Powering Up: Technology Investing in Trucking Batteries
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September 24, 2013 (www.investorideas.com newswire) A new article at Rigzone by author Karen Boman outlines how Florence, KY-based ePower Engine Systems, LLC and Axion Power International Inc * (OTCMKTS:AXPW) have teamed up to produce an innovative system for powering Class 8 heavy trucks using the same underlying technology that powers modern efficient diesel-electric locomotives. As the article explains, ePower first approached Axion in 2012 after hearing about the company's successes with creating battery strings for Norfolk Southern Corp's (NYSE:NSC) locomotives. Northfolk Southern explains that a train can move a ton of freight 436 miles on a single gallon of fuel. As the government continues to impose new standards for commercial vehicles and the cost of fuel rises, trucking companies will have more compelling reasons to switch to more energy efficient drive trains.
Part of the impetus for new technology investment in the battery industry has to do with US standards. As Boman points out, “The first U.S. greenhouse gas emission and fuel consumption standards for heavy, medium and light duty vehicles were adopted in August 2011.” New trucks will obviously need to meet stringent federal standards. While older Class 8 heavy trucks may only need to meet standards for the year in which they were manufactured, these trucks generally need to be rebuilt every 400,000 miles. Although these trucks would still have lighter federal standards for fuel efficiency due to their age, replacing standard drive trains with electric versions during the rebuilding process will ensure the regulatory standard is met.
Switching to an electric drive train can also help companies save money. Class 8 heavy trucks represent 4% of vehicles, but consume 20% of fuel (pdf). Extensive testing has shown that the PbC battery strings manufactured by Axion and used by ePower help reduce gas consumption by 35%. Since Class 8 heavy trucks rack up fuel charges of over $100 million each day, the savings could be substantial - up to $9.7 billion per year at current fuel prices ($3.55 per gallon in the US). Fuel is the largest variable cost in trucking, and by cutting down on fuel and using electric batteries to help boost power, these trucks may see reduced cost with very little change in performance.
Axion's PbC batteries use a layer of activated carbon rather than the traditional sponge lead to create a battery that accepts larger amounts of charge. Axion CEO Thomas Granville explains, “A lead acid battery – or any kind of battery hooked into a series string – is only as strong as its weakest battery. If one battery goes low, you can realistically only bring that battery back up to the proper state of charge by charging the entire string.” In charging the string, batteries that are already at, or close to, proper states of charge, end up getting overcharged which leads to gassing and dry out of a battery, and eventually the early loss of functional life for those batteries. Using activated carbon not only creates a lighter battery, it also helps the string maintain charge throughout a trip based on its inherent self-equalization properties from the asymmetric design of the PbC battery. AXPW closed September 23rd at $0.123, no change for the day, with a market cap of $16.02 million. Its 52-week trading range is $0.12 - $0.38.
Another company creating batteries for the heavy trucking industry is Valence Technology Inc (OTCMKTS:VLNCQ), based in Austin, TX. While they are not in direct competition with Axion's focus on Class 8 heavy trucks, they do create batteries for commercial vehicles, including both single and double deck buses. The last time we covered the company, they had been awarded a contract with Frito-Lay North America to provide 99kWh lithium phosphate battery systems for Frito-Lay's trucks. The company creates a specialized lithium iron magnesium phosphate (LiFePo4) cathode powder using a Carbothermal Reduction Process. Unlike traditional lithium-ion batteries, LiFePo4 batteries discharge at a constant voltage until exhausted. Valence is currently in the process of approving a bankruptcy reorganization plan from their July 12, 2012 Chapter 11 bankruptcy filing. The company would revert to being privately held by founder Carl Berg. VLNCQ closed September 23rd at $0.005, no change for the day, with a market cap of $934,942. Its 52-week trading range is $0.00 - $0.09.
San Francisco, CA-based ECOtality Inc (Nasdaq:ECTY) is an automotive battery manufacturer that creates both battery charging stations and hydrogen and fuel cell battery systems. While the company doesn't create batteries for heavy trucks, their Minit-Charger system was developed for commercial applications, such as airline baggage handling vehicles. The company filed for Chapter 11 bankruptcy on September 18th of this year following a bankruptcy warning in August. One unit of the company, the Electric Transportation Engineering division, listed up to $500 million in debt in the filing with only $50 million in assets. ECTY closed September 23rd at $0.137, up $0.004, with a market cap of $3.10 million. Its 52-week trading range is $0.12 - $2.40.
Today's transportation battery companies may have an uncertain short-term future, but new technology investments could well pay off in the future. As commercial vehicles face more stringent standards, electric or hybrid commercial vehicles will likely become more common. Coupled with additional research into the field of battery technology, these standards (along with significant cost savings and thus higher profit margins) may help ensure a bright future for the battery companies of today.
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