General Electric (GE) said on May 12 that it would invest $100 million in a battery manufacturing plant in upstate New York, which will produce sodium-based batteries for hybrid trains and other vehicles. The venture, a new business for the company's GE Transportation unit, should bring in $500 million by 2015 and $1 billion a few years later, says Chief Executive Jeffrey Immelt.
The move promises to create 350 factory jobs as well as help stimulate the sluggish regional economy near GE's research and development headquarters in Niskayuna, N.Y., when the factory opens in mid-2011. GE has applied for economic-stimulus funding from the U.S. Energy Dept. to underwrite the effort. "A public-private partnership can help us accelerate this," says Immelt.
Mark Little, GE's director of global research, estimates that thousands of supply chain, construction, and service jobs could also be created to support the plant. The factory will make batteries based on a proprietary sodium-and-nickel-chloride formula and tightly controlled manufacturing process that the company invented about five years ago. Little says GE has 30 patents on the technology, which stores energy produced when a vehicle brakes.
The federal stimulus bill set aside $2 billion to support advanced-battery technology. New York officials, from Governor David Patterson and U.S. Representative Paul Tonko (D), have pushed the GE plans. Tonko says that he worked with House Speaker Nancy Pelosi (D-Calif.) and other legislators to "stretch the language of the American Recovery & Reinvestment Act to make it technology neutral, so that it would also cover energy storage as well as energy generation" to assist GE. Energy generation, from solar cells to wind turbines, tends to grab more headlines.
So far, GE has invested $150 million in advanced-battery R&D, says Immelt. The sodium-nickel-chloride battery will help power GE's first hybrid locomotive, scheduled to hit the market in 2010. The company hopes to target both existing and new customers not only in the rail industry, but also in mining and shipping.
These new batteries aren't suitable for automobiles, however. Car batteries must not only store energy, but provide quick acceleration. To supply that market, GE has invested about $70 million for a 10% stake in A123 Systems, a Watertown (Mass.) startup that creates lithium batteries for electric plug-in cars.
Other multinationals are investing in advanced batteries for transportation as well. A subsidiary of Warren Buffett's Berkshire Hathaway (BRKA), MidAmerican Holdings, paid $230 million for a 10% stake in Chinese automaker BYD last fall with the aim of developing batteries for electric vehicles. BYD began selling late last year a plug-in electric hybrid car that uses an iron-phosphate-based battery.
Part of a Wider Energy Push
Analyst Ron Pernick of Clean Edge, a San Francisco research firm that manages an index of green energy companies for Nasdaq, says that GE's high-profile investment in advanced batteries could inspire other companies to push into new energy-storage technology, not just energy-generation products. Both, Pernick says, are needed to meet the world's power needs.
He notes that GE aimed for $17 billion in sales of "eco-imagination," or green products, last year, and hit that goal. "They've set a good example of how companies can scale their ideas and see financial results."
Jana is the Innovation Dept. editor for BusinessWeek.