6
Conclusions and Recommendations

This chapter provides the committee's conclusions and recommendations regarding the processes used by the USABC to select and manage R&D projects for EV battery technology and the outcomes of these projects based on information received by the committee as of January 1998. Following an overall perspective on the USABC program, the committee addresses four specific areas: program goals, program management, procurement procedures, and battery technologies. A number of these recommendations are relevant to cooperative government-industry R&D programs in general, including the Advanced Battery Initiative, which has been proposed as a follow-on to the USABC.

Overall Perspective

Conclusion. Participants in the USABC have made a reasonable effort to develop technology for an extremely demanding application. Despite an overly ambitious schedule, which was imposed by regulatory requirements, the USABC has made significant progress. However, no technology meets all of the midterm goals, although work in progress has a significant chance of meeting both the midterm and commercialization goals early in the next decade, or even before the year 2000. The consortium has effectively brought together battery technologists and experts in EVs in creative, focused partnerships but has missed some opportunities to provide broad technical leadership because timely information (such as summaries of progress or a technical road map) was not made public.

The USABC program has been strongly focused on responding to specific challenges imposed by regulatory agencies. The committee generally agrees with



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--> 6 Conclusions and Recommendations This chapter provides the committee's conclusions and recommendations regarding the processes used by the USABC to select and manage R&D projects for EV battery technology and the outcomes of these projects based on information received by the committee as of January 1998. Following an overall perspective on the USABC program, the committee addresses four specific areas: program goals, program management, procurement procedures, and battery technologies. A number of these recommendations are relevant to cooperative government-industry R&D programs in general, including the Advanced Battery Initiative, which has been proposed as a follow-on to the USABC. Overall Perspective Conclusion. Participants in the USABC have made a reasonable effort to develop technology for an extremely demanding application. Despite an overly ambitious schedule, which was imposed by regulatory requirements, the USABC has made significant progress. However, no technology meets all of the midterm goals, although work in progress has a significant chance of meeting both the midterm and commercialization goals early in the next decade, or even before the year 2000. The consortium has effectively brought together battery technologists and experts in EVs in creative, focused partnerships but has missed some opportunities to provide broad technical leadership because timely information (such as summaries of progress or a technical road map) was not made public. The USABC program has been strongly focused on responding to specific challenges imposed by regulatory agencies. The committee generally agrees with

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--> the strategic judgments that have guided the program, the most fundamental of which are (1) that development based on existing science should take precedence over research to create new science and (2) that multiple technologies should be pursued simultaneously. The committee considers that, overall, the participants in the USABC have made reasonable efforts to develop technologies for a very demanding application on a very aggressive schedule. The program has demonstrated that the technical difficulties of developing batteries for EVs constitute a major challenge, perhaps even an insurmountable challenge, if success is measured against the stated long-term performance goals. Even when adequate funding is available for R&D, the USABC goals may not be met. For instance, the USABC would like to have an alternative to the lithium-polymer battery as a long-term option. However, a recent solicitation did not elicit any proposals deemed worthy of funding, even though USABC funds were available. The USABC may have had no option but to try to meet the implementation date of 1998 mandated by CARB in 1990. However, in the committee's opinion, 1998 was not a realistic date. The first two years of the USABC's existence were consumed with the logistics of creating the organization and its operating principles, defining goals, soliciting proposals, formulating principles governing intellectual property, and negotiating contracts. The committee believes that this necessary work was pursued as efficiently as could be expected and that many lessons were learned that can be used for establishing future government-industry collaborative R&D programs. Nevertheless, by the time the logistics had been established, only three years remained before EVs were scheduled to be ready for the marketplace in 1998. Given the time required for vehicle development, little time was left for battery development. Thus, the USABC's options were restricted. Even with a larger financial commitment, there is no reason to believe that more progress would have been made in the development of the chosen battery technologies. Nevertheless, the committee respects the role of regulatory initiatives in trying to force the pace of progress in this field because of the significant public benefits that could result from reduced vehicle emissions. In the committee's opinion, an implementation horizon after 2000 would have allowed enough time for a more balanced and effective R&D portfolio on EV batteries, including more opportunities to pursue new science that could improve the performance or cost effectiveness of critical components. Some high-risk investments in exploratory research might have paid off in the long term. The USABC program has focused largely on development and, except for materials, does not have a research component for the pursuit of new science. The progress on batteries being carried forward into Phase II was partly the result of scientific research on new electrode materials. However, this research was conducted in parallel with the development of large cells, and incorporating the new materials was substantially delayed because of the necessary redesign and retesting of the large cells.

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--> The USABC consortium has brought together automotive and battery manufacturers, electric utilities, and DOE to provide a venue for a focused approach to meeting EV requirements. For the first time, a forum was established for integrating the battery into a vehicle, as well as for evaluating the transportation infrastructure requirements for EVs. The interactions between automobile manufacturers and battery manufacturers have added a valuable dimension of systems integration and testing to battery development programs. A number of groups outside of the USABC are addressing infrastructure issues related to EVs, such as standardized charging systems, the availability of materials for the construction of advanced batteries, and battery disposal and recycling. The committee understands that the USABC considers these issues to be beyond its scope, but they will be critical to meeting the USABC's goals. Therefore, the committee believes the USABC would be justified in paying more attention to infrastructure issues in the remainder of its program. The committee was surprised to find how little public information has been made available on an ongoing basis from the USABC. In the committee's opinion, proprietary concerns do not necessarily preclude the publication of regular public reports summarizing major progress and concerns. The committee was provided with a draft of a detailed final report on Phase I battery R&D; it is not clear to the committee whether this report will be released to the public (USABC, 1997). 1 In the committee's judgment, this draft report is a good (but belated) report that will not invite the participation of entrepreneurs and small businesses that might have been elicited by regular, timely reports. The lack of regular reporting may well have excluded potential participants from the USABC program. The lack of public information from the USABC program has also encouraged the perception that "EVs are just around the corner." More public information could have helped to inform the public of the difficulties of developing a commercially viable EV. A USABC technology road map similar to the Semiconductor Industry Association's road map would be a useful guide and would present an accurate picture of the status of EV battery development. A road map would also inform a broader community of potential technology developers and encourage and enable "off road map" innovation. In the committee's opinion, the USABC had an opportunity and a responsibility to support a climate in which battery technology could move forward on a broad front, not just in large-scale projects directly funded for application in a relatively short time. The USABC could have encouraged creative thinking for the longer term by clearly describing the challenges. The consortium missed this opportunity to provide leadership because it has operated in remarkable isolation. The committee recognizes that sensitive intellectual property in individual projects had to be protected, but the participants in the USABC could have been 1    The final report on Phase I was submitted by the USABC to DOE in December 1997, a year after the work being reported was completed.

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--> provided with more incentives and encouraged to participate in general technical forums. The USABC partners have a common long-term interest in fostering a healthy industry with multiple suppliers for a given EV battery technology. The USABC could have effectively promoted this interest at very low cost by developing and updating a technology road map and by making concerted efforts to summarize progress regularly on a nonproprietary basis. By adopting a collegial management model involving program officers from DOE, the USABC was able to take advantage of DOE's extensive expertise with battery systems. However, the committee is concerned that other DOE battery R&D (under the Exploratory Technology Research program or elsewhere in DOE) may have been unwisely reduced to cover federal participation in the USABC. The USABC has a focused development program aimed at one very demanding battery application that might be unrealizable in terms of the defined performance goals. The committee believes that the nation has many different interests in battery science and technology (e.g., for load leveling, solar and wind energy storage, smart buildings with energy-saving features, remote power applications, and portable power sources) and that these interests should be managed, financially and otherwise, in a balanced way by DOE and other federal research programs. Overall, the 3M/Hydro-Québec lithium-polymer battery program appears to be a good model for future joint development projects between government and industry. In the cooperative environment provided by the USABC, several major companies, including 3M, Hydro-Québec, and the three automotive companies, brought together the needed expertise, which significantly advanced the technology. Participation of national laboratories also contributed to the success of the project. Significant progress has been made toward developing a battery that is expected to meet, or even exceed, the interim commercialization criteria for an EV. The establishment of a U.S.-based manufacturing capability is also well under way. The success of the 3M/Hydro-Québec project is due in large part to the selection of a technology that was mature enough to be developed in the required time frame but not sufficiently mature at the start of the USABC program for collaborative development to be constrained by concerns over sharing proprietary information. Careful project design and management ensured that material selection, cell design, and process development are being done in good order. Recommendation. In future programs and in current programs outside the USABC, DOE should focus more on research that advances the science of electrochemical systems that have the potential to meet the long-term performance and cost criteria for electric vehicles, as opposed to development of systems based on existing science. A significant portion of the scientific research should be focused on battery technologies that have not been included in the USABC program.

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--> Recommendation. In concert with other groups addressing infrastructure issues, the USABC should use some of its remaining Phase II funds to address infrastructure for its most promising long-term technology, in particular, ensuring the availability of materials and recycling of batteries. Recommendation. The USABC should communicate its targets and results on a regular basis to the technical community, within the bounds of agreements on proprietary information. The USABC should develop a technical road map to guide battery development, even outside the USABC, and to identify barriers to the implementation of batteries in commercially viable electric vehicles. A technical road map would also be valuable for follow-on programs to the USABC. Recommendation. Given the trend toward cooperative government-industry technology development and commercialization, DOE should collaborate with other federal agencies to develop a governmentwide approach to the efficient implementation of cooperative agreements. These procedures could also be used for launching a follow-on program to the USABC. Program Goals Conclusion. The USABC acted appropriately in establishing performance goals consistent with both the CARB mandate and the marketing assumptions made by the three major U.S. automakers. The goals reflect a legitimate view of requirements to meet the CARB mandate with vehicles that could be successful in the marketplace. A successor to the USABC may have the latitude to rethink the performance goals in the light of ongoing technical developments and changing market potential. A fundamental assumption of the USABC program was that meeting the CARB mandate required that except for vehicle range, EV performance be comparable to the performance of current vehicles powered by gasoline-fueled ICEs. The committee concluded that the approach taken by the USABC was reasonable in light of the regulatory requirements. The USABC relied heavily on its own marketing study and marketing studies by the U.S. automakers to compare the competitiveness of EVs and ICE vehicles. Other marketing strategies, based partly on the advantages of EVs, such as quietness, cleanliness, automatic in-home ''refueling,'' and potentially reduced maintenance, as well as the possibility of an EV being used to complement a household ICE vehicle (e.g., a smaller "neighborhood" vehicle for shorter trips) have been discussed in the literature (see, for example, Kurani et al., 1996). If the USABC had viewed the EV not only as a competitor with the gasoline-fueled ICE vehicle, it might have established more attainable performance goals. Battery systems developed to meet the midterm goals were not expected to gain a sustainable share of the market for EV batteries or even to benefit the

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--> development of battery systems to meet the long-term goals. The committee observed that the main purpose of developing midterm batteries was to meet (or show a good faith effort at meeting) the original CARB mandate (which has since been changed) for the ZEV market share in the late 1990s. The committee questions the wisdom of using short-term regulatory requirements to establish an initial technical direction for the USABC's program. Cost goals should be a high priority for the USABC program. The projected full cost of ownership and operation of the battery is one very important consideration for EV development. Although the USABC recognizes the importance of the cost issue, it has not used consistent methods or realistic assumptions to address it. For example, a distinction should to be made between battery cost and battery selling price, and models used to predict cost reductions associated with increases in production levels should be explained better. In addition, detailed cost estimates are extremely important for guiding development and setting targets. Recommendation. Participants in a follow-on program to the USABC should allocate some program funds to examining a broader spectrum of electric vehicle concepts and related market opportunities, in addition to developing a replacement vehicle for a gasoline-fueled ICE vehicle that could capture a significant share of the conventional automobile market. Recommendation. The participants in a follow-on program to the USABC should make a critical assessment of the economics of batteries for electric vehicles. The issue of cost should be addressed early in the program, and cost projections should be monitored and tested by consistent methods throughout battery development. Meeting cost goals should be an important criterion for maintaining funding. Program Management Conclusion. The three major U.S. automakers have managed the USABC program effectively using proven industry practices and have made appropriate decisions to narrow the portfolio of battery technologies as the program has proceeded. In the committee's judgment, the industry-led consortium model adopted by the USABC has effectively focused development on well defined, but extremely challenging, technical targets. The three U.S. automakers have managed the program effectively and have made appropriate decisions to narrow the portfolio of battery technologies as the program has proceeded. As the consortium has "matured," the participants have focused on areas where their expertise is most relevant and useful. For example, the national laboratories have now focused primarily on testing and materials development.

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--> The committee observed that both funding and decision making within the consortium are highly leveraged. Although funding levels of the three automakers and EPRI are proprietary, the committee estimates that the contribution of the automotive companies is significantly less than the contribution of DOE, although most of the consortium's management decisions are made by the automakers. The relatively modest financial commitment of the automakers raises some questions about the commitment of high-level managers at Chrysler, Ford, and GM. Nevertheless, the committee recognizes that the automakers have made substantial financial commitments to the development of EVs, especially in the area of vehicle engineering. On the whole, USABC management has been effective in focusing on promising technologies. Also, because the three automotive companies will be customers for EVs and must ensure that batteries developed under the USABC will be compatible with their vehicle requirements, they should have the overall responsibility for their development. The management processes adopted by the USABC include most proven industry practices. Effective mechanisms have been established to ensure that the statements of work for each project are being followed or are modified in accordance with established procedures. Appropriate mechanisms have also been established for focusing R&D on critical issues, and the implementation of Go/No Go decisions has been informed and decisive. The USABC's management protocol requires that projects meet milestones in order to be continued; renewal is not automatic. Despite the many excellent features of USABC program management, the committee believes that some changes should be made. The USABC oversight process includes a "peer review" step, but not in the sense that peer review is understood in the context of projects supported by government agencies. USABC peer reviews are done by personnel from within the management structure, rather than independent, outside experts. In the committee's judgment—based on its collective experience of R&D program management—the USABC peer review process is unsatisfactory because it is not sufficiently objective. For example, program managers are likely to defend developers for whom they have oversight responsibility. A recent report from the NRC (1997b) defines "peer review" as the "use of independent external experts" and argues in favor of using peer reviews for government-supported technology development programs similar to the USABC. The committee believes that peer reviews of the USABC program at regular, specified intervals, and when major new support areas are established, would be useful. Peer reviews would minimize concerns about future decisions regarding technology selection and the financial contributions required of technology developers, as well as the quality of program management. Peer reviews could also provide a different perspective on the technology programs, which would increase the likelihood of finding the optimal midterm and long-term approaches. The committee believes that peer reviews would improve the management processes of the USABC and any follow-on battery initiative.

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--> DOE has responsibilities as a partner and as an overseer in the USABC program. DOE's oversight function is exercised largely through a number of functions laid out in the cooperative agreement between DOE and the USABC. On an operational basis, DOE's participation appears to the committee to be largely collegial rather than directive. In general, this arrangement seems to have worked smoothly and yielded good results. However, it is not a sound practice to have the same individuals fulfill collegial and oversight roles. The DOE must be responsible for ensuring that the public funds spent on the USABC are managed effectively and responsibly. Recommendation. Within the limits imposed by proprietary considerations, regular peer reviews of the USABC's ongoing programs should be implemented immediately to provide objective assessments and to support decision making. Peer reviews should also be incorporated into any follow-on program that receives federal funding. Recommendation. DOE should keep its collegial and oversight roles in the USABC program separate by ensuring that managers above the level of participants receive appropriate progress reports. Procurement Conclusion. The USABC has solicited proposals, chosen contractors, and made awards using accepted procurement processes. Although methods for verifying practical accountability have been established, the progress made by the USABC has not been satisfactorily disseminated to a broad audience. As a result, some opportunities for technical advancement have been lost. The USABC's policies on intellectual property and its processes for evaluating proposals may have precluded the participation of small companies and international partners, especially organizations with relatively mature battery systems. In the committee's judgment, the USABC has used a sound, effective process to solicit proposals. The original RFPI was broad and open, and the USABC stimulated an impressive amount of creative collaborative activity among technology developers. For example, the joint project between 3M and Hydro-Québec, which was brokered by the USABC, appears to be a successful collaboration between two owners of potentially valuable, complementary technologies. The result of this collaboration appears to be much greater than the sum of its parts. Many small companies, however, were unable to compete for contracts effectively because the USABC's proposal evaluation criteria placed considerable emphasis on the developer having an established large-scale manufacturing capability. For example, the circumstances of small companies working to develop

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--> battery technology relevant to EVs were apparently not taken into account.2 In addition, the fundamental objective of fostering American competitiveness in the automobile and battery industries tends to limit international collaboration. In recognition of the need for practical technologies, Phase II was designed to counter this tendency by soliciting proposals from Asian organizations. No new international partnerships have been developed, however. The USABC's policies governing intellectual property favor the consortium partners rather than the developers of the technology. Other organizations, such as Sematech, which have adopted policies that are more favorable to the developers, seem more likely to promote the enthusiastic development of desired technologies. In this respect, the operational practices of the USABC appear to be defensive. The RFPI requirement that companies reveal commercially sensitive information almost certainly has discouraged battery developers with relatively mature systems—which they had developed over many years at considerable expense—from participating. The committee applauds the consortium's requirement that testable items, particularly cells, batteries, and packs, be delivered periodically. The committee also believes that the national laboratories have performed a valuable service as independent evaluators of technology, especially through testing programs tailored to the needs of the USABC. By this mechanism, the consortium has created an excellent method of establishing practical accountability. However, the virtual absence of timely progress summaries for a broader audience is a major deficiency. Proper documentation is not only a means of tracking progress, but is also a valuable tool for analyzing programs and stimulating researchers and vendors. The USABC has probably lost opportunities for technical advancement because of the lack of timely documentation. Battery Technologies Conclusion. Given the constraints of the CARB mandate, the USABC made a reasonable selection of prospective technologies for EVs and pursued these technologies with appropriate partners. Substantial progress has been made even though none of the required technologies and none of the battery systems currently funded meets the USABC's cost or life objectives. At the outset of the USABC program, the technologies to support the program's goals did not exist. Although the necessary technologies have still not been developed to the point of meeting these goals, substantial progress has been made. In the committee's judgment, given the established performance goals and timetable of the CARB mandate, the USABC made a reasonable selection of technologies and pursued them with appropriate partners. 2    As discussed in Chapter 3, however, DOE has created opportunities for small companies through the Small Business Innovative Research program.

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--> The USABC has made substantial progress in the development of Ni/MH (nickel metal hydride) and lithium battery technologies for EV applications and has improved the understanding of design, manufacturing processes, system integration, and cost issues. The committee commends the USABC on developing two competing Ni/MH technologies based on AB2-and AB 5-type hydrogen absorbing alloys. The USABC now has a fall-back position in the event that one of the battery systems fails to meet program objectives. Unfortunately, recent USABC solicitations have not led to a potential alternative technology for the lithium-polymer battery as a long-term option. In the committee's judgment, the USABC acted appropriately in closing down unpromising lines of investigation. The consortium made the correct decisions in canceling the sodium-sulfur, lithium-iron disulfide, and lithium-ion polymer battery projects that did not meet critical performance criteria or offer promising business opportunities at the end of Phase I. The committee also considers that the USABC made the correct decision in focusing Phase II on reducing battery costs. None of the battery systems presently funded has met its cost objectives, which will be critical to the successful commercialization of EVs. The SAFT/ANL lithium-iron disulfide battery program could have benefited from focusing more attention on the well known problems of cell cycle life and calendar life. Calendar life is often the most important parameter because corrosion processes occur at operating temperature regardless of whether cycling is being performed or not. Changes in size that occur with cycling in solid electrode forms can also affect calendar life. With more emphasis on corrosion and seal behavior early in the project, a more cost-effective assessment of the technical barriers to developing a lithium-iron disulfide battery for EV applications could have been made. The SAFT program was eventually terminated. After lead-acid battery technology was excluded from the USABC portfolio, the manufacturers of lead-acid batteries and their suppliers decided to form their own consortium and undertake an applied research program to make their technology competitive with battery technologies developed under the USABC. The ALABC (Advanced Lead Acid Battery Consortium) program has made significant technical progress with very little government funding. In spite of the progress made by the USABC, much remains to be done in the areas of battery systems integration and testing, reliability, and infrastructure development before commercialization can become a reality. Safety remains a concern for all battery systems, but particularly for the Duracell/VARTA lithium-ion battery with an organic electrolyte. Nissan's plans to market EVs incorporating Sony lithium-ion technology have apparently been delayed by major safety issues (Wilkinson, 1997). Cycle and calendar life have yet to be determined for most of the battery systems. The Duracell/VARTA program appears to be a good model for the systems testing and integration of modules that will be required for the 3M/Hydro-Québec technology. Experienced battery manufacturers, working with the automotive companies, have produced a project model that can be adapted to other projects.

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--> Three areas may require additional funding in the future in the 3M/Hydro-Québec project: the recycling and disposal of spent batteries, safety testing of used cells nearing the end of life, and the evaluation of performance under extreme temperatures and stressful-use conditions. The committee questions the continued development of Ni/MH technology for application in ZEVs because current estimates suggest that Ni/MH batteries will not approach performance goals. The Ni/MH battery, which does not meet the midterm performance or cost requirements, will be discontinued after cost reduction efforts are completed in 1998 (Heitner, 1998). It will remain under development in a separate program to meet high-power energy storage requirements for hybrid vehicles for the PNGV program. The USABC established midterm technology programs in response to the CARB requirement of 2 percent ZEVs in 1998. However, CARB has since changed the mandate to 10 percent ZEVs in 2003 and is considering revising the requirement to include hybrid vehicles as ZEVs. The committee, therefore, believes that the USABC is justified in reevaluating its midterm battery programs. The Duracell/VARTA lithium-ion battery meets the midterm performance criteria but not the cost requirements. The necessity of redesigning the battery and/or using modified materials suggests that the program may not meet the schedule required for midterm batteries. Because the final design freeze for the Duracell/VARTA battery is scheduled at the same time as the design freeze for the 3M/Hydro-Québec battery, the USABC should consider whether the Duracell/VARTA battery could be developed to meet the interim commercialization goals and, if so, what additional work would be required. Recommendation. In Phase II, the USABC should place more emphasis on evaluating promising battery systems under extreme temperatures and stressfuluse conditions. Batteries should also be subjected to extensive safety and reliability testing from the beginning to the end of life. Recommendation. The USABC should reevaluate its midterm battery programs. The development of the lithium-ion battery should be continued if it has the potential to meet the interim commercialization criteria.