“The problem has been the availability of lithium-ion batteries,” Lutz continued. “The Tesla uses 6,831 laptop batteries all wired together.” The Volt, by contrast, uses a specially designed automotive cell, and that’s why it will sell for around $40,000 before tax credits, Lutz explained. Then Lutz and Letterman made nice as Letterman asked to buy the first Volt. “I’ve probably promised it to about seven or eight other people,” Lutz said.
Next, Letterman and Lutz walked over to a side stage and the production Volt rolled out. The audience applauded enthusiastically, but there were far fewer ooohs and aaahs than when Tesla’s prototype Model S sedan appeared on the show.
And then Letterman concluded the segment by reaching inside the car, grabbing the steering wheel, and shrieking, “Ahhhh! Ahhh! I’m being electrocuted!”
New Year’s Day 2010 marked the beginning of the home stretch for the Volt. Eleven months and the first Volt had to roll off of a production line. It would be a soft launch; the first cars would go to utilities and governments and various test fleets. It would initially be available only in California and a few other markets. It still wasn’t clear whether the car would be sold or, like the EV1, just leased. In fact, GM’s talk of test markets and “learning how consumers use the car” was uncomfortably close to the language used to launch the EV1.
The newest set of Volt prototypes, approximately eighty of them, were being flogged at test tracks across the country, piling up miles, the engineers’ fingers crossed that no showstoppers emerged. So far, though, the Volt team had been nothing but pleased with the results of their torture testing. To check the car’s hill-climbing ability, Volt engineers drove a prototype to the top of Pikes Peak and back down. They tested the battery’s liquid cooling and heating system in Death Valley and Kapuskasing, Ontario, where, according to Tony Posawatz, the engineers are disappointed if the temperature climbs above —18°C. Not that they would be likely to admit any major mishaps, but the Volt principals appeared convincingly confident. What was left for the final eleven months, in addition to scaling up the manufacturing apparatus needed to put the car into production, was software work—battery management, human-machine interface tweaks, the final debugging and software coding.
By the start of the North American International Auto Show in January 2010, the Detroit-area plants that would assemble the Volt and its battery packs were warming up. Soon, both would begin their rehearsal run, building batteries and cars for testing and validation. On the first day of the show, I asked Jon Lauckner what he thought of the electrification theme that had overtaken Cobo Hall. “It’s interesting and gratifying,” he said. He thought back on the announcement of the Volt in this same building three years earlier. “At the time, people were enthusiastic about the fact that we had reclaimed the electric car from the ash heap of history, but there were quite a few skeptics out there who said, ‘Nah, we don’t think they’ll go to production with this vehicle, ’ because, in their words, batteries weren’t included. It’s gratifying, to say the least, that something that started with a concept car in January of 2007 has now spawned many, many variants of the same theme—that is, drive using electricity rather than petroleum.”
The intervening months hadn’t been without drama. In December, Frank Weber left the Volt project to return to Opel in Germany. Most significantly, Fritz Henderson was out, the second CEO firing that year. The timing was atrocious. The first week of December, Henderson was scheduled to give the keynote speech on the opening morning of the Los Angeles Auto Show. He was canned the night before. Chairman Ed Whitacre took his place as interim CEO, and Bob Lutz replaced him as the morning speaker.
In LA, I caught up with Posawatz and asked him what he thought about the latest shake-up. “Surprised,” he said numbly. “A little disappointed. Don’t understand the timing. But there’s been all kinds of shake-ups this last year. I mean, literally a year ago at the LA auto show I can remember watching on TV our former CEO Rick Wagoner getting grilled by the congressional panel.” Posawatz said he was not at all concerned about the latest major personnel change harming the Volt program. The Volt had too much momentum. It was too close to the deadline. “The Volt team will outpace much if not most of any General Motors restructuring,” he said. “Remember: By next month I’m building batteries. By the early spring I’m building cars in Hamtramck. We have a demonstration fleet program which was announced earlier today. We’re gonna do stuff in 2010, and then when we’re ready to produce the production car we also peel off some for customers, some for the DOE. We’ll collect data using OnStar, which no one else can do. This machine is in motion. It is humming at a fast pace. And oh, by the way, having been involved with a few short discussions with Mr. Whitacre himself—huge fan of the Volt,” Posawatz said of the chairman and new interim CEO, who had given himself the job when he fired Fritz Henderson. “Huge fan of the Volt.”
Not to say Posawatz showed no signs of burnout. He took a little time to vent about the approach that many journalists were taking to the Volt. “I’ll be honest with you, I am personally very disappointed in your craft,” he said, “that the most oft-asked question on this program since day one is: ‘What will it cost?’ And today I told these guys: You guys are being lazy journalists. Here we had rides of the vehicle, we showed off the extended-range mode, et cetera et cetera. We’re building a battery plant that will start building batteries next month, General Motors, U.S. green jobs, and you guys are asking the lazy question. Why don’t you guys tell me? Where is California with their HOV lane legislation? What does a Prius with an HOV lane sticker sell for versus one that doesn’t have one?”
In their defense, I said, the cost of the car is a major issue here, because if you can’t sell it for less than $40,000—
“Uh-uh, they ask about price, not cost,” he interjected. “I’d love to talk with them about cost.” And so we talked cost, and I asked him to respond to the common claim that lithium-ion batteries will never be cheap enough to make electric cars a mass-market reality. “It’s not a Moore’s law curve on batteries. It is not.” Nonetheless, Posawatz added, evolutionary engineering changes will soon make the batteries vastly cheaper. Set fundamental science aside for a moment. The Nissan Leaf’s battery is air-cooled, which is cheaper than the elaborate liquid conditioning system the Volt uses; maybe they’ll find that they can use air to cool the Volt’s battery pack? The Volt is designed to use only half of its battery capacity, a conservative decision meant to ensure that the batteries can last the full life of the car’s warranty. But in time it may become clear that you don’t need to set aside a full half of the battery as cushioning. If you can use more of the same battery, you just increased the range of the Volt without spending anything. “Can I take thousands of dollars out of the battery in a couple years?” Posawatz said. “You bet. Thousands of dollars. Am I ahead of all the experts’ opinions relative to the dollars-per-kilowatt-hour cost? I’m ahead of all the experts—who haven’t built a battery in their life. Right?”
In Detroit the following month, as Lauckner and I talked, a mob of people crushed through the Volt stand—the kind of human swarm that at the big auto shows generally signals the arrival of a celebrity. In this case it was a congressional delegation, led by Nancy Pelosi, there to see how the government’s investments were performing. GM’s latest CEO, Ed Whitacre, escorted Pelosi, John Dingell, and Steny Hoyer toward the Volt, and they were swarmed by video cameras and photographers.
Beyond the unusual level of government interest, plenty of other things at this year’s Detroit show emphasized that the landscape was shifting. On the other side of a wall from the GM stand was an unusual competitor: the Chinese company BYD, which began its existence in 1995 as a battery manufacturer and had only recently moved into automobiles. From their base in the industrial megalopolis of Shenzhen, an hour outside Hong Kong, BYD was plotting domination of the world electric car market. They had allies in Warren Buffett (who in 2008 became a 10 percent investor in the company) and
the Chinese government, which in April of 2009 declared a national goal of becoming the world’s largest supplier of electric cars by 2012.
What BYD had in high-profile backing it lacked in polish. By the glossy standards of the international auto shows, its booth was chintzy, with ragged carpet edges and a ring of tiny plastic potted plants surrounding its marquee product, the e6 battery-powered sedan, which it said it would soon bring to the United States.
Even the Germans were caving in to electrification. That day BMW revealed an electric version of its 1-series coupe, a bridge between the Mini E project (which had been plagued by poor battery life in cold weather, long waits for customers to get their garages wired for charging docks, and other problems) and a high-end electric urban commuter that BMW planned to release by 2015, which they were calling the MegaCity. Across the aisle, Audi was showing off a shortened coupe version of the E-tron concept, the second electric supercar it had trotted out in the past two months.
Tesla stood across the aisle from Mercedes. A dusty white roadster with several Sharpied autographs testified to Tesla’s position that the charging-infrastructure issue was overblown, and that range anxiety was “for the weak,” as the company’s press materials put it. Tesla engineers had driven the roadster from Los Angeles to Detroit for the show, and they intentionally left it unwashed. The following day Elon Musk gave a press conference that was almost affected in its contrition, that seemed designed to begin correcting the image he had built for himself since taking over as Tesla CEO as a brash, trash-talking egomaniac who loved being quoted calling his critics “douches.” While the new plant that would build the Model S sedan was still delayed, Tesla seemed to have righted itself. It had sold more than one thousand roadsters since 2008 and—no small feat—it had survived the most devastating recession since the Great Depression.
At the end of the first day, the visiting congressional delegation took to a small stage on the showroom floor to give a few remarks. Nancy Pelosi, Steny Hoyer, John Dingell, Ray LaHood, Hilda Solis, and a few other Washingtonians had been chauffeured throughout the day by Michigan’s governor, Jennifer Granholm. The succession of stiff, brief speeches consisted of a series of platitudes about the Survival of an Industry and Keeping America Number One. The most sincere-sounding moment came when Steny Hoyer, House majority leader and representative from Maryland, admitted to feeling like a “kid in a candy shop” on the show floor, wistfully recalling that when this elder congressman was a kid, the “symbol of America’s greatness was the automobile.”
8
THE STIMULUS
As the world’s automakers began to cautiously embrace the lithium-ion-powered electrified car, the battery boom began. In 2008 and 2009, think tanks and industry groups issued forecast after forecast assessing the electric car’s chances this time around, and, of course, their conclusions differed wildly, ranging from profoundly pessimistic to delusionally optimistic. But in the battery business everyone knew that even a small electric-car market would be a tremendous opportunity. Even early-adopter volumes of lithium-ion-powered cars of any kind—plug-in hybrids that run on gas after ten or twenty or forty miles, pure EVs, next-generation variations on the basic Prius format—would require a staggeringly large number of batteries. Charles Gassenheimer, the CEO of Ener1, parent company of the American lithium-ion manufacturer Enerdel, liked to say that one hundred thousand electrified cars a year—just twice the number of Leafs Nissan will build for 2011—would “soak up the entire cell capacity that exists in the world today for the cells you have in your laptop computer.”
Advanced-battery start-ups were popping up like mushrooms after a spring rain. Even large automotive suppliers with a steady stream of business in other areas wanted in. Johnson Controls, for instance, an automotive supplier and manufacturing conglomerate with three hundred thousand employees worldwide, decided it needed to enter this new market, and so it sought out a partnership with the French battery company Saft. The Canadian auto supplier Magna began marketing itself as an electric-car-battery packager. Dow Chemical got into the field by forming a joint venture with Kokam, a Korean battery company.
Soon the word “battery” was no longer exclusively associated with the Energizer Bunny and the TV remote. Batteries became a segment of the clean-tech boom, with all the dewy and righteous credibility of thin-film solar and offshore windmills. If anything, the battery industry carried an additional dose of sexiness because of its attachment to futuristic cars like the Tesla Roadster.
National, state, and municipal governments around the world became interested in electrification. Politicians from Israel to Oregon shook hands with executives from the Renault-Nissan alliance, joining in an effort to build charging stations and other EV infrastructure. Austin and Indianapolis began competing with Detroit to become advanced-battery hubs, players in the next big technological thing. Better Place, a battery-swapping and EV-infrastructure company founded by the Silicon Valley entrepreneur Shai Agassi, was circling the globe negotiating electric-car infrastructure deals.
American businessmen and politicians learned to work the battery issue with a simple, persuasive line: “We’re going to end up replacing foreign oil with foreign batteries!” The American auto industry had been kneecapped by the global recession and its own structural imbalances and mismanagement; the lean Detroit that it would take to survive could never make up for all the jobs that had been lost by building cars alone, and so the notion of building a sister enterprise—an American advanced-battery industry—was irresistible. Detroit wouldn’t just build cars; it would build a new breed of car and the batteries that go into those cars, along with the solar panels and windmills that will charge those batteries.
By the end of 2008, the heads of Detroit’s automakers were agitating for government help to reinvent the Rust Belt. William Clay Ford, Jr., recited the standard national security line to The New York Times: “We really don’t want to trade one foreign dependency, oil, for another foreign dependency, batteries.” Rick Wagoner, then still at the helm of GM, made much the same argument to The Washington Post. Charles Gassenheimer spoke on behalf of the nascent North American battery industry. “Advanced batteries are as important to this new market as the microprocessor was to the emergence of the personal computer revolution,” Gassenheimer told reporters. “You can’t have one without the other. Unfortunately, the U.S. manufacturing capacity is just not there today to produce them in anything approaching the numbers we need over the next few years at costs the market demands.”
It didn’t take long for this talk to translate into government support. James Greenberger, the director of the National Alliance for Advanced Technology Batteries, a not-for-profit trade organization, recalled a conference he held in Chicago in June 2008. “We invited industry and local political leaders from the Chicago area,” Greenberger said. “The takeaway was that whereas lithium-ion technology was a potentially transformative technology and might, in fact, become the basis for the auto industry and permit us to displace a lot of imported Middle Eastern oil, we were likely to displace that Middle Eastern oil with Asian batteries.” He says he spoke to a fellow “who worked for one of our local politicians” about how best to build this new industry. Have another conference? Start an industry group? Eventually, with the politician’s encouragement, Greenberger started assembling NAATBatt, as it came to be called.
“Not much happened in the balance of 2008,” Greenberger said. “But then this fellow’s boss got elected president in November 2008, and all of the sudden everybody started paying attention.”
The Obama administration was the best friend the battery industry could have wanted. In February 2009, during his first address to a joint session of Congress, President Obama cited the insult of running American-built plug-in hybrids on “batteries made in Korea” as evidence that the United States was falling behind in the clean-energy race. Obama had already set an official goal of putting one million plug-in hybrids on the road by 2015. The opportunity
to do something big in that direction came in the form of crisis. As the world economy teetered on the verge of collapse, the Obama administration saw the opportunity to use a necessary package of emergency spending to build a lithium-ion industry—a factory for clean energy jobs—from scratch.
“It must have been January or February, I got a call from Rahm Emanuel’s office, saying, ‘We’ve got this stimulus package coming down, and we’ve decided we want to do something for battery funding in the stimulus package. How much do you guys need?’ And I thought, ‘Wow, that’s an interesting question.’” After talking to a few colleagues, Greenberger knew the answer. “We’ll take $2 billion,” he told Emanuel’s office. “It was a little bit tongue-in-cheek, but that was certainly the wish. And lo and behold, that’s what ends up in the stimulus package.”
In August, the Department of Energy revealed the winners of $2.4 billion in stimulus funding, and Obama’s deputies were dispatched nationwide to deliver the news. Secretary of Energy Steven Chu was sent to Celgard, a Charlotte, North Carolina, company that makes the thin polymer separators that lie between the electrodes of a lithium-ion battery. “This is the single largest investment ever made in advanced battery technology anywhere in the world,” Chu said of the grant pool. Awards like the $49 million that Celgard was receiving were “incredibly effective investments that will come back to us many times over—by creating jobs, reducing our dependence on foreign oil, cleaning up the air we breathe, and combating climate change. They will help achieve the President’s goal of putting one million plug-in hybrid vehicles on the road by 2015. And, most importantly, they will launch an advanced battery industry in America and make our auto industry cleaner and more competitive.”
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