ZennMotor/EEStor interview

[Dr Mordrid]

This from the GM-VOLT blog.

IF the EEStor storage device meets its goals it could revolutionize transportation, as well as the entire "battery" industry.

ZENN Motor Company is a small Toronto based company currently building low speed lead-acid neighborhood electric vehicles. They have partnered with the secretive Texas company EEStor that supposedly has developed a breakthrough energy storage device. I had the chance for an interview with the CEO of ZENN, Ian Clifford, which follows.

What is the cityZENN?

We announced it at the end of March. We announced it in relation to the commercialization of EEstor’s energy storage technology. EEstor had made an announcement earlier in the year on their agreement with Lockheed Martin. We felt it was time then from a product development perspective to lay out our plans for a highway capable vehicle based on EEStors’ energy storage technology.

So you will use EEStors ultracaps as the sole energy source of the vehicle?

Thats correct. EEstor has these breakthrough energy and power densities, and so I think to call it an ultracapacitor is some respect is a disservice to the technology becasue it is such a breakthrough from existing ultracapacitor technologies. It is certainly a solid state energy storage device so it has the ability to store tremendous amounts of energy and power in a very compact footprint. The way that its designed allows for extremely rapid electronic charging times. If you have a charge situation where you have an EEStor device connected to another EEstor device in a charging station or even in a home, the ability to recharge in minutes as opposed to hours is entirely possible. cityZENN will have several several charging algorithms built into the car as its launched. You will be able to plug it into a regular 110 outlet and it will probably take about 4 hours to recharge or you could plug it into a 220 outlet and it will probably take about 2 hours to recharge.

The performance characteristics are such that we think that this vehicle specifically will meet the driving needs of probably 90% of people in North America, and even more people outside of North America in terms of driving habits. So we’re talking about a car with a 250 mile electric range between charges. You’ve got a highway capable vehicle so 80 mph is our target top speed with full gradability. So you’ve got a car that is absolutely usable in virtually any driving situation. Its not susceptible to cold or heat so you don’t have the technological limitation of chemical batteries. EEStors been testing to millions of cycles in their early cell prototypes so we basically have an energy storage device that is a permanent energy source that is distinct from something that has to be replaced every number of years.

So you’re saying millions of cycles as opposed to the typical 5000 cycles that is a goal for lithium-ion batteries. These devices could go millions of cycles without a decay in energy storage capability?

That’s correct. And that’s typical for capacitors. As a solid-state device they certainly will last and last and last and they’re known for that. So tha’ts one of the similarities that EEStor has definitely.

How did you form the relationship with EEStor, did they contact you, did you contact them. Most automakers are looking a lithium-ion, so how did that come about?

I founded ZENN in 2001 and we started creating a certain amount of profile for the company over 2001 and 2002. To such an extent that EEStor actually found us. I got a call from Dick Weir late in 2002 and he was at the point where he and his partner Carl Nelson were getting ready to commercialize the technology that they had developed 10 years previously. They were looking to find a industrial partner who would be entrusted in purchasing the technology right or rights to purchase their technology fro certain exclusive markets. That’s where the discussion started and we did extensive due-diligence on what they were doing back then. We were completely blown away by what we saw and what we saw the potential for their technology to be.

You felt that that was a superior route than going down the lithium-ion or nickel-metal hydride route?

For a number of different reasons. We were certainly compelled by what was happening in chemical battery technology and the advances that were happening, but they were quite incremental. So no significant breakthroughs and this is going back four or five years. We’ve certainly since seen continued incremental improvements in lithium-ion technology but to date we’ve yet to see a commercialized lithium-ion solution at even 20 kwh of storage. We’re still kind of waiting for that.

There were also other significant differentiators that compelled me to the EEStor technology, and a lot of the were the barrier things. The issue of being able to recharge in the same amount of time that it takes to fill a tank of gas, that was a big consumer barrier. How could you expect mass adoption if people were going to be inconvenienced by charging an electric car. So that was a very big motivator for me.

The volume and weight of the technology. We’re looking at a technology thats 1/4 to 1/3 the size, mass, and volume of a lithium-ion technology for the same energy storage. So suddenly you have an energy storage device that can store enough energy to give a useful range of an electric vehicle without having concerns about being able to crash-test. That always is a very very significant concern.

Are there risks of an electric short with the EEStor system?

That was the other thing I was going to get to, safety. The ability of the architecture that EEStor has developed allows for basically instant discharge to ground. So they’ve got becasue it is solid state the ability to dump that energy virtually instantly. If you look at any chemical battery what do you do with that energy thats caught in a medium that cannot discharge instantly? So that was an important consideration for us, its ability to act as a huge circuit breaker on itself.

I think perhaps the biggest thing and perhaps one of the things thats overlooked the most in the debate thats going on now in the search for energy storage is raw material availability. Its not until very recently that people have started to debate the availability of lithium, the global reserves of lithium. And the implications of potentially millions and millions of electric cars using pretty massive energy storage devices onboard and what that does to the existing global reserves of lithium which are limited. And that word limited I think is an understatement.

So as we we’re looking at technologies we were very very conscious of the scalability of the technology and what we saw with EEStor that was quite profound was their utilization of the raw material barite which has massive global reserves, over 2 billion tons of reserves. Enough if you put it in the context of automobiles, enough to build 10 billion automobiles. Hopefully we’ll never get there. The other implications for EEStor was that they play in a whole bunch of different markets so we saw in their design the ability to meet global energy demand. That was a huge consideration for us.

Do you guys have any working prototype vehicles?

No. Our expectation from EEStor and that’s always been our expectation is that they will deliver a commercial product to us. They will deliver and what they’ve told us is by the end of this calendar year was delivery of an early production commercial unit. I get asked that question all the time and my answer has remained consistent in that I’m not interested in a hand-built prototype from EEStor I’m interested in a commercial grade product that we can order 1 or 2 or 10 million of and not something that they’ve hand built. Thats not relevant to us. The only thing thats relevant is a mass commercialized product. Thats ultimately where the end game is for us.

[Dr Mordrid]

Part 2

So you see them doing all of the assembly work on their end and providing you with the packs for production?

Exactly. We have a great relationship with EEStor. We’re very very close to them, our engineering teams are integrated to the extent where we are specking final production product with them. We’ve worked through all the power electronic issues. Were very very comfortable with our costing. The discussions from our perspective are highly advanced. And what we see in terms of their build out, we are certainly one of the few companies and few people who have actually been behind the doors of what they are doing and its so compelling and truly thrilling. Just in terms of the impact that it has on global energy use and foreign fuel dependency and all the other issues that are related to petroleum. I see it as really a turning point.

Looking at the GM example, they get delivery of cells and they test them in their lab. They want to see things on the cell level. Have you seen examples of the EEStor cells behaving as they say they do?

Well the original patent is all based on the lab testing that EEStor did a decade previously. So absolutely as part of our due diligence with EEStor initially all that data was shared with us. So we have a very strong level of confidence that the science works but of course like anyone else the proof is in the final product and so becasue of that we’ve structured our agreement with EEStor based on milestones. So every payment milestone that we have on our technology agreement is based on third party verified data of EEStor achieving the specific milestone as they work towards commercialization. So we’ve been cautious as well. But certainly the build out that were seeing and the level of advancement that they’ve made in the last eighteen months gives us a great level of confidence.

So even though you don’t have a cell in hand you are seeing third party data along the way showing that they are achieving the milestones?

Exactly.

When do you expect to bring the vehicle to market?

We’ve stated that if EEStor stays on schedule to deliver early commercial units to us by the end of 2008 that we will have a fully certified highway vehicle powered by EEStor at the end of 09. We did state publicly that the initial launch for that vehicle will probably most likely be Europe and Asia as distinct from North America. That has mainly to do with the time it takes to certify a vehicle in the U.S. We are not going to engineer a car from the ground up. Were going to partner with a key global OEM on the chassis of the vehicle. So this will most likely be a vehicle that is already certified to certain global standards and then we will work together to integrate what we calla ZENNergy Drive System into the vehicle that would be powered by EEStor.

So have you shown any concept of what the exterior of the car will look like yet?

We haven’t shared that yet. We are still finalizing negotiations, very close to finishing negotiations related to what Ill call the initial cityZENN vehicle. So you can expect some more information on that in the near future from us.

Can you say how many people it will seat?

Yes were anticipating that it will be a five-passenger sedan. Our exclusivity with EEStor’s technology goes up to a 3100 pound curb-weight vehicle which is basically a Toyota Camry or Honda Accord-sized vehicle and smaller. Thats our exclusivity, our non-exclusivity goes to any size passenger vehicle as well. So I would anticipate that it would be a car thats pretty close to our maximum exclusive weight and it would have operating characteristics that you would expect out of a vehicle that size at a retail price that would certainly be competitive with an ICE version. Thats been our target all along.

Is your target less than $30,000?

Yes, exactly. You’ve got to remember that the GM Volt has an electric range of about 40 miles and we would be looking at a 250 mile electric range, without a range extender.

Is the EEStor technology less expensive than lithium-ion cells?

Dramatically. I cant go into specifics on that but suffice it to say that we feel quite comfortable in offering a vehicle with the characteristics I have defined with a price point of $30,000 or less. It is orders of magnitude less expensive than lithium-ion.

Lithium ion is costing $800-$1000 per kwh now and the USABCs goal is $200 per kwh and I guess you’re talking about values less than that?

I wont comment on the $200 per kwh becasue I don’t think thats realistic for any technology to be honest with you. But for lithium-ion I can only see the price going up. Just based on raw materials cost alone. Were going to get into a situation very quickly, the global reserves are such that were going to go into a serious price squeeze going forward if we get into serious large-format lithium ion battery production.

The people at A123 have advised me that there should be enough lithium out there to build more than 2 billion cars, you seem to have a different perspective than that.

Yes, very much so. The studies that we’ve seen and the understanding that we have that to meet capacity even with small scale adoption of plug-in hybrids the lithium reserves would be severely challenged to meet that demand. The lithium reserves are about 17 to 25 million tons. Thats not a lot of raw material. The price has already gone up in the last 8 years. Barite on the other hand which is the core ingredient of what EEStor is doing is incredibly plentiful and available throughout the world. Massive reserves in North America and very easy to get to and extract. This is part of the debate that has not really been articulated yet. Right now without EEStor yet being really commercialized it hasn’t really come to the forefront of the debate.

Why do you think the big companies like GM haven’t embraced this technology?

I think they are learning about it to different degrees, and I know that different companies have taken a look at the technology at different stages. I think ultimately and you see this with lithium technology, they say show us the product. They wont make a decision until they’ve got a commercial battery. And right now there isn’t a lithium ion battery out there at the scale thats required for a commercial product yet. Its very difficult to do. Its a huge challenge.

Is you long-range hope to become a major global player in the automotive market?

We see ourselves more as an enabler. We did announce the cityZENN as a ZENN branded product that we would distribute through large distribution networks. Once again partnering with other organizations. But ultimately we believe our most significant opportunity is the ZENNergy drive and that is an integrated drive system utilizing EEStor as the energy source that we would then joint-venture with any OEM around the world an then create a “powered by ZENN” drive for vehicles that fit within our market in exclusivity. Its kind of like the “Intel inside” model. We intend ZENN and ZENNergy to be synonymous with electric drive and thats the biggest role that we can play globally. And then every OEM is not our competitor, every OEM is our partner.

Is the city ZENN then more of a demonstration so other OEMs will become interested in purchasing the ZENNergy drivetrain system?

Exactly. We don’t need to re-invent the automotive industry, I think we need to re-define it. We don’t need to become a global OEM in order to demonstrate the viability of electric. I think judging from the response we get and certainly the response that you get on your site there is a huge pent up hunger for electrification. It’s remarkable. I think every major and minor automaker around the world appreciates and understands that. I think that ultimately the consumer and technology will drive us to that inevitability which is extremely exciting.

Are you guys planning to offer conversions when you have your ZENNergy system up and running?

We have worldwide exclusive rights to EEStor technology for the conversion of any 4-wheel vehicle on the planet. So absolutely the conversion market is something that is extremely compelling to us. Our plan is to start looking at some of the largest install bases for single platform use in fleet applications. So in NY you think of yellow cabs and black limos, in London taxi cabs, US postal service, you think of very very large install bases. So leveraging our ZENNergy drive we would create kits that would be specific to certain platforms. I think that will be an incredibly exciting market.

You would then be able to offer that to any 4-wheel vehicle?

Yes, any 4-wheel vehicle. Thats our exclusivity. To me thats the access to the 750 to 900 million cars that are on the planet. If you think about it we’ve got this huge investment in raw materials in every vehicle on the road. Depending on who you ask theres something between 20 and 40,000 gallons of water going into every car thats on the road. You think if all of the raw materials, and process materials, and energy that goes into creating this chassis and really the thing that fails in an internal combustion vehicle is the internal combustion system. You take a 5 year old vehicle that has whatever mileage and you create a replacement ZENNergy drive system for that platform, you certainly have another 10 years at least on the chassis.

[Dr Mordrid]

Part 3

This all sounds very exciting, but lets face it, it all depends on EEStor actually delivering a product. What is your confidence level that you are going to have a commercial grade EEStor product by the end of 2008?

Were expecting it by the end of the year and I cant state by what date specifically. Our level of confidence is extremely high based on what we are exposed to and certainly the involvement of others in this technology. The involvement of Kleiner Perkins is significant, the involvement of Lockheed Martin is significant. So we have a very very high level of confidence. To the extent that last year we became and equity investor in EEStor as well. So we put our money where our mouth is and invested in the common stock of EEStor as well, so no only do we have a technology agreement with them we also have participation in the other markets that they are developing product for. On the other hand, its not proven until its delivered. Ultimately the proof is in the commercial product. We are obviously making plans to develop solutions based on EEStor so that continues to show our level of confidence in our path.

How many employees does EEStor have?

Thats not publicly disclosed.

Have you guys spoken with GM at all?

Yes, we have. I wont get into any details and to what level we are at, but interestingly a Volt with a ZENNergy drive is a kind of a sexy product. You never know. It would certainly be something we’d love to explore. As I said earlier were a little tiny company and it takes more and more proof of the technology to get the attention of the bigger companies. We’re working at it

So you will tell the world when you get the product this year?

Oh you will know. Theres no question about it. For one thing were a public company and these are material advances in the company and they trigger payments. We intent to let the entire world know of the developments and the final commercializations.