Short Supply: American-made Electric Car Batteries
By Bill Moore
As Big 3 CEO's, the head of the UAW, and various invited economic experts appeared before Congress this week, one key witness was missing, which is ironic, because the success or failure of a revitalized American auto industry pivots around its presence.
That missing witness is an American advanced automotive battery manufacturing industry.
With all the talk on Capitol Hill this week about Big 3's plans to introduce advanced, plug-in electric cars, with the CEO's dramatically arriving to testify in conventional hybrids and advanced prototype plug-in models, little if any attention was paid to the fact that America has next to no advanced automotive lithium ion battery production capacity. With the exception of a currently shrinking handful of US-based firms, virtually all advanced nickel metal hydride (NiMH) and lithium ion (Li-ion) production is done overseas, mainly in China, Japan and Korea.
Two Japanese companies: Panasonic and Sanyo produce nearly all of the batteries found in today's hybrids, including those manufactured by Toyota, Lexus, Honda, Nissan and Ford. And Panasonic, whose hybrid battery production JV is now largely owned by Toyota, is seeking to acquire Sanyo, which would give it nearly monopolistic control of all NiMH battery production for automotive applications.
US-based Cobasys, originally founded as joint-venture between Troy, Michigan-based ECD and General Motors to produce NiMH batteries for the now extinct EV1 electric car, produces nickel-based batteries for the troubled giant's hybrids, but its fate is uncertain. Between legal spats with Daimler and product quality issues with GM, as well as management problems, the joint venture with Chevron-Texaco remains, at best, a small player in a rapidly shifting market. Two other NiMH plays, Colorado-based NiLar and ElectroEnergy, which also produces lithium-based cells, have run into either technical obstacles or financial ones.
On the lithium ion battery front, the picture is much the same. The literally thousands of finger-sized cells that power the Tesla Roadster come from Asia. The same goes for the battery cells the Chevy Volt, the extended range electric car on which General Motors is pinning its future.
The battery "pack" in the Volt consists of a series of battery modules, each similar to the starter battery on a small car or motorcycle. Inside these modules are individual "cells", each rated at 2-3 volts. These are connected together to make a module, which is connected to all the other modules to make a single 16 kilowatt hour battery pack, giving the car a range of 40 miles on electric power only.
General Motors contracted with two firms to develop the battery pack for the Volt: Michigan-based Compact Power, Inc. (CPI) and Germany's Continental AG (Conti). CPI gets its cells from its parent, LG Chem, the giant Korean conglomerate. Conti partnered with Massachusetts-based A123 Technologies for their cells, but those cells are manufactured in China.
So the lithium battery technology inside the Volt "mule" -- a converted Chevy Cruze -- in which GM CEO Rick Wagner arrived on Capitol Hill for a second round of Congressional hearings, ultimately came from Asian manufacturers, not American ones.
There are just a tiny handful of North American lithium cell manufacturers that are actively engaged in producing cells for automotive applications.
Milwaukee-based Johnson Controls and French-based Saft have created a joint-venture -- JSC -- to produce advanced automotive batteries, but at the moment production is in France with product consigned for use in BMW and Mercedes hybrids in Europe.
ElectroEnergy, which originally hoped to manufacture a bi-polar NiMH battery, decided to acquire an abandoned lithium ion cell plant in Gainesville, Florida. Originally built by Energizer Holdings in the early 1990s, the plant closed without producing a single 18650 cell -- the kind that powers most laptop computers and digital cameras -- for commercial sale when cheaper, better Asian cells began to flood the market. It sat idle for a decade until ElectroEnergy acquired it, hoping to tap into the burgeoning market for lithium batteries. During the recent Electric Drive Transportation Association conference in Washington, D.C., the company president, Michael Reed announced that having run out of operating cash and potential investors, he was within days of going out of business, this despite having some $7 million dollars in orders.
Another US-based, advanced battery manufacturer, Altair Nanotechnologies, produced a small number of its advanced lithium ion batteries -- the cells themselves originally sourced from a Chinese partner -- for Phoenix Motorcars, which was using them for its electric truck conversion project. While initially showing very promising results in terms of fast charge capability and battery longevity, the company's automotive battery venture has yet to emerge from the custom prototype pack stage. Phoenix has had to turn to other potential suppliers.
One of those suppliers is Toronto-based Electrovaya, whose Superpolymertm chemistry was initially developed for laptop computers. Efforts by the State of New York to woo the company into a building a plant in its economically depressed Upstate region have made little headway as Electrovaya increasingly turns it attention to India and Europe. It is collaborating with Indian industrial giant Tata and a Norwegian company to build an all-electric car in Scandinavia. It is also studying building a battery plant in India, the home of its co-founder, Dr. Sankar DasGupta.
The advanced lithium ion batteries in the Segway scooter -- and now the Brammo electric motorcycle -- come from Austin, Texas-based Valence. However, actual cell production is, again, in China.
The one bright spot at the moment in all-American advanced automotive battery manufacturing is EnerDel and its Ener1 battery production unit. The Indianapolis-based manufacturer is developing packs to power the Th!nk City electric car in Norway, which is slated for a US introduction sometime around 2010. According to EnerDel Chairman Charles Gassenheimer, the company is also in discussions with at least two other OEMs. The firm's Indianapolis facilities produce both lithium ion cells and finished battery packs; and it recently acquired the third largest lithium cell manufacturer in Korea, obviously anticipating growth.
The Chicken and Egg Again
The most frequently voiced concern to EV World among both established and up-and-coming electric vehicle manufacturers and converters is the dearth of available advanced batteries. They just aren't to be had.
A large part of the problem is a lack of production capacity -- wildly fluctuating resource costs don't help either. From the supply of lithium salts in Chile and China, to over-extended assembly lines, the lithium battery industry, which only came into being just over a decade ago, is structured to produce cells and finished batteries for the portable electronics market, not the automotive market. Advanced automotive battery manufacturers are cranking out all the units they have the physical capacity -- and financial wherewithal -- to produce. Toyota sales of Priuses slipped through most of 2008, not because of a lack of consumer interest, but largely because of a shortage of battery packs. The story is the same at Ford with its Escape and Marina Hybrids. New York City's plan to shift all of its cabs to hybrids has been stymied, in part, because cab owners argued they couldn't buy the cars.
In the classic chicken-and-egg conundrum, lithium salt producers and battery manufacturers won't build additional capacity unless they have firm orders they can take to the bank, and even then -- as ElectroEnergy's Michael Reed has learned -- that isn't always a guarantee. Gambling with the future of one's company, be it in Santiago or Indianapolis, given the uncertainty of the auto industry worldwide, militates against any decisions to expand capacity, at least until the present fog of fear starts to dissipate. And no one is hazarding a guess when that might occur.
This has led to suggestions that local, state and federal agencies use their not-insigificant financial resources to place large, hard orders for advanced electric-drive vehicles, helping stimulate demand. U.S. President-electric Obama has pledged, where security allows, to shift The White House fleet of vehicles to plug-ins shortly after taking office next year. The U.S. Army announced it is looking to acquire electric vehicles.
All these are positive steps, but until investors and banks are willing to underwrite the growth of U.S.-based battery production capacity, encouraged by federal policy, the lion's share of plug-in vehicle battery production will remain offshore. While it can be argued that $50 billion in foreign battery imports is better than $500 billion in foreign oil imports, the nurturing of an America advanced battery production infrastructure seems critically important to the economic security of the nation.
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