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Monday, June 8, 2009

Stimulus package’s $2B investment in domestic US battery manufacturing

Jun 8 2009 10:44AM | Permalink |Comments (18) |

Investment bank HSBC recently called battery makers, blessed with $2 billion in funding in the stimulus package, “one of the most compelling investment opportunities” in clean energy, according to the Wall Street Journal.

18650 lithium ion battery cells I had a conversation last week with Neil Maguire, VP of business development at Silicon Valley battery start-up Imara, and asked what this influx of money can mean to the US domestic battery companies. He agrees that the stimulus money, “is the [scale] of investment that could make a difference in building a battery industry in this country.”

Battery manufacturing is a very capital-intensive business. The stimulus money will be in the form of 7-8 awards of approximately $100-150M each awarded to US battery companies. (Winning one of those wards must be like winning the lottery for those lucky seven battery companies.) What difference would it make to a relatively young lithium ion battery technology company like Imara?

Imara’s business plan has always called for them to make the industry-standard 18650 cells, which are similar in size to a AA battery, in Asia using existing Asian capacity. This still makes sense, because those cells ultimately end up in products that are also made in Asia, like laptops and small hand-tools. However, Imara’s long-term plans are for a larger format cell targeting the automotive electric vehicle market, as well as large outdoor equipment, like mowers and lawn tractors. The stimulus money would accelerate plans to build that manufacturing capacity here.

How will the DOE decide to make the awards? Maguire hopes that the decisions take into consideration not just which company can put up a factory the fastest. “We’re hopeful that the decisions are made largely on the technology, as well as who can not just build a factory the fastest and hire create some green jobs, but, who has the technology that will be able to compete with the Sonys and Sanyos and Samsungs so that we have green careers and not just green jobs.”

Related entries in: Battery Power | Power Sources/Controllers |

Reader Comments

at 6/8/2009 1:43:40 PM, M. Simon said:
The Polywell Fusion Reactor project funded by the US Navy got $2 million of the stimulus. It will take two more years of research to confirm (or not) viability.

It would make a nice battery charger at 100 MW a copy.

at 6/8/2009 2:20:53 PM, Chris PE said:
I remember visiting one of a high tech Chinese companies and I was surprised with an extreme technology of the machines.It may be a case here.If we start on a newest and most modern equipment and technologies we may become a supplier to Sony , Samsung and Sanyo.Just maybe a full circle will close.A lot of their plants need modernization.I think that there is a good chance.We just have to ask American companies to become specialized in batteries.Danger of explosions and release of toxic gases (which caused exodus of our battery industry to other countries - mainly India)is gone now and we can become experts again using modern - top of the line equipment.We all have to start supporting OUR factories and companies and we shall come back.Just my humble opinion :o) Thank you for an interesting article.

at 6/8/2009 2:22:39 PM, Meredith Poor said:
Somehow I keep thinking that product that can be easily produced as a commodity (even if it's a high-tech commodity) isn't going to last long in the US. Running up the scale, we have batteries, battery packs, battery/controller clusters, and power storage systems. Right now the battery/controller clusters are made in the US (Ocean-Server.com) and power storage (numerous UPS manufacturers). The value in spending this money is that we can define the most advanced standard anyone is likely to build to, which would be presumably the most efficient, cost effective, and reliable. Particularly with regard to efficiency, this would be worth the $2 billion.

at 6/8/2009 2:42:07 PM, Jim Stevens said:
I resonate with Meredith's comments about batteries being commodities [albeit hi-tech]. I have worked in the electronic component R&D business most of my life and have seen manufacturing continuously move offshore despite hi-tech materials and processes in the US. I hope the stimulus is used wisely where we can defend ourselves with patents on products that will be used in US manufacturing in large volumes to compete effectively.

at 6/8/2009 2:43:41 PM, USA Battery Manufacturing said:
Hopefully the manufacturing facility and employees are and will be American. i.e. not shipped out or use of Foreign empoyees on VISA.

at 6/8/2009 3:26:17 PM, Thompson said:
I can only hope that with government stimulus money slated for battery manufacturing, that government will also not continue to impede mining that produces the raw materials for that industry.

at 6/8/2009 8:06:59 PM, Jan Pape said:
Very interesting Article. It is great to see that investments like this are being made again in the US.
If the companies, whoa re getting the government funding for technology development start to develop the next generation battery technology immediately with an understanding of the commodity need for those products down the road, there is a very real chance to keep the whole supply chain in the US.
In my opinion it is all a question of mindset, strategy setting and planning for running a technology driven commodity business.
You do have to make sure that you do have a highly flexible high volume manufacturing capability and than "invent" your products continuously new and make sure that you develop your products from the start for the lowest product cost possible.
Last not least, the closer you stay to your key markets and leading customers, the faster you can ramp to volume and earn your money back.
After that, keep repeating.
Planned that way, run that way, there is no reason why these companies should not be able to keep technology development AND manufacturing in the US for the long run.

at 6/8/2009 11:01:21 PM, T. Jordan said:
I concur with M. Simon. Batteries are great but the tech is so rapidly evolving smaller research grants to more companies and universities would be much more effective. From what I've been reading about new battery technologies of late, I suspect that Imara's tech will be out-of-date by the time they get to market with car batteries - although they may still do well with AA's. What should be getting big grants are the energy production technologies that require more upfront funding for R & D. Polywell fusion is a great example of a technology that could radically change all our lives - much more than new batteries ever will.

at 6/9/2009 4:14:32 AM, arclight said:
Stimulus should be focused on transferrable R&D, with a proviso that the IP generated won't be transferred to overseas under any conditions. The problem with doing this as stimulus, though, is that it will run out. When is this country going to invest in R&D the way everyone else does--as a real line item in the budget rather than being hidden?

at 6/9/2009 7:45:24 AM, Chris PE said:
Very interesting discussion. Great points , but I still think that 2 billion dollars is a huge amount of money and it should last further than development.Under no circumstances any of that money should envolve ANY other countries.Idea here is simple and of for some reason those of you Ladies and Gentleman who disagree with a high tech commodity - trust me , we have enough golf carts in this country which could use new batteries :o)

at 6/9/2009 12:48:44 PM, Neil Maguire said:
I would like to add to Margery's fine article from the Imara perspective and weigh in on the comments. Imara's technology was initially funded as R&D by the Department of Energy. We strongly encourage more R&D spending in this space as it enables us to stay ahead for future products.

Historically the challenge for US battery companies has been raising enough capital investment to buy the highly automated equipment to commercialize these advanced batteries. The Stimulus dollars are a 50:50 share with private investment to cross from R&D into large scale production. In the past, all lithium-ion batteries were consumed in Asian laptop and consumer electronic products so US companies would have to pay to ship the product overseas and are at a disadvantage by not being close to their customer's development teams. This time around, the technology has advanced to enable a new class of outdoor power equipment, vehicles and grid storage... and these are mostly made in the USA. Today, Imara has a 50,000 sgft facility right here in California, and we are committed building batteries near their point of consumption.

at 6/9/2009 5:22:07 PM, c. perte said:
wow... batteries get $2Bn while the polywell, which has such potential to change tohe world for the better(a lot better), gets a measly $2M. sad

at 6/10/2009 5:52:06 AM, Dave Pawlik said:
Why all Lithium batteries. All the eggs in one basket? NiMH power density is approaching that of some Li tech. NiMH is tried in the field, works, reliable, environmentally friendly, cost coming down, lasts a long time (Prius packs out there now with >200k miles, >10 years). Why not have some of the funding apply to advanced NIMH??

at 6/10/2009 8:58:16 AM, Darrell Hambley, SENTEK Engineering said:
Lithium is entering a huge market due to the low weight/power ratio. The market for Aerospace is just starting with the Boeing 787 and soon, the 737NG. For the automotive market however, power density just took a huge leap with carbon nano technology for lead-acid. Companies such as Exide are pumping jusge resources into this. A portion of the stimulus would be well spent in this area so, as D. Pawlick wrote, not "all the eggs in one basket."

at 6/16/2009 3:53:00 PM, Sales said:
Check out www.fireflyenergy.com Here is a technology that will revolutionize our batteries!

at 6/17/2009 10:23:02 AM, Dollar sense said:
Did anyone else notice this? Even if 8 awards at $150M were granted, that only adds up to $1.2B. Where does the other $800M go? Administrative costs? I'll only take a 0.1% finder's fee, thank you very much. :-)

at 6/18/2009 2:55:25 PM, Wilson said:
I hear much talk of Lithium-based batteries and NIMH batteries. For one, no one is discussing the cost of materials associated with both chemistry. For Lithium=based batteries, I many have suggested that cost, availability or raw materials, and safety (in that order) are real impediments that must be overcome before it can be adopted for large-scale deployment. Concerning raw materials for Lithium in particular, most of which is in China and Latin America, the US will once again be at the mercy of unfriendly regimes that have a raw material we need (we already have oil dependency, let's not create a "lithium" dependency). Likewise, NIMH requires "rare earth" material which is in serious short supply. Both of these batteries contain hazardous materials. I don't believe they are recyclable either. What happens to these batteries at the "end of life?" The DOE has already said that Lithium is "not ready for prime time" because of the cost. If the raw materials are already in short supply, I can only see price increases for the future.
Which is too bad, because both of these technologies are promising. We need other alternatives.

at 6/19/2009 8:17:49 AM, Ken said:
Only 2 billion. There is a lot of research to do like materials research, Increase in power research. High speed recharging research, composite research, how to have a battery drive a car 160 miles a hour for 1000 miles research. recharging battery research solar/wind/magnetic field recharge research. computer controlled travel extension research.
as to the 2 billion its a little better than nothing, but in comparison, the Salvation Army gives 5 Billion (US) a year so the poor can have a nice Christmas. Now this money to the salvation army should increase as it does good work. What Im saying is that anyone with any thinking ability knows battery research needs 200 Billion a year for a few years for research. In fact it seems only the republican senators dont know this as they are half drunk drinking beer and wine and thinking of the 1950's when they were young. Hey republican senators, its not 1950 anymore. The backward thinking of the old republican senators is getting unforgivable even to God. The Senators forget about pollution problems and so then there is another environmental disaster to remind them. The old thinking tracks of republican senators jest cant handle the future let alone the present. Even the Chinese are starting to seem righteous and decent when compared to the thinking process of the old republican senators. US lost New Orleans to pollution and so the republicans want to open more oil well near New Orleans. Very clever. Americans especially Senators definitety all have ADD's ((ADD's))

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