The Volt is not a fluke. Neither is Nissan's future Leaf all-electric vehicle, set to begin production in both the U.S. and Japan, or a planned plug-in version of Toyota's Prius hybrid.
Auto suppliers need to ensure now that they are ready for the next generation of cars and trucks, which will be around for a long time.
“This is not a Beta vs. VHS issue,” waiting on the sidelines for a winner, warned Sandy Stojkovski of engineering and consulting group Ricardo Inc. “The electrification of the vehicle is coming.”
Stojkovski is director of total vehicle fuel economy and the U.S. government market sector for Ricardo, based in the Detroit suburb of Van Buren Township, Mich.
The issue is quickly becoming which companies will be part of the new supply base that will produce everything from thermoplastic film used in lithium-ion battery separators to plastic-encased wiring to control systems and even the next generation of batteries.
“Right now a lot of the center of gravity in battery manufacturing is in South Korea, in China and in Japan because that's where the batteries were first used,” said Ann Marie Sastry, a professor at the University of Michigan and CEO of battery technology company Sakti3, both in Ann Arbor, Mich.
“Now, with government support, we're moving the battery center of gravity to the U.S.,” she said at the Center for Automotive Research's Management Briefing Seminars, held Aug. 4-7 in Traverse City.
Detroit-based General Motors Corp. is likely to be the first major carmaker to start building a mass-production all-electric car — the Chevrolet Volt, promised to hit the market late next year. In 2011, it will introduce a plug-in hybrid Buick crossover that will use lithium-ion batteries. The Buick represents the last car in GM's “first generation” of electric vehicles, Vice Chairman Tom Stephens said. Research for the next generation of electric cars is already well under way.
At the same time, Tokyo-based Nissan Motor Co. Ltd. has said it will introduce its own all-electric car, the Leaf, in 2010, promising it will get 100 miles on a single charge, compared with the Volt's 40 miles. At first the car will be made in Japan, but the firm has committed to launching a second production line, in the U.S.
Toyota Motor Corp. of Toyota City, Japan, has talked about bringing production of its Prius hybrid to the U.S. as well.
That production, along with $2.4 billion in grants the Energy Department announced Aug. 5, will guarantee that high-value manufacturing will be moving in.
U.S. manufacturers are moving from assembling battery packs now to producing lithium-ion battery cells — including treating the plastic film separators inside each pack — with companies like Compact Power Inc. investing $300 million to $400 million to build new cell-manufacturing plants. Currently most cell production is in Asia, although a handful of companies including Celgard LLC of Charlotte, N.C., already produce cells in the U.S.
Entek International LLC of Lebanon, Ore., will build new polyethylene separators through its partnership with Milwaukee-based battery maker Johnson Controls Inc. and its JCI/Saft joint venture.
“As we go down the value chain to cell assembly [and] electrodes, we will eventually get to materials in terms of investment,” said Prabhakar Patil, CEO of Troy, Mich.-based Compact Power.
Lithium-ion cells will not be the end of the electric-car picture, however. Both Toyota and GM are charting future vehicle growth that will include fuel-cell vehicles, which also rely on plastic films and components.
Toyota has set 2015 for its first mass-produced fuel-cell vehicle, said Justin Ward, advanced powertrain program manager with Toyota's North American technical center. Infrastructure improvements both in car production and in hydrogen and electric powering centers will continue beyond that.
“We expect that after 2030, we will see oil- and gas- [fueled cars] decrease, especially compared to electric and fuel-cell vehicles,” he said.
It's not just the car that will need new parts as the electrification industry takes off. GM CEO Fritz Henderson said he has heard from entrepreneurs looking at ways they can provide auxiliary parts for the Volt with businesses like charging stations. GM also debuted a charging pack for the Volt that uses many of the same materials as consumer electronics.
“We are going to have partnerships outside the traditional [supplier] nexus,” said Bob Kruse, global executive director for GM vehicle engineering, hybrids, electric vehicles and batteries.
Copyright 2009 Crain Communications Inc. All Rights Reserved.