R20 - Axeon
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Nobel Court, Wester Gourdie, Dundee
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1 About AG Holding Ltd (Axeon)
1.1 Axeon is a leading technology developer, designer and manufacturer of complete lithium-ion battery systems for electric and hybrid electric vehicles ( EVs and HEVs).
To date there are well over 150 production EVs on the roads of Europe powered by Axeon lithium-ion battery systems. Axeon currently produces batteries in production volume for two of the UK's leading EV suppliers, Modec (Coventry) and Allied Vehicles (Glasgow). In addition, we have designed, produced and delivered several prototype batteries for a very diverse range of other vehicles:
- High performance sports car for Ruf GmbH, Germany
- Highway-capable electric scooter, USA
- Materials handling truck, Germany
- City buses, Italy & USA
- HEV heavy plant vehicle, Scandinavia
We believe that we have to date made more lithium-ion electric vehicle batteries than any other company globally. We continue to invest in R&D to make better batteries, improve battery technology, reduce cost and increase performance. Axeon is fully owned by AG Holding Ltd, which is backed by funds managed by Ironshield
Capital Management LLP. It is headquartered in Dundee, Scotland, with operations in the UK, Switzerland, Germany and Poland.
Technologies to reduce GHG emissions
2.1 In response to Q1 we believe that electric and hybrid electric vehicles have the greatest potential in the short term to reduce GHG emissions. These vehicles are available now and lend themselves particularly well to the commercial and public sector fleet. 2.2 It might be helpful to explain the difference between electric vehicles ( EVs), hybrid electric vehicles ( HEVs) and plug-in hybrid electric vehicles ( PHEVs):
2.1.1 Electric Vehicles (
- These are already available ( e.g. from Modec, Allied Vehicles, Smiths Electric Vehicles)
- EVs are all-electric, powered solely by batteries and with an electric motor
- The battery is recharged by plugging into the mains supply (3 phase is required in the case of larger vehicles)
- They have an 70 to 130 mile range
- 10 kWh to 75 kWh capacity, and can be charged overnight
- EVs produce zero CO2 emissions at the point of use
2.1.2 Hybrid Electric Vehicles ( HEVs)
- These are already available ( e.g. Prius, HEV buses)
- Internal combustion engine ( ICE) is main drive, 400 mile range
- Electric motor and battery provide power boost - typically 0.5 to 1.5 kWhr
- The battery is recharged by the internal combustion engine only. Uptake of HEVs will therefore not impact on demand on the grid.
- HEV bus probably delivers 20 to 40% CO2 emissions reduction However, an efficient diesel engine can deliver better CO2 emissions reduction than an HEV car
2.1.3 Plug-in Hybrid Electric Vehicles ( PHEVs)
- All the main car manufacturers are now developing PHEVs ( e.g.GM Volt) and these should be available in 2011
- These have a battery/electric motor drive, which will cover most day-to-day driving, particularly in an urban context. They can switch to an internal combustion engine for longer journeys.
- Battery is recharged by plugging into mains supply (3 phase in the case of larger vehicles)
- 10 kWh to 15 kWh battery, 30 mile range on battery, 400 mile range on ICE
- Car - 85% CO2 emissions reduction
2.3 It can be seen that of the various types of electrically-propelled vehicles pure EVs can make the biggest reduction in carbon emissions. This is of course also dependent on how the electricity is generated, but the King Review (October 2007) identified electric vehicles as the lowest carbon emissions route to clean transportation, even taking into account various mixes of electricity generation.
2.4 EVs are ideal for urban driving as their range (70-130 miles on a single charge) would cover all likely journeys. A range of vehicle types is already available, including light goods vehicles (under 3.5 tons), box vans (3.5 to 7.5 tons), taxis and minibuses, which offer the capability of both delivery and passenger transport of varying capacities.
2.5 Light goods vehicles ( LGVs) constitute the majority of the public sector fleet, emitting 28.3 ktCO2 in 07/08. In contrast with other road transport vehicle types, emissions from LGVs are forecast to continue rising in the medium- to long-term. As such vehicles tend to be used for urban transport and thus have a limited journey range they are ideally suited to conversion to electric vehicles; conversion of a significant proportion would reduce GHG emissions considerably.
2.6 Independent analysis (Ricardo 2009) has demonstrated that the probable take-up of EVs in the short-term will place no additional load on the grid. Scotland already generates 16% of its gross electricity consumption from renewable sources; if Scotland can increase its proportion of renewable energy it will ensure that the widespread introduction of EVs makes a significant contribution to carbon emission reduction overall.
- Widespread take-up of EVs, HEVs and PHEVs is likely to have the most impact in reducing GHG emissions in the short to medium term.
3.1 The potential take-up rates suggested by the UK Committee on Climate Change (page 24 of the consultation document) lack ambition. We would strongly recommend that to stimulate the market for LCVs and encourage their take-up the Scottish government should set ambitious targets for public sector fleets. By 2020 EV, HEV or PHEV versions of almost all types of municipal vehicles should be available (with the possible exception of HGVs) so it would be reasonable to set a target of 95% of all 2020 new vehicle purchases to be LCV. However, the government should note that LCVs are more expensive than ICE-powered vehicles and likely to remain so for the foreseeable future. Therefore the government should provide financial support to local authorities ( LAs) to enable them to purchase LCVs.
3.2 If the key aim is to reduce CO2 emissions, then the target should relate to the total emission reduction across the entire public sector fleet. How this is met will differ, depending on the location of the LA and the composition of its fleet. For example metropolitan areas, for which a more limited vehicle range would suffice, should be able to achieve significant LCV penetration in a short timescale through conversion to electric LGVs and hybrid buses. These vehicles may be less suitable for more rural LAs. The government should therefore look at overall targets for the country, with a bias towards urban areas.
3.3 UK government subsidies have been very slow to be implemented. The Low Carbon Vehicle Procurement Programme ( LCVPP: managed by Cenex) has so far taken two years from inception and has yet to deliver a single vehicle. We are concerned that it may have already distorted the market; there is evidence that local authorities have delayed purchasing decisions while awaiting the launch of the programme. Restricting the LCVPP both to a trial programme and to a limited number of public sector bodies has had, we believe, a negative impact on a market that was already being addressed by existing British EV manufacturers. We therefore recommend that any scheme that supports private/public sector fleets should be implemented quickly so as not to distort the market.
3.4 A demonstration project of 40 EVs will start running in Glasgow next year, involving Axeon, Allied Vehicles, Glasgow City Council, Scottish Power and Strathclyde University. While this should produce useful information on behavioural impacts, which the Scottish government should acquire and consider, further demonstration projects may delay wider take-up of EVs (as above).
3.5 Government-backed uptake of EVs by the public sector would demonstrate the viability of such vehicles and potentially create a secondary market for older vehicles with either new batteries or reduced range and therefore cheaper batteries.
3.6 Currently it appears to be the case that larger fleet managers (including major retailers and delivery companies) are buying EVs faster than the public sector. At present this is driven by the desire to reduce CO2 emissions, rather than economics. For wider uptake across the private sector fleet, targets for private sector fleets are likely to be required. This could perhaps be achieved by mandating permissible levels of CO2 emissions rather than particular vehicle types; however, the government should note that if Scottish private fleet managers are required to use particular types of LCVs without any compensation for doing so, this could reduce their competitiveness by increasing their costs. Therefore financial support is likely to be required.
- The Scottish government should set ambitious targets for public sector fleets and provide financial support to enable them to convert to more expensive but lower carbon-emitting vehicles.
- We believe that 95% of all 2020 new vehicle purchases being LCV will be achievable, if a high proportion of these are EV, HEV or PHEV.
- Any scheme that supports private/public sector fleets should be implemented quickly so as not to distort the market.
4 Overcoming barriers to uptake of LCVs
4.1 For significant uptake of EVs a comprehensive charging infrastructure will be required. This is less of an issue for commercial vehicles, which typically would return to a depot where 3- phase charging facilities can be installed, than it will be for passenger vehicles. Although much media attention has focused on the desirability of increasing the battery range of the latter, it may be more cost-effective overall to install a dense coverage of charging points rather than spending huge sums on increasing battery range.
4.2 Standardisation of charging infrastructure is critical to ensuring that consumers are not locked out of certain chargers. It is instructive to note that in the US three levels of charging are coalescing into a de-facto infrastructure standard:
Level 1: 110V, 15 or 20A. This is the standard US household service, available anywhere and everywhere. Lowest-common denominator solution, not fast, but can
charge almost anything to a usable state in 24 hours. It is expected that the vehicle will come with its own charging cord for plugging in.
Level 2: 220V, single-phase, 30A. The so-called "preferred" method for EV cars. A J1772 connector is likely.
Level 3: 480V three-phase, 60-150 kW. This will probably be used only for commercial installations, not for general public. It may use inductive leads or dedicated / bespoke connectors.
In the UK some charging post manufacturers offer the choice of single or three-phase connection in the same facility, determined by the charging pin configuration. We recommend that the government should seek to establish a charging infrastructure but in consultation with private sector providers, European governments and standards agencies over the standardisation of charging points (reference Q18).
4.3 The consultation document mentions the possibility of battery swapping stations. This technology is still unproven and there is much scepticism in the industry that it will work effectively, as car manufacturers are unlikely to make batteries that are compatible across all models of vehicles. We do not believe that this would be an effective substitute for a broad network of charging points.
4.4 Fast charging is a much-discussed topic, but we do not believe that the current speeds of charging should be a major deterrent to uptake of EVs, particularly commercial EVs with relatively fixed runs and overnight storage at depots. Current battery and charging technologies permit rapid charging using a 3-phase 32A source and slower charging using single-phase 13A (3kW). This would enable a full charge within 6-10 hours, depending on battery size, or faster top-up charging. As the majority of vehicles have significant down time during any 24-hour period, overnight re-charging is suitable for most users. A point often ignored is that to charge a battery quickly requires a very large power supply and this has the potential to limit severely the practical uptake of fast charging. For example, to charge a 300Vdc, 50kWh battery in 15 minutes a user would require a 200kW supply. The size and cost of the grid infrastructure will make this impractical for most domestic and light commercial applications. Battery technology is improving, and the introduction of newer chemistries is likely to speed up charging times, but we do not foresee that charging times will be comparable to that of filling a petrol tank in the short to medium term.
Smart EV Grid
4.5 There is potential for Scottish companies to develop smart grid functionality to lessen the impact on the grid of the introduction of electric vehicles. If electric vehicle users all begin charging at peak time in early evening the load on the grid will increase significantly at the existing period of heaviest demand. However, it is possible to develop technology that would allow a user to set charging preferences, for example, selecting the most economic tariffs, greenest sources or simply a time of next use. This has the potential to reduce significantly the cost of new grid infrastructure and to use electrical supply sources that were previously under-utilised. Companies such as Scottish Power, Scottish and Southern Energy, Allied Vehicles and Axeon have the necessary experience to develop this technology if encouraged to work in partnership. This would enable Scotland to take the lead in developing and introducing standards that could be licensed and sold to other countries.
4.6 EVs cost more than conventional ICE-powered vehicles, due largely to the significant cost of the batteries. Over the medium-term the whole-life running costs of EVs are likely to be lower than conventionally-powered vehicles, partly due to lower prices for electricity than for carbon fuels and partly because electric engines are more efficient than internal combustion engines. However, the high capital cost of EVs is a significant deterrent to potential purchasers. Some of Axeon's customers (the vehicle manufacturers) offer the vehicles on a leased basis so that there is reduced up-front cost. A current issue with battery leasing is the lack of information on the residual values of the batteries - they simply haven't been running long enough for us to have a clear idea of how much life they will have left beyond the 3 year warranty. As time goes on and there is a larger base of installed EVs, it will become possible to make these calculations.
4.7 There is, understandably, widespread ignorance about EVs and PHEVs among the public. Education is needed to raise awareness of potential purchasers of the benefits of EVs. We recommend that an education campaign focuses on fleet managers first as likely first adopters of such technology. Axeon plans to run seminars specifically on EVs for fleet managers, and we would welcome government support for this.
The government should
- work with local councils to ensure an extensive coverage of consumer charging points;
- establish a charging infrastructure, in consultation with private sector providers and other European governments and standards agencies over the standardisation of charging points;
- provide support and incentives for Scottish companies to work together to develop smart grid technology;
- support an education campaign on the benefits of EVs, focusing first on fleet managers.
5 Technology development
5.1 Given current battery technology developments, it is likely that within two to three years EV batteries will be smaller, lighter and with extended range. These technology developments are costly however, and it is critical that government funding continues at all level of the innovation chain, from fundamental scientific research through to product development.
5.2 The market pull is much weaker for EVs because of their increased cost compared with installed technology, therefore government intervention is needed till a later stage of the innovation chain than might otherwise be the case.
- The government should continue to support R&D into more advanced battery technologies at all stages of the innovation chain.
6 Scottish capabilities
6.1 Scotland already has a technological lead in EV batteries and vehicles, with companies operating in most of the related fields, including power generation (Scottish Power, Scottish and Southern Energy), fleet transport operators (Stagecoach, First Group), specialist vehicles (Allied Vehicles, Alexander Dennis, Johnson Sweepers) and batteries (Axeon Holdings). Given the range of major energy and transport companies headquartered in Scotland, it is well placed to drive this technological development for the UK and become a leader in lowcarbon transport.
- The Scottish Government has a unique opportunity to act at a relatively low cost and position Scotland as a global leader in sustainable, low-carbon transport.
7 Other considerations
7.1 In August 2009 the US government announced that it would accelerate the introduction of EVs by handing out $2.4 billion to the USEV battery sector in the form of grants. This has placed non- US companies at a competitive disadvantage - these grants may allow our competitors to overtake our technology, undercut our prices, and offer US-made solutions to US customers for whom "Buy American" is an increasing consideration. Significantly it also makes us an acquisition target for cash-rich US companies. Because of the availability of these grants the US has become a very attractive potential manufacturing base for Axeon (it is now as straightforward for us to set up a facility in the US as in Scotland) and the probable need to provide a US-made solution to US customers is likely to reinforce that attraction.
7.2 At the recent Low Carbon Vehicle show at Millbrook Proving Ground several senior industry commentators (including John Wood, the former head of MIRA) made the point that given the importance of the battery to an EV, the UK needs a battery industry. Axeon is virtually unique in this regard, both from a Scottish or UK perspective, and therefore support for the company will help to ensure the continuation of a UK battery industry.
7.3 There are potential negative social impacts related to the charging of consumer vehicles (reference Q7). Charging of consumer vehicles will be much easier for those with drives or garages; on-street overnight charging is likely to trigger major health and safety concerns (such charging points may be at risk from vandalism or pedestrians tripping over charging cables). This may make it more difficult for those living in areas of high-density housing to run EVs.
7.4 Island communities (reference Q10) might well prove suitable for electric transport, particularly those which generate their own renewable energy. Lewis may be a case in point, with the development of the UK's first commercial wave power station. Indeed, if electricity is generated locally from renewable sources, the overall costs of buying and running an EV might compare favourable to ICE vehicles that rely on expensive fuel. The range of the vehicles would be the limiting factor; EVs are not suited to situations where long distances have to be driven. In these situations HEVs or PHEVs would be more suitable.
7.5 There is a dearth of skilled automotive engineering talent in Scotland. The government may wish to consider an initiative to retrain engineers currently working in declining industries and thus enhance the skills base (reference Q 23).
- The government should view EVs and PHEVs fuelled by renewable energy sources as a means of overcoming fuel poverty in remote areas;
- The government may wish to consider an initiative to enhance automotive-related engineering skills.