Can Battery Manufacturers Survive in the U.S.?

What if, in response to the steadily rising tide of Chinese, Japanese, and Korean lithium-ion battery production over the past two decades, a U.S.-based company decided to open up shop and manufacture Li-ion cells? Could it be competitive? A recent study published in the Journal of Power Sources attempts to estimate the cost of such an endeavor and compares it to the cost of the same exact venture in China. The conclusion? Well, maybe.

Examining the production costs involved in the widely-popular, boringly-named 18650-size li-ion cell?commonly found in rechargeable flashlights, older laptop batteries, and the Tesla Model S?battery industry researchers Ralph J. Brodd and Carlos Helou estimate that it would cost 30 cents more per cell to produce 35 million batteries in the U.S. as opposed to doing it in China. (Ramping up the production ten-fold to 350 million batteries reduces that difference to 7 cents per-cell.) The disparity might seem almost negligible, but, over a full year of production, it would cost a U.S. factory $10 million more to produce those 35 million.

Although the numbers seem to say that opening a U.S.-based battery manufacturing operation, right now, will be more costly than opening one overseas, the researchers argue "that this cost differential is not significant enough to influence a siting decision." That conclusion is based on a number of future hypotheticals: Rising wages for highly-skilled Chinese workers, reduced costs due to increasingly automated production lines, as well as a few intangible benefits such as "innovative synergies that may develop when R&D personnel have convenient access to the factory floor," plus the added bonus of a "Made in the U.S.A." tag?however attractive that may be to global automotive companies.

It's nice to fantasize about a return to U.S. manufacturing dominance (the country is still fourth in the world, by the way), but domestic Li-ion battery-makers aren't faring well at the moment. A123 systems, considered a poster-child of U.S. renewable manufacturing after receiving a $249 million federal grant, went bankrupt late last year and was bought by the Wanxing Group, a large Chinese auto parts maker. Currently, Johnson Controls seems to be the strongest U.S. Li-ion battery producer?with an expanding plant in Holland, Mi.?however, their latest project comes by way of a $45 million Department of Energy grant to supply Li-ion batteries for 120 municipal hybrid trucks. Tesla Motors, whose CEO is a driving force behind electric vehicles and bastion of American entrepreneurship, exclusively uses Panasonic li-ion cells made in Japan in the battery pack of the Model S.

Source: http://www.popularmechanics.com/cars/news/auto-blog/can-battery-manufacturers-survive-in-the-us-15632971?src=rss

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