Celgard capitalizes on automotive battery demand

DETROIT (Nov. 19, 4:10 p.m. ET) -- Celgard LLC began making film separators for rechargeable lithium-ion batteries 20 years ago in North Carolina.

Now the company is in the right place at the right time as the North American auto industry gears up for an electric vehicle future, one that will include the makers of vital components like Celgard and its porous membranes.

The company will expand production capabilities in Charlotte, N.C., and also finalizing site selection for a second plant in the southeastern United States to meet the expected demand for lithium-ion auto battery packs. Celgard expects to spend nearly $100 million on its expansion, with the company matching a $49 million grant through the U.S. Department of Energy -- part of a package of grants announced this summer to help prepare the U.S. industry for electric vehicle and hybrid vehicle production.

“There’s been a lot of talk about the vehicles, but what’s also important is that we have a supply chain in place here,” said Mitchell Pulwer, vice president of Celgard, during a Nov. 16 interview in Detroit. “You have to be able to create the batteries here and create the critical parts for those batteries here.”

Celgard makes polyolefin and polyethylene micro porous membrane films in both monolayer and tri-layer formats that are at the heart of lithium-ion batteries. The film is located between the anode and cathode elements, part of a jelly roll like spiral interior at the center of each battery cell. Most of its membranes, as thin as 12 to 16 microns, are made in Charlotte, N.C., and shipped to users throughout North America, Asia and Europe. Celgard generates about $100 million in sales annually. It is a wholly-owned subsidiary of Polypore International Inc.

It supplies the film to a wide range of battery makers, including Johnson Controls-Saft Advanced Power Solutions — the joint venture that is supplying lithium-ion batteries for Daimler AG’s lithium-ion hybrid Mercedes S class hybrid sedan — making Celgard one of the early suppliers for mainstream production vehicles using the batteries. It also produces film used in a variety of consumer electronics, cell phones and other applications.

Lithium-ion batteries offer users the chance to store more power in a smaller package than traditional batteries, although the auto industry has had to fine tune batteries to stand up to the wear and tear of vehicle use. Lithium-ion cells are starting to make their appearance now, though, including on Daimler’s hybrid and in the all electric Tesla Motors Inc. Roadster.

The real transition for the auto industry will come starting in late 2010 when General Motors Corp. and Nissan Motor Co. Ltd. plan to introduce all electric vehicles, the Chevrolet Volt and the Nissan Leaf.

GM has been encouraging suppliers to create a North American supply chain that can provide the essential elements of its Volt and other cars in the future. The bulk of the lithium-ion battery production is currently focused in Asia.

Celgard is one of a few companies already up and running and making those battery components in North America. Its 300-employee operation in North Carolina ships separators to battery producers in Asia as well as Europe and North America. The federal grant helped accelerate expansion plans, which will start by converting a 121,000-square-foot warehouse to film production and eventually add the second site, Pulwer said. The company also expects to add about 200 jobs.

The company produces film in large rolls which are later cut to customers’ specifications. Its films can be produced to precise orders or customers can buy standard configurations. The film is coated and installed into battery packs by Celgard customers.

Celgard produces PP and PP/PE multi-layer separators in North Carolina. It purchased Yurie-Wide Corp. of Ochang, South Korea — a manufacturer of PE films — in May 2008.

“We believe with our capacity and acceleration of production, we are going to be able to meet the needs the industry has,” Pulwer said.

Celgard is not alone in chasing the lithium-ion prospects. The Department of Energy has targeted more than 20 different companies nationwide to receive grants through its $2.4 billion initiative to create a battery infrastructure.

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