Alliance seeks funds to create Li-ion cell fab

Still in its still early days, the group of fifteen companies has yet to fix its terms of membership, write a business plan and begin its campaign for funding.

The alliance is made up of mainly small and medium sized companies who make batteries or battery materials. Many are venture-funded startups with proprietary technology for Li-ion cells.

The alliance, first disclosed by a story in the Wall Street Journal aims to build a plant in the United States to make Li-ion cells, catching up with work in Japan, Korea and China. Individual companies would provide the cell designs, purchase the finished cells and have them assembled into finished batteries in a model parallel to that of TSMC or other chip foundries.

Boost U.S. market
"Today we have no large-scale Li-ion manufacturing in U.S., so all cells with minor exceptions have to be imported from China, Korea or Japan where governments have subsidized these industries for many years," said Jim Greenberger, an attorney with a background in clean technology at Reed Smith LLP who is organizing the alliance. "The U.S. government has to step up and do the same," he added.

Such a facility could not only give the United States an edge in what is seen as a leading battery technology, "it could help resurrect the U.S. auto industry," he said.

The call for a U.S. manufacturing capability came out of a Chicago conference on battery technology Greenberger ran for prospective clients in June. "I thought rather than organize another conference, I should help organize the industry," he joked.

The group aims to move quickly. It had its first meeting November 21. It hopes to define its membership terms and draft a business plan within the next two weeks.

"We've been told Washington is very serious about using green tech as a basis for an economic stimulus package," said Greenberger. "If there is going to be an initiative something needs to be on the Hill in January," he added.

Sanford L. Kane, a former IBM executive and one of the founders of the Sematech, is acting as a consultant for the alliance. Kane was the CEO of U.S. Memories, an alliance of chip and computer makers that tried to build a DRAM fab in the late 1980's to compete with Japanese vendors but failed to attract sufficient investments.

Kane said the battery alliance is taking a similar approach of building a for-profit factory shared by members. But the members of the current effort are generally small companies who can't afford the billion dollar price tag of the plant and need government support.

"Exactly what form the government assistance takes is still up in the air," said Kane who now acts as an industry consultant and sits on a variety of company boards.

Facing the challenges
Kane said he hopes the alliance does not become part of discussions on any broad economic stimulus package but goes after other funds, ideally in existing programs. He mentioned a Department of Defense program on advanced batteries that calls for $750 million to set up manufacturing capabilities.

"We could be the answer these guys prayers," said Kane.

Li-ion technology is mainstream in notebook computers and cellphones today. But versions for large scale systems such as electric and hybrid cars are still in development.

The alliance includes several Li-ion startups with unique cell designs such as Actacell, All Cell Technologies, Envia Systems, MicroSun Technologies and Mobius Power. Other members include a handful of companies such as 3M that make battery materials and some establish makers of batteries of embedded systems.

One major omission from the list is A123 Systems, an emerging Li-ion maker working on a battery for the Chevy Volt from General Motors expected to debut in 2010.

"I don't think you should read anything into that," said Kane.

"They have is an incredible amount of funding, and probably have the impression they can go it alone," he added. "Once we have a detailed business plan, I have a feeling A123 and others will see there is no downside for participating in it."

Another Li-ion startup, Boston-Power, is also not a member. The company is currently focused on a unique design for notebook computers and recently struck a deal with Hewlett-Packard to use its batteries. However, it is also conducting research in large-scale batteries suitable for cars.

Kane said the alliance has done an analysis of the technical issues, concluding that companies with significantly different Li-ion cell designs can be made on a common set of processes and equipment. Whether the group will also find it needs a packaging facility analogous to ones used by the chip industry remains to be seen.

The group may also face challenges with lawmakers uncomfortable backing an effort for a specific technology. "Doing nothing is an industrial policy, but it's the wrong kind," said Kane.

"A small, fragmented battery industry will not long survive in the face of determined Asian competition," says Ralph Brodd, a battery consultant working with the alliance. "Other countries are investing heavily in the manufacture of Li-ion cells. Those countries understand that whoever makes the batteries will one day make the cars," he said.

- Rick Merritt
EE Times