The Electric Car Battery War 2009: Ener139s Future

The electric car battery war

Ener1's future rests on that device, a prototype of a lithium-ion cell that, Gassenheimer hopes, will power fleets of eco-friendly cars.
President Barack Obama has set a target of 1 million electric cars on U.S. roads by 2012. “If we are going to meet that goal,” Gassenheimer says, “it will require about $40 billion worth of domestically produced batteries.” Most experts agree that lithium ion, which can be used to create batteries that weigh far less and store more power than those in today's hybrids, will be the dominant technology. All Ener1 needs to ramp up is a $480 million loan from Washington. ASIA'S DEEP POCKETS Whoever prevails, some lithium-ion batteries will likely be assembled in America. The bigger stakes are over which companies will control the key technology — the lithium-ion cells stacked inside the batteries and the design of the car power system. The Asians can also better afford the hundreds of millions of dollars needed to build large, state-of-the-art factories. U.S. investors are unwilling to risk such sums for startups — especially now that the recession and cheap oil have dimmed the future of hybrid cars. After surging this fall, Ener1's stock has fallen by half since mid-December, to around 4. Should Uncle Sam provide billions in loans and grants to a promising but unproven business Or should the government wait for the market to sort things out before it backs a U.S. company The risk is that by then another major industry could go the way of memory chips, digital displays, the first solar panels, and the original lithium-ion batteries used in notebook PCs and cell phones. American scientists, funded by federal dollars, were at the forefront of each of those. Yet the industries — and the high-paying manufacturing jobs that go with them — quickly ended up in Asia. U.S. labor costs and taxes drove many operations abroad, but often industries fled simply because Asian governments, banks, and companies were more willing than Americans to risk big capital investments. MANAGING THE GRID, TOO Another Asian contender is Toyota — controlled Panasonic EV Energy. Panasonic supplies 90% of the nickel-metal hydride batteries used in today's hybrids. Last year it agreed to buy Sanyo Electric, the largest maker of rechargeable batteries.
China has more than 10 manufacturers — Beijing has declared lithium ion a strategic industry. Mainland battery giant BYD Auto, in which Warren Buffett holds a 10% stake, turned heads at the Detroit car show with a small plug-in hybrid sedan, the F6DM, that it says can run 60 miles on a lithium-ion battery before the vehicle switches to gasoline. In China, BYD already sells a plug-in for $22,000. The Volt is expected to cost $40,000.

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