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Lithium for Hybrids: Is Nickel for Batteries Dead?

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Excellent article on seeking alpha reinforcing Lithium as the commodity to be the way to go....
Lithium for Hybrids: Is Nickel for Batteries Dead?
March 21, 2011 | about: JJN, JJNC, LIT
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In a previous article published on July 12, 2009, I asked myself: “So if Li-ion batteries are to be used quite soon in plug-ins and both range-extended and battery EVs, then why not utilize them now for conventional hybrids as well?”. I was referring at the time to Hitachi´s (HIT) announcement that beginning 2010 and by 2015 it would increase its Li-ion battery production by 70 fold for hybrids.
I then predicted that: (i) “Hitachi´s approach is likely to be followed by other battery makers in Japan and elsewhere”; (ii) “…This may be a short-lived approach. We will not have to wait too long until the major car makers of the world realize that mass-producing REEVs and BEVs (rather than HEVs and PHEVs) is the correct way forward”; and (iii) “… to retain its largest share in the automobile market of the world, Toyota will probably need to modify significantly its current conservative business strategy”. The article gave rise to a number of harsh comments, most of which aimed at discrediting the main thrust of my arguments.In retrospect, I was found to be essentially correct.Here is why.
First, Hitachi´s approach was in effect followed by other Li-ion battery makers such as LG (from South Korea) which will power the new Sonatahybrid to be launched in a few months in the U.S., and Yuasa (from Japan) which will be energizing the new Honda Civic to also be introduced into the market pretty soon.In addition, it has been known that the Buik LaCrosse, a mild hybrid built by General Motors (GM) to be launched later this year, will use Hitachi´s lithium-ion batteries for the stop-start technology and other new features of the car.
Second, most major car makers have announced that in the next 2 or 3 years they will produce PHEVs and BEVs. This result differs somewhat from my original supposition. But does it mean I downplayed PHEVs while overemphasizing REEVs without a valid reason? Not necessarily.
For one thing, it is hard to tell how many of those “regular” PHEVs already announced will finally make it to production lines, particularly in light of some recent events that are to transform the electric car horizon shortly.In fact, PHEVs were thought of as a second-best solution for a “not too high” oil price world.Chances are the price of oil will not only stay high but also could even reach higher levels, both due to the current Middle East unrest and a new source of demand for oil resulting from the nuclear energy crisis in Japan. In this context, I doubt PHEVs will remain an interesting option.
For another, as major auto makers begin to know more about the specific REEV technology developed by GM, they will likely end up embracing it. One example is Honda (HMC), which has just indicated that its new plug-in hybrid platform “will permit a vehicle to be driven solely on either gasoline or electric power – or a blend of both.” Obviously, here Honda is not talking about a “regular” PHEV but a REEV. Another example is Nissan (NSANY.PK) that has also shown interest in this kind of technology albeit has “no firm plans to launch it at the moment.” This may be understandable from a marketing perspective, considering the recent launch of its all-electric Leaf. Meanwhile, many non-mainstream car makers (e.g. Kia, Citroen, Audi, Volvo, BMW) and start-ups (e.g. Fisker Karma, Proton, Exagon, Ricardo, EMAV)are heading for a prompt launch of their different REEV models. So all of the above only reinforces my argument that we may not have to wait long to see more and more REEVs and BEVs on the roads.
Third, the question remains as to whether Toyota is finally interested in significantly changing its business strategy. Even though by and large the Japanese motor giant continues to resist to lithium, one small indication of a significant change underway is Toyota’s recent announcement that it will use Li-ion batteries for its up-coming Prius+ for Europe, the first Li-ion battery-operated Toyota Prius ever. In a previous articleI argued that one aspect of Toyota´s strategy aims at delaying as much as possible the electric vehicle revolution “because this will simply kill the Prius”. Perhaps the recent move implies that Toyota decided to kill nickel instead. Of course, this doesn´t mean that after Toyota´s decision nickel will no longer be demanded for other uses.It only means that it will not be demanded for batteries. As shown in my presentation at the First Lithium Supply & Markets Conference held in Santiago, Chile in 2009, republished by EVWorld.Com, this shouldn´t be surprising at all given “the dominance of lithium-ion batteries in the booming market of rechargeable batteries in recent years”.
How is this reflected in the stock market? One way to go about this issue might be to compare the performance of the ETFS Nickelwith that of Global X Lithium ETF(LIT).The following figures couldn´t be more convincing: Whereas the former shows a pronounced downward trend, the latter reflects more or less the opposite. Be aware that the figures are not strictly comparable, since the ETFS Nickel is a commodity ETF while the Lithium ETF is a composite ETF including both lithium resource producers as well as Li-ion battery makers.In view of all the arguments already expressed above, however, it doesn´t seem too difficult to assume that a composite nickel ETF, including both nickel resource producers and nickel battery makers, would only make things worse, not better.