Because battery technology will become the core competency that defines the modern car company, it will hardly be the kind of intellectual property you'd want to outsource to a foreign auto supplier.
For America the ultimate irony is also the ultimate humiliation: Just as the electric car is finally arriving to save Detroit, the U.S. is poised to swap our dependence on foreign oil for a dependence on foreign batteries.
Electric car companies want to be located near their battery suppliers to save shipping costs. They also want to be near markets with the biggest potential--countries where high gas prices make the economics of buying expensive electric cars far more attractive. On both counts that means Europe and Asia, not the U.S. Batteries will give car companies their competitive edge. They will determine how fast your car can accelerate, how far it will go on a single charge, how quickly it can be recharged, and---since it can account for as much as half the cost of an all-electric vehicle---how much you'll pay for it. A battery for an all-electric car now costs between $10,000 and $20,000.
The Obama administration is making clear that the best way to save the U.S. car industry is for Detroit to build clean cars. The recently passed stimulus package includes $2 billion in grants for advanced battery manufacturing, and the Department of Energy is distributing $25 billion in low-interest loans to encourage companies to build green vehicles.
A new, multibillion-dollar American battery industry will soon generate thousands of green jobs across America's recession-ravaged heartland. In January, Michigan governor Jennifer Granholm signed a bill providing $335 million in state tax credits for car-battery makers locating in her state. "We want to be the battery capital of the world!" she said.
The question is, can America build a competitive battery business fast enough to compete with the Asians?
The odds don't look good. For basic battery R&D, the U.S. is depending on a few small companies. Asian giants like Sanyo (bought recently by Panasonic), NEC and LG have been mass producing the batteries for years. Unless the U.S. changes its ways dramatically, it is likely to get creamed in the Great Battery Race.
And the big automotive sales development problem (or opportunity) today is consumers aren't buying many cars of any kind--never mind more expensive electric models.
Source: FORTUNE, April 27, 2009
