By on January 12, 2009

The talk about US-based A123 receiving federal and Michigan taxpayer funding to ramp up American-made batteries for the plug-in electric – gas hybrid Chevrolet Volt seems to have been much ado about nothing. The AP (via Yahoo) reports that GM “has picked LG Chem of South Korea to supply the lithium-ion battery cells for its Chevrolet Volt.” Apparently mindful of its precarious political situation, GM makes a big deal about the South Korean cells being “assembled into battery modules and packs at a factory in Michigan.” In the mid-80s, I was a young engineer in Silicon Valley’s then booming semiconductor industry, and we outsourced the low tech, low value added final packaging and assembly offshore to places like South Korea, Taiwan and Singapore. Back then, the high value added R&D and primary manufacturing still largely happened in the US. My how times have changed.

GM’s flag-washing continued with statements from its new best friend, LG Chem’s CEO Peter Kim. Kim said his “company may eventually build cells in Michigan; and anticipates that the company’s U.S. subsidiary, Compact Power Inc., will add to its 100 person work force in Troy, Mich.” GM is also quick to point at plans to build a new 31,000 square foot battery lab at the Warren technical center; just as soon as the taxpayer pays for it all, one must presume.

Politics aside, LG Chem won by having the better design: flat cells. A123′s cylindrical cells are said to have inferior power density and heat dissipation characteristics when compared to the LG Chem design. On that basis, it sounds like GM made a good choice. But how it will all play out remains to be seen. Assuming the Volt in production ever enters something approximating mass production.

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33 Comments on “GM Selects S. Korea’s LG Chem for Volt batteries‏...”


  • avatar
    austinseven

    With batteries it comes down to three things.
    Warranty?
    Life?
    Replacement cost?

  • avatar
    cwallace

    …oh never mind, zingers based on my tax dollars going to Korea via GM are just too easy.

  • avatar
    tesla deathwatcher

    The best “prismatic” lithium ion cells I have seen are made by the Japanese company Enax in China. Continental has a deal with them.

    I don’t think much of LG Chem. Or A123. They are solid companies (unlike a company like Altairnano).

    But they are too new. No track record of reliable performance that you need in the battery business. Those companies are all in Japan, South Korea and China. (I realize LG Chem is in South Korea, but it is a newcomer there.)

  • avatar
    guyincognito

    They said the loans were going to help US companies developing new green technology and that is exactly what is happening with this deal! GM is helping A123 to be crushed by their Korean competition.

  • avatar
    mtypex

    Man is this an American “REVOLUTION” or what! Sign me up for a Pontiac G3!

  • avatar
    autonut

    ‘Nough said about corporate patriotism. They’ll take money from US taxpayers to guarantee work for South Koreans. I reckon it is better then Pakistan or Iran.

  • avatar
    Cicero

    autonut :
    January 12th, 2009 at 3:59 pm

    If GM was building a car that was designed to explode in crowded marketplaces, Pakistan would be a shoo-in for the key components.

  • avatar
    seabrjim

    Our forefathers would not have tolerated this. They would already have the rope and would be picking out oak trees with good branches. GM better not ever run one of those heart jerking patriotic style commercials again.

  • avatar
    taxman100

    The American economy has been sold out by Wall St., and regulated to death by Washington.

    If you want GM to survive, they are not going to be using the United States for any new technical work. The United States cannot compete anymore due to bad management, and bad government.

    Simple as that – we are moving down to a second world power.

  • avatar
    mikeolan

    The American economy has been sold out by Wall St., and regulated to death by Washington.

    If you want GM to survive, they are not going to be using the United States for any new technical work. The United States cannot compete anymore due to bad management, and bad government.”

    Our forefathers would not have tolerated this. They would already have the rope and would be picking out oak trees with good branches. GM better not ever run one of those heart jerking patriotic style commercials again.

    Wow, you guys ever taken Econ 101 or something? GM is doing something very simple: picking the best component for their product, and battery manufacturing happens to be a strong point of LG Chem in Korea. What, it grinds your gears a South Korean company happens to have almost unsurpassed expertise in this field was chosen?

    Working with the company able to provide them with the best product and operating as an international company is GM’s best bet for survival. That does NOT equate to ‘shipping all of our jobs overseas.’

    Furthermore, plenty of companies do this. Apple doesn’t build their own batteries (Sony, other companies do), but they are heavily involved in the engineering and power management aspects. Who do you think builds those LCD screens inside your car? Hell, even the taillights for a lot of GM cars are made from a molding factory in New Zealand.

    This doesn’t mean the U.S. economy is going down the shitter. We live in a global economy and if you don’t know how a global economy works I suggest getting advice from someone other than the toothless guy at the local tire fire.

  • avatar
    Droid800

    Guys, was it really necessary to bring politics into this? Yeah, LG Chem is South Korean, but they also provided GM a better product and a better design. The flat design, as GM said, is better for the E-flex platform, and is best-equipped for automotive applications. GM could have taken the ‘patriotic’ route and chosen A123, but the end product would have suffered. (and TTAC would have certainly berated them for it)

    They chose the better design, plain and simple.

  • avatar
    akear

    I have no problem with GM using foreign battery technology. Just don’t ask US tax payers to fort the bill.

  • avatar
    Robbie

    If GM can get better and cheaper batteries abroad and then needs less of my tax dollars, they can get their batteries from anywhere, as far as I am concerned. Wouldn’t we want foreign companies to give US companies a fair shot at their business too?

  • avatar
    akear

    GM has the right to weaken its research and development as long as it does not cost the tax payers. Let them hang themselves without our help.

    The Volt won’t last much longer than the defunct EV1, so maybe it does not even matter.

  • avatar
    Demetri

    “Wouldn’t we want foreign companies to give US companies a fair shot at their business too?”

    Are foreign companies getting money from the US government? The bailout changes all the rules. They better be so american that they have apple pies coming out of their asses.

    Keep in mind that one of the stipulations with the bailout was that it would all stay in the US. Not that the government will do a damn thing about it.

  • avatar
    PeteMoran

    How soon before Barney Frank and his Car Czar try to interfere attempting to pull the contract to A123?

  • avatar
    akear

    This whole thing is a nightmare.

    All this fuss over a niche vehicle like the Volt.
    When the Volt is finally cancelled all this will be forgotton.

  • avatar
    Demetri

    “How soon before Barney Frank and his Car Czar try to interfere attempting to pull the contract to A123?”

    Never, because they don’t really care. A123 isn’t UAW so it isn’t in their interest to do so.

  • avatar

    Demetri:

    A123 is based in Watertown, MA. Although it’s in the 7th Congressional District (Frank’s is the 4th), you gotta think Rep Frank has their interests in mind.

  • avatar
    akear

    Go get them Frank!

  • avatar
    jthorner

    “Guys, was it really necessary to bring politics into this?”

    It is unavoidable when GM is begging for, and getting, taxpayer dollars just to keep the lights on.

    For decades now conservatives have decried anything with smacks of a “US Industrial Policy”. Yet all of our fiercest competitor nations have very detailed industrial policies dictated from the government, and industrially they are cleaning the US’ clocks. There is not a single industry in which the US is opening up a capability gap vs. other nations. In fact, in many industries the US is now the laggard or completely out of the game. In others the gap is closing fast.

  • avatar
    Droid800

    @JTHorner

    You’re missing the point though. The A123 battery was not the better product. It was not the best fit for the Volt program and it did not fulfill GM’s requirements. It would be different if we were talking about two companies with products that were evenly matched and both met the requirements of GM, but we’re not.

    Bringing politics into this is attempting to create a controversy where there is none. It’s this kind of us against them blather that led many American companies (including GM) to make poor decisions by choosing domestic parts and products, even though they were clearly inferior.

  • avatar
    Kevin

    Maybe LG Chem can just BUY OUT GM and save us all from future bailouts.

  • avatar
    Lumbergh21

    I called it. No surprise to me. IF LG truly has the better batteries, then they were the right choice. As far as “Our forefathers would not have tolerated this. They would already have the rope and would be picking out oak trees with good branches. GM better not ever run one of those heart jerking patriotic style commercials again.” Our forfathers wouldn’t have conceived of anything like the bailout to the auto manufacturers or the financial businesses in the first place.

  • avatar
    Phil Ressler

    The flat cell wins, fair and square. A123 can get a chance again later. What’s not mentioned here is the further revelation by GM that they intend to get back into the battery business with US R&D and US manufacturing. They now view battery mastery as strategic to their business. If so, then the LG Chem contract is a temporary measure to stay on track for getting to market, and a longer term direction for electron power in GM cars will be derived from a much greater domestic role. If GM is serious about reverting to ownership of battery expertise as a core competence, then in this case both the tactical decision and the strategic vision are, respectively, proper. A123 just got the message that competing for automotive applications requires a change in packaging geometry, so I expect they’ll return to the game accordingly.

    Phil

  • avatar
    don1967

    So GM goes to Korea to buy the technology for a future novelty car that will address last year’s gas prices, while the Koreans focus on building quality cars for the masses at bargain-basement prices.

    The writing is on the wall…

  • avatar
    Kurt.

    Doesn’t GM already own a Korean car company? (the answer is yes). Do you think it possible that if GM were serious about developing their own battery technology that they might just BUY this company for the technology they already paid for? Especially after the company sank its own money into building a new facility right here in good old Troy, Mich?

    As someone else said – the writings on the wall.

    (musing)I wonder what the stock symbol is…

  • avatar
    Rix

    LG Chemical could buy GM if it wanted to. Before breakfast, with room left over for dessert.GM Could be wanting to get taken over…LG would be a logical choice to pick up Chevy in a breakup. Less political issues than selling to the Chinese and the Indians don’t have the money anymore.

  • avatar
    minion444

    WIll they use an Electric Freighter when they ship them to the US? WIll they protect South Korea’s environment when they manufacture these bad for the environment batteries?

    THese batteries will not be “green” for the world, just us.

  • avatar
    anoldbikeguy

    Sorry to burst everybody’s bubble here, but this whole premise of buying batteries from LG vs. A123 that all of you responded to is false.

    Compact Power was bought by LG so that they had a North American presence.

    A123 was bought by Continental AG (you know, not US based) as Continental wanted to compete in this area.

    So – neither is US based.

    One other thing that bugs me is that our government has supplied funding to several universities to develop battery technology.

    When the time came to commercialize the technology, the government did nothing to prevent that technology from being sold to foreign based companies. They then took this technology and received funding from their government to bring it to production.

  • avatar
    tesla deathwatcher

    A123 was not bought by Continental.

    Also, the battery technology developed at US universities has generally been exploited by US companies. Rutgers University probably leads the way. Their technology has been pursued by both Altairnano and Electro Energy. So far, they have reached nothing but dead ends.

    MIT scientists started up A123. But their first product was a failure. They recognized that and moved to a different technology.

    I’ve seen nothing to support the idea that foreign companies are snapping up US government funded research and commercializing it with subsidies from their own governments. Foreign companies dominate battery production for a variety of reasons. Government subsidies and industrial policy are way down on the list of those reasons.

  • avatar

    I hope LG has improved their design and quality control – because when I worked in telcom I had to deal with a string of LG mobile products with, you guessed it, bad batteries. I’d say between 1/4 and 1/2 the products in our stock were affected. Pretty damn bad if you think about it.

  • avatar
    Droid800

    @JEC

    Two completely different companies buddy.

    Following your reasoning, people shouldn’t watch NBC if they had a bad GE washer and dryer, since they’re both GE products.


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