Will Start-Stop Technology Unplug the Electric Car?
While the debate rages over the real-world viability of electric cars, money manager Shawn Hackett sees another alternative.
The North American International Auto Show just got underway in Detroit, and an interesting question was posed this morning by Neil Winton of the Detroit News:
"Where are the cars of the future?" he asks.
"2011 was supposed to be the year of the electric car, but apart from the fact that the Chevrolet (GM) Volt is about to be named Car of the Year, the vast majority of cars on display at the show are variations on the traditional internal-combustion engine theme. Nissan, which is plugging the battery-powered Leaf, doesn't even have a stand at this year's show."
Not many things provoke such emotionally fraught debate as does the electric car. There is no shortage of proponents who are "all in" and, on the opposite end of the spectrum, detractors who are equivalently "all out."
So, what about all that unoccupied space in between the two extremes?
This is where, in money manager Shawn Hackett's opinion, automotive stop-start technology--which is already a key component in the Toyota (TM) Prius, as many are quick to point out (see comments below)--is set to dominate. Stop-start, which, as the name implies, stops the engine when the vehicle isn't moving (increasing fuel economy and reducing emissions by as much as 15%) and incorporates advanced battery technology to complete the package, is currently occupying a prime piece of real estate on money manager Shawn Hackett's radar.
"I think stop-start is likely to be the near-term standard. It just makes too much sense," Hackett, founder and president of Hackett Financial Advisors, tells Minyanville. "I'm not as confident as some other people that cars are right on the cusp of going 100% electric. For real-world applications, I believe stop-start's not far off from hitting what I call the "iPod (AAPL) moment."
While there are a handful of companies in the space right now including Maxwell Technologies (MXWL), Enersys (ENS), and Johnson Controls (JCI), Hackett is drawn to advanced battery and energy storage company Axion Power International (AXPW).
At November's 11th European Lead Battery Conference in Istanbul, Axion presented what Hackett calls "the best trial results by far in stop-start."
"We now have unequivocal evidence that their batteries work," he says. "Axion's product has 10 times the dynamic charge acceptance, five times greater cycle life, 85% efficiency improvement, and is 30% lighter. With a supply agreement with Exide (XIDE), they're now in a position to really rip."
As for rapid adoption by the driving public, a former Axion director named John Petersen, recently made the following observation:
"While human beings are far more complicated than physical objects, the reality is we all resist rapid, pronounced, or uncontrollable changes in our lives, our habits and our established rituals, even when the changes might be beneficial. In the final analysis we're all bound by inertia. We praise change, adaptation and progress as desirable goals for others but resist them mightily in our own lives.
"The only vehicle segment where I can identify a force strong enough to overcome the laws of economic gravity and human inertia are micro-hybrids that use simple stop-start idle elimination systems to reduce fuel consumption and emissions. This market will not be driven by individual choice. Instead it will be driven by EU mandates that require automakers to reduce CO2 emissions to 130 grams per kilometer by 2015 and US mandates that require automakers to achieve average fuel efficiencies of 37.8 mpg for passenger cars and 28.8 mpg for light trucks by 2016. Car buyers will undoubtedly resist stop-start the same way they resisted seat belts in the 1960s and pollution control systems in the 1970s, but it won't make any difference because government mandates have the power to overcome both economic gravity and human inertia."
Ford (F) has already introduced start-stop in some conventional European models and it is currently being used in Ford's US hybrids. In 2012, stop-start will be available on Ford's conventional cars, crossovers, and SUVs in North America. Beyond automobiles, Norfolk Southern Corporation (NSC) is working with Axion to retrofit a portion of its fleet of 3,500 diesel locomotives with PbC battery-management systems, which will conserve about 450 million gallons of fuel annually.
"Crude oil has a governor on it," Hackett says. "The world can't operate -- and grow -- at $150-$200/bbl oil, and I don't see anyone discovering new sources that'll dramatically change things in the next five to 10 years. If production stays flat, that means use has to stay stagnant."
As the chances of this happening are virtually nil, Hackett maintains we simply have "no other choice than to change the way we use crude or the market will force us to do it."
Or, as John Petersen notes, efficiency mandates already have. Thus, if Shawn Hackett's prediction plays out the way he imagines, fuel conservation is, in essence, the next "fuel" the world will be using.
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