Economy
9:59 am
Wed March 6, 2013

What’s up with the future of advanced batteries?

Boeing hopes to have a permanent fix for its new Dreamliner jet by the end of the month. All Dreamliners have been grounded since January after reports of the batteries smoking or catching fire.

The news is another bump in the road for lithium ion battery manufacturers, who’ve already had some problems marketing the next generation of batteries.

Listen to the story here.

Lithium ion dominating the market

Lithium ion based batteries are everywhere; your cell phone, laptop or tablet, cordless power tools. But there are several kinds of lithium ion batteries. The ones in the Dreamliner aren’t the same as the ones in consumer electronics.

“We’re in the middle of a horse race and right now lithium ion is far in the lead of that horse race,” Sam Jaffe said. He’s an energy storage analyst with Pike Research.

He says lithium ion batteries are beating traditional batteries because they can store a lot more energy in a much smaller space. They charge up fast, and they’re more durable over time.

But trying to store energy safely is always a challenge. It requires a lot of safety engineering, and that’s been a problem with the batteries in the Dreamliner.

“When you have incidents where it’s not done correctly, it makes everybody in that industry look bad, and that is going to be an issue going forward,” Jaffe said.

Cost a factor in lithium ion’s next big potential market - vehicles

Jaffe says the high cost of lithium ion batteries is another critical issue facing the industry, especially when it comes to electric vehicles, which he says is the next big potential market for lithium ion batteries.

The price of the lithium ion battery makes the biggest difference in the sticker price of an electric car.

Jaffe estimates it costs General Motors more than $12,000 just for the battery in the Chevy Volt. The LG Chem plant in Holland, Michigan was supposed to supply batteries for the Volt, but demand is still low enough that its plant in South Korea can handle the job. The company got millions of dollars in federal money to build the plant, but so far it hasn’t built any batteries.

Governments in China, South Korea, Japan and the United State have all subsidized lithium ion battery plants. Their hope is that it will help producers make cheaper batteries and boost demand for electric cars.

In 2009, the federal stimulus package dumped two billion dollars in battery plants, but the results have been mixed.

Besides the idle LG Chem plant, another company, A123 Systems, went bankrupt. It’s still making batteries at plants in Romulus and Livonia but now it’s now owned by a Chinese company.

Another battery plant in Muskegon, Michigan was cleared for millions in state and local tax breaks, but it still hasn’t been built yet.  

Without the subsidies from the federal stimulus, it seems unlikely the battery plants would’ve been built in the United States at all.

“We would’ve made the investments with or without the grants, but I think the effect of the grants were that they made sure that the investment was in Michigan instead of in China or somewhere else in the world,” said Jeff Kessen, Director of Automotive Marketing at A123 Systems.

“The very act of incentivizing these factories is one of the reasons why they are not running at full, or in some cases, any capacity,” Jaffe said. “I think the other issue is simply time.”

Jaffe says the problem is sort of a classic Catch-22 situation. Batteries can’t be made super cheap because the demand isn’t high, and the demand isn’t high because the cars aren’t very affordable. But he sees that balance shifting over the next few years.

Some investments in battery plants have worked

Johnson Controls’ Meadowbrook plant got the biggest chunk of the stimulus money that went to battery makers. 

Plant Manager Shelly Maciejewski took me on a tour of the plant, just two miles down the road from the LG Chem plant in Holland.

“We do a lot of tours,” Maciejewski explained. “For potential customers and people in the community, we want to make sure that we’re open to showing what this technology is, how we’re developing not only here at the plant but the supply base and our future expansion projections.”

Johnson Controls sells these new batteries to several different customers in different industries. It’s a huge global company with lots of capital, and it already has lot of experience making other kinds batteries. It makes more lead acid batteries than any company in the world. Those are the batteries used to start regular cars and trucks.

So maybe it’s no surprise this lithium ion battery plant is doing well.

“We’ve already put our second shift in place and we’re already looking to hire our third shift. So we’re currently going into production and we’re doing our system build for a major European manufacturer,” Maciejewski said.

More federal money goes to battery research

The US government’s investment in battery technology hasn’t stopped since the stimulus package.

Johnson Controls is a partner in a new federally funded project that could completely transform the battery market and the science behind it.

The research team wants to build a new battery in five years that holds five times as much energy as lithium-based batteries, but can be produced at one-fifth the cost.

Jeff Chamberlain is deputy director of the Joint Center for Energy Storage Research in Chicago.

“That’s what needs to be achieved in order to have the impact on society, or to put it another way, to pay back the investor. The investor is the taxpayer,” Chamberlain said. “We believe what we’re going to do may even have impact on lithium ion in the short run.”

“The idea of building lithium ion battery infrastructure, it’s a good idea in my opinion. It’s not going to go away anytime soon,” Chamberlain said. He believes lithium ion and other batteries with different chemistries will all likely be around in the future. “The market is a pie. It has a lot of slices in it,” he said.

Chamberlain concedes the ‘five by five in five’ is an ambitious goal, but for taxpayers, the payoff for this research could be much better than their investment to subsidize battery plants – especially ones that aren’t making any batteries at all.