General Motors Not Buying American For The Volt?

Published reports say that GM is in final negotiations for lithium-ion batteries with Compact Power, the US subsidiary of Korea's LG Chem. If correct, LG Chem has beaten out the joint venture between Continental and A123 Systems. GM has said that it will not announce the winner of the battery contract until late 2008, but reports of a LG Chem victory have persisted for weeks.

Reportedly, the sticking point in negotiation is how the warranty costs for the batteries - which could be substantial - will be handled. GM has already been bruised this year by inordinate warranty claims on batteries for its existing hybrid vehicles. The battery problems were so severe that it brought Malibu hybrid production to a virtual standstill.

The challenge of supplying lithium-ion batteries is still a critical issue for US auto manufacturers, and the selection of a company with headquarters outside the US could mean that the automotives are merely trading dependence on foreign oil for dependence on foreign batteries. The choice is especially disappointing, since A123 Systems and Continental had pledged to build a production facility here in the United States.

The fact remains that substantial research and development on battery technologies are being conducted in the US, but actually translating the research to reality is left largely to offshore manufacturers. To accurately claim US independence from foreign power source, the automotives must eventually commit to producing their own batteries here in the good ol' US of A. The Volt would have been a good opportunity to do this, but for reasons not yet clear, GM has apparently elected not to "Buy American" at this critical stage of the game.