Gov. Jennifer Granholm with A123 executives.

Gov. Jennifer Granholm with A123 executives.

Massachusetts-based A123 Systems Monday formally opened what it called the largest lithium-ion battery production plant in North America.
A123’s new Livonia plant is expected to expand A123’s manufacturing capabilities by up to 600 megawatt-hours per year when fully operational, contributing to the company’s plan to expand global final cell assembly capacity to more than 760 megawatt-hours a year by the end of 2011.

The opening of the Livonia factory comes just more than a year after A123 was awarded a $249 million grant from the United States Department of Energy as part of the American Recovery and Reinvestment Act to help the company ramp up U.S. manufacturing capabilities to meet what it says are market-driven demand for its  technologies.

Monday’s opening ceremonies were livened up by a phone call from Presidnet Barack Obama.

“This is about the birth of an entire new industry in America,” Obama said. “An industry that’s goning to be central to the next generation of cars. It’s going to allow us to start exporting those cars, making them comfortable, convenient and affordable.”

The administration has cited the battery industry as one of the success stories of its $814 billion stimulus program. The president has said that in coming years, 40 percent of electric vehicle battery production will be done in the United States. In 2002, almost all of that production was done in Asia.

“I do not see a decline in manufacturing as inevitable for the United States,” Obama said. “I know you don’t either. We’re starting to reverse that slide. Anybody who doubts that, has to go and see what you guys are achieving.”

Energy Secretary Steven Chu was at the dedication ceremonies, defending the Obama Administration’s support for the electric vehicle battery industry.

“There are people who think the economy can run on white collar and service jobs, like financial services,” Chu said. “But I think they are wrong.  We can and must make high quality products in the United States.”

The A123 plant is the largest of 16 electric vehicle battery plants  in Michigan being built with the help of federal stimulus money and state tax breaks. Backers say this will create 65,000 jobs long term. But there are those who are skeptical.

“We may be seeing a glut of batteries and electric vehicles in the near future,” said Mike Omotoso, who tracks alternative powertrains for J.D. Power and Associates.

Omotoso sees much of the electric vehicle market being pushed by the government, and is concerned about consumer interest.

“From the consumer perspective, consumers want value for the money,” said Omotoso, in an interview with WWJ AutoBeat reporter Jeff Gilbert. “Right now with gas being less than three dollars a gallon and electric vehicles being expensive initially, we don’t see a large demand for electric vehicles in the short term.”

Gov. Granholm told Gilbert at this morning’s dedication that she understands that issue, and feels the government has to help create the market for electric vehicles.

“Clearly we’ve got to work on creating that demand,” said Granholm.  “When I said ‘we’, I think the federal government has to keep up the    incentives that will bring down the initial cost of that battery.”

Incentives will help make the first electric vehicles affordable, keeping the all electric Nissan Leaf in the $25,000 range, and the Chevrolet Volt, with its onboard recharger, in the $30,000 range.

But those who are developing electric vehicles know that the incentives are just a short term solution.

“Our goal is to prepare for a world when there isn’t the amount of government support that we have today to establish the marketplace,” said Mark Perry, director of product planning for Nissan USA. “You have to do it through scale.”

Perry said Nissan is gearing up to build 500,000 electric vehicles a year worldwide, 150,000 of them in the United States.

Others in EV development say that moving battery production to the U.S. is a big help in keeping costs down.

“In the end, if we don’t do this, the cost of electrification will far exceed customers’ability to purchase it,” said Mickey Bly, who heads General Motors electric vehicle operations.

President Obama told the battery plant dedication that helping create a market for electric vehicles is all about keeping the U.S. a center of auto production: “When folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: ‘Made in America.”

A123 president David Vieau said his company plans “to create thousands of jobs in greater Detroit and plan to continue our expansion in the area as we do our part in helping the U.S. emerge as a global leader in the production of advanced lithium ion batteries.”

A123 will focus on manufacturing prismatic cells and systems at the new 291,000-square-foot Livonia plant. The factory is designed to enable the complete production process, including research and development, manufacturing of high-value components, cell fabrication, module fabrication and the final assembly of complete battery packs ready for vehicle integration.

As part of its continuing U.S. manufacturing ramp up, A123 also plans to open a coating plant in Romulus, expected to come on line during the first half of 2011.

In addition to the DOE grant, the company received $125 million in state incentives from Michigan as part of its 21st Century Jobs Fund to help finance the plants.

A123 is the first major U.S.-based battery manufacturer to receive TS 16949 certification, an international quality management standard emphasizing defect prevention and consistency in the supply chain, for its cylindrical lithium ion cells for automotive applications.

A123’s growing list of customers includes BAE, Eaton, Fisker, Navistar, Shanghai Automotive Industry Corp. and other global automakers and heavy-duty vehicle manufacturers. The company’s  technologies are also being implemented in a wide variety of commercial products, and the company has also delivered more than 20 megawatts of its Smart Grid Stabilization Systems to customers worldwide, making A123 the world’s largest producer of lithium ion batteries for ancillary services for the power grid.

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  1. Ron Boron says:

    300 jobs costing the taxpayers 249 mil with no guarantee that they will be around in 10 years. There are too many battery makers with no real idea if gas prices will spike higher.

  2. Jesse Hunter III says:

    looking to find a job on the near future

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