Batteries

John Petersen wrote a series of popular articles last week to introduce new investors to the battery sector, following the A123 IPO.  We've had a couple requests from readers who missed one part or another, so here is a quick index to the articles. Part I - Battery industry overview. Parrt II - Comparison of energy storage technologies and companies. Part III - Benchmarking Performance of battery stocks Part IV - Debunking misconceptions about electric vehicles and battery technology.

John Petersen In "The Sixth Revolution: The Coming of Cleantech," Merill Lynch strategist Steven Milunovich heralded cleantech as a new investment theme and forecast a period of gut wrenching change followed by an age of plenty. A few days later venture capital icon Vinod Khosla warned his audience “500 million people on earth enjoy a lifestyle that 9 billion people will want in 2050.” The differences between these two informed viewpoints are more than a little stark, but they highlight a frightening truth about cleantech: for the first time in human history the fundamental drivers of a technological...

9.30.09 Cheap vs Cool John Petersen I've been blogging about pure-play energy storage device manufacturers since July 2008. By mid-November I'd assembled a short list of thirteen pure-play public companies that accounted for almost 25% of the $30 billion global battery market. Frankly I was shocked to learn that major battery manufacturers like Exide (XIDE) and Enersys (ENS) that report billions in annual sales carried tiny market capitalizations when compared with far riskier technology development companies like Ener1 (HEV) and Valence Technology (VLNC) that would be little more than rounding errors on the big boys' financial statements....

John PetersenLast Friday I published "Battery Investing for Beginners" as an introductory piece for investors who don't know much about the energy storage sector but are interested in learning more because of the hugely successful initial public offering by A123 Systems (AONE). Since the article was well received and there seems to be a good deal of reader interest, I've decided to continue the theme with a series of articles where I'll try to build a contextual framework for the industry and show where various types of energy storage devices and their manufacturers fit into that framework. Since I...

John Petersen I've been blogging about the energy storage sector since last July because batteries, single purpose devices that most of us take for granted unless they need to be recharged or replaced, are an essential enabling technology for cleantech, the sixth industrial revolution. With this week's impressive launch of A123 Systems (AONE), the tsunami of investor interest I've been predicting since last fall has finally arrived. Since the A123 Systems IPO has introduced an entirely new class of investors to the energy storage sector, this seems like a particularly good time to go back to square...

John Petersen This morning Reuters is reporting that A123 Systems, Inc. (AONE) increased the number of shares offered in its IPO from 25 million to 28.1 million and sold those shares at a price of $13.50. If the underwriters exercise their overallotment option, which is usually the case in IPOs of this size, the total IPO proceeds will be $437.5 million before costs, commissions and discounts. This IPO has been a long time coming but it was worth the wait. I want to congratulate the A123 team and the underwriters on a job well done. Assuming full...

John Petersen This morning, A123 Systems Inc. (AONE) amended its registration statement to increase the price range for its proposed IPO to $10.00 to $11.50. I take this as an indicator that their IPO road show has been well received and the offering will go to market in a timely manner. While I've avoided commenting on A123's prospectus, business or financing plans, there is one point that deserves some attention. Their prospectus summary says: According to A.T. Kearney, the global lithium-ion battery market for automotive application in HEVs, PHEVs, and EVs is estimated to be $31.9...

John Petersen Over the last couple of years, the mainstream media has been awash in reports of how automakers are lining up to build fleets of PHEVs and EVs using lithium-ion batteries as a principal power source. I've consistently argued that investing in objectively expensive lithium-ion battery company shares on the basis of testing decisions was dangerous. The reason for my caution is simple, a decision to test a new concept is very different from a decision to commercialize a proven concept and failures in the preliminary testing stages are far more common than successes. In...

John Petersen This morning A123 Systems filed another registration statement amendment for its planned IPO. The amendment specifies a preliminary price range of $8.00 to $9.50 and a preliminary offering size of 25 million shares (28.85 million shares with over-allotment option). Amendments like today's filing occur during the late stages of an IPO and it's not unusual to see the price range or offering size increase in later filings. Both of the preliminary values are about half of what I expected. The price range surprises me because of its rough parity with the $9.20 per share...

John Petersen On August 28th, the Office of the Inspector General of the U.S. Postal Service published the results of a feasibility study titled, "Electrification of Delivery Vehicles." While the feasibility study reaches a foregone conclusion and recommends the purchase of a 3,000 unit demonstration fleet, I was surprised by the high level of Federal subsidies the Inspector General thought necessary to bring EVs within Postal Service capital investment policies. I was even more surprised by the conclusion that the tipping point in the economic analysis was revenue from ancillary vehicle to grid, or V2G, services. The...

John Petersen Since I've stirred up a hornet's nest over the last two weeks first by debunking the mythology that PHEVs and EVs will save their owners money and then by showing how PHEVs and EVs will sabotage America's drive for energy independence, I figured I might as well go for the triple-crown of harsh realities by showing readers that in the U.S., where 70% of electricity comes from burning hydrocarbons, PHEVs and EVs won't make a dent in CO2 emissions. They'll just take distributed CO2 emissions off the roads and centralize them in coal and gas...

John Petersen Yesterday I asked a frequent commenter and staunch electric vehicle advocate whether he ever questioned the ethics of building an EV that can save one owner 400 gallons of gas per year while using enough batteries to build ten Prius-class hybrids that could save their owners a combined total of 1,600 gallons of gas per year. I then spent an hour in stunned silence as the critical importance of that question crystallized in my mind. I didn't get a responsive answer from the commenter, but I did get one of those rare moments of clarity...

John Petersen A123 Systems filed another amendment to the registration statement for its proposed IPO on August 19th. With this amendment, A123 is much clearer on its anticipated Federal funding than it was in earlier filings. In addition to discussing the recent DOE announcement that they'll receive $249.1 million in ARRA battery manufacturing grants, they've reduced their estimate of the ATVM guaranteed loans that they'll be eligible for from $1 billion in their July filing to $235 million in the current filing. This most recent number is specific enough to indicate that it reflects ongoing negotiations rather than...

Jason HamlinThe lithium market is buzzing as GM, Nissan and other car manufacturers get set to roll out a new series of electric cars that will greatly increase demand for the obscure silver-white alkai metal. GM has announced plans to construct a $43 million plant in Michigan to build lithium-ion batteries for its Chevrolet Volt electric-powered car, which captured headlines with its claim of 230 miles per gallon. Adding to the lithium mania is Washington’s support in the form of $2 Billion in stimulus funding: “New plug-in hybrids roll off our assembly lines, but they will run...

In August of last year I wrote an article titled "Grid-based Energy Storage: Birth of a Giant." Over the last 12 months I've written a series of follow-on articles that discuss the principal classes of manufactured energy storage devices and the companies that are making or planning to make products for smart grid energy storage applications. My entire archive of articles on the energy storage sector is available here. One of the biggest problems I've encountered over the last year has been a dearth of reliable third party information that can help investors understand the breadth and...

John Petersen On Monday of this week, the treehugger blog published a guest essay from Vinod Khosla that clarified his stance on the future of next generation lithium-ion batteries. The essay was prompted by "blog chatter" about an article in Earth2Tech where he was quoted as saying that lithium-ion batteries are overhyped. Since the Khosla essay included a link to my article "Why Lead-Carbon Batteries Will Deflate the Li-ion Bubble," I think it's important to tell readers that Mr. Khosla has written his own essay on the subject and encourage them...