Batteries

John Petersen The last couple weeks remind me of the adage that history never repeats itself, but it frequently rhymes. As I watched the awesome market volatility my mind drifted back to October 1987 when I cleared SEC comments on a client’s registration statement a week before Black Monday. As a result of the market break, the planned IPO didn’t happen, the client and its underwriter both went broke and I didn’t get paid. It was an expensive education that’s paid for itself many times over. The market is always fickle, often brutal and sometimes downright...

John Petersen Last week I stumbled across a link that led to a 2010 report from the National Research Council titled "Hidden Costs of Energy, Unpriced Consequences of Energy Production and Use." This free 506-page book takes a life-cycle approach – from fuel extraction to energy production, distribution, and use to disposal of waste products – and attempts to quantify the health, climate and other unpriced damages that arise from the use of various energy sources for electricity, transportation and heat. After studying the NRC's discussion of the unpriced health effects, other nonclimate damages and greenhouse gas...

John Petersen In three years of writing about investing in energy storage, I’ve learned that most public relations nightmares encountered by battery companies are self-inflicted wounds. They do an appalling job of managing the expectations of investors and potential customers. Then, when the inevitable delays, disappointments and cost overruns arise, everybody suffers. It may not be their fault, but it is most certainly their problem. Most of my long term readers have seen this timeless and blistering 1883 Thomas Edison quote: “The storage battery is one of those peculiar things which appeals to the imagination, and...

John Petersen Last Friday President Obama and executives from thirteen leading automakers gathered in Washington DC to announce an historic agreement to increase fleet-wide fuel economy standards for new cars and light trucks from 27.5 mpg for the 2011 model year to 54.5 mpg for the 2025 model year. While politicians frequently spin superlatives to describe mediocre results, I believe the President's claim that the accord "represents the single most important step we've ever taken as a nation to reduce our dependence on foreign oil" is a refreshing example of political understatement. After three decades of demagoguery, debate,...

John Petersen Today is the third anniversary of my blog on investing in energy storage. While the last three years have been profoundly troubled by a market crash, a slow recovery and more ups and downs than a roller coaster, energy storage has been surging to prominence as investors realize that batteries, products we all love to hate, are a critical enabling technology for wind and solar power, efficient transportation, the smart grid and hundreds of other applications that make life more pleasant. With each passing day it's increasingly clear that energy storage is an investment mega-trend that...

John Petersen I hate being wrong, but Mother always taught us, "if you have to eat crow don't nibble." In February 2010 I wrote an article titled "Why I Don't Expect A Lithium-Ion Battery Glut" that's shaping up as one of the worst predictions in the history of my blog. This week Lux Research published a report titled "Using Partnerships to Stay Afloat in the Electric Vehicle Storm" that has me convinced that the capacity glut in lithium-ion batteries will be massive for at least a decade. I humbly and sincerely apologize to any readers...

John Petersen Last week Societe Generale published a thematic research report titled "A new world order, when demand overtakes supply" which examines the macro-economic and demographic trends that will transform the global economy over the next 20 years. It mirrored the theme of Jeremy Grantham's April 2011 quarterly letter titled "Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever" and did a great job of summarizing an issue I touched on in "How PHEVs and EVs Will Sabotage America's Drive For Energy Independence." In the words of Societe Generale: "So, while...

John Petersen On June 27th Johnson Controls (JCI) hosted their 2011 Power Solutions Analyst Day and unveiled their expectations for the future of stop-start idle elimination systems. After noting that all automakers are developing a range of powertrains, JCI used this graph to emphasize their view that the overwhelming bulk of alternative powertrain vehicles over the next five years will have simple, cost effective and fuel efficient stop-start systems. You don't see much about stop-start systems in the mainstream media because politicians and reporters are too enchanted with plug-in vehicles and other exotica...

John Petersen In 2009, the world produced some 13.2 billion metric tons of hydrocarbons, or about 4,200 pounds for every man, woman and child on the planet. Burning those hydrocarbons poured roughly 31.3 billion metric tons of CO2 into our atmosphere. The basic premise of alternative energy is that widespread deployments of wind turbines, solar panels and electric vehicles will slash hydrocarbon consumption, reduce CO2 emissions and give us a cleaner, greener and healthier planet. That premise, however, is fatally flawed because our planet cannot produce enough non-ferrous industrial metals to make a meaningful difference and the prices...

John Petersen I'm a cynic and a heretic when it comes to plug-in vehicle schemes because most defy the laws of economic gravity and violate a cardinal rule that Ford engineers developed for the EcoStar light delivery vehicle program in the early '90s: – The unloaded weight of a plug-in vehicle should never exceed 70% of its loaded weight. Investors who pay attention to this simple rule can easily distinguish between pipe-dream vehicle electrification schemes that are nothing more than feel-good eco-bling and realistic vehicle electrification projects that make economic sense. For the last...

John Petersen One of the most pervasive and enduring myths in the energy storage sector is that a robust recycling infrastructure for used lithium-ion batteries will be built before the wonder-batteries that are being manufactured today for the first generation of plug-in vehicles reach the end of their useful lives. In the worst case scenario, advocates suggest used lithium-ion batteries will be stockpiled until there are enough used batteries to justify the build-out of recycling infrastructure. The numbers tell a very different story. For several years the single minded obsession of all lithium-ion battery developers...

Eiad Asbahi, CFA In this article, I’m going to analyze Advanced Battery Technologies, Inc. (ABAT) and provide evidence that the company is inflating its financial statements. This article summarizes key points that we have put together in a longer report available here (.pdf). An alternative copy for backup purposes is available here. A video summary of the findings, along with discussions with certain customers, are available at the following links: ABAT Analysis Video 1 of 2 ABAT Analysis Video 2 of 2 ABAT Customer Interview 1 ABAT Customer Interview 2 (Video 1 of 2)...

John Petersen Bartenders are smarter than most investors because they know what dilution is and they never get it wrong. Unfortunately, the markets have made such a bogeyman out of the word 'dilution' that public companies often suffer extreme backlash from financing transactions that should have existing stockholders on their feet and dancing in the aisles. Today I'll try to clear up some of the profound confusion that runs rampant in the minds of retail investors. Every bartender knows you can't dilute a beer by adding a shot of whiskey. The boilermaker is always stronger....

John Petersen One of the most seductive and dangerous stock market myths is the immensely popular but demonstrably false notion that the rapid cost reductions and performance gains we enjoyed during the information and communications technology revolution will be repeated in the age of cleantech. The persistence of the mythology is astonishing when you consider that the entire history of alternative energy proves that cost reductions and performance gains are extraordinary events, rather than common occurrences. Investors who buy into economies of scale mythology without carefully considering the fundamental differences are in for a world of disillusionment and...

John Petersen On March 30th, Lux Research released an update on the vehicle electrification market titled "Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market" that predicts: E-bikes and micro-hybrids carry minimal storage, but compensate with high volume. E-bikes show strong unit sales, as they sustain a 157 GWh storage market totaling $24.3 billion in revenues in 2016. Micro-hybrids benefit from increasingly stringent emissions limits, supporting 41 GWh and $3.1 billion in storage sales. Hybrid electric vehicles (HEVs) like Toyota's Prius grow steadily while PHEVs and EVs are at the mercy of external factors....

Green money managers' stock picks after the Japanese nuclear crisis. Even as the nuclear disaster in Japan unfolds, it's clear that the world's energy industry will be forever changed. Russian reactors were never considered safe, but a Japanese to have a nuclear meltdown is an entirely different story. Market Reaction Since Monday, nuclear stocks and ETFs have been plummeting. As of Wednesday night, The Market Vectors Uranium + Nuclear Energy ETF (NYSE:NLR), the iShares S&P Global Nuclear Energy Index (NASD:NUCL), PowerShares Global Nuclear Energy Portfolio ETF (NYSE:PKN), and the Global X Uranium ETF (NYSE:URA) are down...