GM Might Have Found A Way To Make Money Off Used Batteries
Earlier this year General Motors (NYSE:GM) unveiled the Chevrolet Bolt, a 200 mile-range electric vehicle that will reportedly go on sale sometime in 2017. [1] The business press was quick to call the car a challenge to Tesla Motors’ Gen III electric vehicle, another high-range EV expected to go on the market also in 2017. It is clearly a concept car but it is also production ready. Its specifications are broad enough to meet the needs of a wide range of consumers. It comes with a hatchback making it spacier, a 10-inch diagonal screen, self-driving technology, and is fast charging.
Before the release of the Chevrolet Bolt, however, the company will release its 2016 version of Chevrolet Volt into the market next year. [1] The vehicle is said to have a range of around 50 miles and a hybrid mileage of around 41 miles per gallon (mpg). General Motors hasn’t done too well with its electric vehicles in the past. It targeted annual sales of 40,000 for the Volt when it was first launched. Sales peaked at 23,094 in 2013 and fell to 18,805 in 2014. [2] Having fallen short of projections, the company might just have come up with an alternative way to recoup its investments in the battery powered vehicle.
We have a $38 price estimate for General Motors, which is about 5% higher than the current market price.
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Energy Storage
General Motors is now using five sets of batteries from aging Chevrolet Volts to power a new data center at its Milford Proving Ground. [3] This initiative comes just as the company was getting ready to start production of a second generation model of the extended range electric car. The idea behind this initiative is quite simple: most lithium-ion batteries used in electric cars can last for about 10 years, a period which is much longer than what many people who will lease those vehicles will drive them for. Over time, the batteries lose their ability to quickly discharge their power, which renders them unusable for powering cars, but they can still be used for powering less intensive applications such as powering a home. Most of these batteries still retain 70% of their capacity at the end of their driving cycle, which means that either the company or their owners can sell them off to recoup their cost.
According to the Energy Information Administration, there were about 70,000 electric vehicles on U.S. roads in 2013. [4] In the next few years, the batteries of those vehicles won’t be useful for powering cars but can still be used elsewhere.
Ancillary To Renewable Energy
Power grids are setup to deliver electricity as it is produced. As a result, most utilities only produce as much electricity as needed. However, solar and wind power do not work that way. Battery storage is essential to making these forms of energy production work on a large scale. Batteries provide a way to store the energy produced by these means and deploy it later when the demand is present. Renewable energy companies, energy conscious home owners and utilities looking to arbitrage energy production costs can use stacks of batteries to store energy when its sunny or breezy and drain them as needed. GM is currently trying out small scale deployments of these ideas. In the GM Proving Ground, the batteries will be put together with solar and wind power generation capabilities to generate around 100 MWh(Mega-Watt hours) of energy annually. It is only a small scale installation but given the presence of many possible use cases of used batteries, it may pave the way for more such installations when used batteries start entering the market over the next few years.
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- GM Bolt Seeks to Rival Tesla, Wall Street Journal, January 2015 [↩] [↩]
- Nissan Leaf Sales Double Chevy Volt to Close Out Winning 2014, Auto Blog, January 2015 [↩]
- General Motors to offer alternative battery uses, USA Today, June 2015 [↩]
- California leads the nation in the adoption of electric vehicles, EIA, December 2014 [↩]