AFSCME 3357-HOF'S BLOG

Battle of the Cutaway Electric Cars and the State of the LiON Battery Business

I have had a lot of ideas for blog posts in the past week, mostly relating to the Detroit Auto Show. Unfortunately, I haven't had much time. Autoblog.com has a neat gallery of photos showing the various cutaway car models at the auto show. I wanted to post small versions of the pictures contrasting the Tesla electric car with the Chevrolet Volt, but I haven't figured out how to imbed low-res versions of the Autoblog gallery picture, so you'll just have to go to the original source. If you do, you'll see that the battery module in the Chevrolet is much more compact and low to the ground.

Speaking of the Chevrolet Volt's batteries. Chevrolet announced this week that it was going to build a factory in Michigan to build battery assemblies for the Volt using cells supplied by LG Chem, a Korean conglomerate that until just a few years ago was best known for selling cutrate microwave ovens and portable televisions. LG beat out (among others) an American company, A123, which many expected to get at least a share of the business, especialy because A123 announced that it was applying to the United States Department of Energy for a large loan through the Advanced Technology Vehicles Manufacturing Incentive Program for purposes of building a battery factory in Michigan. (A123 currently makes its litium batteries in China. Most notably for DeWalt power tools.) A123 is privately held, but has gone through (some say) hundreds of millions of dollars in financing from its venture investors which include General Electric and Qualcomm. It looks like A123 is going to need a lot more money from its parents before it can move out of the house.

The entire lithium ion battery industry in the United States is in an awkward chicken and egg stage right now. Several firms have invested hundreds of millions of dollars in technology development, and to a large degree they have been successful in producing batteries that are light in weight, generate good power, have broad temperature tolerance and product life cycles. Finally, they have come a long way in making automotive lithium batteries safer than the lithium batteries in laptops. Besides A123, another promising American company (actually an international joint venture), Enerdel, is also seeking DOE funds to expand its existing plant in Indianapolis that makes lithium ion batteries. The battery makers need to ramp up production and hope they can find the customers to take the capacity as it is added. If a company is slow to build large numbers of batteries, that company will likely lose out in the cost benefits inherent in the technology curve, or learning curve, an amazingly consistent property of manufacturing economics which states that costs drop as accumulated units produced goes up.