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Summary:

The team at battery tech startup Atieva didn’t plan on using high-profile electric car startup Tesla Motors as Battery Class 101. But that’s what it ending up being for many of the engineers at the 2-year-old Mountain View, Calif.-based startup; almost of third of the founding […]

The team at battery tech startup Atieva didn’t plan on using high-profile electric car startup Tesla Motors as Battery Class 101. But that’s what it ending up being for many of the engineers at the 2-year-old Mountain View, Calif.-based startup; almost of third of the founding team (and about a fifth of the current one) learned the ropes at Tesla before joining Atieva. Founded by former Tesla VP Bernard Tse and Astoria Networks founder Sam Weng, the company is developing software for monitoring individual battery cells, mechanical packaging and controls for battery packs in plug-in vehicles.

Atieva isn’t using the technology Tse and some of the other Atieva engineers worked on at Tesla, but Mike Harrigan, another former Tesla VP who joined Atieva as chief of sales and marketing earlier this year (Atieva now has about 30 people, mostly engineers), said in an interview this week that the new venture still takes lessons from Tesla. In addition to the industry connections Tse made during his time there, he and other engineers acquired basic knowledge about the demands on electric car batteries. Such expertise, along with a tight focus on battery pack tech, which is not as capital-intensive as the manufacturing and distribution of actual cars, may help Atieva to avoid some of the delays, detours and financial troubles that Tesla has encountered.

Tesla Motors initially planned to enter a similar business — battery tech supply — through a division called the Tesla Energy Group. Tse headed up the division at a time when, according to a 2007 post by founder Martin Eberhard on the official Tesla blog, it was “impossible to hire people with ‘prior experience.'” The electric car battery tech sector was simply too new for many people to have any significant experience in it. Tse moved on after Tesla shifted gears to focus on its main product, the Tesla Roadster, and started Atieva in 2007.

Eberhard noted in his post about the Tesla Energy Group that the company “did quite a few ‘Fourth of July’ tests to understand how lithium ion cells (of every stripe) failed” and “went through something like seven generations of design before we had what we consider to be a good, safe, reliable design” for vehicle battery packs made from commodity cells. Harrigan told us this week that Atieva put together a working prototype within six months (it’s now being tested in a converted vehicle by Norway’s Think), compared with what he said was more than a year for the Tesla Roadster pack, and he expects to have only 1-2 more iterations before Atieva has a solid design.

At that point, the design will still be tweaked for virtually every order. Harrigan said Atieva plans to design custom packs for each customer (“it’s pay as you go”), and aims to be “chemistry agnostic,” working with whatever cells an automaker wants to use or that a cell-maker wants packaged. Right now, Atieva is working with China’s Lishen to build 3,000 battery packs for buses in China as part of a nationally subsidized initiative. Harrigan said Atieva is also “in active talks” with Chinese and European automakers that are interested in deploying test fleets of electric vehicles, as well as a U.S.-based electric motorcycle maker.

Ultimately, Atieva aims to be something like a Magna International or Bosch — auto parts suppliers — for smaller, independent plug-in car makers. Harrigan said he expects big car companies to bring battery tech in-house within the next few years, as GM wants to do for it’s Chevy Volt, but “smaller companies will be more dependent on companies like us.” Within 3-5 years, he thinks Atieva will be producing hundreds of thousands of packs per year, with high-power electrical engineering, tooling, and development of automation taking place in Taiwan, and software and system development remaining in Silicon Valley.

Harrigan said the startup has received less than $10 million in funding from venture capital firm Venrock and is looking to raise a second round. And like so many others in the battery business this year, Atieva just might get a windfall from the stimulus package. It hasn’t applied directly for funds, but it has partnered with 2-3 companies that have requested funding under the battery program, agreeing “to work with them in some way,” Harrigan said, if they get DOE grants. Tesla, meanwhile, has revived its battery division, and recently snagged a battery pack supply deal with Daimler. It hopes to get DOE funds to set up manufacturing for its planned Model S sedan. So for now, for both companies, it’s wait and see.

This article also appeared on BusinessWeek.com.

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