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Exclusive interview with Shmuel De-Leon, CEO Shmuel De-Leon Energy

01 August 2013

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Shmuel De-Leon Energy was founded in 2010 to support the development of the battery industry by sharing information and pushing for cooperation, helping to design the most suitable energy solution for the relevant applications. Shmuel De-Leon, CEO, gave his insights on the battery market, in Israel, where his company is based, and also worldwide. You are in contact with thousands of battery and material suppliers. What trends did you see in the last 2-3 years? Are there new challenges/issues?

Shmuel De-Leon: The main issue is to have better batteries, in terms of energy density and cost. Many governments and companies invest a lot of resources in research and development, but even if we can see some breakthroughs, these products need 10-15 years to hit the market.

The potentially solutions are LI-Ion with silicon Nano-structure anodes, High voltage Li-Ion, Lithium Titanate (LTO), Lithium Sulfur (Metal), Metal Air systems and Fuel Cells as well. Having these breakthroughs will create better batteries for EVs, and could lead to EVs market to a mass production. How is the overall battery EV market doing? Is it different in Israel? Are companies over the hype and the struggling part to start making real business or not yet?

Shmuel De-Leon: Unfortunately the situation is complicated. The demand for HEV, PHEV and EV is not growing as expected because of the premium cost required for these vehicles. The whole supply chain is suffering: the OEMs are not selling, the battery and cell makers are suffering, and even the battery material makers are slowing down. This is not sustainable. We are going to have a situation where fewer and stronger companies will survive, and they will lead the market in the coming years.

In Israel we had a huge crisis with Better Place. They planned for high sales but the cost of the technology was too high, the public did not buy. We see that all cars importers, Mitsubishi, Chevrolet, Toyota, Renault are hesitating to bring PHEV/EV in Israel because they think that the price is still too high, even with the incentives from the government don’t help (there are almost no taxes for EVs). At the moment everything is slowing done in Israel for EVs as well as in other countries. We still have one pilot project from BYD for electric buses, but in general, if there is nothing new like reduction of costs or improvement of the technology, the situation is not likely to change. What do you think about Better Place bankruptcy? Was it predictable? What lessons can we learn from it?

Shmuel De-Leon: The problem with Better Place is that this is a mid-term solution. They had planned a product for a specific time period, and in the end they had huge delays. They spent a huge amount of money on public relations, and had thousands of people who wanted to buy the cars, but unfortunately there were no car ready to be sold at the time. When they finally had the car (after 1,5 year delay), it suffered from childhood malfunctions. It took another year until mid-2012, to have most of these issues solved.

Another issue was the uncompetitive cost, which people did not accept. They also had delays in installing the infrastructure (public infrastructure and swapping stations) so with these disadvantages and delays, people were not really confident to buy the car. Unfortunately they reached a point where they could not continue fund the project. They thought that they needed another 4 years of funding before reaching profit, but they did not have so deep pockets. So they ran out of business.

Better Place solution was targeted small group of potential customers – these who need a sedan car and have a private parking at home and at work – that by itself couldn’t support mass sales.

But speaking with Better-Place customers brought the feeling they love the cars and want to continue using it – they feel like somehow like Apple customers that are very loyal to the product and the brand – that something we should think off. How is Renault doing in Israel since the Better Place bankruptcy?

Shmuel De-Leon: Renault responsibility is to support the 900 Better Place customers who bought Renault cars, to provide them with charging infrastructure or a solution for them to be able to drive the cars. The company that bought Better-place assets is working on providing solution with or without cooperation with Renault. We have heard also that the remaining cars from Better Place are offered at much low cost than their initial price.

Renault together with Carraso (Renault cars importer to Israel) considering importing the Nissan Leaf to Israel - no final decision made yet. Tesla has just announced their battery swapping system a few weeks ago. Do you think it could work for them?

Shmuel De-Leon: Regarding Tesla, they are building cars for niche market, which competes with luxury cars. In this segment, green customers can afford themselves a Tesla. However, I do not see Tesla selling hundreds of thousands of cars like other manufacturers do, even with their car coming in 2016/2017, which is expected to cost around $30,000, which is high for a small EV.

On the other side, Tesla, by using Panasonic 18650 cells, has found a good compromise between controls, range and price, which is something that seems to work for their consumers – that an excellent decision they made and I see more companies using 18650 cells for their EV/PHEV batteries.

About their swapping system, I do not yet know how Tesla plans to install the infrastructure, but it will be difficult to have this system becoming very popular in the US. You recently organized your annual conference in Israel. Did you see new trends in the market?

Shmuel De-Leon: Yes, The Israeli Government funding a program called “INREP”. Four universities got funded to develop new breakthrough batteries – Bar Ilan University – Prof. Aurbach, Tel-Aviv University – Prof. Peled, Technion Institute – Prof. Ein-ali and Ariel University – Dr. Schechter. They are in the second year of energy storage development and we expect to see new products or new breakthroughs in the next 3-4 years.

In Israel, the company Phinergy is also very promising: they are working on Aluminum-Air battery which they claim could go for 1,500km on a single charge. They already have working prototypes with Citroën cars and cooperate with Renault, it seems to me that this is an important direction which could lead to a breakthrough. When it comes to automotive applications, are battery suppliers focusing on Li-ion only now?

Shmuel De-Leon: It still depends on the application. Lead-acid batteries are still mainly used for automotive off road cars. They are also used in start-stop systems together with supercap, and also for hybrid solutions with different technologies.

We also can see that some PHEV makers use Lithium Titanate (LTO) batteries and some first lithium Metal batteries.

NiMh batteries dominate the 3rd generation of hybrids, mainly Toyota. For PHEV and BEV, we see a tendency to move to Li-ion for its advantages, and I believe this technology will become stronger with time and take the lead in e-mobility. Of course we always hope for better energy density and better cost, but we will have to wait for that. Talking about applications, is energy storage for the grid currently more important than e-mobility for battery manufacturers?

Shmuel De-Leon: Batteries are needed for many applications. It keeps the industry working, as most of these applications have a growing market. Only two markets have not developed as expected: e-mobility and energy storage for the grid. They have grown much slower than expected, which have led to extra production capability, pushing the prices lower, so profits are going down, and in the end of the day the industry is struggling. I was in China a few weeks ago, the situation is not good, companies are struggling to survive, like in Europe, the US and Japan. I hope we will pass this difficulty and move forward in 1-2 years. Regarding EV market penetration, what would be most needed in your opinion? Public infrastructure, tax grants for companies, tax incentives for consumers?

Shmuel De-Leon: I can say that all these points need to be taken into account. First of all, the key issue is to have better batteries at lower cost. Besides that, we are talking about the need for charging infrastructure, tax reduction for the penetration period and standards. The lack of standards is a real problem that increases expanses of all players.

We also need more cooperation between companies, more cooperation between governments and common program worldwide to help increase sales and open the market. Thank you very much.

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