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Lithium Economics

The Obama Audit Task Force and the Volt

Apr 18, 2009

In several articles published over the last year and a half or so both in Bolivia and the United States I have advocated GM‘s Volt as a technological innovation that would revolutionize the global car industry. So, on March 30 2009 I was astonished by the main conclusion of the Obama Audit Task Force (OATF) regarding the Volt:

“GM is at least one generation behind Toyota on advanced, “green” powertrain development. In an attempt to leapfrog Toyota, GM has devoted significant resources to the Chevy Volt.”

This conclusion only reflects the OATF´s failure to understand what advanced “green” car technology really means.

In a recent blog I have argued that by relying on (obsolete but still commercially viable) nickel-metal hydride batteries for their conventional hybrids, both Toyota and Honda have been following a similar but rather cautious and conservative approach to a lithium-based transition to electric propulsion in the global car industry.

This entirely rational behavior not only comes down to a different business strategy than that of their main competitor: General Motors (GM); it also implies their lagging behind GM insofar as electric automobile technology.

In fact, while conventional hybrids have played a big role in raising driver´s consciousness over the last ten years or so, everybody now agrees that Plug-in Hybrid Electric Vehicles (PHEVs), Range Extended Electric Vehicles (REEVs) and Battery Electric Vehicles (BEVs) are the obvious steps forward. Something all these new EV technologies share in common is their dependence on lithium.

Both Toyota and Honda know that for sure; that is precisely why they are now investing a great deal in lithium. But given the critical situation of the American motor giant, it simply does not (and did not) make any sense for them to become GM´s technology followers or even leapfroggers.

Had they decided to become followers or leapfroggers of GM, they would have had to lose part of what they seem to value the most nowadays: their reputation. One just needs to remember that at the time GM made its Volt announcement, it was already facing severe financial problems, and Toyota and Honda were still the second and third largest auto makers of the world (As of today, Toyota is first and Honda remains third).

It was then probably wise for Toyota to stick – at least for the time being - with its much proven and praised Prius technology and let other car makers undergo the painful “trial and error” process of the new way of doing things. One must keep in mind also that to leapfrog GM, Toyota first would have had to kill the Prius.

In a similar vein, it also made sense for Honda to be inclined towards a two-step approach to electrification: first, emulate the know-how (i.e. the Prius technology) advanced by a much more respected firm (Toyota) than GM and, second, come up with something revolutionary, something beyond lithium; the hydrogen-powered FCX Clarity model, for instance.

Of course, one should not be surprised if, also as part of their business strategy, sometime down the line both Toyota and Honda introduce some sort of lithium-powered electric cars into the market. As I have recently commented on Seeking Alpha, however, this may occur only at the expense of a technological lag.

Hence the OATF in its recent March 2009 report did not appear to have a clue in terms of what advanced “green” car technology really means. Perhaps some consumers in the US and the UK government could have provided the Task Force with some valuable hints in this regard.

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Note.- This is a republication of a blog originally published on EVWorld.com on April 18, 2009.