Actually, here is where the dots connect and the news turns good. For the technical challenge of greening electric cars means entering a commercial landscape that mirrors the transformative industries of the 1980s and '90s: computers and software, switching and networking, consumer electronics converging with cellular technology. This landscape is full of start-ups and medium-size supplier businesses that play to American strengths: entrepreneurship, originality, comfort with the virtual. We ought to stop thinking about the auto industry as a handful of great manufacturing companies superintending large, dependent suppliers -- or, for that matter, cars as standalone objects. Rather, the electric car will be a kind of ultimate mobile device, produced in expanding networks for expanding networks; a piece of hardware manufactured by a burgeoning supplier grid and nested in an information grid interlacing the electrical grid. Building out these three networks will be more profitable, and a greater engine of economic growth, than building the cars themselves.
There's a lesson here for government, whose pedestrian duty, as Adam Smith wrote, is to "facilitate commerce in general." To facilitate the auto industry in particular, the federal government will need to anticipate a new division of labor among car companies, electric utilities, and, crucially, the layer of new companies that will tie the former two together. Smartening the grid will mean, collaterally, transforming energy infrastructure in virtually every neighborhood; as President Obama never tires of reminding us, green energy means businesses creating jobs here, not sending them overseas. So governments at all levels must get over what once seemed a clear distinction between manufacturing and information services, or automotive jobs and construction jobs. They must seek to expand employment less by helping original-equipment manufacturers, or OEMs, to grow and more by encouraging small software and components suppliers to launch.
Posawatz, who himself runs a kind of start-up within GM, puts the matter eagerly, if a little cryptically: "Our urgent challenge is to become the leading integrator of the sustainable transportation-energy ecosystem -- to control the intellectual property governing the integration of the battery to the car and the car to the grid." Translation: if GM plays its cards right, it could well incubate, and own, the new industry's crucial operating and telecommunications standards, the anchors for thousands of smaller technology companies supporting the electric car's components, information, and entertainment and charging needs. For his part, Duke's Rowand is sure that 10 years from now the dominant players in this new automotive ecosystem will be companies we have not yet heard of.
POWER ON
Let's start with the battery and work our way up to the grid. Battery development has often, and incorrectly, been lamented as an area ceded to Asian firms, a misconception that was strengthened when GM announced that it is initially leaving manufacture of the Volt's lithium-ion battery cells to LG Chem. It is true that LG Chem will be producing cells at its huge home facility in South Korea. But labor is such a trivial cost in making them that LG Chem's American subsidiary, Compact Power, is investing $300 million (including $151 million from the Department of Energy's stimulus funds) to set up a supplementary plant in Michigan. The Department of Energy has meanwhile granted $249 million to an MIT spinoff, Massachusetts-based A123, that will build a lithium-ion battery manufacturing facility to compete directly with Compact Power's facility.
At any rate, cells are to the battery pack what protoplasm is to an organ or transistors to a computer. To focus on cells is to miss the point. I am standing over the Volt's pack at GM's new $30 million testing facility in Warren, Michigan. It looks like a fat, vinyl-clad cross, meant to fill a slot cut out of the car's undercarriage. The pack contains roughly 300 cells. "The voltage of each cell has to be evenly calibrated to every other," the lab's recently departed director, Bob Kruse, tells me. "Like a chain, performance depends on the weakest link."
Kruse notes that his pack is in only its first generation. On the horizon -- "Gen-3," he thinks -- will be a solid-state battery pack that should achieve a 50 percent saving in size and cost, mainly by reducing the volume of liquid electrolytes. His team is working with the University of Michigan's Ann Marie Sastry and her start-up, Sakti3. Sastry has already raised $5 million from a private venture fund and the state of Michigan; all are counting on the Volt to bring scale to a burgeoning industry.
"Gen-1 technologies have sufficiently high rates of discharge, very suitable for getting us over the tipping point, you know, where a reasonable part of the vehicle portfolio goes electric," Sastry tells me. "But liquid electrolytes present integration limits -- also limits on energy density. We think that disruptive manufacturing techniques can improve performance dramatically, as in the chip industry." Does this not ultimately mean very costly fabrication facilities, as with chips? "We aim to create a cheap, scalable process. But government support and appropriate regulation may be needed for other elements of electrification -- and that's justified. Think of what we spend to secure oil. Think of the livability of cities and the dangers of climate change. But the changes have to be reinforced by companies making a profit."
By the way, one of the more compelling businesses to expect from the proliferation of battery packs will come into relief only after Gen-1 cells end their useful lives in cars. Lab tests show that, even after 10 years, Volt packs will still be capable of carrying 75 percent of their original charge -- not enough for the vehicle, but more than enough for utilities to use as storage for bulk renewable energy. Posawatz is excited: "It is easy to imagine warehouses full of used batteries sucking up wind energy and saving it for times the wind does not blow, or homeowners using the pack as backup," he says. "For recycling entrepreneurs, this means a whole new way of doing business."
