A123 Not For The Volt ?  

Technology Review reports that rumour has it that A123 Systems' batteries won't be used in the first generation Chevy Volt - Why A123 Didn't Get the Volt Contract.

There's still no official word (it's expected by the end of the year), but it looks as though A123 Systems, a company based on a remarkable new battery chemistry formulated at MIT, won't be supplying the batteries for the first generation of GM's new electric car, the Volt. The contract, according to a couple of news reports released in recent weeks, will go to LG Chem, a Korean company.

GM had considered A123, a startup with no large-scale experience manufacturing automotive batteries, in part because A123 had developed a novel battery chemistry that produced very powerful, safe, and long-lasting batteries. So, why didn't the company get the contract? ...

Here are some guesses about why A123 didn't get the contract (if indeed it didn't).

GM may be betting that LG Chem is more likely to supply packs on time. LG Chem is a bigger and older company than A123, a startup founded in 2005, and it has more manufacturing capacity. What's more, Continental, which packaged hundreds of A123's battery cells into a large battery pack, was late delivering packs to GM for testing. Getting the Volt out on time is a big deal for the cash-strapped automaker, which is counting on the Volt to change its image and help turn around its sales. After disclosing that only one of the two battery companies would get the Volt contract, GM vice chair Bob Lutz has reportedly explained that "we feel that at this point we have a lower risk with the one company."

Chem's battery pack might be cheaper. There are a couple of reasons why the many cost-saving features of A123's batteries may not have led to a lower-cost battery pack. First, while replacing cobalt with iron reduces materials costs, working with nanoscale powders is very difficult and can add to processing costs.

Second, the design of the Volt may not take best advantage of A123's cells. The Volt design calls for far more battery cells than are actually needed to supply the car's 40-mile electric range. The pack has a capacity of 16 kilowatt-hours, or 2.5 miles per kilowatt-hour. In comparison, Tesla Motors is selling an electric car that gets 220 miles on a 53 kilowatt-hour pack, or more than four miles per kilowatt-hour. A direct comparison between the two isn't possible because they use different battery chemistries and have vehicles that don't weigh the same, and because the Volt is designed to operate like a hybrid after the first 40 miles, which requires keeping some battery charge in reserve. But the difference shouldn't be this much. According to one GM engineer, 12 kilowatt-hours should be plenty of energy. The extra four are essentially for insurance against battery degradation, so that at the end of a decade, the Volt still gets 40 miles out of the battery. A123's batteries may not need this kind of insurance, since they are so stable. That stability could make it possible to use fewer batteries than is possible with other chemistries, cutting costs. But GM requires A123 to supply the extra cells anyway. That could be wise, since better tests are needed to guarantee battery lifetimes, but the result is that the potential of A123's innovations isn't being exploited, so the packs are likely more expensive than they need to be.

Not getting the contract, which is reported to be for 50,000 battery packs, can't be good news for A123. But it's not the end for the company. It is still in the running for the next-generation Volt. What's more, the company is working on batteries for 18 other vehicles.