CAFE Standards Implementation in 2016 Provides Growth Opportunity For Absorbed Glass Mat (AGM) Battery Technology From Exide Technologies (XIDE): Alternative To Toxic Waste Disposal Issues From Nickel Hydride (NiMH) Battery

January 27, 2011 - The Wall Street Transcript has just published Manufacturing Report offering a timely review of the Manufacturing sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.

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James R. (Jim) Bolch is President and Chief Executive Officer of Exide Technologies, a global leader in stored electrical-energy solutions. He also is a member of the company's board of directors. Mr. Bolch's leadership of Exide began in July 2010. His career has spanned 29 years in global industrial businesses, serving a variety of customer segments.

Before joining Exide, Mr. Bolch served as Senior Vice President and President, Industrial Technologies Sector at Ingersoll Rand Company (IR). He joined Ingersoll Rand in 2005 from Schindler Elevator Corporation, where as Executive Vice President of the Service Business, he led the North American services functions. Prior to his tenure at Schindler Elevator Corporation, Mr. Bolch spent 21 years with United Technologies Corporation (UTX), starting in engineering and program management roles with United Technologies Optical Systems and later moving to Otis Elevator Company.

Between 1991 and 1999, he held positions of increasing responsibility at Otis in operations, services and product administration. In his last role at UTC, he served as Vice President, Operations, for the UTC Power Division. Mr. Bolch earned his B.S. and master's degrees in mechanical engineering from Tulane University and the University of Florida, respectively. Mr. Bolch also completed the Advanced Management Program at Harvard Business School.

TWST: You have been doing a lot of interesting work with hybrids and hybrid vehicles. Would you tell us about that?

Mr. Bolch: Let's start with why are hybrids taking off in the first place. The single biggest reason, in my opinion, is the change in regulations. In the case of Europe, which is really leading the world, it's the regulations around CO2 reduction. Fundamentally, it's a dramatic drop in CO2 reduction between now and 2015. There are regulations in the United States called the CAFE standards which are slightly behind the Europeans in timing, becoming effective by 2016. The CAFE standards there are aimed at gas mileage or miles per gallon, but it's effectively the same reasoning, which is making cars more efficient.

As manufacturers look at all the different tools to make cars more efficient, hybrids are a big part of that; however, there are also different levels of hybrids. If you're in Europe now, the one that is probably growing the fastest and will probably be the dominant vehicle, is called a micro-hybrid. With that vehicle, when you come up to a stoplight, the gas motor shuts off and the car runs on the battery, allowing the lights, radio, air conditioning, etc., to continue operating. When you step on the gas, it restarts the car. The reason this was attractive to manufacturers is because for few hundred dollars, you can get 5% to 10% improvement in gas mileage, which is a huge improvement for a small investment, especially for driving in a city. We are very well positioned in this market. That battery is an advanced version of the lead-acid battery. We make a couple models, but the one that is probably getting the most preference is something called AGM, which stands for absorbed glass mat. It's a technology we've used for years and, as I mentioned in discussing the difference in industrial batteries, they're designed to last a long time, are cycle resistance and similar attributes.

A normal car battery is required to start a car maybe half a dozen times a day, but with the micro hybrid model, you may have to start a car a few hundred times a day, so you have to have a much more robust battery. That's the technology we're in, and it is growing quickly in Europe. I expect this technology will come to the U.S. probably within the next couple of years.

Another type of car is what is known as a mild hybrid, such as a Honda (HMC) Insight. It has a smaller electric motor in it than a full hybrid, such as a Prius, which has a larger electric motor in it. However, this also adds from 2,000 to 4,000 to the cost versus a standard car. Therefore, in the mild hybrid market we're looking at advanced lead-acid batteries that can go into those applications. These batteries need to be lighter, so it's a different design, more advanced.

Today, most of those that are shipped are what is called nickel metal hydride. That's a battery that was designed for consumer use, with the majority of them coming from Asia, either Japan or Korea, and the form factor is a D-cell, like those of your flashlights. So if you opened up the back of a Honda Insight, it has lots and lots of these D-cell batteries taped together. In fact, the new Tesla (TSLA), the electric car that has been getting a great deal of press, has lithium D-cells - a total of 6,800 D-cells.

What we believe is that the technology Exide is bringing to the market for use in mild and medium hybrids is an alternative in a lead-acid configuration that is much less expensive, about half the price of nickel metal hybrid. Another major factor is that lead-acid can be recycled; in fact, 98% of the product can be recycled. In the case of nickel metal hydride and lithium, they're very difficult to recycle economically. Therefore, the majority of these products go into landfills as hazardous waste.

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