By Kendra Marr
Washington Post Staff Writer
Tuesday, January 13, 2009 1:07 AM
DETROIT, Jan. 12 -- The most talked-about announcement at the North American International Auto Show yesterday wasn't about any of the gleaming cars on the convention center floor. It concerned batteries.
General Motors unveiled plans to build a lithium-ion battery plant in Michigan to assemble battery packs for the 2011 Chevrolet Volt, the company's highly anticipated plug-in electric hybrid.
"We believe this will become a competitive advantage for GM and will be critical to GM's success," GM chairman and chief executive G. Richard Wagoner Jr. told a crowd at the show.
The project comes as the auto industry and its supporters jockey for attention and possibly a piece of the giant stimulus package being considered by Congress and President-elect Barack Obama. Until a battery plant can be built, key pieces of the Volt's battery pack are being manufactured in South Korea by GM partner LG Chem.
Michigan Democrats Sen. Carl M. Levin and Rep. Sander M. Levin said this foreign involvement underscores the critical need for federal grants and partnership to increase the manufacturing capability necessary to produce the cells and wean drivers off gas guzzlers.
"We are at a critical juncture in the commercialization of advanced battery technology to power the next generation of green vehicles," they said in a statement. "We must be in the position to produce the essential components in the U.S. and not rely on advanced technology and critical building blocks produced elsewhere and brought to the U.S. for assembly."
Throughout the show, U.S. carmakers have been quick to point out that the governments of Japan, China and South Korea each worked with their domestic automakers to develop battery technology. Japan, for instance, put up funding to jump-start Panasonic EV, the joint venture between Panasonic and Toyota, which is now the world leader in hybrid battery production. China, meanwhile, has offered free electricity and equipment to battery factories.
Government subsidies can help encourage wider adoption of the technology by helping keep down the initial cost of the new batteries.
"These are sort of things I'm hoping the Obama administration will understand," said Bob Lutz, GM's vice chairman of global product development. "For the U.S. to become industrially competitive with the rest of the world again, these things are going to have to be done."
For years Michigan has vied for green companies and jobs with little success. Then, three weeks ago, the state legislature passed tax incentives of up to $335 million to attract battery manufacturers.
Michigan Gov. Jennifer M. Granholm (D) is expected to sign the legislation. In a parade of GM's fuel-efficient cars on Sunday, the governor and cheering GM employees marched behind the Volt, holding signs reading "We're electric" on one side and "Here to stay" on the other.
GM has not announced a location or opening date for the new plant. The company did not say how much it would invest. Analysts said it would be logical to build the new plant near GM's Volt production facility in Hamtramck, Mich. Until GM's new battery facility is operational, Compact Power -- a subsidiary of LG Chem based in Troy, Mich. -- will build the battery modules for prototype vehicles.
The auto industry has placed its bets on lithium-ion batteries. The batteries are already under the hoods of many of the concept cars at the auto show.
But, while lithium-ion technology is widely used in laptops and cellphones, it has taken years for it to be tested and vetted for use in automobiles. As a result, Asian companies specializing in consumer electronics, such as Panasonic, have significant leads, analysts said. LG Chem beat out A123 Systems of Watertown, Mass., for GM's battery partnership.
To promote additional advancements in battery technology, GM said it would also open a 31,000-square-foot automotive battery lab in Michigan and partner with the University of Michigan's engineering college to train automotive battery engineers. The location of the lab has yet to be decided. GM also hopes to accelerate its in-house battery development by increasing its electric vehicle staff to several hundred engineers this year.
To date, GM has invested more than $1 billion in the Volt, a car that will be able to travel 40 miles on a single charge. The automaker plans to sell its first generation of the plug-in for $30,000 to $40,000.
Lutz said GM would be open to selling Volt's battery packs to competitors in the future.
"Since we already sell other people engines and transmissions, there's no reason why we wouldn't sell other people battery packs," he said.
GM's investment comes as it is experiencing considerable financial hardship. But Beth Lowery, GM vice president of environment, energy and safety policy, said the automaker's success is ultimately tied to advanced technology particularly the Volt and car batteries.
"You can't afford not to invest in things that are critical to the company," she said.