Michigan Governor Jennifer Granholm has made a big push in recent months to lure battery makers to her state with hundreds of millions of dollars in tax credits and other incentives. Granholm is betting that millions more in stimulus dollars allocated for batteries  — and thousands […]

Michigan Governor Jennifer Granholm has made a big push in recent months to lure battery makers to her state with hundreds of millions of dollars in tax credits and other incentives. Granholm is betting that millions more in stimulus dollars allocated for batteries  — and thousands of green jobs — will flow to the state as a result. But Kentucky, which beat out Texas and six other states recently in what Governor Steve Beshear called “a fierce battle” for a planned $600 million battery center, wants just as badly to be the future hub of U.S. battery manufacturing. According to Beshear, it could transform Kentucky’s economy the way the arrival of Toyota did two decades ago.

As we noted earlier this week, developing an idea in the right location can sometimes be just as critical to success as the merit of the idea itself. Just ask the developers in Iceland who seemed to have all the ingredients to make good on the promise of the Internet, but who were blindsided when two guys in Silicon Valley launched something called Google. For battery startups looking for a home, where’s the best place to go if you want to end up more like a Google when the dust settles and less like the Reykjavic hackers?

At least four battery companies are going with Michigan, which has the obvious benefit of proximity to the Big Three — all of which have lined up battery suppliers for electric vehicles. The state has offered $543 million in tax credits for battery makers Compact Power (a subsidiary of LG Chem), Johnson Controls-Saft, KD Advanced Battery Group (a joint venture from Dow Chemical, Kokam America, and Townsend Ventures) and A123Systems, the lone startup in the group and the one with the biggest hiring plans. In all, the companies’ four projects are expected to create some 6,600 jobs, with 5,000 of those coming from A123. Khosla Ventures-backed battery startup Sakti3, based in Ann Arbor, is also working toward setting up manufacturing in Michigan.

Kentucky, meanwhile, has attracted the NAATBatt consortium — the group of 50 U.S. companies that plan to invest more than $600 million in a battery R&D center — if DOE funds come through. The state also has a second development center in the works set to have an annual budget of $7 million, initially for lithium-ion batteries and eventually for lithium-air and zinc-air batteries for vehicles and grid storage. It’s a partnership between the state government, the University of Kentucky in Lexington, the University of Louisville, Kentucky and the Chicago-based Argonne National Laboratory. Being close to those development centers could expose startups and entrepreneurs to funding opportunities, as San Diego hopes will happen for algae innovators as a result of its new Center for Algae Biotechnology.

What else does Kentucky have going for it? Toyota manufacturing facilities, and the fact that the Japan-based automaker may be in a better financial position to make big battery plays than its Detroit competitors. Toyota is hard at work on batteries itself, however, so we wouldn’t expect a major battery supply contract. Ford, while struggling, is the one Detroit automaker to get by so far without bailout funds, and it has two plants in Kentucky. General Motors also has a factory in the state, but it plans to keep its battery assembly close to home (cells for the battery packs in its planned Chevy Volt will come from LG Chem in South Korea).

As Valence Technology CEO Bob Kanode told us earlier this year when we spoke with him about his company’s plans for a U.S. battery plant, “This isn’t just a Big Three situation. European OEMs are larger than the Big Three, larger than the OEMs of Asia.” Kanode thought Southern states’ weaker protections for labor unions, drier climate and presence of European automakers — BMW in South Carolina, Mercedes in Alabama, Volkswagen in Tennessee) — would also help them lure battery makers.

  1. kent beuchert Friday, May 1, 2009

    I don’t think these politicians understand just how
    volatilethe battery business is these days. For example, should (as it certainly will) the advancements licensed by MIT to A123 Systems come to market as planned in two years (about the same time the Volt will start needing a fair amount of batteries) , then all those Michigan plants for LG will dry up in an instant. Same scenario should EEStor’s potentially battery-killing EESU’s pan out. And right now there is better than even money that they will.
    As they say, “He who lives by the sword (tax breaks),
    can easily die by the sword.” “Green jobs” is a term
    that sounds rosy future, but most green industries
    are useless when reality sets in via cost benefits analysis. Already electric cars , as a method of reducing CIO2, have been slammed really effectively by some British analysts. Gas avoidance remains a real goal, but it’s really a big big mistake to spend money on electric cars in order to reduce emissions. The payoff simply isn’t there. Even mentally challenged Obama may be forced to admit that in the near future, if the media has the guts to tell the truth.

  2. [...] Written by Josie Garthwaite No Comments Posted May 12th, 2009 at 7:00 am in Big Green In the ongoing battle among states to lure big players in the emerging battery industry — with their potential to [...]

  3. [...] have entered a high-stakes competition in recent months to lure battery makers with tax credits and incentive packages in an effort to [...]

  4. [...] $5.9 billion to help Ford retool factories in Kentucky, Michigan (two states that have been vying for battery makers), Illinois, Missouri and Ohio to produce 13 “more fuel efficient models.” Nissan North [...]

  5. [...] the next 12 years. Led by Governor Jennifer Granholm, the state has been putting together similar packages for battery makers in recent months in an effort to build up a new industry as auto companies shutter plants and slough jobs. And this morning, Granholm’s office hinted [...]

  6. [...] Free Press, Biden will make the announcement with Michigan Governor Jennifer Granholm, who has been working this year to lure battery factories (and the new jobs that would come with them) to the state — so we suspect that at least one [...]

  7. [...] The state is competing against Kentucky, EEStor’s home state of Texas, and other states in a high stakes battle to become the future hub of U.S. battery [...]

  8. [...] low volume at a facility in Troy, Mich. But Michigan — whose Gov. Jennifer Granholm has been fighting hard for greentech manufacturing jobs to help revive the state economy — does not have a lock on Skyline’s business long [...]

  9. [...] more than pocket change for ActaCell at this stage. However, it’s small game, compared to the $600 million project that the company had planned to participate in as one of the 50 members of the National Alliance [...]

  10. [...] remain on the “short list” for the facility — the latest game-piece in an ongoing competition among states to woo advanced battery and electric vehicle factories, which raise the prospect of not only bringing manufacturing jobs and future business to a [...]


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