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Charles W. Wessner, Rapporteur
Subcommittee on Electric Drive Battery Research and Development Activities
Committee on Competing in the 21st Century:
Best Practice in State and Regional Innovation Initiatives
Board on Science, Technology, and Economic Policy
Policy and Global Affairs
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THE NATIONAL ACADEMIES PRESS 500 Fifth Street NW Washington DC 20001
NOTICE: The project that is the subject of this report was approved by the Governing Board of
the National Research Council, whose members are drawn from the councils of the National
Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The
members of the committee responsible for the report were chosen for their special competences
and with regard for appropriate balance.
This study was supported by: Contract/Grant No. DE-DT0000584, TO# 29, between the
National Academy of Sciences and the Department of Energy. This report was prepared by
the National Academy of Sciences under award number SB134106Z0011, TO# 4 (68059)
from the U.S. Department of Commerce, National Institute of Standards and Technology
(NIST). This report was prepared by the National Academy of Sciences under award
number 99-06-07543-02 from the Economic Development Administration, U.S. Department
of Commerce. The statements, findings, conclusions, and recommendations are those of the
author(s) and do not necessarily reflect the views of the National Institute of Standards and
Technology, the Economic Development Administration, or the U.S. Department of
Commerce. Additional support was provided by the Michigan Economic Development
Corporation and Michigan's University Research Corridor. Any opinions, findings,
conclusions, or recommendations expressed in this publication are those of the author(s) and
do not necessarily reflect the views of the organizations or agencies that provided support
for the project.
International Standard Book Number 13: 978-0-309-25452-6 (Book)
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Additional copies of this report are available for sale from the National Academies Press, 500
Fifth Street, N.W., Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313;
http://www.nap.edu/.
Copyright 2012 by the National Academy of Sciences. All rights reserved.
Printed in the United States of America
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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of
distinguished scholars engaged in scientific and engineering research, dedicated to the
furtherance of science and technology and to their use for the general welfare. Upon the
authority of the charter granted to it by the Congress in 1863, the Academy has a mandate
that requires it to advise the federal government on scientific and technical matters. Dr.
Ralph J. Cicerone is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the
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Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in
1916 to associate the broad community of science and technology with the Academy's
purposes of furthering knowledge and advising the federal government. Functioning in
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www.national-academies.org
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Subcommittee on
Electric Drive Battery Research and Development Activities
Mary L. Good (NAE), Chair Ralph Brodd
Dean Emeritus, Donaghey College President
of Engineering and Information Broddarp of Nevada
Technology
Special Advisor to the Chancellor Robert Kruse
for Economic Development Principal
University of Arkansas EV Consulting
at Little Rock
W. Clark McFadden II
Raymond G. Boeman Senior Counsel
Director, Energy Partnerships Orrick, Herrington & Sutcliffe LLP
Oak Ridge National Laboratory
Daniel Sperling
Michael G. Borrus Director, Institute
Founding General Partner of Transportation Studies
X/Seed Capital Management University of California, Davis
Committee on Competing in the 21st Century:
Best Practice in State and Regional Innovation Initiatives
Mary L. Good (NAE), Chair W. Clark McFadden II
Dean Emeritus, Donaghey College Senior Counsel
of Engineering and Information Orrick, Herrington & Sutcliffe LLP
Technology
Special Advisor to the Chancellor David T. Morgenthaler
for Economic Development Founding Partner
University of Arkansas Morgenthaler Ventures
at Little Rock
Edward E. Penhoet (IOM)
Michael G. Borrus Director
Founding General Partner Alta Partners
X/Seed Capital Management
Tyrone C. Taylor
William C. Harris President
President and CEO Capitol Advisors
Science Foundation Arizona on Technology, LLC
v
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PROJECT STAFF
Charles W. Wessner Sujai J. Shivakumar
Study Director Senior Program Officer
McAlister T. Clabaugh David E. Dierksheide
Program Officer Program Officer
David S. Dawson Peter Engardio
Senior Program Assistant Consultant
vi
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For the National Research Council (NRC), this project was overseen by
the Board on Science, Technology and Economic Policy (STEP), a standing
board of the NRC established by the National Academies of Sciences and
Engineering and the Institute of Medicine in 1991. The mandate of the Board
on Science, Technology, and Economic Policy is to advise federal, state, and
local governments and inform the public about economic and related public
policies to promote the creation, diffusion, and application of new scientific and
technical knowledge to enhance the productivity and competitiveness of the U.S.
economy and foster economic prosperity for all Americans. The STEP Board
and its committees marshal research and the expertise of scholars, industrial
managers, investors, and former public officials in a wide range of policy areas
that affect the speed and direction of scientific and technological change and
their contributions to the growth of the U.S. and global economies. Results are
communicated through reports, conferences, workshops, briefings, and
electronic media subject to the procedures of the National Academies to ensure
their authoritativeness, independence, and objectivity. The members of the
STEP Board* and the NRC staff are listed below:
Paul L. Joskow, Chair Mary L. Good (NAE)
President Dean Emeritus, Donaghey College
Alfred P. Sloan Foundation of Engineering and Information
Technology
Ernst R. Berndt Special Advisor to the Chancellor
Louis E. Seley Professor for Economic Development
in Applied Economics University of Arkansas
Massachusetts Institute at Little Rock
of Technology
William H. Janeway
John Donovan Partner
Chief Technology Officer Warburg Pincus, LLC
AT&T Inc.
Richard K. Lester
Alan M. Garber (IOM) Japan Steel Industry Professor
Provost Head, Nuclear Science
Harvard University and Engineering
Founding Director, Industrial
Ralph E. Gomory (NAS/NAE) Performance Center
Research Professor Massachusetts Institute
Stern School of Business of Technology
New York University
*As of September 2012. continued
vii
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William F. Meehan III Kathryn L. Shaw
Lecturer in Strategic Management Ernest C. Arbuckle Professor
Raccoon Partners Lecturer of Economics
in Management Graduate School of Business
Graduate School of Business Stanford University
Stanford University
and Laura D'Andrea Tyson
Director Emeritus S.K. and Angela Chan Professor
McKinsey and Co., Inc. of Global Management
Haas School of Business
David T. Morgenthaler University of California, Berkeley
Founding Partner
Morgenthaler Ventures Harold R. Varian
Chief Economist
Luis M. Proenza Google, Inc.
President
The University of Akron Alan Wm. Wolff
Senior Counsel
William J. Raduchel McKenna Long & Aldridge LLP
Chairman
Opera Software ASA
STEP Staff
Stephen A. Merrill Charles W. Wessner
Executive Director Program Director
Paul T. Beaton David S. Dawson
Program Officer Senior Program Assistant
McAlister T. Clabaugh David E. Dierksheide
Program Officer Program Officer
Aqila A. Coulthurst Sujai J. Shivakumar
Program Coordinator Senior Program Officer
viii
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Contents
PREFACE xiii
I. OVERVIEW 1
II. PROCEEDINGS 45
DAY ONE
Welcome 47
Greg Main, Michigan Economic Development Corporation
Opening Remarks I 48
Carl Levin, United States Senate
Opening Remarks II
Introduction by Charles W. Wessner, The National Academies 51
Sridhar Kota, White House Office of Science and Technology Policy 52
Opening Remarks III 56
Jennifer Granholm, State of Michigan
Overview of NAS Study: Building the Battery Industry
for Electric Vehicles 59
Mary Good, University of Arkansas at Little Rock
Keynote Address
Introduction by John R. Chalifoux, Original Equipment Suppliers 62
Association
Debbie Stabenow, United States Senate 63
Panel I: The Federal Outlook for the U.S. Battery Industry 70
Moderator: Charles W. Wessner, The National Academies
The Department of Energy Perspective 70
Patrick B. Davis, U.S. Department of Energy
Vehicle Technologies Program
ix
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x CONTENTS
The Army Perspectives 76
Grace Bochenek, U.S. Army Tank Automotive
Research, Development and Engineering Center
John Pellegrino, U.S. Army Research Laboratory
Panel II: The State of Battery R&D and Manufacturing
in the United States 84
Moderator: Ralph C. Brodd, Kentucky-Argonne National Battery
Manufacturing R&D Center
The Battery Industry Perspective 84
Jason M. Forcier, A123 Systems
Mohamed Alamgir, Compact Power
The Automotive Industry Perspective 92
Nancy Gioia, Ford Motor Company
The University/Startup Perspective 99
Ann Marie Sastry, University of Michigan and Sakti3
Panel III: Strengthening the Supply Chain 103
Moderator: Jim Greenberger, National Alliance
for Advanced Technology Batteries
Battery Manufacturer Perspective 104
Tom Watson, Johnson Controls
Defining the Supply Chain: Gaps and Opportunities 107
Michael E. Reed, Magna E-Car Systems
Battery Materials Availability and Recycling 110
Linda Gaines, Argonne National Laboratory
Panel IV: Market Drivers: 117
Creating Demand for Electric Vehicles
Moderator: Robert Kruse, EV Consulting LLC
Incentives for the Electric Vehicle Market 118
Daniel Sperling, University of California-Davis
The Industry Perspective: Transforming 123
the Automotive Industry
Gary Smyth, General Motors
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CONTENTS xi
Early Adoption of Hybrid Vehicles 125
Bill Van Amburg, CALSTART
Panel V: Building the Battery Workforce 134
Moderator: Bill Harris, Science Foundation Arizona
Workforce Needs and Opportunities 135
Robert Kamischke, EnerDel
Technical Training and Workforce Development 138
Simon Ng, Wayne State University
DAY TWO
Welcome and Introduction 142
Andy Levin, Michigan Department of Energy, Labor
and Economic Growth
Panel VI-A: Federal and State Programs to Support 145
the Battery Industry
Moderator: Charles W. Wessner, The National Academies
The Department of Energy Battery 145
R&D Program and Goals
David Howell, U.S. Department of Energy
Department of Defense Battery 151
R&D Programs and Goals
Sonya Zanardelli, U.S. Army Tank and Automotive
Research, Development, and Engineering Center
The Kentucky-Argonne 154
National Battery Manufacturing R&D Center
Ralph C. Brodd, Kentucky-Argonne National Battery
Manufacturing R&D Center
Panel VI-B: Federal and Michigan Programs 159
to Support the Battery Industry
Moderator: Sujai Shivakumar, The National Academies
The Department of Commerce and the Role 159
of the Manufacturing Extension Partnership
David C. Stieren, Manufacturing Extension Partnership
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xii CONTENTS
Michigan Investments in 163
Batteries and Electric Vehicles
Eric Shreffler, Michigan Economic
Development Corporation
Roundtable: What Have We Learned and Next Steps 169
Moderator: Mary Good, University of Arkansas at Little Rock
Bill Harris, Science Foundation Arizona
Les Alexander, A123 Systems
Gary Krause, Michigan Economic Development Corporation
III. APPENDIXES
A Agenda 177
B Biographies of Speakers 181
C Participants List 205
D Bibliography 209
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Preface
Responding to the challenges of fostering regional growth and
employment in an increasingly competitive global economy, many U.S. states
and regions have developed programs to attract and grow high-technology
companies, develop the talent and resources necessary to create innovation
clusters, and sustain manufacturing and high value employment. These state and
regionally based initiatives have a broad range of goals and increasingly include
significant resources that often focus on driving innovation and often in
partnership with foundations and universities. These are being joined by recent
initiatives to coordinate and concentrate investments from a variety of federal
agencies that provide significant resources to develop regional centers of
innovation, business incubators, and other strategies to encourage
entrepreneurship and high-tech development.
In this regard, the state of Michigan is making significant investments
to develop an electrified-vehicle industrial cluster. The state offered more than
$1 billion in grants and tax credits to manufacturers of lithium-ion battery cells,
packs, and components. Michigan has also invested in research centers and
skilled-worker training programs for electrified vehicles.
Efforts by the federal government to ensure that the U.S. has a
domestic manufacturing base for advanced batteries are complementing
Michigan's initiatives. The federal government in 2009 awarded $2.4 billion in
grants under the American Recovery and Reinvestment Act to manufacturers of
lithium-ion cells, battery packs, and materials.1 A host of other financial
incentives have also been introduced to help companies commercialize new
vehicle technologies, build production lines, build supply chains, and encourage
consumers to buy electric-gas hybrid cars.
To review the developments, as well as the needs and challenges, of the
U.S. electric drive battery industry in Michigan, the National Academies Board
on Science, Technology, and Economic Policy (STEP), in cooperation with the
Michigan Economic Development Corporation and the Department of Energy,
convened a symposium, on Building the U.S. Battery Industry for Electric Drive
Vehicles: Progress, Challenges, and Opportunities.
The symposium, held on 26-27 July 2010 in Livonia, Michigan, and
this report of that symposium, address the first of two key elements of the
Statement of Task (described below) of a committee of the National Research
Council.
1
The American Recovery and Reinvestment Act of 2009 (P. L. 115-5) is a $787 billion economic
stimulus packaged signed by President Barack Obama on Feb. 17, 2009. See Department of Energy,
"The Recovery Act: Transforming America's Transportation Sector--Batteries and Electric
Vehicles," July 14, 2010 (http://www.whitehouse.gov/files/documents/Battery-and-Electric-Vehicle-
Report-FINAL.pdf)
xiii
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xiv PREFACE
STATEMENT OF TASK
The Overall Project
An ad hoc subcommittee will plan and conduct two public symposia to
review and analyze the potential contributions of public-private partnerships and
identify other relevant issues for the Department of Energy, Office of Vehicle
Technologies, Energy Storage Team's activities in the energy storage research
and development area. The symposia will also identify lessons from these and
other domestic and international experiences to help inform DoE as to whether
its activities are complete and appropriately focused. Additional topics that
emerge in the course of the planning may also be addressed. The two symposia
will gather representatives from leading battery manufacturers, automotive
firms, university researchers, academic and industry analysts, congressional
staff, and federal agency representatives. An individually-authored summary of
each symposium will be issued.
This Report
The symposium that is the subject of this report was held in Michigan
in order to provide direct access to the policymakers and industrial participants
drawn from the concentration of battery manufacturers and automotive firms in
the region. The symposium reviewed the current state, needs, and challenges of
the U.S. advanced battery manufacturing industry; challenges and opportunities
in battery R&D, commercialization, and deployment; collaborations between the
automotive industry and battery industry; workforce issues, and supply chain
development. It also focused on the impact of DoE's investments and the role of
state and federal programs in support of this growing industry. This task of this
report is to summarize the presentations and discussions that took place at this
symposium. Needless to say, the battery industry has evolved very substantially
since the conference was held, and indeed some of the caveats raised by the
speakers with regard to overall demand for batteries and the prospects of
multiple producers now seem prescient. At the same time, it is important to
understand that it is unrealistic to expect that all recipients of local, state, or
federal support in a complex and rapidly evolving industry will necessarily
succeed. A number of the firms discussed here have been absorbed by
competitors, others have gone out of business, and others continue to progress.2
2
The Overview chapter of this report takes note of these recent developments.
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PREFACE xv
THE CONTEXT OF THIS REPORT
Since 1991, the National Research Council, under the auspices of the
Board on Science, Technology, and Economic Policy, has undertaken a program
of activities to improve policymakers' understandings of the interconnections of
science, technology, and economic policy and their importance for the American
economy and its international competitive position. The Board's activities have
corresponded with increased policy recognition of the importance of knowledge
and technology to economic growth.
One important element of STEP's analysis concerns the growth and
impact of foreign technology programs.3 U.S. competitors have launched
substantial programs to support new technologies, small firm development, and
consortia among large and small firms to strengthen national and regional
positions in strategic sectors. Some governments overseas have chosen to
provide public support to innovation to overcome the market imperfections
apparent in their national innovation systems.4 They believe that the rising costs
and risks associated with new potentially high-payoff technologies, and the
growing global dispersal of technical expertise, underscore the need for national
R&D programs to support new and existing high-technology firms within their
borders.
Similarly, many state and local governments and regional entities in the
United States are undertaking a variety of initiatives to enhance local economic
development and employment through investment programs designed to attract
knowledge-based industries and grow innovation clusters.5 These state and
regional programs and associated policy measures are of great interest for their
potential contributions to growth and U.S. competitiveness and for the "best
practice" lessons they offer for other state and regional programs.
STEP's project on State and Regional Innovation Initiatives is intended
to generate a better understanding of the challenges associated with the
transition of research into products, the practices associated with successful state
and regional programs, and their interaction with federal programs and private
initiatives. The study seeks to achieve this goal through a series of
complementary assessments of state, regional, and federal initiatives; analyses
of specific industries and technologies from the perspective of crafting
supportive public policy at all three levels; and outreach to multiple
3
National Research Council, Innovation Policies for the 21st Century, C. Wessner, ed., Washington
DC: National Academies Press, 2007.
4
For example, a number of countries are investing significant funds in the development of research
parks. For a review of selected national efforts, see National Research Council, Understanding
Research, Science and Technology Parks: Global Best Practices, C. Wessner, ed., Washington, DC:
National Academies Press, 2009.
5
For a scoreboard of state efforts, see Robert Atkinson and Scott Andes, The 2010 State New
Economy Index: Benchmarking Economic Transformation in the States, Kauffman Foundation and
ITIF, November 2010.
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xvi PREFACE
stakeholders. The overall goal is to improve the operation of state and regional
programs and, collectively, enhance their impact.
WORKSHOP SUMMARY
This report captures the presentations and discussions of the STEP
symposium on Building the U.S. Battery Industry for Electric Drive Vehicles:
Progress, Challenges, and Opportunities. It includes an introduction
highlighting key issues raised at the meeting and summary of the meeting's
presentations. This workshop summary has been prepared by the workshop
rapporteur as a factual summary of what occurred at the workshop. The planning
committee's role was limited to planning and convening the workshop. The
statements made are those of the rapporteur or individual workshop participants
and do not necessarily represent the views of all workshop participants, the
planning committee, or the National Academies.
ACKNOWLEDGMENTS
On behalf of the National Academies, we express our appreciation for
the insights, expertise, and perspectives provided by the many well-informed
contributors to this meeting. We would also like to extend special recognition to
Gary Krause from the Michigan Economic Development Corporation and his
colleagues, along with McAlister Clabaugh and David Dawson of the STEP
staff, for their commitment and excellent organization of the event. We are also
indebted to Peter Engardio, formerly of Businessweek and now with the Boston
Consulting Group, for his preparation of the introduction and summary of the
meeting. We also wish to thank Dr. Sujai Shivakumar and David Dawson of the
STEP staff for their tireless efforts to prepare the report for publication among
many other competing priorities.
NATIONAL RESEARCH COUNCIL REVIEW
This report has been reviewed in draft form by individuals chosen for
their diverse perspectives and technical expertise, in accordance with procedures
approved by the National Academies' Report Review Committee. The purpose
of this independent review is to provide candid and critical comments that will
assist the institution in making its published report as sound as possible and to
ensure that the report meets institutional standards for quality and objectivity.
The review comments and draft manuscript remain confidential to protect the
integrity of the process.
We wish to thank the following individuals for their review of this
report: Robert Bachrach, Energy & Environmental Solutions; Robert Boege,
ASTRA; Martin Dober, Michigan Economic Development Corporation; and
Paul DeCotis, Long Island Power Authority. Although the reviewers listed
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PREFACE xvii
above have provided many constructive comments and suggestions, they were
not asked to endorse the content of the report, nor did they see the final draft
before its release. Responsibility for the final content of this report rests entirely
with the STEP Board and the institution.
Charles W. Wessner Mary L. Good
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