Original URL: http://www.theregister.co.uk/2008/12/19/1bn_battery_aid_request/

Battery builders beg for $1bn

Get in line, fellas

By Rik Myslewski

Posted in Science, 19th December 2008 01:27 GMT

A consortium of 14 US tech companies is asking for $1bn in federal aid to build a lithium-ion battery plant.

According to a report in today's Wall Street Journal, that steaming heap of cash would be used to help build a factory that would enable the companies, in the words of the report, to "catch up to Asian rivals that are far ahead" of US efforts to supply batteries for the next generation of electric or hybrid automobiles.

Ralph Brodd, the co-author of that riveting page-turner, "Lithium-Ion Batteries," is quoted as saying, "though much of the advanced battery technology was developed in the US, American companies 'opted out' of battery production because of the low returns the business offered."

Yogi Berra, the great American sage, is quoted by The Reg as saying, "It's deja vu all over again."

The consortium - known formally as the National Alliance for Advanced Transportation Battery Cell Manufacture (there's no word as to whether they pronounce NAATBCM as "nate-buckum" or "gnat-bickem") - is attempting to rectify the same error that American automobile manufacturers made in the waning days of the previous century. During those critical, transitionary years, Japanese and other carmakers invested heavily in fuel-efficient technologies while the American Big Three preferred to churn out high-margin, low-mileage behemoths such as the Cadillac Escalade, Hummer H2, and the once immensely popular Ford Egregious.

When the inevitable rise in fuel prices hit, the Big Three were caught with their pants down - and it wasn't a pretty sight.

And here we go again. American manufacturers that, as Brodd put it, "opted out" of the low-margin but increasingly necessary work of building better batteries now find themselves equally pants-lite, and are asking for government help in re-hoisting their now-tattered trousers.

Not that the NAATBCM shouldn't receive help. After all, as the WSJ points out, "More than four dozen advanced battery factories are being built in China but none, currently, in the US." We certainly don't begrudge the Chinese their battery plants, but should that growing manufacturing powerhouse decide that it'd prefer to distribute the bulk of its battery output to carmakers in their neighboring countries, the Big Three would be ... well ... in even worse shape than they are today. If that can be imagined.

And so the NAATBCM's request for the $1bn bailout. Or subsidy. Or investment. Choose your preferred term based on your opinion of government support of private industry.

To be sure, it arguably makes good financial sense to leverage economies of scale by bringing all the major players together under the NAATBCM. It's unlkely that any individual member of that consortium could, at this point, front the $1bn to $2bn needed to build a state-of-the-art lithium-ion battery plant.

Or should we just let Adam Smith's "invisible hand" wave goodbye to the American manufacturers of a technology that's rapidly becoming, as the WSJ says, "as strategically important as oil is today?"