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Old 12-18-2012, 03:27 PM   #1
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Default Bankrupt A123 to be bought by Chinese company?

The question mark is whether the deal will go through; it is being challenged by Johnson Controls.

http://legaltimes.typepad.com/blt/20...tery-deal.html

Looking around at some of their competitors, there appear to be a lot of changes coming up in the battery world:

Another competitor, ReVolt Technology, who was touting a zinc-air battery with twice the energy density, intended directly for transportation applications, filed for bankruptcy in November. http://www.sustainablebusinessoregon...ankruptcy.html

ZPower is planning to offer a zinc-silver-water battery that's supposed to have 40% higher power density, safety, and not need lithium (which has limited sources). They're focusing on tiny battery cells, but I don't see an obvious technical limitation. I don't know how much silver they need -- that's expensive -- but zinc is about 1/3 of the price of lithium.

PowerGenix (http://www.powergenix.com/) is offering a Nickel Zinc battery with power density similar to LiIon, but at half the price and without the safety drawbacks.

And of course, Valence is still alive and kicking, despite their own bankruptcy. That's gotten convoluted, with accusations that the bankruptcy was a power grab by their biggest investor, who may come out of this with sole ownership.

It does look like depth of pocketbook has as much to do with survival as technology!
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Old 12-18-2012, 06:46 PM   #2
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Doesn't the question that begs to be asked seem to be; "If there is so much interest and clamor for green energy, which use these batteries for storage and power, then why do these companies have so much trouble staying afloat?"

I believe the answer is at least partially, that there is not so much interest and clamor for this technology as some would have you believe.
People who make the items that every one wants, do not typically have as much problem making their businesses work.

People who make the items that people are told to buy, are told they want, are told that will make their lives better, have less success because telling folks they want them is very different than convincing them.

Once people truly endorse and take these technologies to life, to THEIR lives, then the business prospects will be better. (Segway is not much different in this regard) Once people actually do want these things, and are not just being told they want them, then these businesses and technologies will thrive.

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Old 12-18-2012, 08:23 PM   #3
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"If there is so much interest and clamor for green energy, which use these batteries for storage and power, then why do these companies have so much trouble staying afloat?"
Answers to such questions are available if one wishes to do a little research. Publications for both the battery industry and the automotive industry indicate that the Chinese government is undercutting the market by dumping cells and batteries. When competitors are driven out of business, they buy their assets (and customers). The Chinese are taking the long view, trying to corner the market, and stepping on the neck of competitors whenever possible. They have obviously learned how to play the Game of Capitalism very quickly. (You win or you die.)

The Chinese have already done this to the rare earths market. Rare earths are indeed rare, but there are sources outside of China. However, the Chinese government considers this rare earths a strategic weapon, and they financially support and control the industry. They also limit the sales of some of these raw materials (in this case, lithium). They can make it almost impossible for competitors to be successful.

As Bob Kerns says, this is a very dynamic business, with new technologies and enhancements to older technologies occurring quickly. An analogy might be Nokia and the smart phone market. A few short years ago, RIM Blackberry was on top. Now, ...um... they are not. Obviously, this doesn't mean there isn't a market or that people are being told to buy something else. Rather, it means that a technology and design boat sailed at some point, and RIM missed it.

Valence is on the ropes for a number of reason, not the least of which is that most of the big customers decided to buy batteries from other companies. Rule of Acquisition #147: Without sales, technology is worthless.
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Old 12-18-2012, 10:59 PM   #4
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Originally Posted by KSagal View Post
Doesn't the question that begs to be asked seem to be; "If there is so much interest and clamor for green energy, which use these batteries for storage and power, then why do these companies have so much trouble staying afloat?"

I believe the answer is at least partially, that there is not so much interest and clamor for this technology as some would have you believe.
People who make the items that every one wants, do not typically have as much problem making their businesses work.

People who make the items that people are told to buy, are told they want, are told that will make their lives better, have less success because telling folks they want them is very different than convincing them.

Once people truly endorse and take these technologies to life, to THEIR lives, then the business prospects will be better. (Segway is not much different in this regard) Once people actually do want these things, and are not just being told they want them, then these businesses and technologies will thrive.
Actually, I don't think there's any mystery here. The items are hot, but there's a lot of companies competing, and a lot of the competition is on price.

A lot of companies have put in a lot of capital, only to find that the margins were thinner and the market share narrower (both due to stiff competition), than they projected (and told their investors to expect).

To a large degree, this helps consumers. But it is also rather inefficient. For that inefficiency, though, we get the benefit of not over-committing to one path, one company, one business model, one technology.

Every company that fails and falls by the wayside, leaves more market share to their competitors, who get to make a few more sales, at least until some new upstart comes along.

It's not optimal -- but planned economies have a worse track record at finding efficient production strategies, than marketplace chaos -- and government-backed consortia, etc. don't have that great a track record either, though there can be benefits.

I think there is every bit as much clamor for these products and technology as people would have you believe -- and more. I just don't think the companies are as capable of meeting the needs of that market with as much profit and market share as they'd have their investors believe!
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Old 12-19-2012, 01:25 AM   #5
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It seems to me that marketing, and funding are not always in line with superior products. While frequently pure market pressures do make more and better products and values, this is surely not always the case...

Look into the cases of Beta vs VHS tapes, as an example. Quality and even price points went with Beta, yet VHS was better supported, and eventually won out in consumer markets, and Beta barely survived in technical venues only, because it really was a better product.

There are other cases as well. There are many cases of superior carburetors and fuel management systems being squashed by car and oil companies, who did not have the desire to have those impacts to their markets.

Many markets, including foodstuffs and homeopathic health aids are frequently manipulated by big dollar interests, that are not looking out for increased values to consumers, but to controlling markets in order to circumvent the free market process, and assure profit margins.

So, while the theory of free markets winning better values for consumers is a good one, the practice is far less effective.

As as you have said, it is a flawed process, yet is better than all the alternatives.
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Old 12-19-2012, 03:04 AM   #6
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It seems to me that marketing, and funding are not always in line with superior products. While frequently pure market pressures do make more and better products and values, this is surely not always the case...
Indeed, the difference between success and failure in the marketplace depends on many factors, not all of them a matter of being a better product.

Some have to do with how well the company is managed. How effective the company culture is at adapting in the face of change.

How well it the product is communicated. Perceptual biases in the customer base, and how well they can be countered by effective marketing. The ability of management to lie. Government regulations. The ability of competitors to lie. Hollywood endorsements.

But the problem with a hot market is that you're seldom in control of it.

Back in the early 1980s, I worked for Symbolics -- the very first .com (literally, the first .com domain registered). We made workstations, not unlike what you have on your desk -- bitmap displays, windowed graphics, hardware dedicated to one user at a time, the ability to run multiple processes, strong networking, and much more, including features that are still being reinvented today.

Sun Microsystems ate our lunch, with inferior hardware and software. I won't try to cover all the reasons for that -- there were many -- but they survived, we did not.

Fast forward about a quarter century. Sun Microsystems is eaten as an appetizer by Oracle.

In fact, every company larger than 10 people I've worked for in the past 50 years, has been eaten up by other, more successful companies (not always larger!). Except for the grocery warehouse, all those assets ended up in the hands of two companies when all was said and done -- HP and Oracle.

The sole exception being my present employer, and even there, the group I work for was acquired, long before my tenure.

Oftentimes, success boils down to whether you can pour money into a business long enough to see a return on your investment -- and then, whether you can continue to supply money long enough to change -- a race between corporate finance and corporate inertia.

Your example of Betamax vs VHS was won on the basis of content distribution. There was a narrow range of applications where the technical advantages of Beta mattered, but not enough to justify the price of U-matic. VHS won because people valued content over video quality.

That specific reason doesn't really apply in this case, as the manufacturers of battery cells for Segways and such don't sell to consumers. But manufacturers have their own concerns -- stability of supply being a major one. Redesigns because a supplier goes under really really hurt. Not only is it expensive, to redesign, retool, maintain a supply of spares for existing models, new test procedures, etc. You can literally be left with your entire operating expenses + redesign costs, and no product to sell. A single supplier going under can sometimes kill a manufacturer. My first job out of high school -- landscaping -- ended abruptly due to a problem with their supplier of sod.

So an upside to all this inefficiency, is that if Valence disappears, there's A123. If Segway has to move to A123, they can start looking at other chemistries from other suppliers.

But they won't be alone in that. I think it's unlikely that both companies will disappear. Far more likely that one or both will be snapped up by someone with deeper pockets, who -- for a price -- can offer the customer base some stability, and possibly retain their business down the road with whatever the replacement technology is.
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Old 12-19-2012, 10:25 PM   #7
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There are many cases of superior carburetors and fuel management systems being squashed by car and oil companies, who did not have the desire to have those impacts to their markets.
Really? Having spent many years in powertrain engineering, I would be very interested in some details supporting that belief.

I have no personal knowledge about fuel economy technology being squashed from the turn of the century to the early 1970's, but after that I can't think of a reason either fuel or car companies would want to increase fuel consumption per vehicle. Fuel companies want to maximize profits, while investing as little as possible in exploration and extraction. Ideally, they want consumption to go down while price goes up.

For their part, car companies have had to deal with the Corporate Average Fuel Economy requirements since 1975. I am personally and intimately familiar with hundreds of millions of dollars spent by car companies, trying increase their fleet average by a couple of tenths of MPG. My budgets alone have been in the tens of millions of dollars per year, and that's for just one small sliver of fuel economy and emissions optimization, for just one car company. I don't think they would have bothered to spend all that money if they had Double-Secret technology in the cupboard.

More than likely, you've heard popular myths like the Pogue carburetor, or maybe the lesser-known naphtha and water fuel system? A little thermodynamics will yield inconvenient truths about claims made for the Pogue carburetor, and many other fuel systems fall into the "well, it worked just fine in the lab" , category, but you wouldn't want one in your car.

I'll point out that there are lots of technologies that have been known for decades, but which didn't get into cars because there were less expensive ways to achieve the goals (like increased displacement instead of instead of turbochargers, just for one minor example). That's a different issue.

I truly hope someone is inventing a cold-fusion converter that runs on tap water. Our Earth desperately needs a magical clean energy source, but I've learned that it is not as easy to get better fuel economy as people think. The idea that technology is being suppressed is a conspiracy theory that could only be held by those who are not aware of what powertrain development engineers do, each and every day.
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Old 12-24-2012, 05:33 AM   #8
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One has to wonder why Segway has stuck with Valence for so long. The problem with Valence is that their batteries have always been too expensive. I don't know how much Segway pays for Valence batteries, but they charge their customers over $2,000 per kWh for replacement batteries. Automotive traction batteries reportedly cost around $500 to $600 per kWh and are moving toward $250 per kWh, according to this article.

http://www.greencarreports.com/news/...alyst-says-yes

After all these years, Segway remains Valence's largest customer. Given that Segway isn't a very large customer, Valence has never been able to achieve sufficient volume to generate economies of scale. One would think that Segway would have looked for a lower-cost supplier by now.
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