Blogs / 80beats

The U.S. auto industry may be floundering in part because it failed to embrace fuel-efficient and alternative fuel cars, but U.S. companies can still position themselves to lead the way in the next phase of automobile manufacturing, a group of battery makers is arguing. Fourteen companies have announced that they’re teaming up and will seek $1 billion in federal aid to build a large-scale factory that produces lithium-ion batteries, which would be used in plug-in electric cars. Many experts believe battery technology and manufacturing capacity could become as strategically important as oil is today. Auto makers, including General Motors Corp. and Ford Motor Co., say they plan to roll out plug-in electric cars by 2010 [The Wall Street Journal].

The consortium, which calls itself the National Alliance for Advanced Transportation Battery Cell Manufacture, is modeled after a group formed in 1987 by computer-chip manufacturing companies that were struggling to compete with Japanese chip makers. The situation is similar now, experts say, as Asian companies dominate the battery market. “A small, fragmented (U.S.) battery industry will not long survive in the face of determined Asian competition,” Ralph Brodd, a consultant to battery manufacturers, said…. “(Other) countries understand that he who makes the batteries will one day make the cars,” he said [Reuters].

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Earlier this month, the much-hyped electric car company Tesla Motors admitted that the hard financial times were taking a toll, and scaled back its goals to mass-produce flashy electric sports cars and sedans in the next few years. In that announcement, company founder (and space entrepreneur) Elon Musk revealed that the company would cut staff, close a Detroit office, and postpone production of its next generation vehicle, the Model S. Now the company has acknowledged that it was forced to cut almost 25 percent of its workforce, and analysts are wondering about its future.

The company is reportedly reeling because a number of investors withdrew their support or demanded tougher terms as financial markets collapsed over the past month. The company restructuring means that the Model S, a four-door sedan, won’t be ready until 2011, and the startup could lose its first-mover advantage: By 2010, everyone from General Motors to Toyota Motor, Nissan Motor, and Daimler expects to launch their own electrified vehicles. James N. Hall, who runs the auto consulting firm 2953 Analytics, sees trouble ahead. “If the market wants [electric cars] in the number Tesla is talking about,” he says, “a larger auto company will bury them on cost” [BusinessWeek].

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Chrysler, the smallest of Detroit’s Big Three automakers, surprised the industry this week by revealing three new electric vehicles, the first of which it plans to begin shipping to dealers in late 2010. In unveiling a minivan, a Jeep Wrangler and a sports car, Chrysler’s executives spelled out plans for a future in which most, if not all, automobiles would use electric motors for propulsion — essentially sounding the death knell for the internal-combustion engine [Los Angeles Times].

The car company has struggled financially over the past decade, so the ambitious plan surprised analysts, many of whom thought Chrysler lacked the size and financial resources to develop an electric car on its own [The New York Times]. By announcing that its first electric models will hit showrooms in 2010, Chrysler puts itself in direct competition with General Motors, which has a similar timeline for its electric car, the Chevy Volt, which was unveiled last week. Nissan is also working on several electric cars of its own.

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During a celebration to mark the 100th anniversary of General Motors, the company unveiled a prototype of its long-awaited electric car, the Chevy Volt. Experts say the Volt, which is expected to hit showrooms in late 2010, has the potential to both revitalize the struggling car company and to change American’s expectations of what an automobile can do: GM has said that the Volt should be able to drive 400 miles on a full charge and a full tank. “We’re reinventing the automobile,” [GM executive Rick] Wagoner said…. GM has placed huge bets on the car, reportedly investing at least $500 million in its development [Los Angeles Times blog].

The Volt’s technology differs from the system used in Toyota’s hybrid Prius, which has two motors. The Volt will have only one electric motor, powered by its new battery, and will go up to 40 miles without using a drop of gas. For the nearly 80% of Americans who drive less than 40 miles a day, that would mean they could effectively eliminate gasoline from their lives. After 40 miles, the Volt’s gas engine switches on, but unlike the Prius’s, it doesn’t make the car move so much as an inch [Time]. Instead, the gas engine generates electricity to charge the car’s battery, allowing the driver to go several hundred more miles before either filling up the gas tank or plugging in the car.

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