We have witnessed such a flurry of bad economic news in the last few months that many of us are becoming skeptical about our economic future. However, there are still sectors within our economy that remain active and are experiencing massive growth. Over the next few months, Whittaker Associates will be analyzing some of these sectors in our monthly newsletter.
During his first week in office, President Barack Obama reemphasized his campaign commitment to reduce America’s dependence on foreign oil. A law passed by Congress in 2007 required that by 2020, new cars and trucks meet a standard of 35 miles per gallon, a 40-percent increase over the status quo. President Obama plans to introduce regulation that will force auto manufactures to begin implementing changes as early as 2011. Battery technology will play a central role if these fuel-efficiency standards are to be met.
Currently, most of the batteries we see in advanced hybrid cars like the popular Toyota Prius are manufactured in Asia. Toyota has made numerous advancements to its nickel-metal hydride battery packs since they were first introduced in 1997. American manufacturers are far behind Asian manufacturers in developing battery technology. However, with oil prices hitting record highs last summer and concerns about global climate change rising, auto manufacturers in the United States are finally making some headway into this sector.
In early January, Governer Granholm of Michigan signed a new $335 million tax-credit program to help companies develop and manufacture advanced batteries in Michigan. If battery manufacturing expands in the state, the Michigan Economic Development Corporation predicts that over 50,000 jobs may be created in the state. Later in the month, General Motors announced plans to build a lithium-ion battery plant in Michigan to assemble battery packs for the 2011 Chevrolet Volt, the company’s highly anticipated plug-in electric hybrid.
A Massachusetts-based battery company, A123 Systems, asked for a $1.8 billion government loan to build a factory in southeast Michgan to produce lithium-ioin batteries for hybrids. A123 expects to build an additional plant beyond the Michigan facility, and combined, the two plants are expected to create more than 14,000 jobs. In another development, Ricardo, Inc. annnouced that it has opened a $2 million battery technology center that will help automakers develop hybrid and electric powertrains for future vehicles. The center, located in suburban Detroit, already employs 32 engineers. Ricardo will receive almost $1 million over 10 years from the state through the tax-credit program signed by the Governer earlier in the month. These are welcome annoucements for a state that has seen a string of bad news over the last few years.
Late last year, 14 U.S. technology companies joned forces to seek $1 billion in federal aid to build a plant to make advanced batteries for electric cars in the country. Such developments are encouraging and will certainly help American manufacturers catch up with their Asian rivals.
Whittaker Associates has identified over 50 companies that are directly involved in advanced battery manufacturing. The combined revenue of these companies stands at around $17 billion. Additionally, a review of battery-related capital investments and expansions in the United States revealed over $750 million of investment in the country since 2003. The industry has already created over 3,000 new jobs over the last five years.
The map below shows the 58 project announcements Whittaker Associates observed in the United States in the last five years. A large proportion of the announcements are centered around southeast Michigan and northern Ohio, as most of the batteries are intended to be used in cars.
One company, California-based Tesla Motors, is already producing cars that will spur excitement about battery-powered vehicles. Skeptics argue that battery-powered cars are not as powerful and “fun” to drive as gasoline-powered cars, but Tesla is proving them wrong. The Tesla Roadster, the company’s first production model, is an all-electric sports car. The car has a range of 221 miles and can accelerate from 0 to 60 mph in less than 4 seconds. By May 2008, the company had sold more than 800 cars and had another 400 buyers in its waiting list. Its current model, the Roadster Sport, will sell for around $128,000. The company plans to unveil a sedan in 2010 that will be comparable with the BMW 5 Series and Audi 6, at a price tag of around $60,000. There are also plans for a more affordable sedan priced at around $30,000 by 2012.
Batteries are classifed by the material they use to store energy. Common battery types include lithium-ion; nickel-metal hydride; hydrogen fuel-cell; zinc-bromine; and lead-acid. Lead-acid batteries have been around for more than a century and we use them every day as starters in our cars. While much of the buzz centers around lithium-ion and nickel-metal hydride batteries, lead-acid batteries are making technological advances of their own. Axion Power, a Pittsburg, Pennsylvania-based firm, has invented a lead-acid battery that powers a car for about 45 miles or 70 kilometers. The company replaced a normal negative electrode in the battery with a plate made from activated carbon, a material used in supercapacitators.
Axiom Power is not only developing its battery technology to power cars, but is also experimenting with a mobile energy-storage system that can supply up to 1MW of power for 30 minutes or 100KW for ten hours. If this technology is developed successfully, it may help answer the problem of matching the supply of power generated by solar and wind energy to the demand of energy.
In 2007, Congress passed the U.S. Energy Storage Technology Advancement Act, which may provide up to $100 million a year from 2009 through 2014 to set up four energy storage research centers in the U.S. Currently, battery power storage is very costly compared to other storage options such as pumped hydro storage – over $1,000 per kW installed compared to 2 cents per kW. However, storage application companies expect that battery storage costs will decline as the technology is developed and volume production kicks in.
Developing advanced battery technology here in the United States will not only revive its sagging economy but help it regain its position as the leader in innovation. In his most recent book, Hot, Flat, and Crowded: Why We Need a Green Revolution—And How It Can Help Revive America, Tom Friedman argues that America should embrace clean energy and green technology solutions and regain its economic and political stature in the world. Developments in battery technology are going to play a huge role in this revolution, and will hopefully bring us closer to the goal of energy independence we have been pursuing for over three decades.