by Steve LeVine
Recently, Hillebrand discussed the future with a group of overweight, grizzled men with lines under their eyes. “Kind of legendary” in the global car business, they were the vice presidents of major industry players like GM, Ford, Bosch, and Nissan, the men who, one step down from the CEO, decided what cars their companies actually produced. They tended not to “put up with any crap,” Hillebrand said. “They are not interested in what sounds interesting and what sounds cool,” he said, but in “things that are really going to happen.” It became evident that they did not foresee a breakout of the electric car for many years to come. Electrics cost too much to produce. There was no indication that the economics were going to significantly improve. Motorists might keep buying 20,000 or 30,000 Leafs and Volts a year, they said, but there was no sign that either model would achieve the hundreds-of-thousands-of-cars-a-year sales that signaled mass appeal.
The old guys were right, Hillebrand said. He himself foresaw internal combustion vehicles that could run automatically on almost any fossil fuel. As it stood, mass-market diesel engines, relying on compression rather than spark plugs to ignite the fuel that drove the car, were probably the most efficient on the planet—fully 45 percent of the diesel poured into the tank ended up in the propulsion of the vehicle; just 55 percent burned off as wasted heat in the process of combustion. As for gasoline, just 18 percent of its energy actually reached the wheels; a whopping 82 percent went into the ether. That made diesels the vehicle of choice in Europe, with its higher-priced fuel, while Americans still by far favored the generally quieter and more powerful gasoline engine. But Hillebrand foresaw Americans catching up in efficiency because researchers would transform gasoline into a fuel competitive with diesel. If that could be done, and his own team at Argonne was working to make it so, the gasoline-fueled internal combustion engine would attain 35 or even 40 percent better mileage. If motorists maintained their current driving habits, that meant the world might burn 20 million fewer barrels of oil a day, more than a fifth of global consumption. The resulting global surplus would send down oil and gasoline prices everywhere. OPEC and Russia would suffer a severe blow to their income. Oil-short nations would benefit from sharply lower import costs. As for batteries, the bar would be even higher. “Taking the infrastructure we have, using engines we understand with no new costs, that is where we are going in the next fifteen years, and what is gonna compete really effectively with electrics,” Hillebrand said.
Carmakers would still have to produce electrics—they would be necessary to meet American requirements for a fifty-four-mile-per-gallon average across the vehicle fleet. Highly efficient engines with direct fuel injection, slim, titanium bodies, and decreased power would get you a long way, as would hybrids and plug-ins. But you would still require pure electrics burning no fuel at all to reach the compulsory fifty-four. A fraction of the fleet, but still some electrics.
Such electric bearishness, incidentally, was not shared by the Asian car bosses with whom Hillebrand was speaking that day. By way of an informal, hands-in-the-air survey, the Japanese and Chinese vice presidents signaled a bright future for electric cars. They clearly saw themselves winning by dint of long, iterative patience and rejected American and German pessimism. They didn’t share the same memories of the early twentieth century, when electrics died for the lack of adequate batteries and infrastructure, or of the 1990s, when the same happened to GM’s EV1, the carmaker’s abortive stab at electrics in the 1990s.
Hillebrand said that the question of who was right—the Asians or the Westerners—boiled down to whether you thought that this time was different. Paying six to seven dollars a gallon for diesel, as Europeans currently did, had not impelled them to shift to electrics, for example; instead, the Europeans were merely buying smaller diesel-fueled cars. Perhaps electrics would gain more favor if gasoline or diesel rose to ten dollars a gallon. But Hillebrand’s main point was that the American fleet was “not going to electrify just because we want it to.” It was a swipe at battery race enthusiasm, which again aggravated Chamberlain’s guys.
This annoyance did not constrain Hillebrand. He suggested that the battery guys did not fully appreciate what was required to win. They and carmakers were rushing the science. Automakers were enamored with “bling,” thinking they would earn street cred and general adoration with flashy but ultimately hollow products. The truth, he said, was that big advances took time. All but the most exceptional technologies reached the broad market only after slow, evolutionary steps. In the case of electrics, he said, the automakers would do best by optimizing small, battery-enhanced hybrids like the Prius until they matured into a standard vehicle feature. That would lead to better plug-in hybrids like the Volt. The plug-ins would gain widespread adoption. Then—and only then, perhaps two decades in the future—electrics might be ready for the broad market.
The battery race had to be won methodically. Moving too fast would place substandard vehicles on the road and give the technology a black eye. “Things you do to accelerate do not always accelerate,” Hillebrand said. “Sometimes they give people a bad taste of the technology and then you have to go away for a while and wait until those people forget about it, and bring it out again, because it was not ready.”
• • •
The shakeout was all around Argonne. EnerDel, an Indiana company that four years before shared an R&D Magazine 100 award with Khalil Amine, filed for bankruptcy and was on the brink of acquisition by a Russian timber magnate. A123—the darling of investors in 2009—furloughed a third of its employees as sales failed to materialize. People began to forecast its demise. Amine said, “A Chinese or Japanese company will buy A123 for nothing. Mark my words.” He foresaw bankruptcy for a lot of start-ups and survival only for large companies with deep pockets and an independent income stream. Kevin Gallagher said, “I feel we are at the top of the bubble where it pops.”
Such talk typified the usual path of new technology, Hillebrand said. To demonstrate, he drew a chart. It consisted of a bicycle riding over two hills. The ascent up the first equated to a concept’s early, optimistic days. Near the crest, lavish funding arrived to push the idea along (this was the location of advanced batteries at the moment, he said). Then came inevitable setbacks, given that no early technology was perfect. This induced a downhill plunge, including loss of investor and public confidence, and a shakeout (such as electric cars were just then experiencing). The descent was long and miserable. But it inevitably bottomed out. If the technology was solid, you began to ascend the second hill. Along the way, problems were solved, confidence was restored. Ultimately, you conquered the market.
Consider the cell phone, electric car enthusiasts said. Nearly every teenager and adult in the world seemed to own a mobile device, with six billion in use. But the first consumer cell phone was introduced in 1983. It took another two decades for mobile phones to become commonplace, to reach the point at which they were owned by a majority of Americans. Some futurists said the technology cycle was accelerating, yet it was the same story with the smart phone; it took nineteen years to move from first product in 1994 (the IBM Simon Personal Communicator) to 50 percent penetration in 2013. By that measure, electrified vehicles had a ways to go—the first Prius was sold in the United States in 2001 and the Volt and the Leaf a decade after that. The doubters should probably lay off until well into the 2020s.
Amine said the despair around him overlooked how advances truly happened. “Scientists get stubborn,” he said. “You have a hard goal that no one thinks can be done. But then some clever guy comes from nowhere and, bang, it is solved. Scientists have to be optimists.”
Unlike microchips, batteries don’t adhere to a principle akin to Moore’s law, the rule of thumb that the number of switches on a chip—semiconductor efficiency—doubles about every eighteen months. Batteries were comparatively slow to advance. But that did not make electronics superior to electric cars.
Consumer electronics typicall
y wear out and require replacement every two or three years. They lock up, go on the fritz, and generally degrade. They are fragile when jostled or dropped and are often cheaper to replace than repair. If battery manufacturers and carmakers produced such mediocrity, they could be run out of business, sued for billions and perhaps even go to prison if anything catastrophic occurred. Automobiles have to last at least a decade and start every time. Their performance had to remain roughly the same throughout. They had to be safe while moving—or crashing—at high speed.
Smart phones, iPods, and the like were elite and disposable fashion statements and not on the same technological plane as the electrochemistry underpinning advanced batteries. You installed smart phones and iPods in an electric car. They were mere devices, inferior accessories compared with the science and engineering underlying the lithium-ion battery.
Competitive consumer electronics played to the strengths of the Asian strategy of inching ahead through methodical improvement in engineering and manufacturing—the newest iteration of the iPhone sold wildly as a symbol of style. But the sluggish battery race might turn out otherwise. Even though the United States appeared to be near the back of the pack at the moment, its profound skills in the lab meant it could leapfrog over all.
Here was where Hillebrand collaborated with the battery guys. The Asian manufacturing giants—Japan and China in particular—stood accused of gaining their original edge by stealing Western technology. But all the leading nations reverse-engineered rival brands. In the United States, Hillebrand supervised such work and turned over the data to American carmakers. He called it a patriotic duty. Hillebrand favored a restoration of American manufacturing. Obama had identified advanced batteries and the electric car as the priority. Hillebrand was all in, despite his reservations about the chances for success.
• • •
Hillebrand strolled through an airport-hangar-size warehouse. The structure was among several from Argonne’s first decade. When Hillebrand first happened upon them a few years prior, they had been crammed with magnets and nuclear equipment. He had four of them emptied and retrofitted into automobile labs.
“This is a Korean hybrid vehicle,” Hillebrand said. He gestured toward a half-dismantled sedan. It looked a lot like the Prius. “They are trying to mimic the system,” he said. Vehicles such as this were actually provided by the South Korean manufacturer. It understood that the data would be handed over to its American rivals, but Hillebrand would give a copy to the South Koreans as well, which was valuable information. “They benefit, we benefit,” Hillebrand said. “It is the proper definition of partnership.”
Hillebrand reached an invention that he believed would confound electrics. It was called the “omnivorous engine.” It was an old GM motor retooled to burn any type of carbon-based or synthetic fuel—methanol, butanol, ethanol, and of course gasoline or diesel. The engine self-adjusted for anything you put into the tank. “It is really a sleeper technology,” he said. “It is going to have a huge impact.”
He moved on. “Here is a Volt—we just got it,” he said. “It is the most advanced vehicle in the world, the most fuel-efficient and possibly the best.” He appreciated the Volt in spite of his confidence in the economic case for fossil-fuel engines. His guys were preparing to disassemble it down to its individual instruments, put it back together, test it, and take it apart again before putting it back together and retesting it. Then they would park it in a corner in case other questions arose. When they were finished, they would haul it to the dump. “Because by then, it is not a car anymore,” he said. As of now, it seemed that GM had packed far more capability into the Volt than it was informing anyone. “When you buy that car, you are getting twice the value that you are actually paying for,” Hillebrand said.
“This is the Prius,” he said. The car he pointed to was a shell with wires hanging out. “It is an example of what they look like when we are done,” he said. This particular examination had proven exceedingly useful because when the second-generation Prius was released in the mid-2000s, some wondered whether Toyota had cheated on the fuel economy tests. Hillebrand’s team had showed that, if the company wanted to, it in fact could game federal evaluators. That was because the car could be programmed with advance knowledge of the curves, stops, and hazards that all automakers knew the test featured. So armed, it could adjust and conserve gasoline. Hillebrand’s team did not demonstrate that the Prius folks did cheat. But the opportunity to do so was sufficient. He sent word to the Environmental Protection Agency, which devised a randomized test that was harder to con.
The exercise of disassembling a selection of all the major vehicles on the planet taught Hillebrand that almost every new automotive technology followed a long adoption curve, including disc brakes, fuel injection, and the automatic transmission. He could think of no big advance that achieved immediate acceptance. For electric cars, the largest unknown was outside the control of the inventors or manufacturers. It was oil prices. If they were comparatively moderate for a sustained period, electrics would be even more hobbled than they already were. But if prices climbed and stayed high, creating buying anxiety at the gasoline pump despite improved internal combustion efficiency, they could motivate more concentrated research on better batteries and success in a decade. “We could do it if we have to,” he said. “The problem has been that we haven’t had to.”
31
Only the Irrational or the Naïve Will Win the Day
If the odds of beating gasoline were so low, how could the battery guys hope to win? To find out, Sujeet Kumar, Jeff Chamberlain, and dozens of private energy executives filed into a darkened conference room at UC Berkeley, invited by the Department of Energy for a two-day gathering just before Orlando. The morning keynote speaker was Vinod Khosla, the most aggressive clean-energy investor in Silicon Valley. The New Delhi–born Khosla had graduated from the elite Indian Institutes of Technology and gone on to cofound Sun Microsystems. In recent years, he had invested more than $1 billion of his own and investors’ money in solar power, biofuels, and batteries. He was blunt-spoken and usually dressed in black.
Khosla began by challenging the premise of gasoline’s invincibility: recent history showed that it was as vulnerable as any other incumbent technology, he said. That the odds of beating gasoline were low was precisely why he was invested in doing so—it made the potential financial gain astronomical. “Experts as a group speak knowingly of the 2008 financial crisis, but in June 2008 none predicted it,” he said. The same was true for energy. Experts spoke with great clarity as to the future of shale gas. In 2008, none forecast its arrival.
“You say that I have a hundredth of a percent shot at success?” he said. “I’ll take the odds.”
A slide appeared on the wall. “For those who can’t read it, the probability of success is on the vertical axis and the chance of destructive impact on the horizontal,” he said. “What I am saying is that when there is more than a 90 percent chance of a technology failing, that is when you tend to have the most disruptive potential.” For venture capitalists, the destruction of an established pattern of business—and hence the creation of a new way—tended to bring by far the largest profit.
That was not how most venture and angel investors worked, he said. Instead, venture capitalists sought to reduce risk to a point at which the difference between the consequences of failure and of success was incremental.
“I am suggesting the exact opposite,” Khosla said. One should welcome acute risk and the potential upside the risk offered.
Khosla knew that his message, while heard by most or all of those sitting before him, would be heeded by very few because “only unreasonable and naïve people can attempt things that are near impossible.” Insults might at least discomfit them. “Experts who can always tell you why something won’t work—they can always scare reasonable, rational people from attempting these crazy ideas,” he said.
ExxonMobil did not
entirely rule out Khosla’s scenario. That was clear on page 48 of its 2040 outlook.
“Technology also can be unpredictable,” ExxonMobil’s futurists said. “A breakthrough in low-cost, large-scale storage of electricity would greatly improve the prospect for wind and solar for electricity generation. Faster-than-expected drops in battery costs would likely make electric cars more of a factor through 2040 than we expect them to be.”
In other words, the Argonne group—and any of the teams in the battery race—could confound ExxonMobil’s prognosis. The outlook was where the company and Khosla converged. His core investment principle was the oil giant’s nightmare scenario.
32
A Three-Hundred-Mile Battery
Not everyone in Orlando was dejected. Kumar, for one, was not. Neither were the Japanese present at the conference. They believed the battery industry was not so much doomed as situated in the much-dreaded “valley of death.” This was the gaping and long chasm between the completion of a product and its arrival in the marketplace. How gaping and long was unpredictable. The space of time could be months, decades, or unbridgeable. Start-up companies routinely failed during this stage, often for lack of cash or conviction. They lost to the market. It was why Amine said that many—perhaps most—of the electric pioneers were destined to this fate.
But the valley had another meaning as well, according to a number of voices at the conference, which was that those willing and able to hang on three, five, or nine more years could find themselves in a very different market.
One pathway to a seriously powerful battery was to improve the anode rather than the cathode. The anode was the staging point for the lithium. From there, the lithium shuttled to the cathode, providing the current that propelled an electric. Anodes were judged by how much lithium they could store and the rate at which it could be extracted, which was what delivered distance and acceleration. The standard was a graphite anode developed by Bell Labs back in the 1970s. Kumar was engaged in an industry-wide competition to replace it with an anode made of silicon, a metal that could absorb a much larger ratio of lithium atoms. A graphite anode absorbed one lithium atom for every six carbon atoms; but each silicon atom could accommodate four lithium atoms. Next to pure lithium metal, that made silicon the most energetic possible anode. Such an anode had the potential to deliver an order of magnitude better performance than graphite, whose discharge capacity was about 400 milliampere-hours per gram. Silicon had a theoretical capacity of 4,000 milliampere-hours per gram. You could not hope to attain that maximal peak in practice, but 1,400 or 1,600 were conceivable and, if achieved, would more than triple the graphite anode’s performance.
