General Electric Co may lease costly vehicle batteries to electric-car buyers, joining other companies looking to get more people to buy alternative-energy automobiles.
The largest U.S. conglomerate is just at the “thinking stage” of such a move, said Mark Little, head of GE’s research and development efforts, on Friday at an event at Nissan Motor Co’s (7201.T) research center near Detroit….
A battery leasing program is a venture that could allow GE to show off its range of businesses, from its industrial core which could be influential in manufacturing the batteries, to its GE Capital finance arm which could support the leasing.
This could be a crucial strategy for keeping down the first cost of electric cars. Cost is one of the biggest barriers to entry for any alternative fuel vehicle, but especially electrics, since batteries can add considerable cost upfront and take many years to pay for themselves.
Indeed, batteries continue to come down in price, and the slow global economy continues to keep oil prices down. In a decade, EVs will be considerably more cost-effective, but the key is to jumpstart the market now so you can start getting economies of scale and heading down the learning curve
A key reason this strategy may be viable is that there is likely to be a large aftermarket for these batteries.
After putting in eight to 10 years powering a vehicle, recommissioned batteries from General Motor Co.’s electric Volt cars could be used by utilities to provide backup electric storage for the grid, the company says.
GM and electric power company ABB Group have been working together since September of last year under a joint research and development agreement targeting the reuse of vehicle batteries for stationary power use. Alongside a conference this week in Raleigh, N.C., the groups shared their progress in moving the concept from laboratory to pilot testing….
The automaker and ABB’s R&D partnership is focused on putting the used batteries to work in clusters where they can provide backup energy storage for the grid, either to hold wind or solar energy during periods of low electric demand for use later or to provide backup power in case of a grid disruption.
Valencia said a group of 50 homes could be powered through 33 used Volt batteries, with enough storage capacity to keep them all running for about four hours. In a more likely scenario based on their talks with utilities, he said, batteries would be sold or operated on behalf of utilities in configurations of five to 10 units wired together, where they would serve small groups of houses or commercial facilities with 25 to 75 kilowatt-hours of storage.
This is “an energy solution that goes beyond the road,” he said. “This is in the realm of new storage solutions that are out there.”
I have discussed this strategy with a number of leading experts inside and outside the auto industry. Many believe that indeed there will be a considerable aftermarket for the batteries.
This could create a viable leasing strategy, particularly in the early years when it is most needed. Ultimately, there may simply be too many electric cars for this strategy, but is difficult to see that happening until well into the 2020s.
In fact, the idea of using batteries for backup power is not a new concept, but the economics of the proposition improve significantly when gently used batteries available on a large scale are factored in.
Valencia said the batteries would be removed from vehicles, tested and recommissioned for the secondary market and would likely be warranted for 15 years of further use, reflecting utilities’ expectations as well as the electrochemical reality of the used equipment.
The batteries are well-suited to this type of reuse, he said, because their performance drops dramatically in the early part of their life cycle and then remains fairly steady and predictable for the rest of their useful life, making it relatively simple to predict their performance by the time they hit the reuse market.
Valencia said the batteries’ post-vehicle use for grid power would not rule in or out a similar use as a vehicle-to-grid electricity source while still housed in the cars.
Many stakeholders have pointed to the potential for electric vehicles to offer power back to the grid when they are plugged in during the day, as a means to smooth the demand for power generation.
Valencia said questions about power metering and connections figure largely in that concept and have yet to be worked out. Today, different utilities and locales handle such issues differently. “If we as a society see [vehicle-to-grid applications] as crucial we’ll do that,” Valencia said.
In the meantime, looking at the reuse of batteries after their vehicle stage is a way to sidestep those challenges and the questions surrounding how to warranty a battery that is cycling both in the vehicle and on the grid and work up the learning curve….
Reuse of electric vehicle batteries is not only practical from a cost and technology perspective, but it would temporarily keep them out of landfills or recycling shops, GM officials acknowledged.
Pam Fletcher, GM’s chief engineer for Volt and plug-in hybrid electric powertrains, said the company is not yet ready to talk about the environmental considerations in landfilling or recycling the Volt batteries. “This is really about doing the right societal thing,” she insisted. “Today, we’re focused on repurposing. In the future, we’ll talk about recycling.”
The engineers say the repurposing effort is still in the early stages, with a highlight being the use of factory floor components for both the batteries and for the inverters and other, related equipment coming from ABB, rather than purpose-built testing materials from a lab.
Finalizing configurations and gathering reliability data will require years more development and testing to satisfy potential customers, they say. But that could work well with the timeline inherent in the idea — the first Volt batteries are likely to start retiring several years from now, and Valencia said the groups’ work could hit prime time around 2020.
Murray Jones, vice president of global e-mobility at ABB, said state, local and federal governments have so far been supportive of electric vehicle charging infrastructure and of the types of reuse envisioned here. The companies welcome policy frameworks that can incentivize the adoption of battery reuse, he said, and strategies like these to address “the chicken-egg questions that always come up with new technology.”
This could be a key strategy for jumpstarting the electric vehicle market.