2008 Conference Call
Copeland: Good morning and
welcome to our third quarter conference call.
This is Terry Copeland, president and CEO of Altairnano.
With me today are
we’ll review our performance for the 3rd quarter and highlight some of our
recent accomplishments. I sometimes
refer to Altairnano as a thirty-five-year-old start-up company as this
characterization is descriptive of our position in the market place.
Our primary businesses in stationary power and transportation are both
new markets that we’re targeting for introduction and entry with our new
technology. In that sense we
certainly do resemble a start up. New
businesses in early stage markets have to be vigilant of their cash burn rate
particularly before revenue ramp begins. We
have reported to you in past quarterly conference calls that our first quarter
cash burn rate was higher than what we were comfortable with and that we made
some progress against that in the second quarter.
I’m pleased to tell you that we have continued that effort and that in
the third quarter our cash burn was roughly $4 M, down more than $3.5M from the
second quarter. In addition we added
$10M through the recently announced Al Yousuf investment.
talk about Life Sciences first today. In
July, we were surprised to learn that Elanco
Animal Health, a division of Eli Lilly,
was going to halt spending on the Development Services Agreement that had been
in place since September of 2007. The
reason given was that they were asked to significantly reduce their spending
rate on product development and that they had to curtail product development
programs in order to meet that internal directive.
We worked diligently with Elanco to find a path around this challenge but
it did not surface. Consequently,
after reviewing our broader research license and commercialization agreement, we
made the decision to terminate that relationship.
This resulted in all of the licensing rights to the compound developed
for Elanco reverting to us. This
event does not change our relationship with Spectrum
Pharmaceuticals. That work
continues to proceed as planned.
have since talked to several other companies regarding their interest in the
product but at this point none of the discussions have move to an advanced
stage. Our experience, much like
other companies, is that the challenging economic environment and volatility in
the capital markets has triggered a retrenchment in the product development
activities of our potential licensing partners.
me now turn to Performance Materials and particularly our joint venture with Sherwin
Williams /AlSher. Through the
quarter we continued work developing sufficient data that would enable a more
detailed engineering analysis for a scaled up production facility.
In July and August we had ongoing dialog with a third party that was
interested in licensing our technology for the production of TiO2.
Our intent had been to generate sufficient cash up front so that we could
then complete the engineering analysis and, in conjunction with the third party,
proceed to the scaled up plant. That
particular company has now decided to end that dialog.
No reason was given for their reluctance in proceeding however several
companies with considerable raw material resources have expressed interest in
our process but to date none have made any firm commitment.
Without such a commitment it will be difficult for AlSher to
independently fund the next scale up investment.
you are aware we have been putting greater emphasis on our Power and Energy
Systems as we believe this is our greatest opportunity.
I’ll speak first about stationary power and then move to transportation
and finish with some comments on military applications.
know everyone is anxious to hear about our relationship with AES.
Our relationship continues to be strong and we’re working hard to put
together a commercial proposition that benefits everyone.
It’s important to recognize that the 2MW system built for AES was
designed, constructed and delivered in about 4 months.
It was recognized to be a prototype.
Moving from prototype to commercial design requires considerably more
value engineering and supply chain management efforts.
We have initiated this undertaking and are working swiftly to achieve our
goals in these areas. We also have a
much better understanding of the economics of the specific applications we are
targeting and consequently where our own cost targets need to be in order to
successfully enter those markets.
next want to target a photovoltaic solar smoothing application.
This application helps solve a critical problem when connecting utility
scale PV solar generating assets to the grid.
For example, when a cloud comes over the solar panel array the power
output drops dramatically. This
creates a problem for the supporting distribution grid as the utilities cannot
respond quickly enough with traditional generating assets to make up for the
sudden drop in power. Our energy
storage technology appears to be a perfect solution to this problem.
Our battery can respond within milliseconds to deliver the supporting
power to allow for controlled reduction in output to the utility.
Conversely, when the cloud disappears, and the PV solar output suddenly
jumps dramatically, the battery can again respond within milliseconds to capture
the increased output to allow for a controlled increase in output of power to
the grid. We’re in discussions
with several companies to put in place a demonstration facility similar to that
which we had with AES. I will give
you more information on this once we have a contractual development agreement in
place with an appropriate partner.
the transportation sector, we recently announced that Design
Line International is building prototype hybrid buses based on our cell
technology. This is exciting because
it reinforces our belief that hybrid buses will be a significant early adaptor
of alternative energy power systems. The
needs of this industry match very well with the distinctive capability that we
offer - high power, rapid recharge, long cycle life and broad range of operating
temperature. DLI should complete
their prototype testing in the fourth quarter.
We continue to have success on the military front.
The Office of Naval Research development program is moving
forward. You will recall that the
objective of the ONR project is to provide backup electrical power on a
destroyer that enables, what the Navy refers to as, single generator operations
where they don’t need to run a backup power plant continuously.
The first phase, ONR1, has been centered on module design and build and
should be complete in the fourth quarter. The
second phase, ONR2, valued at $3.8M, will be a scale up to, perhaps, a 500kw
unit for larger scale testing by the Navy. We
have not finalized the phase II contract yet but anticipate doing so in the
fourth quarter. Roughly $4M was
appropriated by Congress in the recent Continuing Resolution for Additional
Development beyond ONR II.
The Army has been pleased with test results to date on our modules for
the M119 - 105mm howitzer program. I
will share with you one interesting finding from the abuse testing that has been
recently performed. Two modules were
subjected to testing at the firing range. These
types of tests are well attended because the results can be… entertaining.
The first test consisted of firing a 7.62mm round directly at the module.
When nothing happened, at least one voice in the crowd was heard to say
‘you missed’. Actually,
the bullet hit dead center on the battery module with no catastrophic
consequences. In fact, open circuit
voltage on the battery was monitored for three additional hours.
The second test was even harsher. This
time a 50 caliber round was fired through the battery.
Again, to the amazement of all observers no catastrophic event occurred.
There was no fire. Not even
any smoke. The US Army was
completely surprised by this outcome and excited for obvious reasons.
Functional testing of the M119 modules will continue in the 4th quarter.
Also, on the military front, just this week BAE Systems gave us
authorization to proceed on what we call phase 1A of a technology development
program investigating the use of our battery technology with the UK Navy.
This part of the program is for $406 K dollars.
We anticipate that phase 1B will follow later in the fourth quarter.
Before turning the microphone over to John Fallini I’d like to make
one more comment. I’m am very
pleased with the recent transaction with Al Yousuf LLC in
which they reiterated their strong belief in our technology and commitment to
the company. With the added $10M in
cash to bolster our balance sheet, we can weather a very difficult economic
environment, proceed forward with our plans to commercialize our technology, and
avoid having to raise money in the public markets.
I look forward to working with Mr. Al Yousuf as a new member of our board
of directors. He has personally
helped build Al Yousuf LLC into a major company, and has an intimate
understanding of the challenges that must be overcome in building a successful
company. Let me now turn it over to
company has an investment of $3.9 M dollars in auction rate notes.
During the first quarter we determined that the financial market for
these instruments was not recovering in the short term and reflected a current
impairment of 20% of the value of these notes, or $780 K dollars, on our balance
sheet as of March 31st. Financial
markets have continued to deteriorate during the second and third quarters, but
the underlying corporate bonds that comprise these notes and the banks holding
them remain strong. It is our
conclusion that these notes are still only temporarily impaired although at a
greater extent than at the end of the second quarter. Consequently we took an
additional impairment allowance of $312 K dollars during the third quarter
raising the total impairment allowance on these notes to $1 M, 92 thousand
dollars. We will continue to closely
monitor this situation in the fourth quarter and beyond.
I will now turn the call back over to Terry.
John. As he has indicated to you our
cash burn rate in the third quarter was significantly improved over that of the
first and second quarters. We
recognize that we still have a long way to go and that it’s important for us
to improve the revenue line in the fourth quarter and in 2009.
That is certainly our intention. Now we’d like to open the call up for
investor questions. Operator, please go ahead…
Operator:And our first question today is from Michael Lew with Think Equity.
Good Morning Michael.
Hi. I had a couple of questions. You
highlighted the shipment of battery packs to DesignLine
International. With regards to
the qualification of the process, which you expect to be completed in Q4, what
are some of the metrics that they’re gauging right now?
And, also, as you see it today, how big is this potential opportunity?
DLI is working with several potential customers on their side for
analyses and evaluation of these prototypes.
Some of the prototypes will go directly to those end customers for
that evaluation and I can’t say who those customers are but they’re very
large and I’m absolutely confident that you’ll recognize who they are. They
will go through a typical process of evaluating those buses vs. other busses
that they might have on-site looking at all of those attributes which we’ve
touted for those batteries. They’re going to want to look at charge rate.
They’re going to want to look at the energy, at how far they’re able to
travel, and their reliability most importantly.
In addition there are other tests that DLI will be doing that have to be
done for any lithium ion battery system basically that’s going to be on the
road. Those are common tests. So
we’re looking forward to those results. Then
your second point of the question was how big is the market?
It’s significant in size. Particularly
if you simply think of any urban area with busses is a target for this kind of
thing. In addition it’s important
to recognize that the purchase of these buses in these urban areas are typically
subsidized by the federal government anywhere from 60 to 80 percent.
And I think that that will certainly be encouraged by the incoming
OK. And also just to confirm… the plan going forward will be to just
provide the cells and not build the battery packs?
That’s exactly right.
Michael: The other question that I had also was with regards to Elanco, now that
the partnership came to a halt, could you share with us how far along Renazorb
is on the development curve? In other words is this product almost market-ready
for, let’s say, a potential additive, or is there, like, significant
additional development work that would be required for somebody who came on
board… who partnered up with Altair?
Any new partner that comes along is essentially going to have to start over
doing their own efficacy tests, and measurements of effectiveness, based on
their own standards. Even if we were allowed to share development results from
Elanco, which we are not, and, of course, we would not, other companies by
default have to do their own testing. So,
while it won’t go back to ground zero, it will take a step back for these
companies to begin doing that analysis. Typically… no I don’t even want to
say typically how long such analysis might take.
We were reasonably far along with Elanco but still had a way to go
particularly with regards to setting up broader tests with a wider ranging group
OK. That helps enough. Also with regards to Al
Yousuf being appointed a board seat can you discuss his role?
Is he going to be a more active board member involved with the daily
ongoing development efforts?
I don’t expect any of our board members to be involved with day to day
activities of the business. That’s
the responsibility of me and my management team.
That said, I do believe Al Yousuf will be a very active board member.
We’re looking forward to his integration into that group.
He, of course, has several interests with this technology.
You’re aware of his relationship with
we’ll go next to Len Cuthbert with
How are you?
You addressed one of my questions which was the large megawatt
battery for AES. Basically, just to sum up, so I understand this, for analysis
it is still ongoing with AES Corporation additional testing
uhm different prototypes are going to be used.
It’s pretty much on schedule. Is
I would say that’s correct. AES
is also supporting us in our efforts to reach out to other potential customers.
We are able to schedule visits with those customers to the AES facility
to show them the power plant – the battery.
We’re very excited about the relationship and it continues well.
in that regards… in the Millarstown PA area, AES is basically, I’ve received
a schematic, one of their power plants out there that they’re going to be
putting on line and there are two large batteries, storage units, showing there.
Are those the old style megawatt batteries or are you aware of any new
A couple of points;…
give you two answers. Number one: I’m not specifically sure where. I
know that AES has moved one of the batteries that we had in
In the same regards in a related event are you aware, or has ALTI been
informed at all regarding the tariff application made by AES regarding the use
of the new megawatt batteries?
do you want to…?
Yes, we are aware of their application.
I don’t expect that you can elaborate any more on that I just wanted to
clarify that you are aware? And my
last and final question: And this is
what we’re doing in our on-going analysis, one of the things that we looked at
really closely in our recommendation of Altairnano was the relationship with
Phoenix and the batteries that were going into the vehicles.
We followed fairly closely. We
were aware of the, basic, triumvirate conference in
The latest with
My smallest and final point will be that, in relation to the
I was not at the
could I just address one final thing again, what you can say, what you can’t
say, are we, and I’m say we/Altair, were we also promoting ourselves for
additional investment possibilities in Dubai?
No. The purpose of the trip to
So basically I could sum up and say that at this particular point our
cash burn problems are fairly under control.
We’re not in the market to either dilute our shares on the marketplace
at all through a secondary issue or we’re not looking, at the present time,
for additional financing. Would that
Yeah, this is John Fellini. That
I thank you guys very much for your candid answers and I’m done.
OK, Len, thank-you.
And we’ll go next to Bill Morrison with Sythful Nicholas & Company.
Couple of questions: First off on the Power Systems and the motive side,
specifically busses. You’ve kind
of been in a constant state of prototyping for a few years really pretty much
across the board in Power Systems but specifically in busses. Is
there any fruit that’s being born from some of the prototyping with ISE and if
not can some of the data that was used in that work be used, you know, for some
of the new motive applications so we don’t have to start the clock from ground
zero to start prototyping. That’s
my first question.
The answer is yes and no. When
we develop, and work with, a company like ISE, that’s done under
confidentiality where we’re restricted from what we can use with other
customers. Obviously anything that
we put into that equation we can use on our side other potential customers but
what ISE would put in we can’t share. I would say that particularly with
regards to test results that a customer under NDA, where that’s under a
confidentiality agreement, those test results really can’t be shared with
other potential customers. That said
we have been working with others and have we’ve been prototyping.
Most of that activity has really occurred this year.
You said ‘In previoius years” but most of the prototype activity and
focus on the large transit vehicles has been, really, this year and principally
in the second or third quarters.
OK. So, with ISE is there any expectation that we might move from the
prototyping stage to production at some point?
Maybe in ’09?
certainly a potential. I’ll tell
you that ISE has changed their leadership structure some and they are
reevaluating how they want to address the whole marketplace.
We’re a part of that reevaluation.
OK. The second question:
As far as the medium-duty truck space. I know that you had some work
going on there a few years back. Is there anything that’s going to come to
fruition commercially there?
In that space we have been re-engaged this year with several major
integrators. How quickly that will
come to fruition I really can’t say. I
did use the word “Re-engage” this year.
So those are really in a relatively early stage.
But we can leverage what we have learned, again, on the inside of Altair
as far as design requirements, and what not, for these kinds of facts to those
our next question will come from Craig Irwin with Merriman.
Hey Terry. Quick question: First one: The
250 Kw unit that was moved from the substation in Indianapolis
Power and Light over to PJM do you expect to recognize any revenue from that
in this current quarter?
No. That was uh… The
revenue came in, what, in July so it came in in the third quarter.
That was all part of the essential 2 megawatt system that we put into
So there’s no residual revenue behind that from the original sale?
OK. OK. Excellent.
Then, really, the most important question that I have is around cost.
A lot of your customers, when I speak to them, they say that your battery
is very very expensive compared to the other alternatives out there but that it
works. Those of them that have
cycled the product out thousands of cycles all say that the test data matches
pretty well with what you show around to prospect customers.
Can you talk a little bit about what you’re doing about taking cost out
of your cells; How much you want to get out and really what sort of time line
this might take?
with any manufacturer of cells of anything when you look at the cost/weight you
want to take out as much as possible, of course.
One of the things that’s difficult to change is how customers evaluate
the cost of, in this case, cells. The
traditional way of valuing cells has been dollars per watt/hr. and they always
look at dollars per nominal watt/hr. If
you look at lithium ion, and we’re getting into some technical detail here,
but if you look at a typical lithium ion battery, it might have about 160
watt/hrs per kilogram. Where, in fact, we’re about half that, at 80.
However, you have to look at, not the nominal, value but what’s the
practical value. How’s is this
used in the environment and typically to optimize the life of a lithium ion
system you can only run it between about a 30% state of and 80% state of charge.
Do the math that says you can only use about 50% of the available energy. 50% of
160 is, guess what? 80. Which
is right exactly where we are. Our
batteries, on the other hand, you could run easily between 90 and 10 so that the
discrepancy between the two isn’t nearly as great as you might expect and then
when you begin to look at real world conditions then you start looking at
temperatures. You have to be able to
run this thing in
Does this mean that your relationship with Kokam,
the sort of, outsource manufacturing and the questions that people have about
potentially being able to bring down the cost of your powders by producing them
through an alternative method, that these are not things that are on the drawing
board for the short term?
Our relationship with Kokam is
very strong. We continue to work
with them and they support our cost reduction initiative.
With regard to the manufacture of the powder, we, of course do that here
Thank-you very much.
our next question is with Justin Cable with Global
Most of my questions have been answered but I did want to get a little
more clarity with regards to the overall head count and cost reductions.
What cost structure are we at now on a quarterly run rate basis and
where’s our head count going to?
current head count is roughly 105. That’s
down some from a couple of quarters ago. We
were up, at one time, to around 117 people. So
that’s, 12 out of 117, that’s roughly a 10 percent reduction.
We’re working aggressively on what I call “value engineering”.
Again, this gets back to a prototype system that was put together in
record time where you’re looking for function.
Now we have to go back and redesign that looking for value and function
at the same time. That takes time. That’s
work with the entire supply chain. And
that’s what we’re doing from copper purchases to electronics - everything.
But in terms of quarterly cost structure.
What’s our quarterly run rate for total cost of business?
I think that we said that our cash burn for the quarter was $4.04 M.
Is that right, John?
the third quarter, correct?
Just as an example I think our first quarter was on the order of 15 million and
then 7.8 in our second quarter.
And then 7.8 during the second quarter.
Were there any further cost reductions made during the third quarter?
Well, again, from a cash burn rate we reduced about 3 and a half million
What is the new share count as well as any options and warrants
John? Can you handle that
uhm… our new share count, as of right now, today is about 95 million. Options
and warrants have not changed materially. There
were no new warrants that were issued, as part of the Al Yousuf investment, for
example. So they’re the same as they were previously.
What’s the total on that? On the
We’ve gotta pull that up out of the last…
No problem. In terms of the 4th
quarter you still have numerous prototypes still in testing phases.
Is there anything that we should anticipate in terms of new contracts or
that we should look out for in any of the sectors that you’re targeting,
before the end of the year?
We have several irons in the fire. I
don’t want to speculate on when they might come to fruition.
I’ve indicated, relative to, for instance, BAE that we just got the
contract with them this week. We’d expect phase 2 of that within the fourth
quarter. We’d like to see DLI’s
testing come to fruition in the fourth quarter and would anticipate further
orders beyond that. Beyond those at
this time I’m reluctant to give any specific guidance.
OK. Now in terms of the DLI
opportunity. How quickly have they
said that they would want to engage in terms of a commercial roll-out?
don’t want to speak to DLI’s timelines.
That’s privy to them. But
it’s safe to assume that, based on successful completion of prototype testing,
that they would proceed forward at a reasonable pace.
And remind us again; what the, uh… if we were to build out into a model what
kind of (indiscernible), margin structure, that sort of thing, should we assume
on a per unit basis?
I don’t think that we’re going to give any guidance on that at this time.
we’ll go next to Raymond Korea with Oppenheimer.
How you doing, gentlemen?
Good. I have two questions and I think that they’re pretty direct and
questions that we’re all waiting to hear:
In your opinion, Terry, why hasn’t Altair been selected to participate
in any automotive demonstration programs domestically or globally?
It’s a good question. Which,
specifically, would you be speaking of?
Raymond: I’m talking in terms of the batteries.
For whom? What companies are
you referring to?
I’m talking about the major automobile manufacturers.
The primary one, of course, is the GM’s Volt.
And that decision was made some time ago.
Certainly well before I joined the company.
I’m reluctant, really, to speak to that not having been part of those
discussions. Any others in
particular you’re interested in?
in general anyone that you know of that has ongoing demonstration programs.
Have you either tried to be part of a demonstration? Or has anyone ever
contacted you with regards to a demonstration?
Maybe you declined? That’s what I’m basically getting at.
in discussions with a number of companies, as you might guess.
Some of these have, well I’ll call them, more “open” prototyping
going on. Others do not. And we are
working with those, again, as a supplier of cells to the transportation market
and we need to be working with an integrator and those companies and we have
And my last question is: In your opinion, why haven’t you received any
orders from any of the major auto manufacturers yet because as far as I see it,
it’s the best technology out there and I would imagine that they would be
knocking down Altair’s door to grasp the technology before someone else did.
as I said… we have active discussions going on.
The developments, particularly in the automotive world take a lot of time
to come to fruition. Are you aware,
other than, of course, the Prius, where they’re working building those
hybrids, of any other major movement in the battery world as far as automotive
goes? GM has the Volt that’s
2010. They haven’t officially
announced even who they’re going to be going with much less how much they’re
going to be ordering.
I’m also aware that Chrysler recently
had a presentation on CNBC outlining the specs of their vehicle, and it had very
similar specs to your battery. Any
comment on that?
thought that I saw that Chrysler had
just dropped their hybrid vehicles.
understanding was just the trucks.
Was there any correlation there or is it just something that you don’t
care to discuss at this point?
I would say that we can’t discuss it at this point.
As I said we’re re talking with numbers of people all the time. We
continue to have discussions with
do believe that they were proceeding forward on their EV sports car.
thoughts on that?
Raymond: OK. Thank-you.
And we’ll go next to Hugh Huddleson with Nature’s
Hi Hugh… Hugh,.. you there?
Accent) Hi. Good morning. How you doing?
Hi. Sorry about that. I just wanted
to just quickly ask could you confirm whether you’re in discussions with
regards to BEA systems and the U.K. Navy, designing something specifically for
the new Queen Elizabeth Aircraft Carrier?
Terry: I can’t speak specifically to the application.
It is with the UK Navy and that’s really all we can say at this time.
OK. Thank-you very much.
I will add that that we’re very excited about it. It’s a very
interesting application and they’re excited about it to with some of the
results that they’ve seen.
Do you have a more specific time line or just that phase two is going to be in
the fourth quarter?
you’re just starting phase one I’m not sure that it’s proper to define the
time line but I anticipate success there just as we’ve had with our own ONR,
Office of Naval Research, and army presence.
Thanks very much.
And our next question is from Mike Yasdenda.
Terry. How you doing?
have a question on the AES application or the stationary power agenda, in
I understand the cloud scenario.
Is there any application for your battery in providing additional peaking
power? Or is that too much of a…
you know I understand that it’s a quick discharge and you need a real quick
recharge. Do you see peaking power
and wind power applications for your battery?
With regards to “peaking power”…
Well… mid day is peak…
It’s conceivable that in some cases you might have a dual performance
system, for instance, tied to a PV solar application, where the PV solar is
running quite well and you still have the battery sitting there, you could
potentially use it for some peaking applications, but what we’re really
looking at is high power applications requiring millisecond responses for
relative short term durations. Typically
peaking power you’re looking for a longer duration event greater than 20 or 30
minutes and I’d say that that’s probably not the optimum spot for our system
but, if you’ve got it sitting in a solar farm, and the weather is good, then
you could throw it into that application to your advantage.
you see it in wind farms? The
battery in wind farms? Performing
the same kind of thing? Variable
We’re certainly looking at that.
I think that the rate of change in a wind farm is somewhat
different than in a solar power system so that’s, sort of, step 3 here with PV
solar being step 2. We’re talking
with wind generators, looking at the application, and evaluating its potential
use. I can’t say that it’s
definitively there that there’s an application as well understood as it is
withn PV solar.
just one more follow-up on that, just in terms of the economics on that
application I guess there’s kind of an “A” and “B” model in my head.
The “A” is… when the power goes away you’ve got to provide the
power or else all hell breaks loose from a utility standpoint.
“B” is your provide 2 mw of power for 30 minutes that’s one
megawatt hour of power at, what would be, a very expensive rate, and you can
multiply that out over the number of times of day its used and kind of come out
with a breakeven model of the battery in that application.
When they’re evaluating it are they on the “A” or on the “B”
side of that?
There’s actually some of both and this is an emerging market with
technology that’s never before been available.
The markets are trying to understand how best to value that system.
I think in general in these applications, and Robert, you may be able to
add to this, but I thin in general in these applications you’re bidding on
power ahead of time and you’re paid on that power in whatever form you deliver
it and so this is supporting that kind of bid structure for companies that are
tying into the grid. (pause) I’ll
give you an example that AES has quoted publicly, this was actually given in a
presentation earlier this year in
Megawatts for 8000 hours?
$55 per megawatt per 8000 hours a year.
That’s a… OK. Cause I was
thinking, when you have the batteries installed, you have a charge event, and a
discharge event so your charging at some lower rate and discharging when you
That’s all part of the cost of operation.
How many cycles do you think a battery like that would go through during the
course of a day? Is that something
that just gets called on occasionally during the month or is it a couple of
times a day, or…?
it depends on the situation, but typically if you look at California ISO, they
put their own model together, and it calls for changing the output every 4
Did you have any other questions, Mike?
Mike: No. Thanks for the time.
And we’ll go next to Barry Quat.
Barry: I have a question. With the very successful pilot for AES, why, in your opinion, has AES not placed an order for additional battery systems with Altair?
Well I think that I addressed this in the prepared portion of my remarks.
What we built was a one-off, very rapid prototype.
In those situations the costs for building that are very high.
And we are working with AES and with our own supply chain to reduce the
costs and to do what we call “value engineering” of that design to make it a
commercially applicable design that you could then build in multiple units and
not just a one-off design. That’s
a cost issue.
OK. My next thing is: The S1 filing with the SEC by A123 indicated that
that they received an order from AES for 5 battery systems to be shipped when
A123 completes a successful pilot. How
does A123’s battery compare with Altair?
Terry: It’s, of course, a completely different chemistry than what we have.
Ours is lithium titanate on the anode and theirs is an iron phosphate on
the cathode. The performance
characteristics/response characteristics are different and the life cycle
characteristics will be different as well. We
believe that our life cycle for our battery system is considerably longer than
that for the A123 system. We welcome
their participation in this market. That
validates that the market is real. But
we have to wait and see if they’re successful in putting this together.
If you look at, dimensionally, an A123 system right now their primary
product is what’s called a 26650 cell which is about the size of a D cell
consumer battery – a little bit larger than that. And for a one megawatt
battery that’s going to take 900,000, or so, of those which consequently means
1.8 million welds per megawatt. That’s
a significant difference over what we have just from a manufacturing
I had another question and I can’t find it. Damn it. OK. I had written
them all down because I couldn’t get through earlier. Alright I guess that
will be fine for now. Thank-you.
our next question is from Kenneth Young.
Hi. How are you guys doing?
As one who is not particularly
steeped in battery technology I have to bring this down to simple minded stuff.
I’d like to come back to the GM Volt for a moment if you don’t mind.
As everyone, I’m sure, is aware, they’ve been blanketing the air
waves with their advertising of the Volt and particularly the big hook is that
they can get 40 miles initially on a charge without any gas at all.
Is that below, or above, the parameters that you’d expect from an
Altair battery pack?
Terry: Well, that’s difficult to say because each vehicle will require its own
battery design. Each vehicle has a
limited amount of space, of volume, for the battery and, at the end of the day,
you want to stuff as much in there as you possibly can.
I think that the real question is: Is forty miles, on an electric charge,
going to be sufficient to draw in consumers?
And that, by the way, that’s forty miles in a “no headwind”
situation and no hills and more or less in a perfect environment.
Applaud them for going there and hope they’re successful.
Again, that’ll validate the industry.
Well seeing that the
Well recognize that the Volt is really a hybrid system. It’s
not an all-electric vehicle.
No, I understand. I
understood that but still if you’re going to start out all-electric whether
you go to a hybrid or not after a while the Phoenix Motor vehicles are supposed
to do much better than that.
much better on an all-electric basis but, again, that’s not what the Volt is
trying to do, and I’m not going to sit here and defend GM, but it’s a hybrid
application. They do have a gas engine in there. It’s a very small one.
But your total range for that vehicle is going to be considerably more
than forty miles it’s just that much of it will be on gas and, it’ll all be
on electric, but you have the gasoline motor charging the battery while the
battery is running the car. The
hybrid system… they really aren’t comparable in the way that you’re trying
to do it. At the end of the day the
consumer’s going to have to make the decision on which they prefer.
OK. Am I correct that you’re primary raw material is lithium?
It’s a lithium-based system. Yes.
In the last year there’s been a huge variation in the price of hard
commodities. Oil. Coal. You name it. You know. Steel. Whatever. It went way up.
Copper went way up then, of course, it crashed down.
Does this valuation in hard commodities affect your input costs at all?
If you use the claim “at all” yes, of course it does, but it’s not
a significant issue at this time.
The other thing is that it seems that lithium ion batteries, in whatever
guise, are proliferating. Is that
going to create a problem as far as the supply of lithium?
There’s an awful lot of lithium available throughout the world right
now. The primary sources are coming
And due to time constraints I’ll now turn the call back over to Dr. Copeland.
Terry: OK. Thanks, everybody, for your questions. It’s always a pleasure to speak with everyone. We’re making progress in building a strong, high growth, company and let me assure you once again that we are committed to building Altairnano in ways that will make our shareholders proud and profitable, and enhance shareholder value. We’ll continue to lead Altairnano with an honest, ethical, strong and decisive leadership style, providing clear direction to meet our business objectives. On behalf of the entire management team and all Altairnano employees, we would like to thank you for your time, interest and support of Altairnano. Thank you very much.
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