The Homa Files

Excerpted from Strategy & Business, “The Future Is Lithium”, by William J. Holstein, February 3, 2009

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The lithium ion battery, which is already widely used in consumer products, is viewed by the auto industry as the next great hope to power future-generation, energy-conscious extended-range electric cars and hybrids. Automakers and their suppliers on three continents are gearing up to determine who will dominate what could be a US$150 billion a year industry by 2030. 

Companies in Europe, Japan, South Korea, and China have clear leads in perfecting the battery, which can hold far more power for longer periods of time than the nickel metal hydride batteries now in use in hybrids. Whether the United States stays in the race largely depends on the future of the General Motors Corporation and its Chevrolet Volt extended-range electric vehicle. If GM, already on life support from the federal government, is forced into Chapter 11 bankruptcy or liquidation, U.S. prospects for securing a piece of the lithium ion industry could fall by the wayside.

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Toyota and GM are eyeing each other’s lithium ion intentions warily. GM was stung by Toyota’s success in the late 1990s with the Prius and is determined to leapfrog that generation of battery technology with a six-foot long, 400-pound lithium ion battery built to last 10 years.

As recently as a year ago, Toyota argued that it was too soon to consider using lithium ion because it was an unproven technology. Some experts believe that Toyota’s conclusion was in part motivated by its huge investment in three factories in Japan that made nickel batteries. “There is only one company that has a stranded cost in nickel and that’s Toyota.”

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Lithium ion industry advocates say that the U.S. government could play a pivotal role in determining how much of the battery business will be domestic by allocating to lithium suppliers a chunk of the $25 billion Congress approved for automobile alternative energy research and development. 

However, if the Obama administration spreads the $25 billion throughout the auto industry to the dozens of companies currently involved in alternative propulsion projects, “there’s the potential for the [money] to be so diffused that it wouldn’t do that much good in any one area. As large as that sum sounds, it could become ineffective.”

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Of course, any U.S. hopes for securing a chunk of the lithium ion industry would be dashed if GM’s Volt project were to fizzle out because of the automaker’s financial problems.

But even if the Americans don’t make the train, a future with more and more powerful lithium ion batteries is inevitable; after all, the rest of the world is already on board.

Edit by DAF

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Full article:
http://www.strategy-business.com/li/leadingideas/li00110?tid=230&pg=all

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This entry was posted on March 11, 2009 at 7:15 am and is filed under Autos - Travel, Batteries - Lithium Ion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.