Bottled Lightning

by Seth Fletcher

  Then AT&T cable boxes equipped with Avestor batteries began exploding. The first incident, in October 2006 in Houston, blew a hole through a nearby wooden fence. The next major blast, near Milwaukee on Christmas Day in 2007, launched the enclosure’s fifty-pound metal door five feet. (There were two fires as well, but the explosions naturally got the most press.) AT&T committed to replacing all seventeen thousand batteries installed in their U-verse boxes, but Avestor would be of no assistance. In a statement, AT&T said, “Normally, we would work with a vendor to diagnose problems and develop solutions. We can’t do that in this case.” The reason they couldn’t is that Avestor had filed for bankruptcy.

  The Phostech Lithium deal, meanwhile, ruined the friendship of Armand and Gauthier. Armand led the scientific team behind the company, but he quickly became disillusioned by what he saw as the unrestrained avarice spreading through the battery community. He said that Gauthier had used his laboratory to perform the work that would underpin Phostech Lithium, but without helping him to deal with a major funding crisis that occurred after 1999, and that almost resulted in his having to lay off several postdocs. But the biggest insult, Armand said, came when Phostech Lithium was unable to manufacture lithium iron phosphate powder that anyone wanted to buy. “So Phostech was created, got the exclusivity, and then they were too mediocre scientifically to do anything with the materials,” Armand said. “It was of low quality, and people didn’t want to use it after a few tests.”

  Gauthier will say little about what happened between him and Armand, citing personal, not scientific differences. As for the accusation that Phostech made inferior electrode powder, he argued that lithium iron phosphate did turn out to be “touchier” to manufacture than they had expected, so they had problems at the beginning. However, Gauthier said that those issues were sorted out, and many of the battery companies that complained about the poor quality of the company’s early product buy from Phostech today. Phostech Lithium still holds the exclusive license from Hydro-Québec and the University of Texas to supply lithium iron phosphate cathode material. Everyone else is, according to Gauthier, in patent violation.

  In 2004, Armand returned to France, too disillusioned to work. “I was crushed,” he said. “Batteries are the only hope for changing the fuels in transport. We know that the fuel cell won’t make it for years. So I mean everything is in the hands of the battery people.

  “It started very idealistically,” Armand continued. “People in the 1970s didn’t talk about global warming, but the movement in the USA was about resources being depleted and pollution. The feeling of emergency—that I was working for my grandchildren. But now I think my daughter’s going to face the problem. I’ve flown from Europe to California many, many times. When you fly over Greenland, one time out of every five you have a clear sky. And you used to see the glacier coming straight to the sea—and no shore, or maybe a few meters. Now you see a hundred meters, one kilometer of land between the glacier and the shore.”

  It was Donald Sadoway, an MIT electrochemist and a colleague of Yet-Ming Chiang, who had urged me to call Michel Armand. The afternoon after Yet-Ming Chiang’s talk at the Materials Research Society in Boston, I had walked across the Harvard Bridge to visit Sadoway, and we sat and spoke for two hours in his high-ceilinged, lamp-lit office. Sadoway has the demeanor of the endearingly egomaniacal professor, the academic who became a lovable star teacher by virtue of his ability to suck the air out of the biggest lecture halls. He was wearing a black Dior jacket, a black button-down shirt, and black tie that looked vaguely like a piano keyboard. Sadoway has problems with lithium-ion batteries, primarily concerns about safety and cost. Sample comment: “Suppose I come to you and I say, ‘I got this cool thing, I’ve got this really cool battery.’ And I say, ‘Well, the electrolyte’s actually flammable.’ And everybody’s saying, ‘Yeah, let’s put it in a car, let’s build a big one!’” We talked about his proposed alternatives, his years in the field, the story of American energy-storage research. And then, as our conversation drew to a close, he nearly jumped out of his seat and said, “You need to talk to Michel Armand! He’s just a broken, broken man. The last time he was here, you know what he said? He said, ‘The number-one property of lithium iron phosphate is that it is an excellent catalyst for human greed.’”

  7

  THE BRINK

  As the Volt battery battle approached its resolution in late 2008, General Motors entered a state of terminal decline. Toyota became the biggest automaker in the world, claiming the title GM had held for seventy-seven years. Meanwhile, GM was setting records for the speed-burning of cash; the company lost $30.9 billion that year. In November, Rick Wagoner flew to Washington, D.C., on a company jet to ask for money; he came home with nothing but scars from a congressional lashing. A month later he returned to Capitol Hill, this time in a Volt prototype, and secured the emergency loan that kept the company functioning for the near future. The loan Wagoner got on his return trip to Washington was only enough to stanch the bleeding for a few months, enough time for GM to present a plan to the government that proved the company could become a viable business in the twenty-first century. Meanwhile a thirsty schadenfreude was growing among the public and the pundits, many of whom seemed eager to watch the automaker die.

  Perhaps because it was the one positive public-relations chip GM had left, the Volt was kept well funded and on schedule. By then, however, it looked like a very different car. Soon after its unveiling in 2007, it became clear that the concept design wouldn’t work in the real world. Publicly, most of the blame was placed on aerodynamics. As Bob Lutz put it, the show car had better aerodynamics turned around backward than it did forward, and in a car like this, “aero” would be essential for getting as much range as possible out of the battery pack. Aero is the reason for the shape of the Prius; only certain angles of a car’s windshield and roofline and rear end allow air to flow smoothly across the car’s body and then break away cleanly without creating vortices or low-pressure areas that produce drag. Which means that when aerodynamics comes first, a designer’s aesthetic choices are restricted, a fact that explains any geometric similarities among the production Volt, the Prius, and Honda’s hybrid, the Insight. The Volt spent some seven hundred hours in the wind tunnel, double what a normal car project would get, and in that time Bob Boniface and his team found dozens of tiny design tweaks that could squeeze another fraction of a fraction of a mile out of a battery charge. Guards were installed to cover the windshield wipers. Side-view mirrors got pushed away from the body of the car and placed on the end of narrow posts. A five-millimeter-high lip was added to the minimal spoiler in order to reduce aerodynamic drag by five counts and earn an extra quarter mile.

  Yet Boniface says that aero wasn’t the main reason for killing the concept design. The bigger issue was that to be remotely affordable, the Volt needed to share a platform with an existing car. Designing and manufacturing a new architecture in addition to all the novel engineering that was going into the Volt’s power train would have added hundreds of millions of dollars to the cost of the project. The best candidate for platform sharing was the Chevy Cruze compact car, which GM planned to release in the United States around the same time as the Volt. Boniface and his designers used Photoshop to see what the car that GM unveiled in January 2007 would look like adapted for the wheelbase of the Cruze chassis. “It was ridiculous looking,” he said. Instead, Boniface’s studio redesigned the car, and it was unveiled at GM’s one hundredth anniversary party in Detroit on September 16, 2008.

  By now plenty of other carmakers were chasing the Volt’s halo effect, some more seriously than others. At the Los Angeles Auto Show several weeks earlier, for example, Mitsubishi encouraged journalists to take their egg-shaped, Japan-only i MiEV electric car, which the company was talking about bringing to the United States, on a drive around downtown LA. At the same show, Mini announced that it would be leasing five hundred all-electric Mini Es, conversion cars with a backseat full of lithiu
m-ion batteries, a top speed of ninety miles an hour, and a range of 150 miles on a charge. But the Mini E seemed hastily assembled and unserious. The handler who walked me to my test drive warned me that the strong regenerative braking was causing the car to lurch forward as soon as you removed your foot from the accelerator, and it was giving some people severe motion sickness.

  Still, there was no doubt that with each successive auto show, where carmakers attempt to surprise and one-up each other with their latest and most impressive efforts, electrics, plug-in hybrids, and regular old hybrids were becoming ubiquitous.

  The electric-car buzz reached a new level at the North American International Auto Show the following January. The GM and Chrysler press conferences seemed designed solely to impress any visiting Washington politicians, who had yet to announce whether they would rescue the two companies. The first day of the show, GM staged a mock political rally, hauling out hundreds of employees who carried signs saying “Here to Stay,” “We’re Electric,” and “Charged Up” as a parade of GM’s best cars and trucks rolled across the showroom floor. The next morning, Rick Wagoner made an announcement that could have seemed wonky to an outsider but was in fact the best thing GM could have done to certify the Volt’s status as a real car: he revealed the winner of the battery derby.

  It was a frigid, postblizzard morning in Cobo Hall. A model of the Volt’s six-foot-tall T-Pack battery stood on the press conference stage, looking more than a little like a crucifix on the altar. With Lutz and the victorious battery team by his side, Wagoner declared Compact Power, Inc., the American subsidiary of LG Chem, the winner. It was the safer choice—a company that already produced millions of lithium-ion cells each month, compared to an untested start-up that hadn’t yet staged a public stock offering. Wagoner delivered his remarks in the stiff, staged language typical of this kind of event, but he was emphatic about the importance of the Volt—and its successors, such as the electrified Cadillac coupe concept the company unveiled the day before—to the future of the company.

  The Volt battery arrangement would be different from the usual carmaker-supplier relationship, because GM was getting back into the battery business itself. Only the Volt’s cells would be made in Korea. In a new thirty-one thousand-square-foot factory that GM would build in Michigan, GM workers would assemble those cells into finished Volt packs. Going forward, battery manufacturing would become a “core competency” of the company, as essential to competing in the twenty-first century as the ability to build V-8s was in the twentieth. It was a major investment and a sober move toward commercialization, and it contrasted starkly with the fantasyland press conference Chrysler gave that week, which seemed to consist primarily of rolling existing cars onto the show floor and saying, See this? It’s an electric Jeep.

  GM’s performance succeeded, at least for a day, in training the world’s attention on the return of the electric car. More than that, it focused the conversation on the piece of technology that in an age of electric cars will replace the engine as most expensive, most complicated, and most essential. As a reporter for The Washington Post put it, “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.”

  While the Volt program chugged ahead, General Motors arrived at the brink. The billions of dollars in federal aid that kept GM alive through the winter had come with a deadline: Show us by March 31, 2009, that you can become a viable business, or give us our money back.

  The head of the White House task force responsible for assessing those plans was Steven Rattner, a Wall Street investor with no experience in the automotive industry. In October 2009, Rattner told the story of his engagement with Detroit’s faltering automakers in an article for Fortune: “Our timing had been set by an arbitrary March 31 deadline that the Bush administration had imposed on the companies to meet a hodgepodge of conditions. And by coincidence, both companies would probably run out of money around the same time.”

  What they encountered when they began their urgent investigation into the state of the two troubled Detroit automakers was disturbing. “We were shocked, even beyond our low expectations, by the poor state of both GM and Chrysler,” Rattner wrote. “Everyone knew Detroit’s reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.” He continued:

  The cultural deficiencies were equally stunning. At GM’s Renaissance Center headquarters, the top brass were sequestered on the uppermost floor, behind locked and guarded glass doors. Executives housed on that floor had elevator cards that allowed them to descend to their private garage without stopping at any of the intervening floors (no mixing with the drones). In my relatively few interactions with chairman and CEO Rick Wagoner, I found him to be likable, dedicated, and generally knowledgeable. But Rick set a tone of “friendly arrogance” that seemed to permeate the organization. Certainly Rick and his team seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate, and the UAW.

  Amazingly, when Rattner and his colleagues made their first trip to Detroit, they didn’t anticipate the stir that their visit—they being the committee in charge of deciding whether two of the Big Three automakers would live or die—would generate. “Throngs of reporters awaited us at every stop while a news helicopter buzzed overhead.” Rattner was particularly perplexed by the attention paid to the Volt. “More peculiarly, the ensuing press coverage seemed wildly over-focused on our test drive of the Chevy Volt, as if the company’s salvation rested on this one vehicle.” He went on to explain that while the team was glad to see GM pay attention to alternative technology, they were really more concerned about whether the company had a chance in hell of surviving even if the federal government invested tens or hundreds of billions of dollars. These were Wall Street guys, after all, not CARB board members. The Wall Street guys determined that the Volt and any subsequent electrified descendants “couldn’t possibly have any meaningful impact on GM’s finances for at least five years.”

  As the March 31 deadline approached, Rattner’s team concluded that while GM had made significant progress in restructuring, it still had a long way to go. There was no way for them to become profitable anytime soon without the kind of changes that can rarely be made outside of bankruptcy court. A year and a half before the Volt would begin rolling off production lines, GM seemed headed for one of the largest and most complicated bankruptcies in American history.

  The verdict was delivered in a public report, released at the end of March, that included a statement that no one within GM would have argued with: the Chevrolet Volt holds promise, but it’s likely to be too expensive in the short term. This was something GM admitted all along: the first generation would be too expensive to make money, but that’s the way it goes. You have to pay for technology on the front end if you want to lead a transformed auto industry. Predictably, the Volt’s critics seized on that observation—that the first generation of Volts would lose money—as evidence that the Obama administration would kill the car.

  That seemed highly unlikely. Not only had the administration made clear that it didn’t want to get involved in decisions about specific products, but the current White House was more supportive of automotive electrification than any since Carter’s. Obama worked an oblique mention of the Volt into his first joint address to Congress as an example of the automotive technology of the future—and as a compelling reason to fund an American lithium-ion battery industry. And on March 19, 2009, he toured the Electric Vehicle Technical Center at Southern California Edison and declared a goal of putting one million electric cars on the road by 2015. He announced a $2 billion competitive grant program for electric-car battery and compo
nent manufacturers, another $400 million for EV infrastructure, and mentioned the $7,500 tax credit already signed into law for people who buy plug-in hybrids. Finally, he delivered a pep talk. “There are days, I’m sure, when progress seems fleeting and days when it feels like you’re making no progress at all,” Obama said. “But often, our greatest discoveries are born not in a flash of brilliance, but in the crucible of a deliberate effort over time. And often they take something more than imagination and dedication alone; often they take an investment and a commitment from government. That’s how we sent a man to the moon. That’s how we were able to launch a World Wide Web. And it’s how we’ll help to build the clean-energy economy that’s the key to our competitiveness in the twenty-first century.”

  Not surprisingly, Rattner and his team saw no benefit to letting Wagoner remain in charge. “It seemed completely obvious to us that any management team that had burned through $21 billion of cash in a year and another $13 billion in the first quarter of 2009 could not be allowed to continue,” he wrote. On March 27, Wagoner was in Washington, and Rattner asked for a meeting. “I don’t know whether Rick had any inkling of why I had wanted to see him alone,” Rattner wrote. “His face was impassive as I said, ‘In our last meeting, you very graciously offered to step aside if it would be helpful, and unfortunately, our conclusion is that it would be best if you did that.’ I told him of our intention to make Fritz [Henderson, the vice president of GM] acting CEO and he supported that idea, cautioning me against bringing in an outsider to run the company. ‘Alan Mulally called me with questions every day for two weeks after he got to Ford,’ he said. As we continued our rather awkward conversation, Rick suddenly asked, ‘Are you going to fire Ron Gettelfinger too?’ Startled by the reference to the UAW head, I replied, ‘I’m not in charge of firing Ron Gettelfinger,’ and Rick soon left to brief his board on our decision.” Later that day Rattner told Henderson the news. His one request: Don’t do him the damage of calling him “interim” CEO. “You can fire me anytime you want, but at least give me a better chance to succeed,” he said, according to Rattner.