For Next-Gen Batteries Look to Universities — and the Rare Startup

PlugIn1Governments and many companies in the U.S. and Europe all but forgot about battery innovation over the last 10-15 years, according to Joerg Huslage, the group leader for electrochemistry at Volkswagen. But with a growing number of automakers now jumping headlong into plug-in vehicle development, and already approaching the limits of lithium-ion (the battery technology of choice for the upcoming generation of electric cars) researchers are now in a high-stakes race to produce the next generation of plug-in vehicle energy storage technology that will have higher energy density, cost less, and last longer than today’s batteries.

Demand for energy storage technology that will replace lithium ion is “tremendous,” Huslage said this morning at IBM’s Almaden Institute — an event that focused on the topic of going beyond lithium-ion batteries. Investors have certainly been concentrating on what will come next, and Vinod Khosla recently went so far as to call lithium-ion a tech that has been “overhyped,” and will “possibly be replaced.”

Now that leaves a lot of questions about where the innovation will come from, who will be developing the breakthroughs and what type of technology will emerge. Will it come out of China, Japan or the underdogs in this race: Europe and the U.S.? Volkswagen, for one, has taken steps to utilize battery tech out of Asia. The German automaker has a partnership with Sanyo Electric to develop batteries for plug-in vehicles, another arrangement with Toshiba for an upcoming electric concept, and in May, announced a deal with China-based BYD Auto to test the Warren Buffett-backed company’s lithium-ion battery technology for upcoming VW cars.

As for who will produce key innovations, Huslage says his money’s on PhD students. That presents somewhat of a handicap for the U.S., he said, noting the declining interest from foreign students in doing graduate and post-graduate work here. As BusinessWeek reported last week, international admissions to U.S. grad schools fell sharply this year — the first decline since 2004, largely because of “the deteriorating job market and problems with visas and financing.”

Startups on the other hand, he said, are swimming upstream — more so in the battery sector than in most others. “It’s easier to build a car” than a battery with 10 times the energy density of today’s devices. As a rule, Huslage said, “Small startups cannot do this.”

One area of battery development that could offer better fodder for entrepreneurs, however, is new materials, said Huslage. And he expects at least some startups, spun out of university labs, to come up with “small solutions” (a groundbreaking electrolyte, for example) that end up making a big difference in battery capacity and performance.

What types of energy storage will emerge after lihtium-ion? Butron Richter, Nobel laureate and director emeritus of the Stanford Linear Accelerator Center, said yesterday, “Some of the experts here say lithium air is the best possible battery,” referring to the battery technology that the summit’s host, IBM plans to develop over the next five years. But “there’s a lot of the periodic table that’s unexplored.”