Bottled Lightning

by Seth Fletcher

If the stimulus money didn’t pick winners, it at least narrowed the field. Dozens of companies were missing from the list. The four biggest awardees all had plans to build factories in the Detroit area—Johnson Controls, A123, Dow Kokam, and Compact Power, the operation that was supplying the batteries for the Chevy Volt. In a close fifth place was Enerdel, which already had a functioning cell factory in the motor-friendly city of Indianapolis.

  Plenty of people saw politics at work in the list of winners. “I think, in the end, we were perhaps not in the state that got rewarded,” said Christina Lampe-Onnerud, CEO of the Massachusetts lithium-ion manufacturer Boston-Power. “We didn’t have a lot of political insight on that. We came with more of a technical opportunity to produce something really good—but I totally respect and understand that’s a different process.” She said her company had been planning a new factory in China, but that when they applied for stimulus funding they put those plans on hold. “The day we were informed of [the stimulus decision], we continued with our China plans. So those three thousand jobs are going to China.”

  On a rainy, near-freezing day in January 2010, dozens of reporters gathered on the polished concrete floor of Enerdel’s lithium-ion cell factory, which at the time was the only remotely commercial-scale lithium-ion cell plant in America. A wall of safety-goggled Enerdel workers formed a semicircle behind us. It was like a scene out of an inspirational commercial about American Ingenuity and Green Jobs. Charles Gassenheimer strode onto a small stage and declared that the Indianapolis area would soon be known as the “Silicon Valley of the automotive industry.” He then introduced Mitch Daniels, the governor of Indiana, a wiry man in a chipper mood.

  Daniels took the microphone. “I’ve always been an internal combustion guy,” he said. “But I have to tell you, I’ve become converted in every way to be an enthusiast about electric vehicles—what they can mean to our nation’s future, the world’s environment and economy, but, specifically, the economy of our state.”

  Enerdel is the automotive-grade battery arm of the New York–based company Ener1. It was formed in 2004 when Ener1 purchased the lithium-ion battery assets of the auto supplier Delphi, including this factory, which, incidentally, Delphi used to develop parts for GM’s EV1. Five months before this presentation, Enerdel had been granted a $118.5 million chunk of stimulus money. Today, Enerdel was announcing that it was using its share of the pie to build a third Indianapolis facility, a much larger factory that by 2015 could churn out enough lithium-ion batteries to power 120,000 electric cars a year.

  After his pep talk, Governor Daniels yielded question time to Gassenheimer, who used the first reasonable opportunity to frame Enerdel’s mission in the language of national security: “We shouldn’t trade our dependence on foreign oil for foreign battery manufacture.” As if reviewing the benefits of a battlefield airstrip, Gassenheimer explained Enerdel’s logistical superiority. Shipping several-hundred-pound battery packs that are considered class-nine dangerous cargo is going to be expensive, and with factories in Indianapolis, Enerdel is convenient to any automaker that might conceivably want to build electrified cars in the United States—both Detroit’s Big Three five hours to the north and the Asian and European automaker factories in the South.

  Short, bespectacled, and perpetually wearing a dark suit, Gassenheimer has the looks and manner of a New York hedge fund guy. Which is appropriate, because that’s what he is. Before he joined Ener1 in 2006, Gassenheimer was an asset manager, and in that role he financed Ener1’s purchase of Delphi’s lithium-ion battery business. For the first two years, the new venture blew through money. It had an “upside-down balance sheet,” Gassenheimer said. In January 2006, the board of directors asked him to come on as CEO, and he made the leap into his current role as a full-time evangelist for the energy storage business.

  We had had lunch in Manhattan a few months before the event in Indianapolis. He chose the Penn Club, where he is a member, and sitting in the club’s high-ceilinged, wood-paneled dining room he explained to me how the stature of the lithium-ion battery business had grown over the past three years.

  “You can track it this way,” he said. “In 2007, I’d go to Washington and I’d get a bunch of meetings with a bunch of junior energy-policy advisers of various congressmen and senators. And in 2008, it was mostly folks who had to take the meetings—they didn’t want to take the meetings. The Indiana delegation, the true believers”—for example, Congressman Jay Inslee of Washington state’s first congressional district. “By the end of 2008, this was starting to get a lot of attention—big dollars, a $25 billion direct loan program [under the Advanced Technology Vehicles Manufacturing Incentive Program]. All of the sudden it was like, $25 billion for green cars, holy shit, we better find out what’s going on. And this year I’ve met with everybody but the president himself. It’s achieved that sort of rock star status of, they’re calling you: ‘Come to Washington, please come meet with Browner, please come meet with Rahm.’”

  Now, the following January in Indianapolis, I was getting a close look at the business behind the hype. Earlier that morning we had toured Enerdel’s existing cell-manufacturing line, which would soon be expanded and then replicated in the new facility on a much larger scale.

  Even in this all-American factory, the process began with electrode powder imported from China. Electrode powder contains the active raw materials that make a battery run—industrialized, proprietarily tweaked variations on the basic lithium-based compounds that the John Goodenoughs of the world cooked up in their laboratories decades earlier. At Enerdel, in the first step of battery-cell manufacture, a clear liquid solvent is piped into a mixing room, where it’s combined with electrode powder, carbon black, and a chemical binder, and then blended in giant gleaming metal mixers that look like industrial-strength pizza-dough machines.

  Next, a sort of industrial printing press paints the electrode slurry onto long sheets of metal foil—aluminum for the positive electrode and copper for the negative. The freshly painted sheets of electrode material then pass through an oven for curing. Because Enerdel makes prismatic, or rectangular batteries (as opposed to “wound” cylindrical cells), next a set of machines chops the reels of electrode material into book-size rectangles. To ensure that no gremlin particles are hiding on the surface of the electrode, the sheets are then brushed and vacuumed.

  In a climate-controlled dry room, positive and negative electrodes get sandwiched together with a “separator” in between. The separator, which looks like nothing more than a strip of white trash-bag plastic, is forgettable but essential: it keeps the two electrodes from touching, preventing a short circuit while allowing them to pass ions back and forth. These electrode-separator sandwiches are next dropped into plastic pouches, which are then filled with liquid electrolyte and vacuum-sealed shut. The result is a cell, the building block of a battery.

  In another room, the cells are placed in what look like plastic milk crates and inserted into chest-high metal vaults. Here’s where the electricity comes in. First the cells are precharged—given just enough juice to start the chemical reaction. Then the pouch is opened to release any gas that has formed; after that, it’s vacuumed and resealed. Next the cells are charged to 60 percent capacity and aged for fourteen days, to make sure none of them are faulty.

  The final step is a matter of wiring any number of cells together into a finished battery pack. With the help of assembly machines, workers add the cooling and heating mechanisms, the voltage-monitoring circuitry, the thermistors that detect any individual overheating cells. Cells are bundled together to form modules; modules are then bundled together in a case and wired with additional monitoring circuitry. The finished product is the black box of electricity that powers the car.

  From Indianapolis I flew to Boston to visit Yet-Ming Chiang and A123. He picked me up at my hotel on the MIT campus in his Prius, which had been converted into a plug-in hybrid powered by a lithium-ion battery pack.

  Chiang is an energetic man
who enjoys showing off his toys, and on that day we started with his lab at MIT. We parked downstairs in the notorious Frank Gehry–designed Stata Center, an architectural landmark whose roof reportedly leaks water like a tin shanty, and took the elevator to Chiang’s office, where he opened a cabinet of curiosities and proceeded to hand me one mystifying object after another, each one an example of the power of materials science to warp matter through the careful tweaking of its structure and composition.

  Chiang pulled out a ghostly, Starburst-size Jell-O cube of slate-blue substance that looked like frozen smoke—a solid that looked like a puff of gas. This material, called aerogel, is used as insulation in aerospace applications. Next he handed me a football-size chunk of iridescent sodium borosilicate glass, which is used in the mirrors of the largest astronomical telescopes on the planet. Then he held up a small plastic case containing an ivory-hued carving of the Taj Mahal approximately the size of a mouse. It was the work of a 3-D printer, which translates digital instructions into a physical plastic model.

  We walked across the hall to his lab, a greasy chemical shop equipped with argon-filled glove boxes and furnaces that run as hot as 2,000°C, which Chiang and his students use to synthesize materials. Chiang says he has more high-temperature furnaces than anyone else at MIT, and probably more than any lab in the world.

  We hurried down the stairs to Chiang’s ecocar, and as we drove away from the campus, Chiang gave me the brief version of his biography. He is an MIT lifer. He was born in Taiwan in 1958 but raised in New Jersey, Connecticut, and New York, and in 1976, following after his older sister, he began his undergraduate education at MIT, majoring in materials science and engineering. One of his first jobs was sifting fly ash from a coal-fired power plant; the fly ash was to be used in a blue-sky energy-crisis-era project involving magnetohydrodynamic reactors, which shoot high-temperature plasma through a magnetic field to create electrical current. After graduation, he enrolled in a Ph.D. program at MIT, which led directly to a job here as an assistant professor. Aside from a few sabbaticals, he never left academia for industry, partly because by the time he finished grad school, in 1985, large corporations were cutting back on basic research. “When I was a grad student, nobody thought in terms of starting companies,” he told me as we drove along the Charles River toward A123’s headquarters in nearby Watertown. “You couldn’t conceive of taking on the IBMs of the world.” Then came the Bayh-Dole Act, which allowed universities to retain title to inventions that were the product of federally funded research, and to license them to, say, entrepreneurial-minded professors. One of Chiang’s first start-up ventures was American Superconductor, which he cofounded in 1987 with three other MIT faculty members. American Superconductor, which is still in business, was an attempt to use the high-temperature superconductors that in the late 1980s had snared the minds of the world’s materials scientists to build commercial-scale superconducting wires, motors, and other applications.

  Even before the 2002 publication of his controversial Nature paper on lithium iron phosphate, Chiang and his partners had begun spinning that research out into a company. They started with private capital and the $100,000 small-business grant from the Department of Energy, soon won a $750,000 DOE grant and the contract with Black & Decker to supply power-tool batteries, and after that the company grew quickly. Next came two contracts totaling $15 million with the United States Advanced Battery Consortium, an electric-car battery alliance among the Big Three automakers and the DOE that dates back to the electric-car boomlet of the 1990s. Before long they had purchased the Canadian company Hymotion, which sold battery packs for converting conventional hybrids into plug-ins, and built the lithium-ion-powered Killacycle, the quickest electric motorcycle in the world and an excellent PR device.

  A123’s loss to LG Chem in the Chevy Volt battery contest didn’t do any noticeable damage to the company’s spectacular initial public offering, which after a long delay was held on September 24, 2009. The IPO was surrounded by hype; Mad Money’s Jim Cramer said it could be the “hottest IPO of 2009.” The automotive lithium-ion market, Cramer explained, had the potential to grow from some $31.9 million today to $74 billion by 2020. “That’s the incredible growth hedge funds and mutual funds crave, and they’re going to play it with A123,” read a quotation from Cramer on his website. Skeptics pointed out that since its founding, A123 had lost $146 million on earnings of $168 million. But that didn’t matter the day A123 went public. The company began by offering shares at $13.50; by the end of the day that price was up to $20.29, and A123 had raised $378 million. The IPO begat an endless series of bad electrical puns—A123 is “charged up,” delivering a “jolt” or a “shock” to the markets—and brought the company esteemed investors such as General Electric, Qualcomm, and Motorola.

  A few months after my visit, A123 announced plans to move its headquarters to another Boston suburb in 2011, but at the time, A123 central was located in a nineteenth-century cannon factory converted into a high-end office and shopping center called Arsenal on the Charles. It was postindustrial chic compared to the drab Midwestern manufacturing vibe of Enerdel. The executive offices were bright and airy, with young, casually dressed employees and a well-stocked vending machine where everything costs a quarter. “It used to be free, but we find that by charging just a little, people waste less,” Chiang said. Bronze patent plaques and framed photos of company execs with notables such as Jay Leno, George W. Bush, and Rob Lowe lined the wall. A recent addition to the collection showed company president David Vieau at the NASDAQ listing ceremony in Times Square.

  Chiang introduced me to nearly everyone we ran into, including the company counsel, Eric Pyenson, who obviously had no idea that Chiang had agreed to give me a full-day tour, unmediated by PR people or lawyers. “Is this for a piece?” he asked as he shook my hand and gave me a wary look. He quickly launched into ground rules and warnings about what Chiang was allowed to say and told me that he needed to be able to review quotes, to which I said sorry, but no. “Well, then, you’re just going to have to be very aware, very conscientious of what Yet is allowed to say, otherwise I wouldn’t allow him to talk to you at all.”

  Chiang turned to me and grinned. “Sorry, this is actually not why I brought you by here.”

  On Pyenson’s wall were autographed photographs of presidents Reagan, Bush the Elder, and Clinton. Before law school, he worked for the U.S. government. Counterterrorism. Telling stories about his previous professional life seemed to relax Pyenson, who was soon talking excitedly about the prospects for A123 and the lithium-ion business in general. “It reminds me of the dot-com start-ups,” he said. “Now it’s a similar situation.”

  We left his office and walked across the parking lot to the research-and-development plant, which occupied a renovated power plant. With its tall brick smokestack and full wall of windows, the building looked more like a high-end Boston brewpub than a battery factory. The plant was dedicated to making, testing, and characterizing basic active materials and then building them into small batches of cells, which are used for testing and future product development. Unlike Enerdel, in this plant A123 makes cylindrical cells, the format traditionally used in consumer electronics. Instead of cutting electrodes into book-shaped rectangles and then stacking the two electrodes and a separator into battery sandwiches, this process involves feeding the electrode-separator-electrode combo into a giant winding machine, which rolls that long sheet of battery material into individual “jelly rolls,” each designed to fit into an aluminum or steel can. The result is a cylinder-shaped battery that looks like a slightly larger and more industrial-strength version of the common AA.

  In a laptop battery, several of these little cylinders are wired in series to reach the desired voltage. Even the flat rectangular battery in your cell phone or point-and-shoot digital camera is most likely wound—just wound into an oblong shape and then placed in a rectangular container. Winding batteries is arguably faster and cheaper than the cut-and-stack process
for making prismatic cells. The benefit of prismatic cells, however, is that all that easily accessible surface area makes them easier to cool, which is particularly important when you start making cells the size of a paperback book and loading hundreds of them into a car. The process for making prismatic cells is still expensive, though battery companies and carmakers say costs will drop as volumes increase.

  Because A123 got its start making power-tool batteries, the majority of its output is still cylindrical, but this will change over time. In 2008 A123 bought the Korean company Enerland, which makes prismatic cells, and a new stimulus-funded A123 factory in Livonia, Michigan, will adapt the Korean process. The intent of the Livonia plant is to build prismatic batteries for customers worldwide.

  As we left the small winding room, where sheets of electrode material are wrapped into cans for the purpose of building test batteries, we walked by a chrome-colored metal basin splattered with glimmering jet-black nanophosphate electrode slurry, like a bakery-grade mixing bowl splattered with high-test chocolate. Some janitor hadn’t been doing his job. We paused to look at the mess, and Chiang shrugged. “Open one up, and everything in a battery looks like black ink,” he said. He took a few more steps, then paused to clarify: “But it’s black gold.”

  Back in Chiang’s hacked Prius, we drove farther west along the Charles, bound for the small factory in the exurb of Hopkinton, where A123 assembles giant batteries that plug into the electrical grid. As we entered the freeway, I asked Chiang how a small company based in Boston could ever compete with the giant companies of Japan, Korea, and China. “That’s a good question,” he said. The short answer, he said, is that you have to aim for the moon. “You don’t have much of an advantage unless you do something high risk,” Chiang said. “To compete in incremental advancements is not a recipe for success.”