Automakers Seek Profit in Electric-Car Batteries

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By way of contrast, rival startup Fisker Automotive plans to stay out of the supply business at least until it secures a market foothold. The company has not reached production for its plug-in hybrid Fisker Karma, and it sees the model's exclusive powertrain and battery pack from Quantum Technologies (QTWW) as a competitive advantage—and key to getting the vehicle to market fast. "Once we get this to market in numbers," said Fisker spokesperson Russell Datz in an interview, "plans may change."

Daimler, which plans to launch an electric version of not only the subcompact Smart, but also a Mercedes sedan, has other pots brewing. The company sources nickel-metal hydride battery packs from Cobasys and lithium-ion packs from Continental AG (CONG.DE) for its hybrids. But Daimler also owns 90% of a joint venture launched two months ago with Germany's Evonik Industries to develop lithium-ion batteries—for its own vehicles and, eventually, third-party manufacturers.

GM Squandered First-Mover Advantage

To be sure, components sidelines offer nothing close to a silver bullet for today's automakers. Many parts manufacturers have come to the brink of bankruptcy as automakers cut production and lenders refuse credit to those doing business with Detroit's beleaguered Big Three.

At least one of the Big Three could have had a hefty piece of the now-hot battery market. A first-mover in the sector, GM started building a sideline nickel-metal hydride business (similar to the one envisioned by Daimler) 15 years ago. But GM ended up selling its stake in a battery venture to Texaco (later acquired by Chevron). Called GM Ovonic, the joint venture with a subsidiary of Michigan's Energy Conversion Devices (ENER) launched in 1994 to commercialize nickel-metal hydride batteries for electric vehicles.

Toyota entered the picture two years later with the joint venture Panasonic EV Energy. The company now gets about 70% of all hybrid battery sales (most of them nickel-metal hydride batteries for Toyota's Prius), with customers including Ford (F), Nissan, and GM itself. GM failed to parlay battery technology licensing and sales into significant revenue, and gave up on its energy storage sideline after a few short years—handing the market to Toyota. In a few years, Daimler, Tesla, or Nissan may be ready to give it a run for its money.

Provided by GigaOm—