Plug-In Forum

The lithium-ion battery cell has emerged as a clear favorite with the plethora of car manufacturers who are announcing their electric ambitions. And as this demand rises, suppliers of battery technology are in a race of their own to provide high-quality, low-cost lithium-ion solutions. Several Asian firms have established dominant footholds in the industry, winning contracts with major auto companies, and they offer a formidable challenge to newer entrants:

South Korea’s LG Chem was the supplier chosen by GM to manufacturer batteries for the upcoming Volt plug-in. The newly formed CODA Automotive (based in California) has a deal in place with China’s Lishen Battery Co., and the popular (in China) BYD line of electric automobiles runs on batteries that are produced by their parent company, BYD Company Limited. Other notable Asian players include Panasonic, NEC and Sanyo Electric, all based in Japan. These companies have established reputations for reliability and their technology is tried and tested.

The Challengers

On the other side of the globe, there is a relentless drive to catch up and surpass. Helping the effort is the $2.4 billion U.S. stimulus program, a large portion of which is slotted for battery development. Ener1, a start-up from Indiana, has recently applied for a $480 million government loan in order to expand their facilities and leverage their proprietary battery technology. The company is already supplying Think Automotive, a Norwegian manufacturer, and they are in preliminary stages of agreements with the Californian carmaker Fisker. What separates their product from competitors includes the chemical coating that they apply to the lithium strips, allowing them to customize the battery performance for various needs, as well as the stacked-design of their battery cells, which their CEO refers to as a “breakthrough”.

Another large American technology company aiming to dominate the market is A123 Systems. They have an edge in that they already have battery plants in Asia and relationships amongst the supply-chain. Now, there are talks of adding new facilities to the U.S. in order to take advantage of tax incentives and geographic benefits. Batteries, which are notoriously heavy, can be expensive to ship, so moving their production close to one’s customers can help lower costs.

The Prize

Numerous smaller firms and research arms across the globe are also in the race. The allure of securing just one contract with a major electric car maker is enough for investors and engineers to pour in vast sums of money, time, and experience.

Market dynamics and product technology make for a complicated and unpredictable future. In order to sell, batteries must deliver on multiple fronts that include price, reliability, range, weight, customization, and overall life. Large auto companies also want a supplier that can deliver on large orders with few defects.

While a true battery breakthrough has not yet occurred, falling prices is an important enough factor to keep demand flowing. Whosoever captures a significant chunk of that demand will earn riches, as well as prestige.

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