Bloomberg News

GM Volt Fire Said to Prompt U.S. Probe of Lithium Batteries

November 25, 2011

(Updates with LG Chem statement in eighth paragraph; share prices starting in 10th paragraph.)

Nov. 11 (Bloomberg) -- U.S. auto-safety regulators are scrutinizing the safety of lithium-ion batteries that power all plug-in electric vehicles after a General Motors Co. Chevrolet Volt caught fire, people familiar with the probe said.

The regulators have asked automakers, including GM, Nissan Motor Co. and Ford Motor Co., that sell or have plans to sell vehicles with lithium-ion batteries about the batteries’ fire risk, four people familiar with the inquiry said.

The Volt caught fire while parked at a National Highway Traffic Safety Administration testing center in Wisconsin, three weeks after a side-impact crash test May 12, said an agency official. The official, as well as the three other people familiar with the inquiry, said they couldn’t be identified because the investigation isn’t public.

“I want to make this very clear: the Volt is a safe car,” Jim Federico, GM’s chief engineer, said in an e-mailed statement. “We are working cooperatively with NHTSA as it completes its investigation. However, NHTSA has stated that based on available data, there’s no greater risk of fire with a Volt than a traditional gas-powered car.”

President Barack Obama’s goal of putting 1 million electric vehicles on U.S. roads by 2015 is part of his strategy to reduce dependence on foreign oil. Nissan is among companies that have received financing assistance from the U.S. Energy Department and European Investment Bank to develop electric vehicles and lithium-ion batteries. GM in January withdrew a request for $14.4 billion in U.S. loan guarantees.

Volt, Leaf

Automakers are looking to expand plug-in offerings beyond the Volt and Nissan’s Leaf, which went on sale in the 2011 model year as the first mass-market plug-in electric cars in the U.S. Toyota Motor Corp.’s Prius, the world’s best-selling hybrid, uses a nickel-metal battery. A plug-in Prius and an electric version of the RAV4 sport-utility vehicle will use lithium batteries.

“The people who are looking at EVs and plug-in hybrids are already committed to the technology,” said Eric Noble, president of The CarLab, an auto-industry consulting firm in Orange, California. The Volt fire and investigation probably won’t affect sales of plug-in cars unless something more dire happens, he said.

Seoul-based LG Chem Ltd., South Korea’s biggest chemical maker, supplies Volt batteries. LG Chem “is fully aware of the situation and is working closely with GM and NHTSA on the investigation,” the company said in an e-mailed statement distributed by Dick Pacini of the Millerschin Group, a public relations firm that represents it in the U.S.

Through Oct. 31, 13,051 Leafs and Volts had been sold in the U.S. this year, according to Autodata Corp.

Market Reaction

GM fell 0.8 percent to $22.51 at the close in New York. Nissan’s American depositary receipts, each equal to two ordinary shares, rose 2 percent to $18.39. LG Chem shares aren’t traded in the U.S.

A123 Systems Inc., which has a contract to supply batteries for GM’s electric Chevrolet Spark, fell 1.7 percent to $2.92. Polypore International Inc., which makes battery components, rose 1.8 percent to $54.95 and Tesla Motors Inc., the maker of luxury electric cars, rose 7.4 percent, to $33.64, the highest since December 2010.

More Testing

NHTSA’s normal practice is to open formal auto-safety investigations, which it publicizes, following consumer complaints. In this case, it had no such complaints and decided to probe based on its observations from the one fire, which occurred in a Volt it bought for the test, the official said.

In June, GM and NHTSA both crashed a Volt and couldn’t replicate the May fire, said Greg Martin, a spokesman for the automaker. GM has safety procedures for handling the Volt and its battery after an accident. Had those been followed, there wouldn’t have been a fire, he said in a phone interview.

“There are safety protocols for conventional cars,” Martin said. “As we develop new technology, we need to ensure that safety protocols match the technology.”

NHTSA and the Energy Department next week plan to test Volt battery modules that have been removed from the cars to see if they can replicate the condition that led to the fire, the NHTSA official said. The agencies will study the batteries immediately and continue to observe them in the coming weeks, he said.

Dan Borgasano, a spokesman for A123 Systems, based in Waltham, Massachusetts, declined to comment. Brian Sinderson, a spokesman for New York-based battery maker Ener1, didn’t immediately respond to an e-mail seeking comment.

‘Really Hot’

Carmakers have engineered electric vehicles using lithium batteries to withstand serious accidents because the element is flammable, said Sandy Munro, president of Munro and Associates, an engineering consulting firm in Troy, Michigan.

Lithium batteries could catch on fire if the battery case and some of the internal cells that store electricity are pierced by steel or another ferrous metal, he said.

“Lithium burns really hot,” Munro said in a phone interview. “But it doesn’t happen often. You have to do something pretty dramatic to make it catch fire.”

If a lithium battery is pierced by steel, a chemical reaction will take place that starts raising the temperature and can result in a fire, he said. If the piercing is small, that reaction can take days or weeks to occur, he said.

Nissan, Tesla

There hasn’t been a reported fire involving the more than 8,000 Leafs on U.S. roads, Katherine Zachary, a spokeswoman for Nissan’s U.S. unit, said in an e-mail.

“The Nissan Leaf battery pack has been designed with multiple safety systems in place to help ensure its safety in the real world. All of our systems have been thoroughly tested to ensure real-world performance,” she said.

Tesla vehicles have been driven more than 16 million miles without having a post-crash fire or battery-safety incident, Ricardo Reyes, a spokesman for the Palo Alto, California-based company, said in an e-mailed statement.

“A fully charged Roadster battery carries the energy content equivalent of less than 3 gallons of gasoline,” he said. Tesla has worked with first responders to develop procedures for handling crashed electric vehicles, he said.

Unlike the batteries in the Volt and Nissan’s Leaf, Tesla uses cells about the size of those used in laptop computers, he said. Such cells “carry much less energy per cell than the larger prismatic cells preferred by other manufacturers, providing an additional layer of safety,” Reyes said.

Crash Tests

NHTSA this year gave the Leaf and Volt its top crash-test rating, following a “good” rating in April by the Insurance Institute for Highway Safety.

In the simulated side-impact crash test, a new U.S. safety test for the 2011 model year, metal punctured the battery, the official said.

The fire in May was severe enough to burn vehicles parked near the Volt, the agency official said. Investigators determined the battery was the source of the fire, the official said.

NHTSA also sent a team of investigators this week to Mooresville, North Carolina, to probe a fire in a residential garage where a Volt was charging. That investigation is continuing, the agency official said.

Duke Energy Corp., which had installed a charging station in the home as part of a pilot program, has told the 25 users of stations in North Carolina and South Carolina to stop using them until the investigation is completed.

UPS Crash

The Federal Aviation Administration, in an advisory to airlines in October 2010, warned that lithium batteries used in cell phones, digital cameras and other devices are “highly flammable and capable of ignition,” adding that fire- suppression systems aren’t effective when that happens.

It issued the advisory after a United Parcel Service Inc. cargo plane carrying thousands of lithium batteries crashed in Dubai after catching fire, killing both pilots.

“As manufacturers continue to develop vehicles of any kind -- electric, gasoline, or diesel -- it is critical that they take the necessary steps to ensure the safety of drivers and first responders both during and after a crash,” NHTSA said in an e-mailed statement today.

“Based on the available data, NHTSA does not believe the Volt or other electric vehicles are at a greater risk of fire than gasoline-powered vehicles. In fact, all vehicles -- both electric and gasoline-powered -- have some risk of fire in the event of a serious crash.”

First Responders

Regulators want to use information collected from automakers to educate emergency responders, tow-truck operators and salvage yards about how to handle plug-in electric cars involved in crashes that may penetrate the battery compartment, the official said.

NHTSA will use the information from the automakers, which also include Toyota and Bayerische Motoren Werke AG, for a three-year $8.8 million electric-vehicle safety study it announced in June, the official said.

“I don’t think lithium battery-pack safety will prove a significant safety hazard, at least compared to dangers of gasoline fuel,” Chris Paine, producer of the documentary film “Revenge of the Electric Car” about the Volt, Leaf and Tesla, said in an interview. “The technology has really stabilized in recent years.”

Range Anxiety

LMC Automotive, a forecasting firm based in Oxford, England, predicts electric vehicles will make up 1 percent of the U.S. car market in 2020. Along with safety, concerns about the short distance electric vehicles can go on one charge -- called range anxiety -- will keep some buyers away, Mike Omotoso, a LMC analyst, said.

“We think it will take two to three generations of EVs before the price comes down enough to get people to buy them,” Omotoso said in a phone interview. “It will take that much time for consumers to overcome fears of safety aspects and range anxiety. By 2020 we expect enough public and private charging stations so that people will be able to drive an EV almost anywhere in the country.”

Fifteen electric-car or battery-powered models will be available in the U.S. by the end of 2014, according to LMC Automotive, which forecasts a glut of electric cars given that hybrid-electric sales were only 2 percent of the car market so far this year.

--With assistance from Alan Ohnsman in Los Angeles and Craig Trudell in Southfield, Michigan. Editors: Bernard Kohn, Andrea Snyder

To contact the reporters on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net; David Welch in Detroit at dwelch12@bloomberg.net; Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Jamie Butters at jbutters@bloomberg.net


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