Tech Hardware Supply Chain - Gazhoo

Bhavin Shah
(852) 2800-8538
bhavin.a.shah@jpmorgan.com
PHEVs will likely be able to
leverage the appeal of their
product power once LiB battery
performance improves
The battery holds the key to
PHEV diffusion
260
Asia Pacific Equity Research
20 April 2009
Plug-in Hybrid Electric Vehicles (PHEVs)
PHEVs are hybrid vehicles that are primarily run on battery power and the ICE
comes in as a secondary source of power to aid the battery. They can also be
recharged using a domestic power source unlike a traditional HEV. We believe they
are likely to attract great attention in the near future as a new hybrid technology
capable of overcoming EVs’ weaknesses. PHEVs have a structurally similar
approach to EVs, and run as EVs charged up on ordinary domestic power sources.
They usually have short driving ranges and can be used as EVs without recourse to
the internal combustion engine. For medium-to-long distances, beyond their range as
EVs, they can be driven as HEVs, using the internal combustion engine and energy
regeneration as the motive power source. We think this is a highly interesting system
capable of simultaneously resolving complex problems, including driving distance,
charging time, and infrastructural issues. We think PHEVs will likely be able to
leverage the appeal of their product power once LiB battery performance improves.
PHEVs represent a new technology that could lead to a reduction in CO2 on a Life
Cycle Assessment (LCA).
Table 141: Ratio of engine and motor drive
Internal combustion H E V P H E V E V
Engine Driv e 100% medium-high low -high
M otor Driv e low -medium low -high 100%
Source: J.P. Morgan.
Setting EV run-distance the key point
An important point for PHEVs is how far they can run on motor-drive alone. The
longer the EV run-distance, the greater the scope to improve fuel economy, but initial
costs and recharge times similarly increase. Furthermore, we think that EV rundistances
demanded by users will vary in different regions and under different
infrastructures. The HEV system adopted will also vary according to EV rundistances,
so how companies fit PHEVs into their strategies will also affect how far
they can run as EVs, in our view.
LiB adoption required for PHEV to take off
The battery holds the key to PHEV diffusion. PHEVs are said to require over five
times the battery capacity of traditional HEVs (Table 142). Power density can be
lowered and energy output raised with NiMH batteries, which are today’s
mainstream technology for HEVs, but just doubling energy density more than
doubles the number of batteries needed for HEVs, and this is unrealistic from a
weight and volume perspective. On the other hand, LiB batteries can provide
improvements in energy as well as power density, so it may be possible to make
considerable weight reductions. Many issues remain unresolved, including costs and
reliability, but we believe transition to LiB batteries is vital to increase battery
capacity several times within a permissible gain in weight.
Table 142: Ratio relation between vehicle type and battery capacity
HEV PHEV EV
Battery C apacity (kw h) 1-3 4-15 20-30
Source: J.P. Morgan, based on “Lithium Ion Battery” by Zenpachi Ogumi.