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GM to Build Its Own Batteries

General Motors (GM) is getting into the battery-making business. On Monday, the company confirmed early speculation that LG Chem, based in Korea, will supply lithium-ion batteries for its Volt electric vehicle, which is due out next year. But GM also announced that it intends to start manufacturing battery packs itself, noting that battery manufacturing will be central to its business going forward.

The Chevrolet Volt is an electric vehicle that runs on batteries charged from an ordinary power outlet for trips shorter than 40 miles. For longer journeys, an onboard gasoline or ethanol-powered generator will recharge the battery. Two battery companies, LG Chem and A123 Systems, based in Watertown, MA, have been in the running to supply the key component of a battery pack--the individual battery cells--for the Volt. Hundreds of such cells must be wired together and paired with control electronics to create the car's 16-kilowatt-hour battery pack.

Initially, cells from LG Chem will be assembled into battery packs by a subsidiary of LG Chem: Compact Power, based in Troy, MI. But once a new manufacturing plant is built, GM itself will assemble cells into battery packs, according to Monday's announcement. Bob Kruse, GM's executive director of North American Engineering Operations, says that the decision to make batteries is much like GM's decision to make its own engines because the technology is vital to the company's future success.

GM's decision is part of a strategic shift by the company toward the electrification of its automobiles, which will range from cars that rely on electric motors and batteries for brief bursts of power to those that run on electricity alone. (See our infographic comparing different electric-vehicle technologies.) "The design, development and production of advanced batteries must be a core competency for GM, and we've been rapidly building our capability and resources to support this direction," Rick Wagoner, GM's CEO, said in the announcement. "This is a further demonstration of our commitment to the electrification of the automobile."

The company also plans to increase its in-house battery development by building a 31,000-square-foot battery lab and hiring hundreds of battery engineers. GM is also working with a battery-engineering program at the University of Michigan to train new engineers. The lack of qualified and experienced battery engineers in the United States has been one of the big challenges facing battery startups such as A123 Systems. Most advanced battery production takes place in Asia, and this could hold back a switch from conventional vehicles to electric ones in the United States.