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LG Chem has won the battery contract to produce battery cells for the Chevy Volt. The lithium power cells, developed by LG subsidiary Compact Power, are similar to the cells shown here. While the cells are made overseas, GM will manufacture the battery packs domestically in Michigan.  (Source: EV World)
GM makes big battery announcements at NAIAS 2009

GM finally resolved its battery quandary, announcing at the North American International Auto Show this week that it was selecting Korean battery maker LG Chem's batteries for the first generation of Chevy Volt.  The decision puts to rest months of uncertainty between LG Chem and its competitor for the contract, a team of A123Systems Inc. of Massachusetts and German auto supplier Continental (formerly part of Siemens).  LG Chem is teamed with its Troy, MI-based subsidiary, Compact Power, which helped design the cells.

While the cells will be produced overseas, the Volt's battery packs will be assembled in Michigan.  The batteries will likely be produced in a retooled midsize facility.  As automotive assembly tooling is not very applicable to manufacturing the packs, they will likely need a freshly tooled line.  The tooling cost to GM to achieve a volume of hundreds of thousands of packs could be $1B USD or more, according to a conversation DailyTech had with GM representatives.

GM's representatives said the decision to pick LG Chem over A123 was simple business, and that GM will continue to support A123's growth and development, calling the company a key business partner.  According to these representatives, the key reason why A123 was not selected was the company's inability to hit mass-production scales by GM's 2010 launch date for the Chevy Volt.

Bob Lutz, GM's vocal vice chairman, stated, "A123 is still sort of a startup, they're still ramping up, and A123 has been specializing mostly in ...cylindrical cells, which are good with power tools and stuff. What we need here is prismatic, which is flat cells. And LG Chem is just farther along."

He continues, "And this is one of the things why we say, if we're serious about the electrification of the automobile, as part of the national energy policy we do need government support for advanced battery development, which of course Japan has... LG Chem has massive support from the Korean government in terms of a whole research campus was paid for by the Korean government because Korea recognizes that advanced battery technology is a key component of the country's competitiveness."

Prabhakar Patil, Compact Power's CEO, had no harsh words for his company's competitor, stating, "It's a business decision.  Some people try to make it into an emotional issue but it really isn't. It's driven by the volume.  The bigger question is actually infrastructure. The labor content in the cell is relatively low. So as a result, there is flexibility. But in order to make that kind of an investment, not only for LG Chem but for suppliers for materials, etcetera, that's a significant level of investment and therefore you need to have enough of a business proposition, sustainable business, and of course infrastructure."

He comments that the U.S. currently does not have the infrastructure necessary to support internal cell production, but is moving toward such a manufacturing base.  He comments, "That's something that is evolving and I have to give state of Michigan a lot of credit for what they are trying to do to support that.  That's something we continue to evaluate and when the time is right we are open."

Competitor A123 currently manufactures its lithium ion battery cells in China, but it has applied for federal grant money to build a plant in southeast Michigan.  It hopes that bringing its production to the U.S. and building a large capacity will help it win a next generation Chevy Volt battery contract.

Ultimately, much of the jobs resulting from GM's final battery plan will be created in the U.S. as one of the most intensive parts of manufacturing battery stacks, is assembling cells, their cooling equipment, and other necessary equipment together into a finished product.



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Why not two suppliers
By CardPuncher on 1/13/2009 7:09:54 PM , Rating: 2
Why be beholden to just one supplier, seems like you would want two or more not only for competition, but in case one company gets wiped out by an asteroid, or more likely has a disruption in meeting demand due to a labor strike.




RE: Why not two suppliers
By meatless on 1/13/2009 8:30:41 PM , Rating: 2
Because they make different types of cells, so the battery packs would not be the same, and they will engineer the Volt to a specific pack?

Because if an asteroid wipes out korea, we have bigger problems than the batteries of korea?

Because they probably won't have a labor strike in korea? :P


RE: Why not two suppliers
By Spuke on 1/14/2009 12:35:50 PM , Rating: 2
30k Volts per year. Don't really need two suppliers.


RE: Why not two suppliers
By ianweck on 1/14/2009 6:03:49 PM , Rating: 2
60K first year, 100k the next. I forget where I read that now. You're right though, hardly worth the effort of getting two suppliers on the same page regarding specs. I wouldn't be surprised if the gen2 has two or more suppliers though, if it ever gets produced.


RE: Why not two suppliers
By Spuke on 1/14/2009 6:54:11 PM , Rating: 2
Oh, they upped the production? Hmmm. Interesting. Speculation alert!!!! I wonder if GM did that because the truck market imploded? Anyone know what GM's expected profit is on the Volt?

Answered my own question. It seems GM is NOT expecting a profit on the Volt unless the batteries last longer than expected.

http://tinyurl.com/7cfwbr

They don't expect a profit until 2016 when the 2nd gen is in production.

http://tinyurl.com/85rs6u


RE: Why not two suppliers
By ianweck on 1/15/2009 2:33:15 PM , Rating: 2
Here's some info on how GM hopes to make up for the loss on each Volt sold, looks like profits might hinge on whether or not the concept Converj gets produced:

http://gm-volt.com/2009/01/15/video-exclusive-gm-v...

"Lutz said he does feel Volts wouldn’t sell as well if gas stayed at $1.50 per gallon, and that at first they won’t make GM a profit.
He said the Converj would cost only slightly more than the Volt to build but yet could be sold at double the price and actually make money for GM, and that’s one of the reasons why he said he’s so enthusiastic about bringing the Converj to production."

BTW this is the site where I read about the production numbers, just don't have time to dig for the article right now.


RE: Why not two suppliers
By Spuke on 1/15/2009 4:08:13 PM , Rating: 2
quote:
BTW this is the site where I read about the production numbers, just don't have time to dig for the article right now.
No problem. That's very much for that info. I'll pay more attention to that site.


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