Thursday, January 22, 2009

GM Throws A123 From a Moving (Hybrid) Car

I'd missed this news from last week's North American International Auto Show, until an eagle-eyed reader called my attention to it: GM has chosen Korean-made batteries from LG Chem, instead of batteries from A123 Systems of Watertown, Mass., for the first generation of its Chevy Volt plug-in hybrid.

From the AP:

    LG Chem CEO Peter Kim said the company may eventually build cells in Michigan, and it anticipates that its U.S. subsidiary, Compact Power Inc., will add to its 100-person work force in Troy, Mich.

    ...{Volt vehicle line director Tony] Posawatz said GM chose LG Chem because of its flat-cell design that dissipates heat better and stores more energy than competitors' cylinder-shaped cells.
    The competition from A123 Systems Inc. of Watertown, Mass., was very capable, Posawatz said, but "one has to be the lead."


The Christian Science Monitor offers more detail on the decision, in this Q&A with Robert Kruse, a GM executive director for hybrid vehicles. Kruse says:

    "...We selected LG as the cell source for Gen-one Volt; and we are also very intrigued and attracted to some of what A123 has to offer and are continuing to do advanced development with A123 for future applications – just not Gen-one Volt.


The Oakland Business Review has an interesting quote from GM vice chairman Robert Lutz:

    "A123 is still sort of a startup, they're still ramping up, and A123 has been specializing mostly in ...cylindrical cells, which are good with power tools and stuff. What we need here is prismatic, which is flat cells. And LG Chem is just farther along," he said.


John Dodge of Design News asks some interesting questions:

    – GM may have bought itself a problem, too. It has taxpayer loans now and despite all its plans to build battery labs and plants in Michigan and around the world, it can’t escape that fact it selected a Korean and not an American company to make the key component for its batteries. Could this be a problem for the incoming president whose number one priority is getting Americans back to work?

    – What did A-123 know when did they know it? Could its executives have been thinking on Jan. 7 [when they applied for a $1.84 billion government loan to build a new plant] that it was going to be GM’s key battery partner? Was the announcement a Hail Mary pass to convince GM that it would have the manufacturing prowess and capability to operate in the giant auto maker’s back yard? Did GM chose LG Chem in the 11th hour?


Ecogeek has more analysis.

No comments in the media from A123, which filed for an IPO last August so the company is still stuck in its quiet period.

Think that public offering will be happening soon?

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Saturday, November 8, 2008

What If We Didn't Bail Out the Automakers?

I was reading this morning about the pleas from Ford, Chrysler, and GM to be the latest recipients of a couple billion dollars of government largesse...

...and remembering the time in 2004 that I visited GM's R&D headquarters and listened to their execs diss the potential of hybrid technology. From the piece:

    "You always have your early adopters," said Alan Taub, GM's executive director for R&D, about today's hybrid buyers. "Toyota sells as many Priuses as we sell Pontiac Aztecs. Is that a success?" Earlier this year, at the Detroit International Auto Show, Bob Lutz, GM's vice chairman of product development, had said that the company's decision not to make a hybrid car "was a mistake from one aspect, and that's public relations and catering to the environmental movement."

Now, Toyota alone has sold more than one million hybrids, and our indigenous car-makers want a taxpayer hand-out.

I know it'd cause major pain in Michigan (and beyond) if one, two, or three of these companies went under.

But could it also give rise to new kinds of car-makers and parts-makers? If GM went bankrupt, would some private equity firms buy the Chevy Volt project, keep it alive, and do a better job of bringing it to market than GM? Would other manufacturing companies spring up in old Ford plants, hiring former Ford workers? Would more companies like Tesla Motors spring up, and take advantage of some of that existing infrastructure and worker expertise?

I tend to think they would.

But maybe that's because I was at the Bedford, MA headquarters of ZINK yesterday morning.

This is a company that bought all of its intellectual property from Polaroid (and then continued to develop it). Zink bought most of its prototyping and manufacturing equipment from Polaroid (for 50 cents on the dollar). They bought an old Konica-Minolta plant in North Carolina to make their product. (ZINK designs ink-less mobile printers, and they produce the paper used in those printers.) The bulk of their employees once worked at Polaroid.

Would ZINK have ever happened if the government had bailed out Polaroid and kept it on life-support?

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