Shunned Volt Battery Maker Joins Forces With China

Bertel Schmitt
by Bertel Schmitt

After a two year neck-and-neck race between battery makers LG Chem and A123, GM awarded its Volt contract to Lucky Goldstar – make that LG Chem, or rather their subsidiary Compact Power: Now the Lucky Guys are waiting for the thing to hit the road in large quantities. A123 was widely regarded as the far better technology, the Koreans most likely were cheaper – we’ll most likely never know.

Now, A123 cut a possibly much bigger and more lucrative deal. A123 is forming a joint venture with China’s top carmaker SAIC to build and sell battery systems for electric vehicles in the world’s largest auto market, and possibly beyond.

According to Reuters, A123’s joint venture with SAIC would build complete vehicle traction battery systems for hybrid electric, pure electric passenger vehicles, and heavy-duty truck and buses in China.

Jason Forcier, who leads A123’s automotive division, wants “to be basically the market leader in China, both in the truck and passenger car market.” With someone like SAIC, this is virtually guaranteed.

Quite oddly, SAIC is also the joint venture partner of GM in China.

With A123, China received leading edge technology, and they will bring the cost down. “Cost is the real driver in this market,” Forcier said. Together with SAIC, he wants to bring down the cost of batteries by as much as 35 percent in the next few years.

Currently, the cost of battery systems for electric vehicles or plug-in hybrids can range from about $8,000 to $15,000.

The venture will be called Shanghai Advanced Traction Battery Systems Co, owned 51 percent by SAIC and 49 percent by A123.

In the short term, the Chinese bus market is seen as an attractive segment for the company, given the government support for electric-powered buses. The passenger car market is much more lucrative in the long term, Forcier thinks. China is serious with electric vehicles, a solution thought to solve the smog problem and the dependency on foreign oil. China has coal and nuclear power in abundance.

A123, founded by scientists linked to MIT, is currently working with BMW, Daimler, and Renault. A123 also has relationships with suppliers like Delphi and Magna Steyr.

First job of the JV between A123 and SAIC will be to develop batteries for the hybrid Roewe 750 sedan and a plug-in hybrid version of the Roewe 550. They should hit the market in 2012.

If the Volt ever makes it to China, you can bet your sweet derriere that it will be powered by batteries Made-in-Shanghai.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Bubba Gump Bubba Gump on Dec 19, 2009

    Cobasys partnered with A123 for the Plug in Saturn Vue (which was finished and completly tested but never put into production) The end result of the testing of those was that A123 could simply not package the power required into the proper form factor the Volt program given their annode design. Round VS Prismatic. They make a great battery but for packaging round sucks.

  • Steven02 Steven02 on Dec 21, 2009

    As has been spoken, they make round cells, good for power tools, but not so good for cars that need prismatic cells, which are flat. I think going with the more established company was a good idea as well. If A123 went under before the Volt was released, it would look really bad for GM. Working with a startup company is risky.

  • Kwik_Shift_Pro4X As much problems as I had with my '96 Chevy Impala SS.....I would love to try one again. I've seen a Dark Cherry Metallic one today and it looked great.
  • Susan O’Neil There is a good reason to keep the Chevrolet Malibu and other 4 door family sedans! You can transport your parents and other somewhat handicapped people comfortably and safety! If someone can stand and pivot you can put them in your car. An armrest in the back seat is appreciated and a handle above the door! Oh…and leather seats so your passenger can slide across the seat! 😊Plus, you can place a full sized wheelchair or walker in the trunk! The car sits a little lower…so it’s doable! I currently have a Ford Fusion and we have a Honda Accord. Our previous cars were Mercury Sables-excellent for transporting handicapped people and equipment! As the population ages-sedans are a very practical choice! POV from a retired handicapped advocate and daughter! 😊
  • Freddie Remember those ads that say "Call your doctor if you still have...after four hours"?You don't need to call your doctor, just get behind the wheel of a CUV. In fact, just look at one.I'm a car guy with finite resources; I can't afford a practical car during the week plus a fun car on the weekend. My solution is my Honda Civic Si 4 door sedan. Maybe yours is a Dodge Charger (a lot of new Chargers are still on dealer lots).
  • Daniel J Interesting in that we have several weeks where the temperature stays below 45 but all weather tires can't be found in a shop anywhere. I guess all seasons are "good enough".
  • Steve Biro For all the talk about sedans vs CUVs and SUVs, I simply can’t bring myself to buy any modern vehicle. And I know it’s only going to get worse.