The state of Michigan also offered generous tax abatements, Mr. Forcier noted, “although as I told several gubernatorial candidates, we don’t intend to pay taxes for another 10 years. If you looked at our quarterly results, you would see that.”

In Michigan, A123 has the largest lithium-ion plant in North America, Mr. Forcier said. It invested $230 million in the 300,000-square-foot facility in Livonia. The plant, which produced its first prismatic cells in June 2010, is capable of producing batteries for 30,000 plug-in vehicles or 1 million prismatic cells per month, he said.

A123 also is building a coating plant in Romulus, Mich. Eventually, that will be the site of a “mega campus,” where A123 intends to do “everything from powder to coatings to cell manufacturing to packs,” Mr. Forcier said.

The big strategic question now facing the battery industry is whether consumers will buy them. “A lot has been done on the creation side. The capacity is in place, and over the next two years a lot of capacity is coming on line,” Mr. Forcier said. “So really the key question is about demand.”

The price of batteries is expected to come down by 50 percent over the next five years, Mr. Forcier said. Half of that price drop will come as a result of higher production volume. Dozens of new electrification programs are underway across the world just in transportation, he explained. In 2012, “you will see a huge increase in the number of vehicles you buy having electric power trains.”


FIGURE 3 Michigan expansion.

SOURCE: Jason Forcier, Presentation at July 26-27, 2010 National Academies Symposium on “Building the U.S. Battery Industry for Electric Drive Vehicles: Progress, Challenges, and Opportunities.”

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