Can Michigan Go Electric?

The state and the country want to reduce their dependence on foreign oil by being at the forefront of hybrid electric technology, but so far almost all of the hardware is being developed and produced in the Far East
GM showed off its electric battery hardware at the North American International Auto Show in January. Photograph courtesy of General Motors Corp.

How do you put 1 million plug-in hybrid-electric vehicles on the road by 2015? Can the auto industry build 8 million fully battery-powered cars, trucks, and crossovers by 2020? That’s the challenge facing the Obama administration, which hopes to encourage what some see as the most dramatic transformation of the auto industry since the first Model T rolled off Henry Ford’s newfangled assembly line nearly a century ago.

Hoping to address the intertwined issues of global warming and our costly dependence on imported oil, the White House is not only pushing the auto industry for cleaner, more fuel-efficient vehicles, but it would like to see a wholesale switch from the time-tested internal-combustion engine to newer, battery-powered technologies. It’s likely to be a costly transformation, but one with significant strategic implications, so the administration is offering up billions in cash to help make the switch possible. The question is whether Michigan and its Big Three automakers will lead or follow in the new world of the battery car.

Despite some serious concerns about cost, reliability, and consumer acceptance, auto industry leaders are cautiously buying into this new approach, often referred to as “electrification.” January’s North American International Auto Show (NAIAS) at Cobo Center brought a score of prototypes and production vehicles, including Honda’s new “mild” hybrid, the Insight; as well as the Tesla Roadster, a high-performance sports car powered by more than 6,800 laptop-style battery packs. Indeed, virtually every manufacturer at this year’s show featured at least one battery-powered vehicle, such as the Concept Blue Zero E-Cell from Mercedes-Benz and Toyota’s third-generation Prius, the latest remake of the world’s best-selling hybrid-electric vehicle.

Exactly what role electric propulsion will play in the car of tomorrow remains to be seen, but there’s little doubt that “batteries are the future,” says Don Esmond, sales and marketing chief for Toyota Motor Sales, USA. In fact, batteries have played an important role in automotive development since the very beginning, and not just as the source of power for headlights and radios. Before there was a cheap and reliable source of petroleum, manufacturers experimented with a variety of different powertrains. At the earliest auto shows, there was an almost even split between steam, gasoline, and battery power. Indeed, Henry Ford’s wife, Clara, preferred a clean electric runabout to her husband’s more popular, but smoky, Model T. Ford’s friend Thomas Edison spent many hours in his lab struggling to come up with a formulation that would yield better range than the lead-acid batteries of the day.

If modern proponents are right, the real breakthrough to getting a large number of electric vehicles on the road is the lithium-ion battery. Lithium is a familiar technology to anyone who has a cell phone, iPod, or laptop computer, but the challenge has been to scale the new chemistry up for use in the demanding world of the automobile. There are approximately 14 different “families” of lithium battery chemistries, some more promising than others — because they can store more energy, for example, or need shorter recharge times.

Lithium chemistry is exacting — even small manufacturing errors can yield grave results. An early Sony plant burned down, and the Federal Aviation Administration has put limits — seldom enforced — on the number of LIon batteries travelers can take aboard an aircraft because of fires caused by spontaneous short circuits. Meanwhile, industry insiders report that Toyota’s electric-propulsion program was set back nearly a year when its cobalt-doped lithium batteries proved too fire-prone to continue working with. No wonder, then, that the Japanese maker is taking a go-slow approach to a LIon-powered plug-in version of the Prius, which would extend the hybrid’s ability to drive on battery power alone to as much as 20 miles. For now, Toyota has decided it will only test-market the technology through selected fleets, starting late in 2010.

General Motors, on the other hand, has no intention of backing down on the aggressive schedule it’s laid out for the Chevy Volt. The star attraction of the 2007 Detroit auto show, the production version of the Chevy sedan will also be drivable on batteries alone – but, in this case, for as many as 40 miles, which GM research suggests would be more than enough for 78 percent of all American commuters. GM prefers to call Volt an extended-range electric vehicle because even when the batteries run down, automatically signaling the sedan’s small internal combustion engine to fire up, its wheels are driven by electric motors. There’s no direct link to the gasoline engine, which only serves as a generator.

“We still have a lot of work to do,” says Bob Kruse, GM’s executive director of global vehicle engineering, but “we believe vehicle electrification is the future of the industry.” To underscore that point, the automaker has shown several other potential versions of the Volt, including the Cadillac Converj, which made its debut at the 2009 NAIAS. GM used the show as backdrop for the unveiling of the production Volt — and also to reveal that it has chosen South Korean manufacturer LG Chem to provide it with the LIon cells that will go into the vehicle.

The announcement generated plenty of headlines, especially when GM CEO Rick Wagoner disclosed that a new factory will be set up somewhere in the United States to produce the T-shaped battery packs that will go into the Volt. “The design, development, and production of advanced batteries must be a core competency for GM,” Wagoner announced. But the news proved a bit misleading, if the following days’ media headlines were any indication. LG Chem officials later revealed that the actual batteries will be imported from Korea, with only the final assembly process taking place in the States.

And that, says Dan Squiller, CEO of battery-research firm PowerGenix in San Diego, is “the real paradox.” The United States could be getting ready to trade its dependence on foreign oil for a dependence on foreign-made batteries. At the moment, there’s but one facility in the United States — EnerDel Inc. in Indianapolis — capable of producing LIon batteries in any significant volume. The vast majority of production is based in Japan and, to a lesser degree, in China and Korea.

“Mass energy storage is a critical need [that’s] gone beyond the tipping point,” says Eric Schreffler, sector development manager for the Michigan Economic Development Corp (MEDC). Schreffler contends that it’s essential for the United States to have the capability of producing batteries from the ground up and not just assembling them using cells imported from abroad. That argument is beginning to resonate, with support coming from a surprising lineup of allies as diverse as the Pentagon and the environmental movement.

In March, President Obama responded, announcing that the Department of Energy would hand out grants worth up to $2.4 billion to promote the development of battery and related systems — with an emphasis on producing that technology here in the United States. That’s on top of the multibillion-dollar program enacted by Congress late last year, which is designed to more broadly promote the development of high-mileage technology (including gasoline, diesel and, potentially, hydrogen and other alternatives). “We can let the jobs of tomorrow be created abroad,” Obama said, “or we can create them here in America and lay the foundation for lasting prosperity.”

In comments made at a Southern California Edison facility used to test electric vehicles, the president also suggested the new program will be a way to prop up Detroit’s Big Three as they go through the difficult problems they’re currently facing. “Even as our American automakers are undergoing a painful recalibration, they are retooling and re-imagining themselves into an industry that can compete and win, because millions of jobs depend on it,” Obama said. But the new grants won’t be limited to Detroit’s makers. Other auto manufacturers, such as Tesla, as well as battery makers, will also be eligible.

The 2010 Ford Fusion Hybrid, equipped with a 4-cylinder engine and battery pack, will get 41 mpg. Photograph courtesy of Ford Motor Co.

The challenge, state officials contend, is to get a fair share of that cash for Michigan. “Our investment in the alternative-energy sector,” Gov. Jennifer Granholm said in January, “will lead to further job creation and will help our nation end its dependence on foreign oil.”

Even before GM’s announcement, state lawmakers approved House Bill 6611, the Michigan Advanced Battery Credits (MABC) act, which provides up to $335 million in refundable tax credits for companies that choose to develop and manufacture their advanced battery technology in Michigan.

That’s on top of the Centers of Energy Excellence program, enacted last summer, to promote the partnering of companies like GM with state universities — a strategy that paid off when the automaker, also in January, announced it would form a five-year/$5-million coalition with the University of Michigan — already considered one of the country’s leaders in advanced battery research — to accelerate the development of advanced batteries for electric vehicles.

Government money alone won’t be enough to win over the battery industry, but the state does have other things going for it. Consider that of the 50 suppliers involved in battery powertrain integration, 46 are based in Michigan, according to the MEDC.

The state is in the hunt on other fronts, as well. Currently, eight states are under consideration by Think Global, the Norwegian electric-vehicle maker once owned by Ford, as the site of a new EV assembly plant. The top two contenders, hints CEO Richard Canny, are California, where Think anticipates finding its primary market, and Michigan, which, Canny explains, “would be close to the top … when it comes to the engineering skills we’re looking for.”

If the state truly wants to adopt a clean energy philosophy, encouraging the development of a Michigan-based battery research-and-production infrastructure is only part of the challenge, cautions Karina Morley, a director with British automotive supplier Ricardo, which operates a large technical center in Van Buren Township. “You would think a plug-in [vehicle] would be cleaner for the environment than a gasoline-powered vehicle, but it’s not, in Michigan, because we’re a coal-based state when it comes to generating energy. And so, from a CO2 basis, it’s not necessarily a better alternative until we get to a much cleaner energy base.”

The good news is that Granholm is making a push for green power sources, especially wind power, and that strategy is winning some bipartisan support. The advisory board, dubbed the Great Lakes Wind Council, will provide recommendations to the governor around Labor Day for, among other things, locating windmill “farms” across the state. Developing that network is one of the many tasks that will involve the state’s advanced energy “accelerator,” NextEnergy.

While Michigan doesn’t have much of a history as a leader in the green movement, some experts think it’s still quite possible to enhance local demand for plug-in hybrids and battery electric vehicles (BEVs). But many skeptics have questioned the wisdom of adding millions of energy-gobbling EVs to the nation’s already strained electric grid. So if, indeed, we are headed in that direction, preventing costly brownouts and blackouts will require charging stations that can effectively disconnect vehicles when the grid is stressed.

The Michigan Public Service Commission recently launched a pilot program to create a “smart” charging interface. And NextEnergy industry services director Pedro Guillen suggests that a smart charger could tap into the energy already stored in an EV’s batteries to prevent grid overload. Plus, motorists could sell back any extra electricity to a utility. “The first plug-ins will have a fairly dumb connection between car and grid,” Guillen says. “But within the next 10 years, they’ll have a smart connection.”

There’s no guarantee that tomorrow’s cars will actually be battery-powered. There are plenty of cynics who fear the technology is just too costly, too unreliable, too limited in range. And even if lawmakers override consumer concerns and mandate plug-ins and BEVs onto the market, there’s also no guarantee that the United States — and Michigan, in particular — can secure a significant role in the design and development of tomorrow’s battery vehicles. But it would be a major mistake to sit on the sidelines and wait to see what happens in the race to electrify. The financial rewards could be massive, and in a state desperate to revitalize its economy, waiting could prove disastrous and irreversible. The good news is that Michigan has taken its first steps in the race and has a good shot at getting more than its share of the spoils.