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Battery Maker Claims a Breakthrough

By BILL VLASICand MATTHEW L. WALD

DETROIT — Lauded during a visit by President Obama, A123 Systems was supposed to be a centerpiece of his administration’s effort to use $2 billion in government subsidies to jump-start production of sophisticated electric batteries in the United States.

Stephen McGee for The New York Times

Joe Parker, left, and Dwayne Washington at the A123 plant in Livonia, Mich.

Stephen McGee for The New York Times

Prismatic battery cells are stacked at the A123 plant in Michigan. The company makes lithium-ion batteries for electric cars.

Stephen McGee for The New York Times

Ronnie Slaughter at the banding station for a rechargeable battery that will go into a 2013 model of an all-electric vehicle.

Instead, the company, which makeslithium-ion batteries for electric cars, has stumbled along with the rest of the nascent industry and now threatens to give more ammunition to critics of the president’s heavy spending on new energy technologies.

A123 had to cut workers at its new factory in Livonia, Mich., financed in part with the promise of a $249 million government grant, after its battery for one new electric vehicle faltered and required an expensive recall. Completion of the factory has been delayed. The company is running short of money and has warned that unless it raises more cash from private investors, it might not be able to stay in business.

Yet as much as A123 represents the risks of the government’s battery technology program, it also represents its promise. On Tuesday, A123 Systems will unveil a new battery technology that the company says is a breakthrough in the industry.

The advance uses a new chemistry that could permit the creation of a simpler, lighter, longer-lasting battery pack that does not require a system to cool or heat it.

The success or failure of the new technology may well determine the fate of A123. It will also render an early verdict on Mr. Obama’s broader push to promote electric cars and build a domestic industry to develop and manufacture advanced batteries to run them.

The president’s prediction of a million electric cars on the road by 2015 seems unattainable, given the tepid demand for the first models on the market. So far this year, combined sales of the Chevrolet Volt plug-in hybrid and Nissan Leaf electric car total less than 10,000 vehicles. The slow sales have already become a campaign issue, and the failure of the solar-panel company Solyndra has also drawn intense criticism of the administration’s clean-energy subsidies.

In response to the Solyndra bankruptcy, which cost taxpayers about half a billion dollars, the Department of Energy has tightened controls on loans related to electric cars and other fuel-saving technology. In the case of Fisker Automotive, which received the defective A123 batteries, the government froze its loans when the company missed production schedules.

Executives of A123, which is based in Waltham, Mass., say the company has gotten off to a slower start than anticipated because the market for electric cars has failed to grow. The company reported a loss of $125 million in the first quarter of this year, as revenues dropped 40 percent from the year earlier.

“It’s been softer than what we and everyone else expected,” said David Vieau, chief executive of A123.

Yet the major automakers remain committed to electric vehicles so far, and G.M. has given A123 the contract to supply batteries for the Chevrolet Spark, an all-electric minicar due next year.

The government, for its part, recently gave A123 an extra two years to meet production targets at its Michigan factory and earn the full $249 million grant, which is being disbursed in tranches. So far, only about half the money has been given to the company.

In addition to the factory grant, A123 has received about $14 million in Energy Department money for research and development.

The government may have financed the company because “these guys have some new chemistry, some new ideas,” rather than the ability to commercialize the product, said Professor Prashant N. Kumta, a materials science expert at the University of Pittsburgh, who began working on lithium-ion batteries in the 1990s.

He said that A123 had been “a bit of a disappointment” because it had not put much product into the market.

The Energy Department said it would not comment on the viability of individual companies.

But a spokeswoman, Jen Stutsman, said, “The market for electrified vehicles is expected to triple by 2017 — which is why automakers in every part of the world are racing to introduce new models of hybrid and electric vehicles.”

“The investments being made today will help ensure that the jobs that support this rapidly growing industry are created here in the United States,” she said.

Supporters of the energy programs say it is unrealistic to expect every government-backed company to thrive immediately.

“We should be willing to take on some of the risks for the new energy economy, even if some of these start-ups fail,” said Representative Diana DeGette of Colorado, the ranking Democrat on the House Energy and Commerce subcommittee that investigated Solyndra.

But Mitt Romney, the presumed Republican nominee for president and former governor of Massachusetts, has attacked subsidies to energy companies as a waste of taxpayer dollars. “When Mitt Romney is president, government will stop meddling in the marketplace,” a Romney spokeswoman, Andrea Saul, said on the campaign’s Web site.

A123 Systems is a prime example of how a promising venture can bog down in the harsh realities of the automotive marketplace. Founded in 2001, the company has been primarily focused on making lithium-ion battery packs specifically for cars, like the Fisker Karma and a forthcoming all-electric version of the Chevrolet Spark, a minicar made by General Motors.

But the company stumbled when it was forced to recall potentially defective batteries planned for use in the Fisker vehicle. And with the future market for electric cars in question, A123 might not survive solely on batteries for those models.

Instead, A123 is now hoping that the new technology it is unveiling Tuesday, called Nanophosphate EXT, will help it enter new markets. The company says the new electrolyte chemistry eliminates the need for heating and cooling in extreme temperatures. That would avoid the addition of costly and heavy temperature-management equipment and prolong the life of the battery.

The technology could be used to produce batteries for telecommunications equipment, military vehicles and hybrid gas-electric cars that employ start-and-stop engine systems. It also could yield batteries that could be used to replace the millions of ordinary lead-acid batteries in cars currently on the road.

“It’s a hedge against the market for electric vehicles,” Mr. Vieau said.

The company is hoping that the promise of the new technology will help persuade investors to back a $50 million convertible debt offering by the company.

One battery expert said the new technology’s extended life span could have an immediate impact on the luxury-car market.

“The car company can advertise that this lithium-ion battery is going to last the life of the vehicle, with no need for replacement,” said Ahmad A. Pesaran, an engineer at the government’s National Renewable Energy Laboratory in Golden, Colo.

Potential automotive customers can test samples later this year, with production scheduled to begin in the first half of 2013.

 

Bill Vlasic reported from Detroit, and Matthew L. Wald from Washington.

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Xtreme Power Guns For Electric Car, Neighborhood Energy Storage Markets

Xtreme Power, which has shown considerable success in selling its energy storage systems and services to utilities, is now eyeing the electric car market and developing not just a battery system for it but the entire drivetrain.

The Texas company plans to announce the new drivetrain later this year, said its founder and chairman, Carlos Coe, during a video interview at PV America West in San Jose last month (see below). The aim for the electric car market brings the company back to its roots: Xtreme Power’s technology came from a joint venture between Ford Aerospace and Tracor in the 1990s for an electric car market that later fizzled.

“The goal is not just to throw another battery out there but to put out a better drivetrain,” Coe said.

Xtreme Power, backed by venture capital, is targeting larger vehicles such as SUV and trucks, fuel guzzlers where greater power savings can be achieved more quickly with more efficient technology. The company plans to sell its drivetrain for after-market conversion of vehicles initially while it works on convincing carmakers to use its technology in their assembly lines, Coe said.

The company actually has posted some information about a drivetrain on its website, though it’s not easily found. There is a private video that requires a password to access, but below it is a PDF file that lists some specs.

Founded in 2004, Xtreme Power has been targeting the emerging market of grid energy storage, and it has lined up quite a few energy storage projects with utilities who want to figure out ways to integrate renewable energy into the grid. With the growth in wind and solar energy, utilities are worried about the impact of these energy sources – which don’t produce a steady stream of power in all hours – on the stability of the grid, which must maintain a balance of supply and demand to work well. The output of a solar powerproject can be more variable than wind, Coe noted.

Customers that have turned to Xreme Power include Duke Energy and a 36 MW systemnext to a wind farm that will come online later this year, Xcel Energy and a 1MW projectfor a solar technology testing center, several wind and solar farm developers with projects in Hawaii and a project announced just yesterday: a 3MW project with Kodiak Electric Association in Alaska to store power from a wind farm.

Xtreme has been deploying its energy storage systems in the field for several years now, and that has given it operational data to show its performance and to some extent the reliability of its technology. It recently opened an office in Beijing to target the grid storage market there, Coe said.

China has been a magnet for battery and other energy storage technology developers because of the government and their state-owned utilities are keen on using energy storage to complement the country’s own growing amount of renewable energy.  Lithium-ion battery makers such as A123 Systems and Boston-Power all are targeting the Chinese. Boston-Power has gone as far as moving the bulk of its operation, including manufacturing, to China.

Xtreme’s technology is a bit of a mystery. It’s never disclosed publicly the core materials used for the battery cells, which the company’s website describes as using alloys such as lead, copper and tellurium. It’s a “dry cell” because the cells are electrically isolated from one another inside a battery pack and contains an electrolyte that isn’t a liquid, gel or paste, Coe said. Liquid electrolytes can be conductive and flammable as they react with other components of the cell, a problem that has inspired a number of startups such as Seeo to develop solid-state electrolytes.

Xtreme Power also has designed a current collector, which is used to ferry electricity out of the cell, that is made with ballistic-grade fiber and topped with a “special alloy,” Coe said.

“If you stabilize the electrolyte you get a very predictable, stable battery response,” Coe said. “All cells are electrically isolated from each other. It’s a very different than any other types of batteries that I know of.”

While the battery technology has invited speculations, Coe said the bulk of the company’s technical expertise is actually found in the software and hardware that control the performance of the overall battery system and its integration into the control systems of a utility or power project developer.

The company makes money in several ways. It sells the equipment to customers who can operate the systems themselves or hire Xtreme to do it. It also leases the equipment or sells service agreements that has Xtreme owning and operating the systems for customers.

A 1.5 MW system (not just the batteries) retails for $1.6 million, or roughly $1,000 per kilowatt, Coe said. That price point makes Xtreme’s equipment competitive with a peaking power plant that is turned on to supply power during peak demand, Coe said. This system can produce 1 MWh of energy, and the retail price for replacing the battery pack in the system is $360,000, or $360 per Kilowatt-hour, Coe said.

Later this year, Xtreme plans to launch smaller systems for “community storage” or even energy storage for homes and businesses. Home and business owners may want to bank the solar electricity from their rooftop panels, and utilities are looking at using energy storage to help them regulate the grid’s health and provide backup power during blackouts. Xtreme will be launching systems from as small as 5 KW to hundreds of kilowatts each, Coe said. Utilities are looking for systems in the 25 KW range.