Bloomberg Businessweek (June 12, 2023)

Год выпуска: June 12, 2023

Автор: Bloomberg Businessweek

Жанр: Бизнес

Издательство: «Bloomberg Businessweek»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 68

Can the US Ever Build an EV Battery?

The fall of startup A123 still haunts the US decades later—and reveals everything that’s wrong with this country’s approach to innovation

On a 3-mile stretch of farmland in southwest Michigan, Ford Motor Co. is building a battery factory. The technology Ford needs to make cheap, stable batteries to power electric vehicles will come from China’s Contemporary Amperex Technology Co. Ltd., better known as CATL, the world’s biggest battery manufacturer. By most measures, Ford’s deal with the Chinese giant is a coup for the state-it’s getting a $3.5 billion investment in a 2.5-million-square-foot factory, thousands of new jobs and the ability to produce enough batteries annually to power 400,000 electric vehicles when the plant opens in 2026. But for anyone who’s been paying attention, it’s a devastating moment of irony for the US: The deal could have been the other way around.

In the mid-1990s, a compound called lithium iron phosphate (LFP), the primary battery chemistry now used by CATL and most battery companies in China, was discovered by scientists at the University of Texas at Austin and commercialized a few years later by the startup A123 Systems LLC in Watertown, Massachusetts. In 2009, A123 was awarded hundreds of millions of dollars by the Barack Obama administration with the great hope that it would help kick-start production of electric cars in the US. But it was too early. There wasn’t demand for EVs, and car companies making vehicles that use less gas didn’t want to risk relying on an unproven startup.

By 2012, A123 had filed for bankruptcy and become a symbol of government waste often mentioned in the same breath as Solyndra, the California solar-panel maker that filed for bankruptcy in 2011 after receiving a half-billion dollars in federal loan guarantees. To this day, Dave Vieau, A123’s former chief executive officer, is dogged by occasional finger-wagging when people learn he ran the company. “You’re the A123 guy who stole all the government money” is a line he’s gotten more than once.

Now, almost 30 years after the discovery of LFP, the US is scrambling to build its own battery supply chain, and the pioneer of the modern assembly line is turning to China to learn how to make the engine of the 21st century. It’s an unsubtle reminder that America learned the wrong lesson from A123. Rather than letting a potentially breakthrough technology, or a young company trying to commercialize that technology, live or die by the whims of the free market, the US could have been committed to a much longer game. And rather than allowing a battery discovery to slip through its fingers and into the hands of what’s now its greatest economic and geopolitical rival, the US could have figured out how to nurture and protect a nascent industry that was inevitably going to encounter trial and error. With the wisdom of hindsight, A123 is a case for tweaking the orthodox rules of American capitalism in the age of competition with China.

In 2013, China’s then-biggest auto parts company purchased A123 out of bankruptcy. That year the Chinese government also began implementing its plan to build a domestic EV market at a breathtaking pace. A decade later, China accounts for 58% of the world’s EV sales and 83% of all lithium-ion battery manufacturing, according to BloombergNEF. Even if all of President Joe Biden’s climate policies succeed in reviving American manufacturing, the US is now at least a decade behind China when it comes to battery manufacturing, in terms of both the necessary technology and the capacity, industry experts say. “China has just marched ahead with a very consistent strategy over the past 20 years,” says Brian Engle, president-elect of NaatBatt International, a trade association that advocates for battery development in North America. “We create all kinds of really cool technology, and then we abandon it.”

Soon after A123’s collapse, some of its engineers answered the call of China’s young and booming battery industry. One eventually became the billionaire chairman of a Chinese maker of carbon materials. A few of A123’s former executives still wonder what would have happened if, at the time, the US had found a way to keep the company going-а government supply contract or even a sale to another American business. Given time and support, could A123 have eventually become a billion-dollar American battery behemoth, the linchpin in a homegrown battery supply chain?

“The US has an industrial policy. Here’s the policy: We don’t have one,” says Jeff Chamberlain, who spent more than a decade at Argonne National Laboratory trying to commercialize battery tech before starting a venture capital firm in 2016. “I’m not saying we should become socialist or communist, but other countries that have decades-long industrial policies, they’re gonna eat our lunch.”

In early 2001, a 26-year-old entrepreneur named Ric Fulop started knocking on doors at the Massachusetts Institute of Technology, hoping to find someone to help him start a battery company. One of the people who answered was Yet-Ming Chiang, a professor of materials science, who invited his friend with a doctorate from Cornell University, Bart Riley, to meet with them regularly. They narrowed in on Chiang’s idea for a “self-assembling battery.” Batteries have three basic components: two electrodes-a cathode and an anode-that store and release a charge, and an electrolyte that helps shuttle the charge between them. The materials used to make batteries determine how much energy they store and at what cost. Chiang’s dream was to find three materials that would, under the right conditions, fall into the exact structure of a battery.

That summer they hatched A123, and soon raised $8 million, along with recruiting Vieau, an executive from a Rhode Island power equipment company, to be CEO. But six months in, the team realized that making the self-assembling battery a reality would take a long time. Meanwhile, Chiang’s lab was publishing science papers on LFP as a superior material, and he convinced Vieau that A123 could use it to pursue a commercial battery instead...

Power FaiIure

• The A123 battery might have fueled US EV dominance. China ended up on top

Papa Has Problems

• The elder-care service is hampered by a lack of gig economy regulation

IN BRIEF

• German diesel subs in India
• 3M
• Florida culture wars

OPINION

• The SEC vs. crypto: What’s needed is a rulebook

AGENDA

• A rate hike pause?
• Juneteenth
• Special Olympics

REMARKS

• How to parse a very weird US economy

BUSINESS

• In the EV race, China’s BYD is hot on Tesla’s tail
• Big Pharma fights government negotiations on pricing
• Bath & Body Works develops a thing for guys

TECHNOLOGY

• Google’s legal eagle nails a win on content. Next up: Al
• Netflix steps up its global game; complications ensue

FINANCE

• Al may be a revolution, but invest in it with care
• The FHLB: Aid to homebuyers, or to banks?
• White-collar crime is no priority for this Supreme Court

ECONOMICS

• Giorgia Meloni’s blueprint for Italy Inc.
• Would ditching the peso cure Argentine inflation?
• Green and fossil fuel energy agree: Permits need reform

SOLUTIONS/NEW ECONOMY

• Total starts clearing a path to Europe for African LNG...
• ...And Saharan solar and wind are on the way—via cable
• Stopping malaria-carrying mosquitoes from being born

PURSUITS

• Europeans sure know how to grill. Learn their tricks
• You’ve been invited to a party; here’s what to bring
• Terrific craft beers, modeled after...Bud!
• Sorrel, tamarind, corozo—not your grandfather’s popsicle
• Creamsicles, Tang—orange novelties of yore are back
• Bang & Olufsen’s great speaker for the great outdoors

LAST THING

• Al is like people: It can have a skewed view of the world

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