Building the U.S. Battery Industry
for Electric Drive Vehicles
PROGRESS, CHALLENGES, AND OPPORTUNITIES
Summary of a Symposium
Charles W. Wessner, Rapporteur
Subcommittee on Electric Drive Battery Research and Development Activities
Committee on Competing in the 21st Century:
Best Practice in State and Regional Innovation Initiatives
Board on Science, Technology, and Economic Policy
Policy and Global Affairs
NATIONAL RESEARCH COUNCIL
OF THE NATIONAL ACADEMIES
THE NATIONAL ACADEMIES PRESS
Washington, D.C.
www.nap.edu
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.
This study was supported by: Contract/Grant No. DE-DT0000584, TO# 29, between the National Academy of Sciences and the Department of Energy. This report was prepared by the National Academy of Sciences under award number SB134106Z0011, TO# 4 (68059) from the U.S. Department of Commerce, National Institute of Standards and Technology (NIST). This report was prepared by the National Academy of Sciences under award number 99-06-07543-02 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the National Institute of Standards and Technology, the Economic Development Administration, or the U.S. Department of Commerce. Additional support was provided by the Michigan Economic Development Corporation and Michigan’s University Research Corridor. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.
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THE NATIONAL ACADEMIES
Advisers to the Nation on Science, Engineering, and Medicine
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council.
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Subcommittee on Electric Drive Battery Research and Development Activities
Mary L. Good (NAE), Chair
Dean Emeritus, Donaghey College of Engineering and Information Technology
Special Advisor to the Chancellor for Economic Development
University of Arkansas at Little Rock
Raymond G. Boeman
Director, Energy Partnerships
Oak Ridge National Laboratory
Michael G. Borrus
Founding General Partner
X/Seed Capital Management
Ralph Brodd
President
Broddarp of Nevada
Robert Kruse
Principal
EV Consulting
W. Clark McFadden II
Senior Counsel
Orrick, Herrington & Sutcliffe LLP
Daniel Sperling
Director, Institute of Transportation Studies
University of California, Davis
Committee on Competing in the 21st Century:
Best Practice in State and Regional Innovation Initiatives
Mary L. Good (NAE), Chair
Dean Emeritus, Donaghey College of Engineering and Information Technology
Special Advisor to the Chancellor for Economic Development
University of Arkansas at Little Rock
Michael G. Borrus
Founding General Partner
X/Seed Capital Management
William C. Harris
President and CEO
Science Foundation Arizona
W. Clark McFadden II
Senior Counsel
Orrick, Herrington & Sutcliffe LLP
David T. Morgenthaler
Founding Partner
Morgenthaler Ventures
Edward E. Penhoet (IOM)
Director
Alta Partners
Tyrone C. Taylor
President
Capitol Advisors on Technology, LLC
PROJECT STAFF
Charles W. Wessner
Study Director
McAlister T. Clabaugh
Program Officer
David S. Dawson
Senior Program Assistant
Sujai J. Shivakumar
Senior Program Officer
David E. Dierksheide
Program Officer
Peter Engardio
Consultant
For the National Research Council (NRC), this project was overseen by the Board on Science, Technology and Economic Policy (STEP), a standing board of the NRC established by the National Academies of Sciences and Engineering and the Institute of Medicine in 1991. The mandate of the Board on Science, Technology, and Economic Policy is to advise federal, state, and local governments and inform the public about economic and related public policies to promote the creation, diffusion, and application of new scientific and technical knowledge to enhance the productivity and competitiveness of the U.S. economy and foster economic prosperity for all Americans. The STEP Board and its committees marshal research and the expertise of scholars, industrial managers, investors, and former public officials in a wide range of policy areas that affect the speed and direction of scientific and technological change and their contributions to the growth of the U.S. and global economies. Results are communicated through reports, conferences, workshops, briefings, and electronic media subject to the procedures of the National Academies to ensure their authoritativeness, independence, and objectivity. The members of the STEP Board* and the NRC staff are listed below:
Paul L. Joskow, Chair
President
Alfred P. Sloan Foundation
Ernst R. Berndt
Louis E. Seley Professor in Applied Economics
Massachusetts Institute of Technology
John Donovan
Chief Technology Officer
AT&T Inc.
Alan M. Garber (IOM)
Provost
Harvard University
Ralph E. Gomory (NAS/NAE)
Research Professor
Stern School of Business
New York University
Mary L. Good (NAE)
Dean Emeritus, Donaghey College of Engineering and Information Technology
Special Advisor to the Chancellor for Economic Development
University of Arkansas at Little Rock
William H. Janeway
Partner
Warburg Pincus, LLC
Richard K. Lester
Japan Steel Industry Professor
Head, Nuclear Science and Engineering
Founding Director, Industrial Performance Center
Massachusetts Institute of Technology
*As of September 2012.
William F. Meehan III
Lecturer in Strategic Management
Raccoon Partners Lecturer in Management
Graduate School of Business
Stanford University
and
Director Emeritus
McKinsey and Co., Inc.
David T. Morgenthaler
Founding Partner
Morgenthaler Ventures
Luis M. Proenza
President
The University of Akron
William J. Raduchel
Chairman
Opera Software ASA
Kathryn L. Shaw
Ernest C. Arbuckle Professor of Economics
Graduate School of Business
Stanford University
Laura D’Andrea Tyson
S.K. and Angela Chan Professor of Global Management
Haas School of Business
University of California, Berkeley
Harold R. Varian
Chief Economist
Google, Inc.
Alan Wm. Wolff
Senior Counsel
McKenna Long & Aldridge LLP
STEP Staff
Stephen A. Merrill
Executive Director
Paul T. Beaton
Program Officer
McAlister T. Clabaugh
Program Officer
Aqila A. Coulthurst
Program Coordinator
Charles W. Wessner
Program Director
David S. Dawson
Senior Program Assistant
David E. Dierksheide
Program Officer
Sujai J. Shivakumar
Senior Program Officer
Contents
Greg Main, Michigan Economic Development Corporation
Carl Levin, United States Senate
Introduction by Charles W. Wessner, The National Academies
Sridhar Kota, White House Office of Science and Technology Policy
Jennifer Granholm, State of Michigan
Overview of NAS Study: Building the Battery Industry for Electric Vehicles
Mary Good, University of Arkansas at Little Rock
Introduction by John R. Chalifoux, Original Equipment Suppliers Association
Debbie Stabenow, United States Senate
Panel I: The Federal Outlook for the U.S. Battery Industry
Moderator: Charles W. Wessner, The National Academies
The Department of Energy Perspective
Patrick B. Davis, U.S. Department of Energy
Vehicle Technologies Program
Grace Bochenek, U.S. Army Tank Automotive Research, Development and Engineering Center
John Pellegrino, U.S. Army Research Laboratory
Panel II: The State of Battery R&D and Manufacturing in the United States
Moderator: Ralph C. Brodd, Kentucky-Argonne National Battery Manufacturing R&D Center
The Battery Industry Perspective
Jason M. Forcier, A123 Systems
Mohamed Alamgir, Compact Power
The Automotive Industry Perspective
Nancy Gioia, Ford Motor Company
The University/Startup Perspective
Ann Marie Sastry, University of Michigan and Sakti3
Panel III: Strengthening the Supply Chain
Moderator: Jim Greenberger, National Alliance for Advanced Technology Batteries
Battery Manufacturer Perspective
Tom Watson, Johnson Controls
Defining the Supply Chain: Gaps and Opportunities
Michael E. Reed, Magna E-Car Systems
Battery Materials Availability and Recycling
Linda Gaines, Argonne National Laboratory
Panel IV: Market Drivers: Creating Demand for Electric Vehicles
Moderator: Robert Kruse, EV Consulting LLC
Incentives for the Electric Vehicle Market
Daniel Sperling, University of California-Davis
The Industry Perspective: Transforming the Automotive Industry
Gary Smyth, General Motors
Early Adoption of Hybrid Vehicles
Bill Van Amburg, CALSTART
Panel V: Building the Battery Workforce
Moderator: Bill Harris, Science Foundation Arizona
Workforce Needs and Opportunities
Robert Kamischke, EnerDel
Technical Training and Workforce Development
Simon Ng, Wayne State University
Andy Levin, Michigan Department of Energy, Labor and Economic Growth
Panel VI-A: Federal and State Programs to Support the Battery Industry
Moderator: Charles W. Wessner, The National Academies
The Department of Energy Battery R&D Program and Goals
David Howell, U.S. Department of Energy
Department of Defense Battery R&D Programs and Goals
Sonya Zanardelli, U.S. Army Tank and Automotive
Research, Development, and Engineering Center
The Kentucky-Argonne National Battery Manufacturing R&D Center
Ralph C. Brodd, Kentucky-Argonne National Battery
Manufacturing R&D Center
Panel VI-B: Federal and Michigan Programs to Support the Battery Industry
Moderator: Sujai Shivakumar, The National Academies
The Department of Commerce and the Role of the Manufacturing Extension Partnership
David C. Stieren, Manufacturing Extension Partnership
Michigan Investments in Batteries and Electric Vehicles
Eric Shreffler, Michigan Economic
Development Corporation
Roundtable: What Have We Learned and Next Steps
Moderator: Mary Good, University of Arkansas at Little Rock
Bill Harris, Science Foundation Arizona
Les Alexander, A123 Systems
Gary Krause, Michigan Economic Development Corporation
Responding to the challenges of fostering regional growth and employment in an increasingly competitive global economy, many U.S. states and regions have developed programs to attract and grow high-technology companies, develop the talent and resources necessary to create innovation clusters, and sustain manufacturing and high value employment. These state and regionally based initiatives have a broad range of goals and increasingly include significant resources that often focus on driving innovation and often in partnership with foundations and universities. These are being joined by recent initiatives to coordinate and concentrate investments from a variety of federal agencies that provide significant resources to develop regional centers of innovation, business incubators, and other strategies to encourage entrepreneurship and high-tech development.
In this regard, the state of Michigan is making significant investments to develop an electrified-vehicle industrial cluster. The state offered more than $1 billion in grants and tax credits to manufacturers of lithium-ion battery cells, packs, and components. Michigan has also invested in research centers and skilled-worker training programs for electrified vehicles.
Efforts by the federal government to ensure that the U.S. has a domestic manufacturing base for advanced batteries are complementing Michigan’s initiatives. The federal government in 2009 awarded $2.4 billion in grants under the American Recovery and Reinvestment Act to manufacturers of lithium-ion cells, battery packs, and materials.1 A host of other financial incentives have also been introduced to help companies commercialize new vehicle technologies, build production lines, build supply chains, and encourage consumers to buy electric-gas hybrid cars.
To review the developments, as well as the needs and challenges, of the U.S. electric drive battery industry in Michigan, the National Academies Board on Science, Technology, and Economic Policy (STEP), in cooperation with the Michigan Economic Development Corporation and the Department of Energy, convened a symposium, on Building the U.S. Battery Industry for Electric Drive Vehicles: Progress, Challenges, and Opportunities.
The symposium, held on 26-27 July 2010 in Livonia, Michigan, and this report of that symposium, address the first of two key elements of the Statement of Task (described below) of a committee of the National Research Council.
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1 The American Recovery and Reinvestment Act of 2009 (P. L. 115-5) is a $787 billion economic stimulus packaged signed by President Barack Obama on Feb. 17, 2009. See Department of Energy, “The Recovery Act: Transforming America’s Transportation Sector—Batteries and Electric Vehicles,” July 14, 2010 (http://www.whitehouse.gov/files/documents/Battery-and-Electric-Vehicle-Report-FINAL.pdf)
STATEMENT OF TASK
The Overall Project
An ad hoc subcommittee will plan and conduct two public symposia to review and analyze the potential contributions of public-private partnerships and identify other relevant issues for the Department of Energy, Office of Vehicle Technologies, Energy Storage Team's activities in the energy storage research and development area. The symposia will also identify lessons from these and other domestic and international experiences to help inform DoE as to whether its activities are complete and appropriately focused. Additional topics that emerge in the course of the planning may also be addressed. The two symposia will gather representatives from leading battery manufacturers, automotive firms, university researchers, academic and industry analysts, congressional staff, and federal agency representatives. An individually-authored summary of each symposium will be issued.
This Report
The symposium that is the subject of this report was held in Michigan in order to provide direct access to the policymakers and industrial participants drawn from the concentration of battery manufacturers and automotive firms in the region. The symposium reviewed the current state, needs, and challenges of the U.S. advanced battery manufacturing industry; challenges and opportunities in battery R&D, commercialization, and deployment; collaborations between the automotive industry and battery industry; workforce issues, and supply chain development. It also focused on the impact of DoE's investments and the role of state and federal programs in support of this growing industry. This task of this report is to summarize the presentations and discussions that took place at this symposium. Needless to say, the battery industry has evolved very substantially since the conference was held, and indeed some of the caveats raised by the speakers with regard to overall demand for batteries and the prospects of multiple producers now seem prescient. At the same time, it is important to understand that it is unrealistic to expect that all recipients of local, state, or federal support in a complex and rapidly evolving industry will necessarily succeed. A number of the firms discussed here have been absorbed by competitors, others have gone out of business, and others continue to progress.2
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2 The Overview chapter of this report takes note of these recent developments.
THE CONTEXT OF THIS REPORT
Since 1991, the National Research Council, under the auspices of the Board on Science, Technology, and Economic Policy, has undertaken a program of activities to improve policymakers' understandings of the interconnections of science, technology, and economic policy and their importance for the American economy and its international competitive position. The Board's activities have corresponded with increased policy recognition of the importance of knowledge and technology to economic growth.
One important element of STEP’s analysis concerns the growth and impact of foreign technology programs.3 U.S. competitors have launched substantial programs to support new technologies, small firm development, and consortia among large and small firms to strengthen national and regional positions in strategic sectors. Some governments overseas have chosen to provide public support to innovation to overcome the market imperfections apparent in their national innovation systems.4 They believe that the rising costs and risks associated with new potentially high-payoff technologies, and the growing global dispersal of technical expertise, underscore the need for national R&D programs to support new and existing high-technology firms within their borders.
Similarly, many state and local governments and regional entities in the United States are undertaking a variety of initiatives to enhance local economic development and employment through investment programs designed to attract knowledge-based industries and grow innovation clusters.5 These state and regional programs and associated policy measures are of great interest for their potential contributions to growth and U.S. competitiveness and for the “best practice” lessons they offer for other state and regional programs.
STEP’s project on State and Regional Innovation Initiatives is intended to generate a better understanding of the challenges associated with the transition of research into products, the practices associated with successful state and regional programs, and their interaction with federal programs and private initiatives. The study seeks to achieve this goal through a series of complementary assessments of state, regional, and federal initiatives; analyses of specific industries and technologies from the perspective of crafting supportive public policy at all three levels; and outreach to multiple
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3 National Research Council, Innovation Policies for the 21st Century, C. Wessner, ed., Washington DC: National Academies Press, 2007.
4 For example, a number of countries are investing significant funds in the development of research parks. For a review of selected national efforts, see National Research Council, Understanding Research, Science and Technology Parks: Global Best Practices, C. Wessner, ed., Washington, DC: National Academies Press, 2009.
5 For a scoreboard of state efforts, see Robert Atkinson and Scott Andes, The 2010 State New Economy Index: Benchmarking Economic Transformation in the States, Kauffman Foundation and ITIF, November 2010.
stakeholders. The overall goal is to improve the operation of state and regional programs and, collectively, enhance their impact.
WORKSHOP SUMMARY
This report captures the presentations and discussions of the STEP symposium on Building the U.S. Battery Industry for Electric Drive Vehicles: Progress, Challenges, and Opportunities. It includes an introduction highlighting key issues raised at the meeting and summary of the meeting’s presentations. This workshop summary has been prepared by the workshop rapporteur as a factual summary of what occurred at the workshop. The planning committee’s role was limited to planning and convening the workshop. The statements made are those of the rapporteur or individual workshop participants and do not necessarily represent the views of all workshop participants, the planning committee, or the National Academies.
ACKNOWLEDGMENTS
On behalf of the National Academies, we express our appreciation for the insights, expertise, and perspectives provided by the many well-informed contributors to this meeting. We would also like to extend special recognition to Gary Krause from the Michigan Economic Development Corporation and his colleagues, along with McAlister Clabaugh and David Dawson of the STEP staff, for their commitment and excellent organization of the event. We are also indebted to Peter Engardio, formerly of Businessweek and now with the Boston Consulting Group, for his preparation of the introduction and summary of the meeting. We also wish to thank Dr. Sujai Shivakumar and David Dawson of the STEP staff for their tireless efforts to prepare the report for publication among many other competing priorities.
NATIONAL RESEARCH COUNCIL REVIEW
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Academies’ Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for quality and objectivity. The review comments and draft manuscript remain confidential to protect the integrity of the process.
We wish to thank the following individuals for their review of this report: Robert Bachrach, Energy & Environmental Solutions; Robert Boege, ASTRA; Martin Dober, Michigan Economic Development Corporation; and Paul DeCotis, Long Island Power Authority. Although the reviewers listed
above have provided many constructive comments and suggestions, they were not asked to endorse the content of the report, nor did they see the final draft before its release. Responsibility for the final content of this report rests entirely with the STEP Board and the institution.
Charles W. Wessner | Mary L. Good |
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