GM Says Batteries for Volt Might Not Be U.S. Produced

GM's CEO Rick Wagoner spoke to Washington Post reporters and editors on Wednesday, Sept. 17, while he was in town to talk with Washington lawmakers. Video by Liz Langton & Jacqueline Refo/
By Sholnn Freeman
Washington Post Staff Writer
Thursday, September 18, 2008

General Motors chief executive Rick Wagoner yesterday offered no guarantee that the auto giant would use American-made batteries in its new electric-powered car, the Chevrolet Volt, even as Detroit automakers pressed for $25 billion in U.S. government loans to support the development of advanced-technology vehicles in this country.

"As we sit here today I can't give you a guarantee that it will be made in the U.S.," Wagoner said. "If we want to get the Volt in the market, as we do by the end of 2010, we've got to make some relatively near-term decisions about how we are going to do all that."

Wagoner's comment came yesterday during a morning round-table discussion with reporters and editors at The Washington Post. Later in the day, Wagoner joined Alan R. Mulally, the chief executive of Ford Motor, and Chrysler chief executive Robert L. Nardelli, as they spread across Capitol Hill to lobby congressional leaders to approve the loan package. Senate Majority Leader Harry M. Reid (D-Nev.) said top lawmakers had agreed to attach the loan package to a continuing resolution end-of-the-year budget appropriation.

Wagoner said the loans were important to help the industry make long-term capital investments in new technology given the tightening credit conditions and the turmoil in the financial markets.

"I think we have to expect the market will be significantly more limited for the foreseeable future," he said.

But Wagoner said so far the financial market problems have not affected other parts of GM's business, such as auto loans. He said he didn't expect major obstacles to selling bonds backed by auto loans. "Securitizing car loans has historically been a profitable business," he said.

At GM, the Chevrolet Volt carries a high symbolic and market importance for the company. Executives and engineers inside GM are pressing to make the 2010 deadline to begin production. They've described the car as key to GM's long-term financial survival in the face of unrelenting competition from Asian rivals and zigzagging oil prices. Already, GM is using the Volt in commercials and other marketing efforts that paint the carmaker as environmentally friendly.

Wagoner said U.S. battery-making capability trails development in Asia, where government policy has long supported the technology. He said it was likely that "at least initially" the subcomponents for the batteries will come from other parts of the world.

"It's a game that we are behind in," he said. "It doesn't mean it's a game that we lost. If we choose to go at it as a country, we are really going to have to pick up the pace."

Spokesman Robert Peterson said GM has not decided which company will produce the Volt batteries. Boston-based A123 Systems in partnership with auto supplier Continental is in the running. Peterson said A123 had much of its manufacturing capacity based in Asia.

LG Chem, the South Korean chemical company, is the other finalist. The company has a wholly owned subsidiary in Troy, Mich., he said. The Volt is expected to be assembled at a GM car plant outside Detroit in Hamtramck, Mich.

Wagoner unveiled a production version of the Volt earlier this month. Its goal is to be able to go 40 miles on a single charge from a home electric outlet. Wagoner made the announcement at GM's 100th anniversary celebration.

The Volt battery, which uses lithium ion technology, is complex and expensive. So far lithium has been mostly used in batteries for laptops and PDAs. Toyota is working on similar technology for future vehicles. Lithium ion technology is seen by many analysts as a potential breakthrough to getting large numbers of high-mileage cars on U.S. roads.

© 2008 The Washington Post Company