Green Energy

Hitching a ride on Tesla Inc. these days seems precarious at best, especially for its sole battery supplier Panasonic Corp.

Shares of the Japanese company plunged as much as 9 percent after a spate of Tesla bad-news stories over the past few weeks. First, the U.S. electric-car maker reported yet another fatal crash, then a shortfall in production targets for its mass-market Model 3 and to top it off, a rating downgrade by Moody’s Investors Service on liquidity concerns. The cost to insure Panasonic’s five-year debt — a broad gauge of risk — has risen sharply.

That Panasonic is dancing to Tesla’s tune is no big surprise — it usually does. Investors have long seen the electronics giant as a derivative play on its U.S. customer. Their thesis: more Teslas, more batteries. To be fair, Panasonic does have solid battery technology — better than the likes of Samsung SDI Co. — and has focused its efforts on the auto industry. In fact, moments of weakness in Panasonic stock are often seen as an opportune time to buy. This time, there are other factors to consider.

First, the level of Panasonic’s reliance. The Osaka-based company revised down its sales and operating profit estimates for rechargeable batteries for the full fiscal year in February because it had to push out sales plans in North America to “future periods.” Its hyped-up gigafactory partnership with Tesla in Nevada has undershot expectations. Panasonic is piling capex into the $5 billion project, in part raising debt to do so. Moody’s expects the company to shovel more than 50 percent of its capital spending into the automotive segment including battery plants.

Besides Tesla, Panasonic leans heavily on the broader electric-vehicle industry, where prospects are dimming amid the Trump administration’s lackluster interest in green policies. Earlier this month, the U.S. Environmental Protection Agency said it was revising fuel-efficiency standards that allow carmakers “to make cars that people both want and can afford.” That damped enthusiasm for the potential growth of electric cars.

Then, there’s China, the world’s largest electric-vehicle market. Panasonic, along with other foreign battery makers, risks being shut out by new-energy policies aimed at cornering the global market. China’s own battery champion, Contemporary Amperex Technology Co., is shoving global competitors aside as it ramps up production and pushes down prices, while reaching standards to supply the likes of BMW AG.

Panasonic started making batteries for hybrid cars in the northeastern city of Dalian only last month, entering a market that’s increasingly looking saturated as growing volumes put pressure on margins. Tesla, meanwhile, which sells in China only through exports, may also be at risk of being drawn into the ongoing trade spat with the U.S.

In this column last month, I concluded that whoever controls the battery supply will command the electric vehicle industry. But what does this really mean? I would like to examine the assertion more closely.

In 1991, Sony released the world’s first lithium-ion battery, which is now a central component of electric vehicles, plug-in hybrid vehicles (PHVs), and hybrid vehicles (HVs). Up until just a few years ago, Japanese companies commanded over half of the global market for lithium-ion batteries. Today, however, Chinese companies control 60 percent of the global market. Japanese companies now have fallen down to a market share of little more than 20 percent, while South Korea’s share is less than 10 percent.

There are about 200 battery manufacturers operating in China. This crowded field is led by Contemporary Amperex Technology (CATL) and BYD Auto.

The Chinese government has identified the promotion of the EV industry as a main pillar of its national strategy, and set a target of having 5 million new energy vehicles, including EVs, on the road by 2020. In China, the government sends clear policy signals to the market. More precisely, in certain strategic industries the Chinese government and corporations act in unison, with subsidies and regulatory measures (for example, setting sales quotas) used to stimulate consumer demand and create a new market.

Chinese battery manufacturers are significantly expanding their output capacity. CATL has declared that by 2020 it will have a productive capacity for 50 gigawatt per hours annually — almost six times larger than its current level.

Beijing will likely press foreign auto manufacturers operating in the Chinese market to build electric vehicles. Then, the Chinese government may use local content policies to ensure that these vehicles are equipped with Chinese batteries.

In that event, China’s geopolitical relations with not only Japan and South Korea, but also with the United States and Europe, will cast a long shadow. Anticipating growth of Chinese demand, the South Korean lithium-ion battery manufacturers LG Chem and Samsung SDI built new factories in China. However, both companies were excluded from China’s list of manufacturers eligible for government subsidies. The friction between China and South Korea over the latter’s deployment of the THAAD (Terminal High Altitude Air Defense) system was deemed to have factored in the Chinese government’s decision.

China will likely require the use of Chinese batteries by all foreign carmakers operating into the Chinese market, along with prodding them for transfer of battery-related technology to local manufacturers.

European countries have made the entry of their automakers into the Chinese EV market a top priority. However, given the fact that Britain, France, and Germany have all adopted the transition to electric vehicles as their own national policy, it is difficult to imagine that they will allow their domestic EV industries to remain dependent on Chinese batteries. At some point the European Union or Germany will attempt a counter-offensive with European batteries.

Meanwhile, China is attempting to widen the reach of Chinese standards on electric vehicles and batteries along its Belt and Road Initiative (BRI).

China plans to beef up its own satellite navigation system by increasing the number of its satellites from the current 24 to 35 by 2020. In addition, China will build roughly 2,000 ground stations across the Eurasian continent that will be spanned by the BRI. This will enable China to develop the type of high-precision navigation system with “centimeter-level accuracy” required for self-driving cars. This massive new infrastructure installation is intended for Chinese-made autonomous electric vehicles, equipped with Chinese batteries. This field is led by the company Baidu, which has embarked on the development of autonomous cars.

Whoever controls the battery supply will command the electric vehicle industry. Without taking the lead on batteries, we won’t be able to lead the competition in not just electric vehicles but all electrified vehicles such as PHVs, HVs and fuel-cell vehicles. At present, batteries comprises a full 70 percent of the total production cost of an electric vehicle.

Batteries represent the pinnacle of manufacturing. Manufacturers must figure out how to cram components into a small area while increasing energy density and electrical output. Batteries are also, in a sense, “raw goods” whose longevity depends on temperature control. It is a field where the magic of chemistry determines everything.

In Japan, Panasonic alone has made a good showing in this field. The technology of its state-of-the-art cylindrical lithium-ion battery is acknowledged to be the best in the world. Both Tesla and Toyota have sought out Panasonic for joint projects on battery development, and Panasonic and Tesla have together built a huge factory in Reno, Nevada, known as the Gigafactory.

Yet Panasonic, Tesla, Toyota and the various Chinese manufacturers are all rushing to compete in the “great transformation”: the race to discover the next generation technology to succeed the lithium-ion battery. Toyota is moving to the development of a solid-state battery.

There is yet another consideration. Countries are desperately seeking to secure access to the raw materials needed for manufacture of batteries, such as cobalt and nickel. Cobalt reserves are concentrated in the Democratic Republic of Congo, and already China is deemed to dominate access to over half of these reserves. Technological breakthroughs may allow countries to overcome economic constraints, but compelling geopolitical constraints — in this case, the need to secure scarce resources — remain.

Japan must strengthen its resources diplomacy in order to open up a new horizon in the electric revolution.

Seven years after the Fukushima nuclear plant meltdown, it’s now safe to return.

The Lexus LC500h is an eco-friendly version of the gorgeous flagship introduced last year. The sedate luxury brand needed an aspirational vehicle that would get attention, if not sales. Sales are about 100 units short of the projected 400 units a month since it went on sale in May 2017. Buzz is strong.

The potent LC500 is arguably the most head-turning vehicle available for less than $100,000. Low-slung, with the wheels pushed all the way to the edge, it has a wide, bulging rear end, so there is no mistake about the intent of what lies under the hood: a fire-breathing 471-horsepower V-8 engine in rear-wheel drive that is so good it’s almost dangerous. It hits 60 mph in 4.4 seconds, with a top speed of 168 mph. It’ll make you smile.

On the other hand, the LC500h looks just as stunning, but is powered by a familiar V-6 engine that makes 354 horsepower. It hits 60 mph in 4.7 seconds with a top speed of 155 mph. It’ll make you smile too, and keep you feeling good at the gas pump with 30 mpg combined, compared with the 19 mpg from the V-8.

One more comparison: The V-8 costs $4,510 less than the hybrid.

Impressive technology

As remarkable as the V-8 is, the technology underpinning the hybrid is equally impressive, if not confusing.

It does not drive like a traditional hybrid in the Toyota/Lexus family, the world’s leader in hybrid powertrains. The only similarity of the “multistage hybrid system” is at low speeds, when the lithium ion-powered motor is doing all the work.

In more spirited driving, it feels and sounds like a sports car, thanks to some artificial engine noise piped through the speakers.

The multistage is essentially two transmissions, consisting of a continuously variable transmission that is modulated by a four-speed automatic.

Switching to manual mode replicates a 10-speed transmission accessible via paddle shifters. Hitting the redline will cause it to shift on its own, but for the most part, the driver feels in charge. The system shifts seamlessly and quickly through the early gears. The higher the speed, the longer it will stay in that gear.

At cruising speed, the engine takes over at its optimal efficiency and charges the battery. There is no CVT drone, which happens when the vehicle speed is trying to catch up to the high engine speed.

Why do it? Greater efficiency in every aspect except racing. And since most owners aren’t going to be racing most of the time, it makes sense.

Balance is great

Yet it is a sports car. If there weren’t the V-8 for comparison, the V-6 would feel punchy enough. In sport plus mode, the rear-drive waggles under that combined 350 pound-feet of torque. The balance is great, with exceptional handling and direct steering, but there isn’t the lift off the line that drops the stomach and elicits a howl. For $100,000, it’s fair to expect more performance.

Yet buyers don’t seem to mind. Lexus expected the LC500h to account for about 10 percent of LC500 sales, according to Toyota/Lexus spokesman Curt McAllister. But the 520 hybrid units account for more than 20 percent of LC500s sold from May to December of last year.

Evidently, like purveyors of fine decaf, Lexus knows a less-potent hybrid can suit the contrasting tastes of performance and efficiency.

 

The Nissan Leaf is currently the best-selling electric car in the world. Since its inception, the EV has been powered by a lithium-ion battery pack. Early versions of the car had a 24 kWh battery, whereas 2016 and up models have a 30 kWh version. A recent study claims the 30 kWh battery degrades three times faster than the 24 kWh variant.

Study findings 

Although the study has not yet been peer reviewed, it has sparked interest throughout the electric vehicle community. Key findings indicate that, after two years of age, the 30 kWh battery declined an average of 9.9% percent annually. By comparison, the 24 kWh battery declined 3.1% annually. The study concludes by saying the degradation rate of the 30 kWh is too rapid to be considered normal.

Nissan responds

Shortly after the study was released, Nissan’s EV communications manager, Jeff Wandell, responded.

“Nissan is aware that a limited number of customers have expressed concerns with the previous generation of the Nissan Leaf 30 kWh battery. Leaf owners are some of our most devoted customers. We take their concerns seriously, and have technical experts currently investigating the issues raised.”

Nissan has struggled with Leaf battery issues in the past. A class-action lawsuit was filed against the automaker for decreased battery capacity in 2011-2012 Leaf models. Some theorize the issues are due to the fact Leaf batteries are air cooled, instead of liquid cooled. Most other EVs use liquid cooling.

2018 Nissan Leaf has all-new battery design

You’ll note, in his statement, Wandell referred to the 30 kWh battery as the “previous generation”. That’s because the brand-new, 2018 Nissan Leaf has a 40 KWh battery pack. So far, this new pack has received nothing but praise. Its robust design gives the car a range of up to 150 miles. In addition, fast charging can get it up to an 80 percent charge in 40 minutes.

Whether or not the latest battery will eventually have performance issues has yet to be seen. Right now, the jury is still on the older 30 kWh battery as well. The study faulting this battery will need to be verified before it can be taken at face value.