An article in the Stanford Social Innovation Review laid out one of the most detailed assessments I’ve seen to date on how China’s electric car programs have been working, and why they have stumbled. Mind you, it’s still early days for the Chinese electric car industry, and one thing is certain: China is the largest car market in the world, and it is making one of the most aggressive bets of any country on electric car development. In the long term, a robust electric car industry and domestic market will likely emerge.

BYD’s electric minivan

China’s method of using its cities to test out local programs, which will later inform a national initiative, is one that has been used for decades. The country has tested out local economic innovation zones in this way and the magazine article calls China’s cities its “macro-laboratories.” The idea is that each region can have different system attributes, which can expose things that work and things that don’t work.

For example, the Beijing government used preferential policies like reducing car taxes, combined with a focus on industrial collaborations like a joint venture with Foton Motors, which is a union between BAIC and Daimler. The city of Shanghai adapted a rental EV model based on one from Bremen, Germany, while the local Hangzhou government also created a rental system; but one where people can rent the car and the battery separately. Shenzen pushed a more commercial approach to selling EVs, and created a financing leasing program with Potevio New Energy and China Southern Power Grid. Meanwhile, the city of Chongqing piloted fast charging stations.

At the end of all the pilots, Stanford Social Innovation Review pointed out that all of the cities fell short of their targets by thousands of cars. Not a single city hit its goals. While the local programs generated local enthusiasm and tested out a large amount of models, they focused too locally.

One problem was that the local governments and city leaders ended up over inflating the progress of the programs, because success could lead to more funds from the national government for the local regions. Competition between local programs also led to “local protectionism,” as the article calls it, meaning local regions would use their own standards that weren’t interoperable with other local ones. From the article:

[T]oo much local competition complicates rather than facilitates the development of the national formula. Without strong guidelines from the central government, the city pilots lose sight of overarching goals and produce specialized local standards that are not widely applicable.

The national Chinese government will clearly now have to find a way to use what it has learned to inform a national strategy. The goals for China’s electric car adoption were set in the summer of 2012 to 500,000 electric cars (all-electric and hybrid) by 2015, and 5 million by 2020.

Those goals might seem small, but given the progress so far they could end up being pretty ambitious.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Electric vehicle outlook: 2012–2017
• After Solyndra: analyzing the solar industry
• Warren Buffett and the true value of solar

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Ups and downs for cleantech in Q1
• After Solyndra: analyzing the solar industry
• Connected world: the consumer technology revolution

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Why service providers matter for the future of big data
• Infrastructure Q2: Big data and PaaS gain more momentum
• 2012: The Hadoop infrastructure market booms

Part of the reason for the oversupply of EV batteries is simple: The market for electric cars is looking like it’s going to be a lot smaller than predicted, at least in the short term. The crunched market is something battery maker Ener1, which had a deal with electric car maker Think, and Johnson Controls, which has a battery partnership with Saft, have discussed publicly. Johnson Controls is looking to end, or expand, its deal to work on EV batteries with Saft, because it wants to pursue the power grid battery market. And Ener1 cut its losses on its investment and partnership with Think, partly because the EV market was looking slower than expected. Think eventually went bankrupt.

At the same time that the EV market is looking tiny, battery makers have been expanding capacity substantially for making EV batteries and new battery makers have been moving into the EV market. But Lux says even if oil prices jump to $200 per barrel, which could cause the EV market to grow substantially by 2020, five of the leading battery makers — LG Chem, GS Yuasa, SB LiMotive, AESC, and Sanyo — would have enough capacity to manufacture far more than needed to cover that market. That means there will be dozens of battery makers with way too much supply, particularly if gas prices remain low.

In fact, Lux predicts there will be only a few winners in the EV battery market, and some of the ones already ahead include LG Chem, SB LiMotive, and Chinese makers China BAK, China Aviation Lithium Battery (CALB), and BYD. Lux also gives Envia Systems props for its innovative technology and GM backing — there will be room for small, innovative tech developers to do licensing deals and be acquired, says Lux.

On the other hand, Lux says A123 Systems and Ener1 face “an uphill climb” — marking both of them as “caution.” Lux also issued caution takes for International Battery, K2 Energy Solutions, Valence Technology, Leyden Energy, Electrovaya, and gave a “strong caution” to Altair Nanotechnologies (ouch).

There are a few ways for these battery makers to survive the coming market crunch and consolidation. One is to find new partnerships — because the market is so immature, the partnerships that are already in place are relatively tenuous. Another survival method will be to find battery markets outside of pure EVs, like hybrid vehicles, e-bikes, and the power grid.

But there will be a significant amount of losers in the market. As an anonymous president of a battery material company says in the Lux report:

“If someone wants us to build out capacity, what happens if no one use it? If we return to just phones and laptops, then my investors are looking for new management because we’re bankrupt.”

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Opportunities for the future of batteries
• Green IT Q1: Cleantech Breaking Out — and Bracing for Hard Times
• Cleantech third-quarter 2012

That 32 MW li-on battery project could be one of the largest of its kind in the world when built. AES Energy Storage’s VP, Deployment and Operations, John Zahurancik, told me in an interview this week that AES’s 12 MW lithium-ion battery grid storage project in Chile (see photo below) was the largest of its kind when that was built. AES also has a 40 MW lithium-ion battery project in the pipeline in Texas.

Using lithium-ion batteries for grid scale storage, and frequency regulation for utilities, is working and has been proving itself economically at the pilot scale, says Zahurancik. AES’s pilot projects include a one-MW pilot with PJM in Pennsylvania Nebraska (photo above), a two-MW project in Huntington Beach, Calif., a one-MW project in Houston, Texas, an eight-MW project in New York that AES is scaling to 20 MW, and a 12-MW project in Chile.

AES has been running its one-MW pilot project with PJM for a couple of years, and now will be decommissioning that project to make way for its 32-MW project with PJM. Zahurancik tells me that AES learned a lot from the PJM pilot project about how to move to more of a digital and IT architecture in the power industry. “In the IT world, it is assumed that devices are connected in a two-way fashion, making them highly manageable. That’s not so true in the power industry,” said Zahurancik. The batteries are remotely managed with IT.

The one-MW PJM project used Altairnano batteries, but AES hasn’t yet disclosed which company’s batteries it will use for its commercial project — whether those are from A123 Systems, Altairnano, Samsung, Sanyo or BYD. Zahurancik tells me the newer players like A123 and Altairnano have been improving and scaling up production of their grid-scale batteries over the years, while the old-school battery companies in Asia are starting to become more aggressive with their grid products.

Commercializing these types of  lithium-ion battery projects will be important as a way to help power companies integrate more clean power. Batteries can act as an on-demand way to provide power when it’s needed — particularly when the sun doesn’t shine or the wind doesn’t blow — and are being used today as a regulation for the frequency of the grid.

Currently, the biggest problem with lithium-ion batteries for the grid is cost. According to a report issued last week by the Electric Power Research Institute (EPRI) lithium ion batteries are among the most expensive choices for utilities that want storage to help them manage the grid and for industrial/commercial applications.

However, EPRI pegs this year and 2012 as turning points for the grid energy storage market, because by then, companies that have collectively received more than $250 million in federal stimulus funding are expected to complete research and development work and move into field trial stages in the U.S.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How the Energy Storage Market Could Pay Itself Off
• Green IT Q1: Cleantech Breaking Out — and Bracing for Hard Times
• Green IT Overview, Q2 2010

1. Ford Revs Start-Stop Tech for North America. Start-stop systems that automatically shut a car’s engine off when you come to a stop (conserving fuel), and quickly restart it when you hit the accelerator, have become commonplace in many hybrid vehicles. And in Europe, start-stop systems are frequently used in conventional cars — but not in the U.S.

Enter: Tighter fuel economy requirements for new cars and trucks starting with the 2012 model year, and hello, microhybrids. Ford plans to add start-stop technology to cars, SUVs and crossover vehicles in its North American lineup beginning in 2012, for fuel economy improvements of between 4-10 percent. This week in Detroit, the automaker will kick things off by featuring its patented Auto Start-Stop technology on a concept vehicle. Last week at the Consumer Electronics Show (CES), Ford debuted its Ford Focus EV, and mobile smart car technology.

2. Heftier Plug-in from GM. For consumers who like the idea of the plug-in hybrid Chevy Volt but want more room for passengers, GM may have just the thing at the Detroit Auto Show. The company is expected to unveil a “more refined” version of the Chevrolet Volt MPV5 concept vehicle that debuted last year at Beijing’s auto show.

3. North American Car of the Year: Will It Have a Plug? It wasn’t so long ago that the notion of plug-in vehicles being front-runners for an industry award like the North American Car of the Year would have seemed like a pipe dream. This year, two of out of the three finalists selected by automotive journalists are plug-ins. GM’s plug-in hybrid Chevy Volt and Nissan’s all-electric Leaf are competing against the Hyundai Sonata, which comes in three flavors: a 35 MPG standard sedan, a sportier turbo model, and a 37 MPG hybrid. The winner will be announced Jan. 10 at the Detroit Auto Show.

4. Porsche’s Spectacle: A Hybrid? After a 4-year hiatus, Porsche is returning to the Detroit show this year, and executives say the brand will debut something “spectacular.” Word on the virtual street is it will be a variation on the 918 Spyder hybrid.

5. Model S, in Alpha. Tesla Motors plans to show off a so-called “alpha build” of its Model S sedan in Detroit. The company has so far assembled at least three of these hand-built, pre-production versions at its facility in Palo Alto for track testing and testing components and subsystems. For some Model S Alpha porn, see these videos.

6. BYD Back for More. The Warren Buffett-backed Chinese battery maker and vehicle developer BYD plans to pull the wraps off its 2012 e6 Premier electric model, as well as its plug-in hybrid S6DM. The company says it will also reveal the schedule for a long-planned (and delayed) U.S. launch of “green-technology vehicles and products.”

7. Toyota Prius Spawn. Fasten your seat-belts, Prius fans; Toyota’s about to take us on a ride into hybrid land, where there’s not just one Prius, but a whole family of them under a new Prius sub-brand. Toyota plans to unveil its long-discussed Prius family (including the current third-generation Prius and the Prius Plug-in Vehicle, as well as a new, larger model and a new Prius concept) on Jan. 10. You can check out the live webcast (scheduled for 1:05 p.m. EST) at ToyotaNewsroom.com.

For more research on electric cars check out GigaOM Pro (subscription required):

• Car Data As the Next Platform for Innovation
  
• Report: IT Opportunities in Electric Vehicle Management
• Why Microsoft’s Electric Vehicle Deal With Ford Matters

Image courtesy of Patricia Drury.

This finding could shape the future of the electric vehicle market given lithium is one of the fundamental resources used in the batteries of the next-generation of electric vehicles, including GM’s Chevy Volt, Toyota’s plug-in Prius, and electric versions of the Daimler Smart and BMW Mini.

So who will likely be the most aggressive when it comes to going after these lithium reserves? Potentially China’s electric vehicle players. China is swiftly becoming an electric vehicle powerhouse, recently surpassing the U.S. as the world’s largest automobile industry. Legacy car companies in North America, Europe and Japan haven’t yet mastered the EV technology, so moving early and fast could allow China-based companies to grab a lead in the nascent market. Chinese automakers, like BYD (which also makes batteries and counts Warren Buffett among its backers,) Chery and Geely, have been moving aggressively into electric vehicles, and global automakers like Daimler have been eager to set up partnerships with the Chinese firms.

The Chinese government has also declared a strong commitment to electric vehicles and has provided subsidies for research and electric vehicle purchases. As China’s vice minister for industry and information technology, Miao Wei, a former Dongfeng Motor chairman, told the New York Times earlier this year, “the Chinese auto industry cannot grow sustainably” unless the “bottlenecks” of air pollution, rising consumption of imported oil and traffic congestion are addressed.

China, which shares a Northeast border with Afghanistan, already seems to have an inkling for some of the untapped resources in the war-torn country. The New York Times reports that last year, Afghanistan’s minister of mines (who has since been replaced) was accused by American officials of accepting a $30 million bribe to award China the rights to develop a copper mine in Logar Province.

“China wants to be the leader in the lithium ion battery market, and I’m sure they’re very interested in getting their hands on Afghanistan’s reserves, particularly given how close they are to it,” says Lux Research analyst Jacob Grose. China’s own domestic lithium reserves — which stands at 1,100,000 tons in its reserve base, and delivers about 3,000 usable tons onto the market each year, according to the United States Geological Services’ Mineral Resources Department — are mostly extracted with conventional mining techniques. That means Chinese lithium can be more expensive to mine than lithium found within salt lakes, which can be processed with evaporation, and are found in South America — and now Afghanistan.

But Lux’s Grose also thinks that the same types of political problems that have plagued Bolivia, and kept Bolivia’s lithium resources far under utilized (despite 5.4 million in reserves it produces very little) will mean Afghanistan’s lithium resources won’t affect the market at least over the next five years. Bolivia has more than half of the planet’s total lithium deposits in the brine beneath its plains but the Bolivian government has been none too keen on giving up its resources to foreign miners. According to Time, Mitsubishi and Toyota (one of the only major automakers that produces its own batteries) have broached talks about lithium development with Bolivian officials, with no luck.

“Afghanistan has ten times more problems than Bolivia,” notes Grose. Just the cost of securing the location through military forces could make producing Afghan lithium not economical.

Then there’s the fact that the Pentagon and the New York Times are entirely vague on just how much lithium reserves are thought to be in Afghanistan, so it’s hard to determine if the size would actually be a game-changer. The known lithium reserves before this Afghanistan find are around 13 million tons globally, and 760,000 tons in the U.S. Chile is the leading producer, followed by Argentina, China, Russia and the U.S.

Still if Afghanistan’s lithium reserves are ever fully developed — by Chinese EV battery giants or not — the more lithium available for the coming electric vehicle boom will only help the market. The U.S. Geological Survey’s mineral commodity specialist on lithium, Brian Jaskula, has estimated that demand will begin to drive lithium prices up in the next 10 to 15 years and that lithium, which now costs less than a buck per kilogram, will not stay cheap for long. More available reserves, could help alleviate that price crunch.

For more research on electric vehicles check out GigaOM Pro (subscription required):

IT Opportunities in Electric Vehicle Management

When we work alone, away from the constant prying eyes of colleagues and supervisors, we tend to lose our competitive edge. I’ve noticed this in myself, too. I haven’t exactly been slacking off or taking my work for granted, but I feel like something’s missing — as if with a bit more push I can get a better, more inspired output. Here’s why:

Competition keeps you on top of your game. Research on social facilitation seems to back up the idea that having an “audience” competing with your or simply observing your work may boost performance. This effect appears to be more pronounced in smaller groups and if performance is tracked individually.

For more complex tasks, though, competition might end up impairing your work because of the distraction involved. Because of this, it helps to find out the depth and amount of competition that would be helpful to your performance.

Competition reminds you of what makes you different. Apart from focusing on your own performance, you also tend to assess the abilities of your competitor. You’ll try to look for the skills and qualities you have that will stand out from the usual criteria that supervisors and clients are looking for. While everyone else presents relatively the same level of skill, pricing, and schedule, you’ll need to identify what’s unique about your services. Once you identify this, you need to work on how to bring it out and enhance it even further.

Competition may lead to collaboration. While this may sound antithetical, in my experience a healthy amount of competition can help expose your weaknesses and strengths as much as your competitors’. If you find a way to work together, you can help compensate each others’ weaknesses and build on both your strengths. For example, I’ve teamed up with another blogger who has skills I lack (Internet marketing, business building). It’s been one of the most educational collaborations I’ve had.

• Freelancers should use some of their downtime to check out the track record and portfolios of their competitors. For employees, examine the habits and performance of the colleagues you admire. How is their approach different from yours? What can you learn from each other?
• Look for other people working in the same field or niche as you do and collaborate on a small project together.
• Review your business or performance statistics from last year. How do you think you’re doing so far? Sometimes you only have to look at yourself to find an ideal competitor.

When we think about competition, we shouldn’t associate it with things like playing dirty or focusing too much on the work of other people. If approached in the right way, a competition — no matter how informal — can help us work better.

How do you stay competitive when you work independently? Does competition affect how productive you are?

Photo by stock.xchng user joanajoeE

Related GigaOM Pro content (sub. req.): Enabling the Web Work Revolution

The idea behind this pairing is that the joint venture — dubbed Shenzhen BYD Daimler New Technology Co. — will be able to “capitalize on Daimler’s know-how in electric vehicle architecture and safety,” as well as BYD’s battery technology and electric drive systems. As J.D. Power and Associates analyst Mike Omotoso told us last year, BYD boasts, “a large research capability — they have 3,000 engineers in Shanghai and plan to employ 10,000 more engineers in Shenzhen.” So an automotive partner stands to “get a head start by using BYD’s engineers instead of starting from scratch themselves.”

The vehicle expected to result from this collaboration will be marketed under a new brand jointly created and owned by the German-Chinese duo. Already BYD, which counts Warren Buffett among its backers, has launched a plug-in hybrid model called the F3DM and an electric car named the e6. The F3DM initially rolled out for fleet customers in late 2008, and came in well below the company’s ambitious sales targets for 2009. But BYD started selling it to consumers in March of this year and hopes to launch its electric e6 in the U.S. by the end of 2010.

Daimler has previously touted its registration of more than 600 patents related to battery-powered vehicles over the last three decades, but the company has over the last year or two shown a heightened sense of urgency when it comes to carving out a piece of the nascent plug-in vehicle and battery market — a potentially multibillion-dollar opportunity by the company’s estimates.

The German automaker has set up joint ventures with Evonik Industries to produce lithium-ion battery cells and packs, and last spring took a 10 percent stake in electric car startup Tesla Motors (Daimler later sold a portion of its stake to Abu Dhabi’s Aabar Investments). Just last month Daimler announced a comprehensive partnership with the Renault-Nissan Alliance to share powertrains and architecture for compact cars and light commercial vehicles. Among other projects, the companies plan to cooperate on electric versions of Daimler’s Smart Fortwo (pictured) and explore “opportunities to co-develop technologies related to electric vehicles and batteries.”

Amid all of these alliances taking shape across the electric vehicle spectrum, China holds particular interest. Today’s Daimler-BYD deal comes at a time when China has only recently overtaken the U.S. as the world’s largest auto market, and when the country’s car companies are jockeying to leapfrog legacy automakers that haven’t yet mastered the technology. The Chinese government has put some policies in place supporting greener cars, and it is widely anticipated (according to multiple reports in Chinese media and comments from global automakers) that Beijing will soon establish new subsidies for electric vehicle buyers, possibly by the end of this month.

Daimler Chairman Dieter Zetsche emphasized in a statement Thursday, “the vast potential of electric mobility in China” and said the partnership with BYD, “adds another dimension to our growing presence in this important market.”

Other companies seeking a foothold in the country’s nascent EV market include charging infrastructure startup Better Place, which announced an agreement with China’s Chery Automobile last month to jointly develop electric vehicle prototypes that can have their batteries switched out (as shown in this video demo of a Better Place battery switch station), with the stated goal of securing one of the government’s regional pilot projects for electric vehicles.

Still, hurdles remain for electric vehicles in China, as in markets around the world. Honda’s chief executive Takanobu Ito told Reuters earlier this week, “There needs to be a major breakthrough in battery technology,” adding the forecast that it will take a decade or two before all-electric vehicles become a mainstream choice. At the same time, Ito said, “If there is a suitable chance, we hope to work with China to (develop) batteries.”

Images courtesy of the North American International Auto Show, Daimler and BYD

Related research on GigaOM Pro (subscription required):

IT Opportunities in Electric Vehicle Management

How EV Battery Startups Can Cross the Valley of Death

Why Google Android’s Electric Vehicle Deal With GM Matters

When signing up for a Silentale account, you are presented with a wizard that helps connect your email and social network accounts, including Facebook, Twitter, LinkedIn, Google Contacts, Highrise, Gmail, Google Apps Mail, IMAP/POP3 email, AOL Mail, Hotmail/Live Mail, and Yahoo! Mail. You can connect to many of these services via OAuth or Facebook Connect, although you have to give Silentale your Google Apps and Gmail passwords, which may make some people uncomfortable.

Once connected, it may take a while for your contacts and message history to be imported, but then, Silentale lets you view and search for information in an elegant and easy-to-navigate interface with only three tabs — Messages, Contacts, and Connectors (which is what Silentale calls the external accounts you have given it).

The Messages screen is laid out in a Twitter-style timeline, and Contacts are presented in a multi-column screen that includes tools to merge contacts and edit names and pictures, but nothing else. The screen is headed with a field for searching messages and contacts. As I write this, contact searches are working, but message searches seem to fail. Silentale does offer a nicely laid out support function where one can report bugs.

Silentale also has an API, and is encouraging development of third-party applications. Android and iPhone apps are on the way, and there are add-ons for Outlook and Firefox available now. When you go to a friend’s profile in a site like Facebook in Firefox, the add-on displays a contact’s details, as well as recent messages you’ve exchanged with them.

Silentale is currently in public beta, and the service is offering free unlimited accounts until May 31. After that, it will offer several pricing levels, plus free accounts for connecting five services or less.

Silentale’s biggest strength is its simple, responsive and attractive interface. While it doesn’t have some of the features that Gist does, its search functions and ability to archive messages make it worth a close look.

Let us know what you think of Silentale below.

Related GigaOM Pro content (sub. req.): Social Media in the Enterprise