Hybrid Battery Supply Questions Remain

Analysts are warning that US automakers could be trading dependence on foreign oil for dependence on foreign batteries. Much of the research and development that goes into new battery technology found in hybrid-electric and electric vehicles is conducted in the United States, but the production of the actual battery packs is carried out in Asia.

Wall Street analysts estimate that the automotive battery market could exceed $10 billion annually by 2015. The automakers have asked Congress to provide financial support and incentives for companies that want to set up production facilities in the US, but to date, Congress has not acted on the request.

Continental, one of two companies still in the race to produce Li-ion batteries for the Chevy Volt, says it will build a battery production facility in the US if GM chooses it as its primary battery supplier. Toda Kogyo, a Japanese battery maker, purchased a plant in Sarnia, Ontario and plans to build Li-ion battery components there. Enerdel, a joint venture between Ener1 and Delphi will begin production of Li-ion batteries at an idled Delphi plant in Indiana, making Enerdel the only domestic supplier of automotive Li-ion batteries in the US. The company will manufacture batteries for the Th!nk EV.

Executives from both Ford and GM expressed doubt over the long-term viability of getting batteries from outside sources, due in part to the cost of the batteries and to ensure the availability and quality of the product. Li-ion battery packs for vehicles are expected to cost about $10,000 each.

Additionally, the automakers are concerned about quality issues surrounding the batteries. GM's hybrid production for 2008 has been hamstrung by faulty battery packs installed in last year's Saturn Aura and Vue models, all of which needed to be replaced. The replacement process has reduced GM's hybrid production capacity to near-zero for the Aura, Vue and Chevy Malibu models at a critical time. Toyota, GM's chief rival in the hybrid-electric vehicle market is also having trouble getting its popular Prius model to dealer showrooms due to severe battery production constraints.

Source: Detroit Free Press