14 U.S. Companies Join Forces, Seek $1 Billion in Aid to Build Batteries for EVs

14 U.S. Companies Join Forces, Seek $1 Billion in Aid to Build Batteries for EVs

By Scott Doggett December 18, 2008

Fourteen U.S. technology companies are joining forces and seeking $1 billion in federal aid to build a plant to make advanced batteries for electric cars, in a bid to catch up to Asian rivals that are far ahead of the U.S., The Wall Street Journal reported today (subscription required).

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GM engineers work on the lithium-ion battery pack for the Chevrolet Volt.
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The effort, the latest pitch from corporate America to inject federal dollars into a project, is similar to an alliance that two decades ago helped the U.S. computer-chip industry restore its competitiveness. Participants include 3M Corp. and Johnson Controls Inc.

Many experts believe battery technology and manufacturing capacity could become as strategically important as oil is today. Automakers, including General Motors Corp. and Ford Motor Co., say they plan to roll out plug-in electric cars by 2010.

But the United States has limited capacity to make the lithium-ion batteries those cars will need. Asian producers such as Panasonic Corp. dominate the car-battery field.

Federal energy laboratories, including the Argonne National Lab, are advising the alliance, and more companies are expected to join. Together, the consortium members estimate the plan to build the first large-scale lithium-ion battery plant in the U.S. could cost $1 billion to $2 billion, the Journal reported.

Hurdles Ahead

Experts say the plan faces several hurdles, including its high cost and the fact the United States has lost the lead in battery manufacturing.

Ralph Brodd, a Nevada-based energy-storage consultant, recently published a report on battery manufacturing for the National Institute of Standards and Technology. He said that though much of the advanced battery technology was developed in the U.S., American companies "opted out" of battery production because of the low returns the business offered.

Asian manufacturers picked up the business because of their proximity to makers of electronic devices, which need a steady supply of batteries.

Brodd said American companies now face significant hurdles in regaining lost ground, including the preference by Asian carmakers to use Asian-made batteries in their hybrid models. However, he said U.S. concerns could leap ahead if they developed the right technologies.

"If you manufacture everything in China, you lose control of the technology," Brodd said, according to the Journal.

Not One-Size-Fits-All

The consortium's plant would make battery cells of various chemistries and sizes for the consortium companies. Members would turn the output into finished batteries by adding their own proprietary electronics, which would control factors such as operating temperature and voltage, and package the batteries to fit specific products.

The consortium intends to solicit as much as $1 billion in federal funds from the Obama administration by tapping loan guarantees contained in an energy-security act passed last year.

The act pledges as much as $7 billion in loan guarantees for advanced-battery plants in the United States. The focus is to produce jobs and create a domestic supply chain, and the factories need not be owned by U.S. companies.

Alliance members also may seek funding through the U.S. Department of Energy and legislation that could funnel money to job-creating industries aimed at developing greener energy technology.

Experts said the consortium, called the National Alliance for Advanced Transportation Battery Cell Manufacture, has a high likelihood of receiving U.S. funding because it gives the government a place to concentrate efforts and investment in battery technology without favoring any one company.

Migrating Technology

But the consortium faces obstacles. Several national labs and U.S. companies including 3M and General Electric Co. have been pursuing advanced battery technology for years. But researchers have been dismayed that the technology and processes they develop appear to be migrating largely outside the United States. Battery manufacturing has moved to Asia for many reasons, among them a better-developed supply chain and lower labor costs.

Most of the batteries used in today's hybrid vehicles, including Toyota Motor Corp.'s Prius and some of GM's hybrid models, come from Asian makers.

The consortium is the most ambitious effort to date to boost the ability of U.S.-based companies to meet what is expected to be surging demand by automakers for high-tech batteries.
 
U.S. companies say the alliance attempts to lower the biggest hurdle they face: funding construction of a large manufacturing facility when there aren't orders yet for the batteries.

More than four dozen advanced-battery factories are being built in China but none, currently, in the United States.

Scott Doggett:  is an AutoObserver.com Associate Editor.