Experts fear U.S. battery companies could meet 'same fate as domestic solar-panel makers'
U.S. battery makers — including A123 Systems Inc., a company that employs 40 in Ann Arbor and 700 in Michigan — face a number of significant challenges, leading some experts to fear "that the fledgling industry could face the same fate as domestic solar-panel makers," the Wall Street Journal reported.
A123 Systems has reduced its Michigan workforce by 30 percent since July.
Photo courtesy of A123 Systems
"Korean and Japanese companies have a big head start in this market," the Journal reported. "They've been making lithium-ion batteries for consumer electronics for at least 20 years—and they've been aggressively moving to leverage that experience to serve the electric-vehicle market."
A123 Systems, which has reduced its Michigan workforce by 30 percent since July, says it has a stockpile of cash and a growing list of customers that will help it thrive. The Massachusetts-based company has said its layoffs are temporary. (Read AnnArbor.com's extensive analysis on A123 Systems' financial health and market challenges.)
"A123," the Journal reported, "says its technology can squeeze more energy out of batteries than competitors' can, allowing it to supply smaller packs that provide the same range as larger ones."
Other battery makers that have had to scale back expansion plans include Johnson Controls, which has a plant in Holland.
Read the full Wall Street Journal story here.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
LarryJ
Tue, Dec 13, 2011 : 5:07 a.m.
A couple of thoughts for those who like free-market solutions: 1. Does that mean ending subsidies for petroleum? Oil depletion allowances, special tax status for oil exploration, cost of 2 wars . . . 2. To make the market fair, users or producers of petroleum should pay the cost to society of the CO2 released into the atmosphere. This is a HUGE problem for us, our children, and our grandchildren. Contributing this pollution should have a cost, either as carbon tax or cap & trade. If you level the playing field, then these industries start to become profitable, then economy of scale makes their products much cheaper. And American workers get hired in the process.
shepard145
Sun, Dec 18, 2011 : 1:59 a.m.
While common pedestrian leftist talking points, none of what you've written is part of the real world. Oil companies do not get "subsidies" other then to deduct their expenses against their profits as any business does. Oil fuels the world but those who believe the human controlled global weather fraud are willing to crash the US economy as a tribute to their ignorance and willingness kill millions of US jobs. To constantly compare those programs that developed nuclear power with folly of "green energy" is flat out stupid - they are nothing alike. What you support is a rejection of economic sources of energy in favor of an eco fairy tale that would push millions of American families into poverty.......and by happy democrat coincidence, dependance on "the government" which equals those of us who still work. Wake up Larry.
shepard145
Wed, Dec 7, 2011 : 12:57 a.m.
Really? For the same reason - that there is no market and no rational reason to challenge gasoline as a fuel? LOL Oh the dance of the fools on a grand scale....
AnnArBo
Tue, Dec 6, 2011 : 1:04 a.m.
Paying for research is one thing, giving billions to a company in production, based solely on ideology is nuts. Ask youself why venture capital firms are not investing, because they know enough to crunch the numbers and they don't work. Solyndra, now this, all because a bureaucrat "thinks" and "wants" it to be the future, and politically it scores points. Government did not put money into researching the internal combustion engine, it was done privatly thru trial and error. Literally hundreds of upstart auto companies came and went or were bought up by sucessful companies, and that market driven process weans out the weak, why because the MARKET dictated what would be in demand and profitable, not a bureacrat with artificial support. Now we have a "bureau" or "czar" making decisions who have no business sense, who obviously don't look at the market of supply and demand. Its no wonder these companies line up for the cash, but it should be obvious once the easy cash is gone so are they.
Kai Petainen
Tue, Dec 6, 2011 : 5:16 p.m.
i actually try not to get political. i believe in trying to find the argument for and against any opinion. so if people are against an idea, i want to know why it is a good idea. if people are for an idea, i want to know why it is a bad idea. the same goes for stocks, if folks like a stock, i want to know why others hate it. if folks hate a stock, i want to know why others like it.
AnnArBo
Tue, Dec 6, 2011 : 4:28 p.m.
Kai, as opposed to our government who make billion dollar decisions based on ideology, and policital reasons? Are you and others defending our noble government that has spent us into 15 trillion in debt and CLIMBING because of their politically driven spending? I keep forgetting, we can have everything we want and need, and make someone else pay for it.
Kai Petainen
Tue, Dec 6, 2011 : 4:21 a.m.
"Ask youself why venture capital firms are not investing, because they know enough to crunch the numbers and they don't work" you raise a really good point -- venture capital firms are always looking for that great project that will deliver results (money)....
Arborcomment
Tue, Dec 6, 2011 : 12:28 a.m.
Thanks Nathan, another excellent follow up. Sad to hear of the total: $2.4 billion in federal money to build batteries for Fisker (current $93k model made only in Finland), Think City Cars, Elkhart, IN (production ceased after 15 vehicles, Company filed for it's fourth bankruptcy), Chevy and Chrysler (we bailed them both out and yet they selected a South Korean firm for the batteries in Volt and LLC).
AnnArBo
Mon, Dec 5, 2011 : 9:16 p.m.
Just about every government program is near bust, and we trust these guys with the vision and business sense to invest in a very speculative unproven private company? We have no one to blame but ourselves for electing these leaders and buying their sales job ideolgy over real economics.
Sparty
Tue, Dec 6, 2011 : 4:20 a.m.
I'm sure you could have done a much better job than the hundreds of economic and green energy experts within the government or available to consult with them. Continue on with the snippets of info pulled from various places. LoL.
Arborcomment
Tue, Dec 6, 2011 : 2:51 a.m.
You're batting one out of three Rob. The National Council of Economic Advisers, and the Federal Reserve had no input on Green Graft. You are correct on the Treasury Department however. They are involved: A) Warned Department of Energy that loan agreements repaying private Solyndra investors in front of government backed funds may be illegal. B) Treasury now also investigating entire deal. Other experts involved as well. Office of Management and Budget and later the Government Accounting Office warned the DoE that they were ill-equipped to effectively administer and provide oversight for the doubling of their budget by Obama in 2009.
Dcam
Mon, Dec 5, 2011 : 9:43 p.m.
Ford Motor Company, Borg-Warner et al. were very vocal a few years ago that it was indeed the government's job to handle electric vehicle projects - shareholders shouldn't take risks. "The reason the government has to do that is because much of this research simply is too financially risky over a long period of time to justify the return," said Wallace." John Wallace, Ford VP R&D, 2001 "...who better to work on it than the government?" " Shareholders shouldn't be paying for research; government should." Chairman/CEO Borg-Warner (didn't archive his name), 2001 Wall Street wants taxpayer monies for private enterprises...odd, isn't it?
Sparty
Mon, Dec 5, 2011 : 9:26 p.m.
So a National Council of Economic Leaders isn't equipped to make economic decisions, with input from experts at the Treasury and the Federal Reserve? Who is? You?
Kai Petainen
Mon, Dec 5, 2011 : 6:25 p.m.
after falling a bit this morning... A123 tweeted this 2 hours ago "More than just cars: Grid market has nearly $2 billion in sales opportunities for A123 over the next few years alone: ow.ly/7OYK9" the world of investor relations is fascinating.... companies can choose which articles they tweet and which ones they don't. in general (in the world of investor relations), it creates this question: - should a company tweet all the news? some of the news? just the good news? - should a company tweet at all? - at what point in the day should the company tweet? after the close of the market? before? during?
Buster W.
Mon, Dec 5, 2011 : 3:52 p.m.
April 2009 "Nobody has what I'm about to sign into law today," Granholm said. "The credits will enable Michigan to be the place to locate if you are a battery cell manufacturer, if you're doing research and development related to batteries, if you are doing pack assembly related to batteries." U.S. Sen. Carl Levin, D-Detroit, who helped insert the $2 billion grant program in the stimulus bill, said "environmentally, economically and in terms of our national security, these batteries will make a huge difference."
Kai Petainen
Mon, Dec 5, 2011 : 2:46 p.m.
Nathan... thanks for covering A123. You're doing a great job with this stuff. It's an interesting story. As a local, I wish them the best... but I can't allow my behavioral bias to get in my way. I wish your stories would get picked up in the Yahoo ticker feeds.
Sparty
Mon, Dec 5, 2011 : 2:30 p.m.
Where are all the blame Obama people today? Or now that the WSJ indicates that that the US could lose this industry without temporary government support, are they taking cover? Should we just give up on this business, along with solar, every new green energy, and any other new business that the Chinese decide to enter? Pretty soon we will have McDonalds and KFC left if that's your thinking.
Sparty
Tue, Dec 6, 2011 : 4:16 a.m.
Well, At least we have one update about the Obama haters .....LoL
Arborcomment
Tue, Dec 6, 2011 : 12:16 a.m.
We're just a little tapped out Rob: this is the third article in the series and we can only yell "train wreck" so many times. In addition, we work during the day.
xmo
Mon, Dec 5, 2011 : 1:39 p.m.
This is what happens when Government gets involved in the private sector. Companies that really do not have a good business plan get funding and then go out of business. What a waste of tax payer money! I guess all of these "Green Movement" products really are just slick marketing!
clownfish
Tue, Dec 6, 2011 : 4:32 p.m.
Don't let facts interfere with your posts XMO.
Adam Jaskiewicz
Mon, Dec 5, 2011 : 1:54 p.m.
Many of them are great technologies but they're really just not quite there in terms of costs. They're still expensive to produce, and thus expensive for consumers to buy. People don't have much money these days so they'll go with cheaper alternatives, even if they might be more expensive in the long run. The fact that these techs need gov subsidies to be competitive means they'll be running on a knife-edge even more so than most businesses, and it isn't hard for them to fall down. The money needs to go into R&D, not subsidizing techs that still need a few years of work to be competitive.
zip the cat
Mon, Dec 5, 2011 : 1:14 p.m.
The average person/family cannot afford to plunk down $40 k plus for a car. I don't care how much gas costs. There not selling them like they thought they would and the battery plants are seeing the results of it. Its like the windmill,anybody got $50 k laying around and $50 k is for starters,then you have all the red tape to get it approved,and all the "not in my backyard folks".
trespass
Mon, Dec 5, 2011 : 1:09 p.m.
If your Chinese born engineers are stealing your secrets and giving them to China it could put a damper on your business. We keep investing huge amounts of taxpayer money in these companies and losing the manufacturing to China. Read more at; <a href="http://www.china-threat.com/" rel='nofollow'>http://www.china-threat.com/</a>
trespass
Mon, Dec 5, 2011 : 3 p.m.
@Ron- my comment is based on information that is not in the story
Ron Granger
Mon, Dec 5, 2011 : 2:51 p.m.
Stealing? You must not have read the story. They've been making lithium batteries in Asia for 20 years. The US is late to the party. President Carter greatly advanced alternative energy in this country 30+ years ago. Reagan undid those efforts and moved us back into the dinosaur oil stone age. So we follow instead of lead. If the barrier to entry for a business is so low that someone can "steal" the idea, the business venture was not sound. When a market collapses or an investment falters, VC's will sometimes unwind the company and *take their money back*. The government should do more of that when their investments and gifts underperform.