Phoenix Places Large Order to Altair, Altair Receives 16.6% Ownership in Phoenix

Altair Nanotechnologies Inc. (Nasdaq: ALTI) entered into an exclusive three year supply agreement with Phoenix Motorcars and in return has received a 16.6% ownership of Phoenix.

Altair has received a purchase order for its NanoSafe™ 35 KWh battery pack systems from California-based Phoenix Motorcars for $1,040,000 for battery pack systems scheduled for delivery in February and March 2007.

In addition, the company announced it has entered into a multi-year purchase and supply agreement with Phoenix under which Phoenix has projected orders for 2007 between $16 and $42 Million for up to five hundred battery pack systems.

$42,000,000/500 = $84,000 -- This doesn't make sense. What's wrong?

In consideration for a three-year exclusivity agreement within the U.S., Altairnano received a 16.6% ownership in the company. The three-year exclusivity agreement provides Phoenix with limited, exclusive use of Altairnano’s NanoSafe battery packs in four-wheel, all-electric vehicles having a gross weight up to 6,000 pounds. Phoenix must meet minimum battery pack purchases, annually, to maintain the limited exclusivity agreement. The minimum commitment to maintain exclusivity for 2007 would provide $16 Million in battery pack sales to Altairnano. Altairnano’s NanoSafe battery packs manufactured for hybrid electric vehicles (HEVs) and plug-in electric vehicles (PHEVs) are excluded from the exclusivity agreement.

"The market opportunity for freeway-ready, all-electric, zero-emission vehicles is growing daily," said Phoenix Motorcars CEO Daniel J. Elliott. "Having a best-in-class company such as Altair Nanotechnologies as an equity owner and as a provider of safe, powerful, fast-charging battery packs, will be a major driver for our growth," added Elliott.

Altairnano’s NanoSafe 35 KWh battery pack systems enable Phoenix SUTs to meet California’s Air Resources Board Type III Zero Emission Vehicle (ZEV) standards while providing power for a driving range of 135 miles and driving speeds of up to 100 miles per hour. The NanoSafe battery pack can be recharged in less than 10 minutes at fast-charge stations.

The initial order of battery pack systems, valued at $1,040,000, is scheduled for delivery to Phoenix in February and March 2007, and additional shipments of increasing value are planned throughout the 2007 calendar year. Depending on Phoenix’s level of demand, the entire projected order for NanoSafe battery pack systems may be shipped to Phoenix in calendar year 2007. Under the terms of the multi-year purchase and supply agreement, Phoenix will purchase all battery packs for its electric vehicles from Altairnano.

Phoenix Motorcars’ market strategy targets operators of fleet vehicles, such as public utilities, public transportation providers, and delivery services. This market presents a significant opportunity as there are more than 200,000 fleet vehicles in the State of California alone, with an increasing number of fleet operators now seeking freeway-capable, zero emission, all electric vehicles. The Phoenix SUT and SUV vehicles are the only all-electric vehicles currently on the market capable of meeting California’s Type III ZEV requirements.

Comments

[Jimmi]

I was thinking the same thing... is the cost rising?

[JP Elverding - the Netherlands]

Multi year contract, so it'll probably be $1.040.000 per 500. But a 20 year contract? Weird indeed!

[LeDuc]

imo Real price for battery does not include the ZEV tax credit and may be even <$ 5000-7000 range mass production mode.
GM wants VOLTs? Alti got NanoSafe Amps.
Stay tuned for Alcoa news soon!

[Lim Chee Kit]

MEAG DEAL!!! Look at my revised estimates again based on the US$16-42 million contract. I'm using the low end estimate of $16 million as costs usually goes down when in mass production:

Revised estimate:
Year No. of Nanosafe pack Estmated Contract Value
2007 500 US$16 million (35KWH)
2008 5000 US$320 million! (70KWH)
2009 20000 US$1.48 billion!! (70KWH)
2010 50000 US$3.2 billion!!! (70KWH)
2011 100000 US$6.4 billion!!!! (70KWH)

[KacherMB]

I have never posted at this site, but I have been reading the energy blog for a while now. It's a great site and I enjoy reading it. When it states that an "exclusivity agreement within the U.S." has been agreed upon, does that mean that Altair can sell the batteries outside of the US?

[Greg Woulf]

Good Question KacherMB.

I think the contract price should just be ignored. The only thing I think you can take away from the $84,000 per pack number or the previous $750,000 order for 10 packs is that the battery packs cost less than the $75,000 price each.

That's because Phoenix was also paying for exclusivity, charging technology and to some extent the publicity of being first.

I have no idea how much the packs cost, and I think only people within the two companies do.

I'm hoping the 35kWh pack is less than $20k, and the 70kWh pack is less than $35k.

[amazingdrx]

I remember the figure 14k for the 35K pack from a previous post on Altairnano.

This battery in the GM volt would give the 40 mile plugin range at about 2k at that price. A much more economical car that had a 40 hp motor instead of the Volt's 80 hp would need only half the storage for those 40 miles so need only 1000 dollars worth of batteries.

A hypercar, built with ultralight materials, could operate with economy car performance with a 40 mile plugin range with only 500 bucks worth of these batteries. How much for the 10kw backup generator this hypercar would need?

Honda produces the most reliable units of this size for under 1000 bucks.

Will solid oxide fuel cell/microturbine backup generators with 75% efficiency be the next big breakthrough? I think so.

Even with low production, 500 dollars for the batteries in an economy hypercar with 40 mile plugin range and over 100 mpg in ICE generator mode makes these vehicles practical and affordable right now. So what's the holdup?

Why don't japanese automakers introduce them? Is there import quota pressure on them from the Cheney administration? Will Subaru only put out a short range electric or go with backup generation too? We'll see.

[Tim]

The holdup is that it's hard to go from prototype to mass production quickly. If and when Altair, or EEStor, or any one else demonstrates that they can produce these miracle batteries in quantity at a reasonable price the car makers will get serious about mass producing electric cars.

[kent beuchert]

Don't attempt to figure out the cost of the batteries by any payment figures that are provided. Those have in the past included such things as payment for engineering services, prototyping and other odds and ends.
The source for battery cost info is Gotcher himself, and he has CLEARLY stated that the cost of mass produced NanoSafes will be comparable to li ion batteries, which generally means somewhere around $400 per kilowatt hour of capacity. That is more than any of the automakers want to spend, and is the main reason that they are paying for more battery research. But they are
focued on plug-in hybrid batteries, not batteries for a viable electric car, like the NanoSafes. Batteries for plug-ins don't have to be fast rechargers and the automakers don't envision batteries like the NanoSafe, which will easily outlast any vehicle they are placed into. If the battery research can produce a cheaper battery that
is equivalent to the NanoSafes, more power to them and the world, but it may not such a cheap battery may not be possible. If that's
the case, then there needs to be a rethink and consider thecar and battery packs as two different animals, using a 15 year mortgage to finance the battery packs. The NanoSafes are relatively cheap on a per year or per mile basis, but, like li ion batteries, their initial cost is high. THAT'S the stumbling block here. The automakers are thinking in terms of list prices on the window, but this may be a whole new ballgame that they don't yet understand. The lifespan of a NanoSafe battery pack may include
powering three or four generations of cars.

[JohnBo]

Good for Phoenix Motors. Hopefully this support will aid them. KacherMB, the exclusive agreement is only for three years supply. In return, Altair gets 16.6% of Phoenix...wow. That's a sweet deal for Altair for very little risk.

Like Tim said, it takes a while for large successful companies to make changes. GM, Toyota, et al will take their time and do their best to have a success where Phoenix is betting the farm. Both business models are normal for each. There is no sinister dark room intrigue from the "Cheney Administration" or any other place like amazingdrx suggests impeding progress.

Lets hope Phoenix is in the right place at the right time and can be successful. Time will tell. JohnBo

[amazingdrx]

400 bucks per kwh, that puts an equivalent to a gallon of fuel in an ICE at around 2200 dollars. Enabling an economy serial plugin hybrid design that gets the 40 mile plugin range needed.

That maybe more than they want to pay, but it is fine for the average consumer that will cut their gas bills by 90%.

Figure it out. A regular motor and related systems in an economy car costs maybe 2000 bucks to manufacture.

The whole serial plugin hybrid system, batteries, electric motor, backup generator, would cost maybe 4000 to manufacture.

So charge 2000 more for the plugin serial hybrid to recover extra costs, which will no doubt disappear with actual mass production.

The huge fuel savings with the serial hybrid will justify the extra cost to consumers and if government chips in with a 2000 dollar tax credit? It's a done deal.

Detroit once again makes zero sense around these issues, leading one to believe this foot dragging is more fakery to help their corporate partners in the oil bizz.

[John F.]

"400 bucks per kwh, that puts an equivalent to a gallon of fuel in an ICE at around 2200 dollars."

$400 doesn't buy you 1kWh of energy. I buys you 1kWh of energy STORAGE CAPACITY. Maybe you're trying to say paying $400/kWh for a battery is like paying $2200 for a 1-gallon fuel TANK.

In terms of Phoenix's actual truck, an illuminating way to look at it would be to compare its 35kWh battery pack with a 7-gallon gasoline tank. Both would give the vehicle about the same range. The battery pack costs $14,000 (mass produced), but costs about $3 to charge (empty to full). The gasoline tank costs $500, but costs $23 to fill.

Over the life of the battery (15,000 charge cycles, 2 million miles), $45,000 will have been spent on electricity. The gasoline tank would also have been filled 15,000 times, but at a cost of $345,000.

Of course, 2 million miles is more than the most people drive in a lifetime. What this points out is that your 35kWh battery pack will only have used 10% of its useful life when dispose of your EV car after 10 years, so you might be able to recover a large portion of that $14k investment. I say might, because better/cheaper batteries on the market 10 years from now will likely push down the resale value of your old NanoSafes, even though they're still almost as good as new.

[amazingdrx]

Good analysis John!

It is definitely doable right now. Mass production will make this drivetrain cheaper than an ICE in the end.

1000s of moving parts and computer chips in a modern iCE car.

Under 100 moving parts and a lot simpler control system for a plugin serial hybrid of this design.

No prohibitively expensive materials (such as platinum in catalytic converters or hydrogen fuel cells) either.

Now imagine a 75% efficient solid oxide fuel cell/microturbine backup generator. Boeing is working on this for airliner backup electric power. it runs on multiple liquid fuels.

[Demesure]

amazingdrx,
I don't think you'll find a 75% efficient microturbine on planet Earth. Capstone's well proven turbines have only 25% electrical efficiency.

[ab]

Just wondering about these PHEV. I live in Montreal, Canada & it's usually cold here at this time of yr. We would need heat in the car & I can only assume that in Texas, they would like A/C in July. How much power would this take from the battery? If a car can go 40 miles on electric before the gas engine starts up, how far would it go when its 0 F.

[Paul Dietz]

ab: one could imagine storing heat in a 'thermal battery' (an insulated mass of some material with high specific sensible or latent heat). One could 'charge' this battery either electrically or with waste heat from the IC engine, and draw off the heat to warm the passenger compartment during driving. The heat/mass would be far higher than the stored electrical energy/mass of even Li-ion cells.

If I recall correctly, BMW had a small thermal store like this that hooked into the engine coolant loop in order to quickly bring the engine up to operating temperature, reducing engine startup emissions. It was heated by the coolant, not electrically, but the principle is similar.

[Abraham]

amazingdrx is at it again.

1. No microturbine for cars, we went through that before.

2. No 75% efficiency for Fuel Cells in the near future.

3. GM will only allow the batter to go to 40%, so that means you need 30kw as posted with regard to the volt.

AND altair does not have the capacity for mass production.

THIS STUFF IS COMING, JUST NOT YET FOR THE MASSES. Look for the first set of serial hybrids to be around $35,000 with E85 ICE for backup.

[Nucbuddy]

Paul Dietz and ab,

A heat pump can be employed to put more energy (as heat) into the cabin than is drawn from the battery.
google.com/search?q=%22electric+car%22+%22heat+pump%22

[JohnBo]

ab the space heating is not a super large load for an EV sized battery, but it is significant. Guessing at 0 degrees a 3000W heater would be sufficient the Phoenix 35kWh battery would last over 11 hours (the motor not running).

If you drove 70 miles using 70% of battery capacity in 3 hours you would have 30% of 35kWh (10.5kW) reserve for heating. In this case (23mph average speed) you have just enough to get home and be comfortable on the way.

The moral is for living in Canada, if you are a slow driver you better turn the heat off to make it home or move closer to work. :) JohnBo

[JohnBo]

I am a electric fan and I hope Phoenix makes it but... there are some exaggerated claims in the Phoenix information.

Lets just look at the $3 per "fill up" cost claim. It takes more than 35kWh of charge energy to yield 35kWh of usable return from a battery. Lets say we give the battery and the charger system a generous 95% efficiency rating. You must buy 37kWh.

Electric power in California cost 14.53 cents per kWh (Dec 15, 2006 DOE report). The cost for the home plug in would then be $5.38 for your 35kWh of usable energy.

If you "fill up" on the road the filling station will want a little profit. Even at a low 12% profit margin the cost is going to exceed $6 per 35kWh.

I read where chicken fat can be turned into biodiesel for $0.50 per gallon. I'm afraid the EV has a bumpy road compared to the hybrid technology as much as we all want it to happen.

John F try your calcs with $6 EV fill ups and $2/gal fuel. It's more realistic, but sad for the EV. Phoenix is smart to sell only in CA where regulations and subsidies (tax payers) pay the bill.

[Beek]

JohnBo, electricity is 5.5 cents US/KWh up here in Canada, and gasoline is US$ 3.52 a gallon. Assuming 3 miles/KWh, 85% efficiency of grid-to-wheels, and 20 mpg ICE, then 105 miles (35 KWh) range can be had with $2.26 in EV or $18.48 in ICE. That is a factor of 8:1 in favor of electricity.

[Paul Dietz]

For ComEd customers around Chicago, residential off-peak electricity (if you have time-sensitive rates) is $.0352/kWh plus some surcharges.

[JohnBo]

Beek,Paul,

I enjoyed your feedback, thanks. Those are great rates for electric. Perhaps even California has some off hour lower rates, I just used the DOE report and picked on CA since that's where the first Phoenix sales go. Here in the midwest our farm rate is about $0.09/kWh. It's hard to imagine the Chicago rate being sustainable.

The all electric EV vs. the hybrid is similar to solid state vs. mechanical disk drive memory for computers. Each time a new electronic memory technology is anounced I think it's the end of the more complicated hard drives.. but the mechanical guys keep improving too.

With bio-diesel production tripling every year and new low cost methods being announced (like algae) the cost of fuel could drop substantially. The mechanical guys may give the EV a good run. It's all very interesting.

Since there is such a disparity of prices for exactly the same commodities, I suppose the local tax structure has more to do with what happens than true market conditions. It's sad that the best may not win due to politics.

If these high energy batteries come to be maybe we could get a black market going by shipping them from California to Chicago to be charged..haha. Of course there may need to be a tax break given to Union Pacific RR to lower shipping costs for EV batteries ..haha.. sorry for the humor :) JohnBo

[Rais]

Don't attempt to calculate the cost of Altair NanoSafes by published contract figures. Those can include such things as California green credits - you must realize that in California, nothing is as it seems and very crazy policies prevail.
"Up to 500 for up to $xxx" may be backwards - reading it in reverse yields $32,000 for a 35-60 kwhr battery pack (the avg pack size is not mentioned), which wouldn't be too far from reality for an assembly line that isn't benefitting from large numbers.

[used computers]

I have no idea how much the packs cost, and I think only people within the two companies do.

[انفجن]

from my point of view looks fair and good deal

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