Congratulations to Mr. Marchionne for being a (rare) pragmatist.

This may actually be good news for A123. I don’t think they would have been able to supply the necessary quantity of cells in the near term which is one of the reasons they didn’t get the GM Volt deal. Following that logic, they would have eventually lost the Chrysler/ENVI deal as well. This delay gives them a chance to get their cell manufacturing set up and running so that they can support 60,000 vehicles or more per year.

To give you an idea of the magnitude of the problem, consider that the GM Volt uses a 16kW-h battery system. To deliver batteries for 60,000 cars/year, each using a 16kilowatt-hr battery requires a battery manufacturing capacity of 960megawatt-hrs/year. According to the A123 prospectus, they currently have a total capacity of 169.3megawatt-hrs/year including the batteries they manufacture for power tools which is the majority of their business today. Of course they are moving rapidly to expand production using the money from their recent IPO as well as stimulus money but it can’t happen overnight and even one deal on a vehicle that is selling at 60,000 units/year requires nearly a six-fold increase in their manufacturing capacity.

Another sanity check: Toyota builds about 300,000 Prius cars per year. They use a much small 1.3kW-h Ni-MH battery but this still represents 390megawatt-hrs/year of battery capacity from their primary battery supplier which is Panasonic.

Obviously A123 and the other cell manufacturer and battery manufacturers are going to have to expand substantially in order for the EV market (which includes hybrids, battery cars, and plug-in hybrids) to be successful. There are other issues besides manufacturing capacity, mainly cost per kW-hr, that are also important. So, not only do the battery manufacturers have to ramp up capacity, they have to bring down prices.

Peter, you use big words for someone obviously iq deficient.  Care to explain why a guy who runs the worst EU auto mfgr, then buys the worst U.S auto maker should be congratulated?  Ummm because he hasn’t spent a dime on next gen fuel vehicles—and that’s a smart thing eh?

Electric cars are useful in small doses, and can be beneficial for the environment.  However, they cannot, and should not, be used to replace cars on the mass scale.  We need more efficient long distance transportation systems for cargo and passengers, such as electrified rail.

http://www.selfdestructivebastards.com/2009/10/electric-cars-in-small-doses.html