A second advanced energy storage system for micro hybrids is the PbC battery from Axion Power International ( AXPW). The PbC is an asymmetric lead-carbon capacitor that replaces the lead-based negative electrodes in a conventional AGM battery with carbon-electrode assemblies. The result is a hybrid device that offers extraordinary charge recovery times while eliminating negative electrode sulfation, the principal failure mechanism of conventional lead acid batteries. Like the Maxwell ultracapacitor solution, the PbC complements current battery technologies instead of competing with them because the PbC electrode assemblies have been designed to work as plug-and-play replacements in any AGM battery plant. The PbC hasn't scored a design win yet, but extensive data generated in three years of laboratory and vehicle testing by several first-tier automakers indicate that the PbC is the only proposed solution for micro hybrids that already meets all of the automakers' performance goals. Since the PbC is a newer technology, Axion will face significant hurdles as it builds production capacity and works to reduce costs while further improving performance. Micro hybrids have created a truly unusual business dynamic in the battery industry. Automakers have decided to implement stop-start technology as fleet-wide standard equipment in response to emissions-control and fuel-economy regulations. They're building the cars today and depending on the battery industry to catch up. The first beneficiaries of the micro hybrid tsunami will be JCI, Exide and several foreign battery manufacturers that can upgrade their flooded-battery products at a modest cost while expanding AGM battery manufacturing capacity. They will all enjoy improved margins on enhanced flooded batteries and very attractive margins on AGM batteries. According to JCI, an automaker shift from flooded to AGM batteries will double per-vehicle revenue and triple per-vehicle margins. Over the next few years, the larger beneficiaries will be innovators like Maxwell, Axion and several other companies that are working to improve micro-hybrid battery performance by another order of magnitude. It's shaping up as a real horse race where the incremental annual revenues to the winners will be many times their current market capitalizations. Disclosure: The author is a former director of Axion who has a substantial long position in its common stock.