Big Three turn to Asian countries for hybrid batteries

The future of the U.S. auto industry resembles a box of parts for hybrids, plug-in electrics and fuel cells, which promise to slash oil demand and provide jobs for another century. But that box comes with a familiar disclaimer: Batteries not included.

As Detroit's automakers rush to develop vehicles powered by electricity, they find themselves relying on foreign sources for the advanced batteries that will make such technology available to everyday consumers. While much of the science has been developed in U.S. labs, Asian companies have a two-decade head start on actually making rechargeable batteries.

That gap concerns U.S. automakers, which often have to shop Asian manufacturers for the most expensive parts of today's hybrids and their first generation of plug-in vehicles. The batteries for General Motors Corp.'s Chevrolet Volt will be made in South Korea or China, depending on which supplier is chosen, and likely will cost more than $10,000 per vehicle.

"One of the reasons for having hybrids is to reduce dependence on foreign oil," said Sherif Marakby, Ford Motor Co.'s chief engineer of hybrid core engineering. "You don't want to substitute dependence on foreign oil with dependence on foreign materials for lithium-ion batteries."

While the first commercial plug-in hybrids have yet to hit the road, Wall Street already has begun to salivate over the potential for the market, with estimates of hybrid battery sales approaching $10 billion annually worldwide by 2015. And if fuel-cell vehicles ever become commercially feasible, such batteries will come standard.

GM spokesman Greg Martin said batteries are different from other auto parts, which have been rapidly outsourced to low-wage countries in recent years. "Other countries such as Korea and Japan have identified advanced battery research and production as competitive priorities," Martin said. "We have to make sure not to cede that competitive race. If we rely on foreign sources for those products, we still could in a sense be relying on foreign sources of energy."

U.S. companies have long led the race to research and invent new types of batteries, and the first lithium-ion designs were developed in the United States in the late 1980s. But it was Sony Corp. that licensed the technology first for manufacturing, and since most of the consumer electronics and computer companies using the batteries were Japanese, battery suppliers in Japan and other parts of Asia had a natural advantage.

Those advantages have carried over into cars and trucks.