Pact with automakers puts firm in fast lane: Battery pioneer signs deal with big three alliance, hopes to push technology for hybrid cars to market

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A deal with the big-three U.S. automakers has positioned an Indianapolis manufacturer to be one of the leading battery providers for domestically made hybrid vehicles.

EnerDel Inc., which employs 35 at its 8740 Hague Road headquarters, recently signed a deal to provide technology for hybrid-vehicle batteries to a consortium formed by DaimlerChrysler Corp., Ford Motor Corp. and General Motors Corp.

EnerDel is a joint venture between two publicly traded firms, F l o r i d a – b a s e d alternative-energy company Ener1 Inc. and Michigan-based auto supplier Delphi Automotive Systems Inc., which has plants in Anderson and Kokomo. Delphi owns 19.5 percent of the company.

Financial terms of the deal between EnerDel and the U.S. Advanced Battery Consortium were not released, but EnerDel officials said it has a seven-figure value.

They said the contract will advance the company’s plan to launch a cost-competitive lithium ion battery that is lighter, smaller and higher-powered than the nickel metal hydride batteries currently used in hybrid vehicles.

“We believe the [battery consortium] has validated the path we are pursuing to develop and commercialize a [lithium ion] battery that will significantly improve future hybrid vehicles made in the U.S., and add value to the American automotive industry,” said Charles Gassenheimer, Ener1’s chairman.

EnerDel’s battery should last longer and operate more efficiently in variable temperatures than current hybrid batteries, said Ulrik Grape, president of EnerDel in Indianapolis.

Even before striking the deal with the battery consortium, EnerDel officials said they had achieved strong power performance with small lithium ion batteries.

“Now, based on our initial data, we believe that our battery technology has the potential to exceed … goals,” Grape said.

EnerDel hopes to complete the energy cell for the battery system by the end of this year. The consortium is seeking a partner to handle two more phases of the project. One would help develop the electrical and safety systems for the battery, and the other would help develop the battery casing. Those deals, which EnerDel is pursuing, each could be worth more than $10 million.

EnerDel officials are confident their new batteries could cut the costs of hybrid vehicles up to $2,500.

The new lithium-ion batteries are made possible by technical breakthroughs in lightweight lithium-ion cells, introduced in rechargeable batteries in the 1990s, but until recently deemed too volatile for safe high-power use.

Yet-Ming Chiang, an MIT professor and battery pioneer, told The Wall Street Journal that many companies are lured into battery manufacturing. “Research in batteries is very seductive,” he said. “It initially looks easy to boost power, but many variations turn out to shorten battery life or make batteries so unstable that runaway [explosions occur]. Batteries are chemically complex, electrically complex and mechanically complex.”

EnerDel formed in September 2004. Company officials say they’ve perfected their batteries through research and partnerships with domestic and Japanese companies, including one of the leading Japanese technology companies, Ieotchu.

The big-three automakers have lagged far behind their Japanese counterparts in the race to get hybrid vehicles to market.

Toyota Motor Corp. formed a joint venture early this decade with Osaka, Japan-based Panasonic to make batteries, and has led the way. Part of the problem, Gassenheimer said, is the lack of U.S. batterymakers capable of making these specialized products.

Only a handful of other domestic companies are racing EnerDel to market. Milwaukeebased Johnson Controls Inc., Gassenheimer said, is likely the biggest of those rivals.

EnerDel’s recent agreement with the big three U.S. automakers gives it a clear advantage, industry experts said. And the agreement doesn’t preclude the company from marketing its product to Japanese and other foreign automakers.

“The exciting thing is, we’re already working on the next generation of battery that will power these hybrid vehicles,” Gassenheimer said. “Lithium ion is the future”

The future could mean a much bigger research-and-production facility in Indianapolis, Gassenheimer said.

“When we expand, we might look to open other U.S. operations, but we like Indianapolis because of its central location, its proximity to Detroit, and its skilled work force,” Gassenheimer said. “The growth in Indianapolis has the potential to be significant.”

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