2003, according to Harvard University's Joint Center for Housing Studies. But having paid a little extra to go green, many consumers are now encountering an unexpected irritation: They have to pay more than their neighbors to stay green. The price of maintaining, repairing and even getting insurance for green products can often be higher than for their ordinary counterparts. "There are hidden costs that people don't think about," says Tim Haab, an environmental economist and a professor at Ohio State University. And with many tax credits for energy-efficient upgrades likely to expire soon, some consumers are finding themselves having to recalculate the cost of being eco-conscious.
Industry experts say that in many cases, higher expenses are just the price to be paid for owning an upscale, niche product. Parts and expertise for upkeep can be in short supply—few neighborhood handymen are likely to have a spare hybrid battery or green-certified home-coolant system lying around, for example. "It's not like they are making a million of them and selling them all at Home Depot," says Lino Carosella, an EPA-certified renovator in the Philadelphia area. Then again, just because a product becomes more popular doesn't mean its cost of ownership will drop. Insurance rates for hybrid cars, for example, are likely to rise in the near future, now that more people are driving them (and wrecking them).
To be sure, many people don't put dollars and cents first when going green, basing their decisions instead primarily on ethics and their desire to help the plaqnet. And given the potential for long-term energy savings, many buyers will still probably come out ahead financially. But some green advocates fear that in a sluggish economy, even minor extra costs could bog down the green movement's momentum. We take a look at how some of these hurdles are tweaking the ownership math for cars, home improvements and appliances.
Home Improvements
Energy-efficient home upgrades are the textbook example of green economics. Take solar panels: The typical solar-power installation costs about $24,000; as sun power kicks in and utility bills shrink, the systems generally pay for themselves in a decade. But many homeowners have found this equation doesn't account for other incidentals. Three years ago, former marketing executive Rob Saffer started building a certified green home in Woodstock, N.Y., complete with an advanced solar electricity system. Just as he expected, Saffer hasn't had to draw power from the local utility since he flipped the solar switch. But he's still paying a bill to the power company—to his surprise, he's learned there's a service charge of $240 a year for residential customers to stay connected to the grid. Saffer also saw annual insurance premiums for his home rise by about $100 after his insurer decided that the system increased the house's value by $60,000, and he has to periodically plunk down another $100 to apply cleanser and antifreeze to the water-heating apparatus. "I still think the system will pay for itself," says Saffer, "but it will pay for itself more slowly than I was led to believe."
Certainly, all kinds of home power systems require regular maintenance; an upkeep contract on a traditional heating and air-conditioning system, for example, can cost up to $400 a year. But for many green homeowners, the cost of replacements and repairs is still a blank slate—simply because the products don't yet have much of a track record. Solar power, which has been around for a few decades, offers a reminder that costs go beyond installation. Lyndon Rive, chief executive officer of Foster City, Calif.–based solar panel installer SolarCity, says the biggest replacement cost is often the inverter, the circuit that converts solar energy into usable electricity. It costs $2,500 to replace an inverter, and a homeowner is likely to have to swap it out once or twice after their warranty expires. It's "the weak link," says Rive.
Many homeowners assume that green improvements will pay off by adding value to a home. So far, though, there hasn't been evidence of a "green premium," says Kermit Baker, director of the Remodeling Futures Program at Harvard University's Joint Center for Housing Studies. That's partly a function of the housing meltdown, which has kept a lid on real estate prices in general. In addition, because many green materials and products are still relatively new, the quality and durability is untested. Bamboo flooring, for instance, is a favorite among eco-friendly builders, in part because it's considered sustainable. But it can sometimes scratch more easily than hardwood, says Carosella, the Philadelphia remodeler. Mark Elwell, owner of Bamboo Flooring Hawaii, says high-quality bamboo that's at least five years old when harvested is stronger than some traditional hardwoods, like some oaks and maples. But he adds that due to lack of regulation and a rush of producers entering the business, "there's a lot of product out there that's young, and it's softer. You get what you pay for with bamboo."
Hybrid Cars
When hybrids first started to gain some traction, people who bought them became awfully popular with auto insurers. Early adopters were seen as model customers, more responsible on the road than the average driver, says Greg Horn, vice president of industry relations at Mitchell International, a provider of information services to insurance companies and body shops. As a result, many auto-insurance providers gave discounts of 10 percent off premiums.
That honeymoon, alas, may end soon. As gas prices went up and more people bought hybrids, the number of accidents and tickets rose too, making the hybrid-driver profile riskier. Horn estimates that premiums for hybrids could rise by 20 percent over the next six months to a year. Not only will hybrid owners lose their discount, but they'll actually pay about $100 a year more than the average driver.
If insurance does rise, it won't just be because of bad driving. It'll also be because it's more expensive to repair a hybrid. On average, claims for collision-damage repairs are $182 more than on a nonhybrid car—a difference of 6.5 percent per job. Engine problems can be pricier too, because many mechanics aren't familiar with hybrids' high-voltage drive systems, says Bob Rodriguez, manager of special testing programs at the National Institute for Automotive Service Excellence, a trade group. Consequently, hybrids are likely to wind up getting worked on at a dealership, where overhead costs are often higher than at independent shops.
Maggie Gilliam, a child-services supervisor in Orange County, Calif., always takes her 2007 Honda Civic hybrid to the dealer, but contrasting her bills with those for her husband's nonhybrid compact can be fairly painful. Over one stretch, Gilliam says, the bill for three repair trips for her Civic was $1,745; for the nonhybrid, it was less than $500. Still, Gilliam says she's glad to do her part to help the environment: "I wanted to be part of the big change." A Honda spokesperson says that once the company's warranty is taken into account, "hybrids do not cost more to repair than a regular vehicle."
Home Appliances
Eco-consciousness and water don't always mix. Carol Bevins bought a front-loading LG high-efficiency washing machine three years ago in hopes that she could cut down on water usage for her family of three. These days, though, the Lebanon, Va., sleep-disorder lab technician says she pines for the days of her old water guzzler. Not only was the eco-friendly washer $500 more expensive than the standard washers she looked at, but she says stores near her home tend to charge at least $2 more per bottle for the special detergent it requires. All that might have been worth it, of course, if the eco-friendly washer were getting the job done. But instead, Bevins says, "it spurts a little water in there, and you can't get your clothes clean." Bevins says she has to wash each load multiple times to get stains out.
A spokesperson for LG says Bevins's problems could be the result of her washer being installed or maintained improperly; the company says the machine's drum has to be cleaned once or twice a month. And manufacturers say many stores don't charge extra for green detergent. But complaints like Bevins's are common among owners of eco-friendly washing machines and dishwashers. Most of these devices lower their environmental impact by using less water per load, but that can leave owners uncertain about how best to get their clothes and dishes clean. Suzanne Shelton, president and chief executive of Shelton Group, an agency that specializes in sustainability and energy efficiency, says problems with cleaning products are one of the biggest concerns in consumer focus groups—in part because eco-friendly detergents are also proving to be less tough on dirt than their traditional predecessors. "Do I pay more for the totally natural cleaner and then use twice as much water because I have to wash everything twice?" wonders Shelton. "Or do I save by using the chemicals and only doing the wash once and using less water?"
* BYD Looks to Charge Its U.S. Business
By NORIHIKO SHIROUZU
BEIJING—Chinese battery and car maker BYD Co. plans to start test-marketing an all-electric battery car in the U.S. next year, after almost a year's delay, and is in talks with officials in Los Angeles to supply e-buses that could eventually lead to a manufacturing plant in the city, a senior company executive said.
Originally, the e6 vehicle was supposed to launch in the U.S. this year. The delay has been a setback for the global ambitions of China's auto sector, which wants to use electric-vehicle technology to close the distance with more-established global car makers.
Chinese auto maker BYD plans to supply as many as 50 e6 electric cars to fleet customers in Southern California by the end of next year.
Stella Li, BYD's senior vice president and head of its U.S. operations, said the holdup was caused by BYD's efforts to make the car roomier, especially its rear-seat area that was cramped thanks to a beefy battery pack that needs to be stored under the seat.
In a recent telephone interview, she denied that the delay had anything to do with a possible intellectual-property infringement on certain battery technology by BYD.
Still, an individual close to BYD said the postponement was in part a result of fear of potential intellectual-property infringement involving lithium powder. The powder is a critical raw material in high-power lithium-ion batteries that help propel all-electric and plug-in electric hybrid cars, such as the Chevy Volt and the Nissan Leaf, as well as BYD's e6 car.
The individual said, however, that BYD appears to have resolved the problem by securing a legal way to produce or procure lithium powder.
Ms. Li said "BYD's formula [for lithium powder] is different," and the company isn't worried at all about any patent infringement with its technology. "We have our own IP," she said.
Electric Jolt
Some of the electric vehicles expected to arrive in U.S. showrooms through 2012.
• 2010: Coda, General Motors Volt, Nissan Leaf
• 2011: BYD e6, BMW 1-Series, Fisker Karma, Ford Focus, Ford Transit, Mitsubishi i, Think
• 2012: BMW MegaCity, Chrysler Fiat 500, Honda Fit, Smart Fortwo, Tesla S, Toyota Prius plug-in, Toyota/Tesla RAV4, Volkswagen E-Up
Source: the companies
She said BYD plans to ship as many as 50 e6 electric cars by the end of next year to fleet customers in Southern California, including the municipal government of Los Angeles. BYD earlier this year began selling e6 cars to taxi operators in the southern Chinese city of Shenzhen and is collecting field data to improve the car.
Ms. Li said BYD will make the e6 available for purchases by private buyers in the U.S. in 2012. She declined to forecast demand, saying it "will depend on gasoline prices and other peripheral factors."
BYD Chairman Wang Chuanfu has said his Shenzhen-based company plans to sell the e6 model for slightly more than $40,000—competitive with some bigger rivals.
Meanwhile, Ms. Li said BYD is preparing to start supplying all-electric buses to the city of Los Angeles. Talks with the city have been going on since the beginning of this year, when BYD agreed to locate its U.S. headquarters in Los Angeles. Those negotiations involve a possible contract to make BYD a supplier of city buses.
"Initially, we would ship e-buses from China, but eventually we would have to localize production," Ms. Li said, citing a greater cost advantage in assembling those buses in Los Angeles if there is enough demand.
Getting the company to locate its U.S. head office in Los Angeles took significant effort by the city, which agreed to consider conducting a pilot test for the bus, and to buy BYD's all-electric vehicles.
Ms. Li said BYD plans to ship at least one electric bus by the second quarter of next year as "a demonstration vehicle" so that "the city could experience our bus first-hand." If the test produced positive results, then the Los Angeles municipal government and BYD would sign an agreement to make the Chinese company a formal supplier of city buses.
Austin Beutner, a former Wall Street executive who this year was named the city's first deputy mayor, said Los Angeles is interested in using electric vehicles in the city's bus fleet.
"We are spending our policy dollars right now more on electric cars, but maybe we want to tilt it a little bit more toward public transportation," Mr. Beutner said during a recent interview, citing the efficiency of the electric bus in transporting passengers compared with the individual electric passenger car.
To entice BYD to locate an electric-bus factory in Los Angeles, Mr. Beutner said that the city is willing to "put our municipal power to work" and place an order large enough for BYD to do so.
"Los Angeles would be able to buy several thousand electric buses... over a decade or so," he said.
* BMW, Toyota and Daimler embrace Tesla's laptop battery packs
Business Wire
Only a couple of years ago, major automakers scoffed at Tesla Motors. Make a powerplant by binding together thousands of laptop batteries? Ridiculous, if not an invitation to thermal meltdown.
Now, the big guys are embracing Tesla's solution. Toyota, Smart car parent Daimler and BMW are turning to bundles of laptop batteries as a quick, cheap way to power electric cars, Bloomberg News reports.
No surprise why. Despite dire predictions, Tesla now has had hundreds of its electric roadsters on the road for more than year running just fine. So far, no mass reports of hot spots in batteries packs -- 6,831 individual cells bound together -- that could lead to fires or other problems.
In fact, the solution costs less than the sophisticated lithium-ion battery packs developed by Nissan for the electric Leaf or General Motors for its extended-range electric Volt.
The car industry has been great for the laptop battery industry. It will more than triple sales to $60 billion in a decade, according to Sanyo Electric, the world's biggest maker. The economies of scale may drop prices.
Tesla's power packs will be used in Daimler's electric Smarts and Mercedes-Benz A-class cars in Europe. Toyota will use Tesla's packs in an electric RAV4 in 2012. BMW leased 450 Minis powered by laptop cells.
* China Sun Group Provides Updates To The 470 Tons Lithium Iron Phosphate (LIP) Contract Signed In
November And Secures Additional Raw Material Supply
The Contract provides for monthly tonnage delivery to Sai Er New Energy, amounting to a total of 470 tons of lithium iron phosphate in calendar year 2011. In addition to 60 tons of LIP materials sold to Huanyu, China Sun already has 530 tons of LIP orders, expected to be delivered before the end of December 2011. According to the recent China domestic average sales price of LIP of US$ 24,000 per ton, this 530 tons of LIP sales is valued at approximately US$ 12.7 million. The actual sales revenue will depend on the final outcome of the negotiations.
In order to establish the work plan for 2011 and accelerate the expansion of strategic objectives, China Sun Group recently hosted the Dalian Xinyang High-Tech 2011 Annual Conference for its employees, including two seminars: technology research and development and the acceleration of the process of strategic expansion, one month ahead of schedule. This conference greatly increased motivation of the management teams and employees.
During the annual conference, the Company’s management also developed a solution to maintain stable supply and high quality of input material for the manufacture of LIP products due to increased LIP demand that has resulted in recent sales contracts exceeding previous expectations. After a careful review of potential LIP raw material suppliers, China Sun signed with two suppliers, Guangxi BMB Science and Technology Co., Ltd. (“BMB”) and Hubei Haoyuan Material Technology Company. (“Haoyuan material”).
Under the agreement, BMB and Haoyuan material will supply a total of 350 tons and 240 tons of iron phosphate materials respectively to China Sun Group during the calendar year 2011, which accounts for approximately 84% of China Sun’s total planned purchasing volume during the year.
“We are honored to be in a strategic alliance with Sai Er New Energy and Huanyu and to work closely with our partner in terms of the production process for lithium ion battery development. We are confident that we can efficiently expand our production capacity in the near future to meet the requirements of Sai Er New Energy and Huanyu’s projects. We are also pleased to have signed two new high-quality suppliers, which will further enable us to secure access to sufficient raw material,” commented Mr. Guosheng Fu, CEO of China Sun Group. “As the Chinese government continues to support the development of energy-saving cars and other sustainable products and technologies, we remain positive that we will be successful in positioning China Sun Group and continue growing. Our goal is to establish a complete supply chain for materials, components and the finished lithium ion phosphate product, which is the LIP battery.”
* Better Place - can our switch stations accommodate different battery types?
december 14, 2010
From day one, accommodation of multiple battery types has been a core engineering requirement for our battery switch stations.
Earth2Tech has reported that Tesla’s long-anticipated Model S will include a switchable lithium ion batteries. The wide, long and flat battery will be positioned underneath the electric car to make the automated lithium ion batteries switch process quick and efficient – in fact, Tesla is quoted saying that the switch process will take around 60 seconds.
At Better Place, we’re enthused at the growing momentum we’re seeing around battery switch from automakers and governments. It’s great to see Tesla embracing battery switch and the recent announcements by Chinese government officials that they have selected battery switch technology in combination with standard charging (instead of fast charge) as the preferred standard for electric vehicles.
However, we need to clear up a common myth that our battery switch stations require that we make battery packs standardized. While Better Place is firmly in support of complying with international automotive and electrotechnical standards (and is even participating actively with the major standardization bodies to establish these standards where they don’t yet exist), we have always maintained that different automakers will require different battery form factors – both within their own product lines, and across companies.
From day one, accommodation of multiple battery types has been a core engineering requirement for our battery switch stations. We have made significant R&D investments to develop a toolkit/adapter in our battery switch stations that can anticipate and supply different battery types for different electric vehicles with different battery-to-vehicle connection mechanisms. Therefore, Better Place does not require one single standardized battery type. In fact, the only element that requires standardization is that the battery be removed from under the electric car.
Battery switch technology opens up a new category for all electric car manufacturers to participate in and allows the OEMs to create a differentiated product that’s not tethered to a socket or the gas pump. It represents the quickest, most convenient means for zero-emission, range-extension for electric vehicles drivers.
The Contract provides for monthly tonnage delivery to Sai Er New Energy, amounting to a total of 470 tons of lithium iron phosphate in calendar year 2011. In addition to 60 tons of LIP materials sold to Huanyu, China Sun already has 530 tons of LIP orders, expected to be delivered before the end of December 2011. According to the recent China domestic average sales price of LIP of US$ 24,000 per ton, this 530 tons of LIP sales is valued at approximately US$ 12.7 million. The actual sales revenue will depend on the final outcome of the negotiations.
In order to establish the work plan for 2011 and accelerate the expansion of strategic objectives, China Sun Group recently hosted the Dalian Xinyang High-Tech 2011 Annual Conference for its employees, including two seminars: technology research and development and the acceleration of the process of strategic expansion, one month ahead of schedule. This conference greatly increased motivation of the management teams and employees.
During the annual conference, the Company’s management also developed a solution to maintain stable supply and high quality of input material for the manufacture of LIP products due to increased LIP demand that has resulted in recent sales contracts exceeding previous expectations. After a careful review of potential LIP raw material suppliers, China Sun signed with two suppliers, Guangxi BMB Science and Technology Co., Ltd. (“BMB”) and Hubei Haoyuan Material Technology Company. (“Haoyuan material”).
Under the agreement, BMB and Haoyuan material will supply a total of 350 tons and 240 tons of iron phosphate materials respectively to China Sun Group during the calendar year 2011, which accounts for approximately 84% of China Sun’s total planned purchasing volume during the year.
“We are honored to be in a strategic alliance with Sai Er New Energy and Huanyu and to work closely with our partner in terms of the production process for lithium ion battery development. We are confident that we can efficiently expand our production capacity in the near future to meet the requirements of Sai Er New Energy and Huanyu’s projects. We are also pleased to have signed two new high-quality suppliers, which will further enable us to secure access to sufficient raw material,” commented Mr. Guosheng Fu, CEO of China Sun Group. “As the Chinese government continues to support the development of energy-saving cars and other sustainable products and technologies, we remain positive that we will be successful in positioning China Sun Group and continue growing. Our goal is to establish a complete supply chain for materials, components and the finished lithium ion phosphate product, which is the LIP battery.”
* Better Place - can our switch stations accommodate different battery types?
december 14, 2010
From day one, accommodation of multiple battery types has been a core engineering requirement for our battery switch stations.
Earth2Tech has reported that Tesla’s long-anticipated Model S will include a switchable lithium ion batteries. The wide, long and flat battery will be positioned underneath the electric car to make the automated lithium ion batteries switch process quick and efficient – in fact, Tesla is quoted saying that the switch process will take around 60 seconds.
At Better Place, we’re enthused at the growing momentum we’re seeing around battery switch from automakers and governments. It’s great to see Tesla embracing battery switch and the recent announcements by Chinese government officials that they have selected battery switch technology in combination with standard charging (instead of fast charge) as the preferred standard for electric vehicles.
However, we need to clear up a common myth that our battery switch stations require that we make battery packs standardized. While Better Place is firmly in support of complying with international automotive and electrotechnical standards (and is even participating actively with the major standardization bodies to establish these standards where they don’t yet exist), we have always maintained that different automakers will require different battery form factors – both within their own product lines, and across companies.
From day one, accommodation of multiple battery types has been a core engineering requirement for our battery switch stations. We have made significant R&D investments to develop a toolkit/adapter in our battery switch stations that can anticipate and supply different battery types for different electric vehicles with different battery-to-vehicle connection mechanisms. Therefore, Better Place does not require one single standardized battery type. In fact, the only element that requires standardization is that the battery be removed from under the electric car.
Battery switch technology opens up a new category for all electric car manufacturers to participate in and allows the OEMs to create a differentiated product that’s not tethered to a socket or the gas pump. It represents the quickest, most convenient means for zero-emission, range-extension for electric vehicles drivers.
