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Sunday, 26 May 2013 22:00

JCI executive says despite challenges, advanced battery industry starting to turn on

Written by  Elijah Brumback and Joe Boomgaard
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Johnson Controls Inc. has developed a new “micro-hybrid” technology that debuted at the 2013 Detroit auto show. The system uses both a 12-volt lead-acid battery and a 48-volt lithium-ion battery in combination with start/stop technology and regenerative braking that can deliver fuel savings of 15 percent to 20 percent compared to conventional vehicles. Johnson Controls Inc. has developed a new “micro-hybrid” technology that debuted at the 2013 Detroit auto show. The system uses both a 12-volt lead-acid battery and a 48-volt lithium-ion battery in combination with start/stop technology and regenerative braking that can deliver fuel savings of 15 percent to 20 percent compared to conventional vehicles. COURTESY PHOTO

While the advanced battery industry has experienced a tepid start in West Michigan, one executive thinks the sector is just beginning to explore its market opportunities.

Despite overcapacity concerns and slow sales of vehicles featuring advanced batteries – not to mention a shakeout of some companies in the developing industry – MaryAnn Wright, the global vice president of technology and innovation for Johnson Controls Inc., believes the advanced battery industry still has a strong foundation from which to grow.

Speaking at a Lakeshore Advantage event held earlier this month at Michigan State University’s Bioeconomy Institute in Holland, Wright said JCI’s production of lithium-ion batteries pales in comparison to the 140 million lead-acid batteries it makes per year. However, the company is seeing growth in shipments to European customers of advanced batteries it makes in Holland.

Still, the nearly $42 billion (annual revenues) Tier-I automotive supplier has been able to weather the industry turbulence that’s caused some bankruptcies and consolidations. With a diversified customer base, JCI has been able to be patient as the advanced battery market continues to evolve, while startup companies like A123 Systems lacked the ability to wait out the fledgling market, Wright said.

“It’s been very challenging,” Wright said. “We knew the market was going to take time. … We knew it was going to take a lot of money and time spent around R&D, and we’ve been pretty consistent in expecting consolidation.”

Forward motion

As disappointing as the challenges and the politicization of the industry have been, Wright said those experiences were to be expected. However, she said she sees opportunity to build businesses going forward.

The industry is also not without competition. LG Chem Compact Power Inc., which has a plant in Holland that is expected to begin production this fall after a string of delays, remains a formidable operation, Wright said, noting it is in the top three of global producers of lithium-ion batteries.  

She expects strong competitors like LG Chem will be able to persevere as the industry develops.

Meanwhile, JCI continues to install incremental capacity for advanced batteries at its facilities as the customer base grows.

One opportunity for advanced batteries could come from the increased adoption of start/stop technology in North America, said Mike Wall, a Grand Rapids-based automotive analyst at IHS Automotive.

The technology cuts the traditional internal combustion engine when the vehicle is at a stop and immediately restarts it, which requires a stronger battery and starter. The systems are prevalent in Europe, but are just beginning to gain adoption among North American automakers, Wall said.

Start/stop technology can typically lead to 3 percent to 10 percent improvements to fuel economy at a fairly low cost — in the range of around $300 to $400, according to most analysts – compared to a hybrid.

With the adoption of start/stop technology on the rise, JCI’s Wright said the future of vehicle powertrains is not a “binary” choice and that the market can expect to have a handful of options. The OEM partners JCI works with can expect “more levers to pull” in the effort to meet increasing fuel economy and emissions standards, she said.

“It’s not going to be just gas or electric vehicles,” Wright said. “There will be a whole spectrum of powertrains that come online over the next few decades.”

Hybrid options

Analysts’ forecasts are generally favorable on the use of batteries in hybrids, but they’re less than certain on the future for electric vehicles.

“The value proposition still is not there, for the electric vehicles in particular,” Wall said. “Where we are starting to see a little bit more movement, for lack of a better term, is on the hybrid side. And this is something we’ve expected. It’s been ongoing.”

Wall said automakers are using hybrid technology to help them meet their upcoming benchmarks for the corporate average fuel economy (CAFE) standard, which for cars increases to 37.8 miles per gallon in 2016 and 54.5 mpg by 2025.

Buyers of hybrids can also expect more equitable pricing as some automakers reduce the premium they charge for the technology “to make it as attractive as possible.”

Still, the horizon for advanced battery opportunities related to an increased market share for electric vehicles is “a much longer term scenario,” said Wall of IHS.

“From a pure EV perspective, you need … a serious increase in gas prices. You would need some sort of disruptive innovation from the battery front that really increases the range significantly … or brings the price down considerably. You can’t really forecast a disruptor like that, but it doesn’t seem to indicate we’re going to be anywhere near there in the near term.”

Wright said JCI is working on some new technology that just might set a new standard for hybrid vehicles in domestic and foreign markets. The so-called “micro-hybrid” technology, which debuted at the 2013 Detroit auto show, is a blending of existing technologies, Wright said. The system uses both a 12-volt lead-acid battery and a 48-volt lithium-ion battery in combination with start/stop technology and regenerative braking.

The high-voltage battery would be used to operate heavy-load systems such as the air conditioning and regenerative brakes when start/stop technology turns off the traditional internal combustion engine as the vehicle is coasting or at rest. The more powerful battery could even be used to assist the engine when it’s under heavy load or acceleration, according to the company.

JCI estimates the system could deliver fuel savings of 15 percent to 20 percent compared to conventional vehicles and undercut the cost barriers currently associated with electric vehicles or plug-in hybrids.

The company’s analysts anticipate the micro-hybrid powertrain to drive the majority share of vehicles on the road by 2020, Wright said.

“The internal combustion engine continues to get more efficient and delivers more fuel economy, so it’s going to have a long runway,” Wright said. “Hybrids, plug-ins and EVs will have a place as well. But over what I call the planning horizon of the next 10 to 20 years, they’ll continue to be somewhat of a niche for a couple of reasons. One is the fundamental cost and two is the performance expectations customers are going to have.”

Wright said she believes developing technology around the micro-hybrid is the best bet for driving scale and standardization in the hybrid market.

Regardless of whether vehicles are powered by an internal combustion engine or one of the developing fuel technologies such as bio-diesel or natural gas, the good news for JCI is that they all still need batteries, Wright said.

Still early days

Outside of automotive use, JCI is looking into other applications for lithium-ion batteries, including stationary power sources, around which the company recently formed a business group, Wright said.

“The technology is still in very nascent stages,” Wright said, referring to stationary power. “There is really no compelling reason to switch over and basic infrastructure needs to be overhauled.”

Still, opportunities exist in peak-shaving and peak load-bearing, but it’s a longer play in terms of real market opportunity, she said. With the rising cost of coal and other traditional power sources, the ability to develop long-term storage of energy in batteries could help offset spikes in electric usage.

“Good ideas don’t necessarily translate into a market opportunity,” Wright said. “There has to be an enabler or driver that can help take these innovations and create a market.”

Another key issue preventing West Michigan suppliers from jumping into the advanced battery industry too heavily is the relatively small niche the sector occupies in the broader automotive market, Wall said. Even Tesla – which many analysts, Wall included, believe has a chance in the long-term – projects sales of only 20,000 units this year, according to statements from CEO Elon Musk.  

“That’s very minor, very small volume,” Wall said. “The challenge that I have found is that I have suppliers that are used to building hundreds of thousands of parts, not 15,000 or 20,000. They can’t build their whole business around that (volume). Their business is built around a complete book of business and (EVs are) one subset of that book, but they want to obviously have a full understanding of what the volume could be.”

Read 8960 times Last modified on Friday, 19 July 2013 12:22

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