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(originally published by Booz & Company)


The Future Is Lithium

Toyota was also worried about the safety of lithium ion batteries. In mid-2006, the Sony Corporation had to recall about 10 million lithium ion batteries used in laptops because of a series of explosions that occurred after the batteries suffered internal metal contamination and shorted out. These Japanese-made lithium ion batteries typically contained cobalt oxide in the cathode. Newer lithium ion batteries and those still in development instead use materials like manganese and iron phosphate, considered to be somewhat safer. 

But Toyota’s announcement at the recent Detroit auto show that it planned to roll out 500 essentially hand-made versions of the Prius with lithium ion batteries in late 2009 was a clear sign that the automaker had overcome its concerns about the technology. The Prius batteries will be purchased from Panasonic EV Energy Company, in which Toyota has a 60 percent stake. “Initially, [Toyota] tried to say lithium ion was too risky and that it was not ready for it,” recalls Compact Power’s Patil. “But GM looked at the data that we were showing them, and said, ‘Yes, let’s try it. It’s not a slam dunk, but let’s do it.’ So now Toyota is joining the party.” Toyota has not yet disclosed precisely what formulation will be used in these batteries.

There does not have to be a single winner in lithium. Multiple lithium ion versions can prevail for different uses. Depending on weight, safety, and energy density requirements, among other factors, some lithium ion batteries may work best for plug-in electric hybrids, which are recharged through electrical outlets, and others for gasoline-based hybrids like the Prius.

Lithium ion industry advocates say that the U.S. government could play a pivotal role in determining how much of the battery business will be domestic by allocating to lithium suppliers a chunk of the $25 billion Congress approved for automobile alternative energy research and development. “We in the United States almost have a bias against developing a new technology in the supply base,” says Johnson Controls Power Solutions President Molinaroli. “I think it’s going to take encouragement from the U.S. government to make sure that at least some of the technology is developed here. We’re going to need some support or leadership or guidance from the feds.” His company manufactures in Europe, Molinaroli says, because that’s where its customers are.

However, Patil warns that if the Obama administration spreads the $25 billion throughout the auto industry to the dozens of companies currently involved in alternative propulsion projects, “there’s the potential for the [money] to be so diffused that it wouldn’t do that much good in any one area. As large as that sum sounds, it could become ineffective.”

Patil and others recommend the creation of a federal decision-making body, optimally within the Department of Energy, to pick the most salient and potentially useful technologies to support with the most money.

Of course, any U.S. hopes for securing a chunk of the lithium ion industry would be dashed if GM’s Volt project were to fizzle out because of the automaker’s financial problems. The work on the Volt is by far the most advanced lithium ion–based auto program of any U.S.-based manufacturer. “Because of GM’s efforts, the U.S. has a real opportunity,” says Patil. “The Volt is an opportunity to take leadership.”

But even if the Americans don’t make the train, a future with more and more powerful lithium ion batteries is inevitable; after all, the rest of the world is already on board.

Author Profile:
William J. Holstein is the author of Why GM Matters: Inside the Race to Transform an American Icon (Walker, 2009). For more on his work, see
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  1. Marshall Brain, “How Lithium-ion Batteries Work,” Some insight into how these batteries work, as well as their pros and cons.
  2. Amy Raskin et al., “Abating Climate Change: What Will Be Done and the Consequences for Investors” (PDF), AllianceBernstein, January 2008: Explores the implications of a variety of new energy sources.  
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