Hot Times at Chevy

By Doug Magill

The fact that the lithium-ion battery packs in the Chevy Volt could catch fire after a collision shouldn’t have been a surprise.  Ever since laptop batteries began catching fire a few years ago – either because of overheating or external trauma – the volatility of the units has been known.

In the case of laptop batteries the problems were related to manufacturing issues whereby metal particles would collect by one of the electrodes and cause overheating.  External forces such as dropping them or hitting them could cause a cell rupture which would then cause the other cells to ignite.

These batteries are essentially pressurized cells with a flammable liquid inside.  In addition there are separators for the anode and cathode (positive and negative poles).  Like anything else, the tradeoff is between keeping things small and light yet robust enough to be resilient when mishandled or overheated.

The National Transportation Safety Board has issued some stringent guidelines for the transportation of these devices because of their potential volatility.  Particularly when shipped via air cargo.  Not many people know, for instance, that lithium-ion batteries are not to be transported in checked baggage unless installed in an electronic device.   It could make one wonder if an aspiring screenwriter hasn’t come up with a scenario of otherwise innocuous-batteries exploding in flight.  Not to give anyone ideas.

Lithium-ion batteries are becoming ubiquitous as they offer the best energy density for the size and weight – certainly better than nickel-cadmium or the older lead-acid type.

Tesla Motors first came to the conclusion that an effective automotive battery could be developed using a lot of small lithium-ion units wired together in parallel.  It is, in fact, a better option than developing a larger single-cell unit.  So, almost all proposed automotive power sources are similar to the original Tesla design.

Current automobile batteries are shallow-cycle lead-acid units that are pretty rugged and certainly proven.  When ruptured in an accident they don’t catch fire although they can explode when overcharged.

The Toyota Prius uses Nickel-Metal-Hydride batteries from Panasonic, employing 168 cells.  While not as efficient as lithium-ion batteries, they are cheaper to manufacture and can be recycled.  Which is one of the surprises not often mentioned: it is not currently economical to recycle lithium-ion batteries.  One doesn’t have to be a pessimist to foresee that there will be environmental issues if use grows to the level envisioned by the Obama administration.

None of this should disguise the fact that gasoline, of course, is highly flammable and causes explosions and fires after crashes.  And, the NTSB certainly has lots of rules on the transportation of highly flammable liquids.

The result being of course, that all automotive-propulsion technologies have drawbacks.  Energy density and cost are the main drivers and today gasoline has more energy density at cheaper cost than any of the alternatives (T. Boone Pickens’ attempts to stack the deck in favor of natural gas aside).  For hybrid and all-electric vehicles the choice has become unanimous – lithium-ion batteries.

The problem is that no one thinks of these vehicles as good road vehicles, or especially great for travel or special purposes.  And, they are more expensive to purchase and repair.  If it weren’t for subsidies and credits demand would be even less than it is (The Chevy Volt will not sell 10,000 units in 2011).  We haven’t seen it yet, but soon there will be stories about the expense to replace battery packs.

By manipulating the economics, the government – through GM – is trying to force the growth of a market that would not develop on its own.  Putting aside concerns about potential for totalitarian instincts, it just isn’t a good use of our money.  And, in a time of fiscal profligacy, wasting money on underwhelming products does no one any good – other than the cronies of the president and his friends.

Consumer Reports opined that the Volt “doesn’t really make a lot of sense.”  And now it has an even bigger image problem.  Because the fires it its batteries occurred days and even weeks after impact testing by the government, potential buyers will become spooked, wondering that if they get in a fender bender will their vehicle blow up in the garage some night.

The perception that the vehicle is perhaps unstable has been compounded by the notification that GM will buy back cars from unhappy buyers, and has a team on standby ready to go help drain the batteries of Volts that have been in an accident.  There’s a sitcom waiting to be produced: the Volt Battery Emergency Draining Team, which as an acronym is the sound many people are making at the prospect of buying one of the things.

The real problem is what does happen to a Volt that gets in an accident?  Someone has to drain the batteries because of the potential for a delayed fire hazard.  And, given the greedy gaze that liability lawyers cast upon all things manufactured, the potential for lawsuits exceeds the odds of a sophomoric joke being uttered by Bill Maher on any given show.  Expect a full-blown recall soon.

In addition, there is an odor of corruption about the whole thing.  Obama bleated that even though we paid $85 billion to bail out GM and Chrysler, we’ll only end up losing $14.3 billion in the end.  After originally promising we wouldn’t lose anything.  There’s a deal to warm the heart of any investor: give your money to us and you will only lose 17percent!  Reaffirming that the president clearly doesn’t understand economics, business, or investing.

But wait! The Treasury Department notified Congress in November that the total loss will be more like $24 billion, reflecting the below-IPO – and declining – value of GM’s stock, which makes the loss around 25 percent.  And, by the way, this number doesn’t include the unheard of tax treatment GM gets from the IRS for some incomprehensible tax-loss carry forwards.  Something, by the way, that companies that go through bankruptcy don’t get.  Another example of ignoring laws and regulations to suit the whims of Obama.   So, add another $15 to $20 billion to the total cost of the bailout.

As an aside, the same report to Congress mentioned that the housing bailout program will also lose money, meaning that the government is 0-fer on its bailout efforts.

The man that was originally appointed as the “car czar,” Steven Rattner, recently explained that “we never said that the taxpayer was going to get paid back.”  Well, OK, we don’t generally put much stock in Obama’s pronouncements, anyway.  This from a guy that started as a reporter, became an investment banker and then was involved in a private equity group specializing in media and communications companies.  In Obama’s world that qualifies one to run a car company going through bankruptcy.

But wait, again! Proving that he does understand how business works on the Obama team, Rattner was recently sued by the New York attorney general for paying illegal kickbacks to assist his company in acquiring investments from the state’s pension fund.  The state is seeking $26 million.  He is rumored to have agreed to pay $6.2 million to the SEC to settle similar charges.

Most people may not be aware of all of the intricacies of these sordid deals, lies, flaunting of law and regulations and cavalier disregard for the waste of taxpayers hard-earned money.  They just know that the whole thing stinks, and that the product involved is at best mediocre.

Don Surber, an editorial writer at the Charleston Daily Mail has called the Volt an “electric Edsel.”  It’s hard to sell a product through a blizzard of suspicion, and when the company and the car has become a national punchline.

Doug Magill has worked in the automobile industry and is a consultant, freelance writer and voice-over talent.  He can be reached at doug@magillmedia.net

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