Michgian's Hybrid Economy: The Next Generation Battery ANN ARBOR, MI (Michigan Radio) - Most people don't know it, but cars powered by lithium-ion batteries are on the road right now. Ted Robertson is with Magna International of Troy, which will make batteries for Ford's all-electric Focus.

As he opens the hood of what looks like an ordinary Focus, one big thing is missing. There's no engine. But, with the hood shut it looks like any other car.

"There's nothing to show you that it's any different from another Focus on the road," Roberston says, "except, if it accelerates and you don't hear any noise, you say, 'there's something wrong with that car.'"

The batteries that drive this electric Focus are lithium-ion. Cars like the Prius and Civic Hybrid use the old technology. Lithium ion is lighter, it stores more energy, and it operates efficiently at both a lower and higher state of electrical charge. But there were some problems at first.

Prabhakar Patil is President of Compact Power in Troy. The company will make lithium ion batteries for GM's all-electric Volt. Patil says some materials in early batteries were quite flammable, or they released oxygen when damaged. That set off cascade failures.

"There were safety concerns, let's put it that way and we didn't want to have them blow up or explode it sets the technology back many years," Patil said.

Patil says they modified the design and the materials, and lithium ion batteries are now very safe. His company was going to make the Volt's battery cells in Korea, and assemble the packs in Michigan. Then, the state approved tax breaks for cell manufacturers worth hundreds of millions of dollars. Now Patil's company will make the cells here, too. Another company, A-123 Systems will make cells and battery packs in Michigan for Chrysler.

Brett Smith is an analyst with the Center for Automotive Research. He says the industry moved in fast. He credits the state's economic development corporation.

The MEDC two years ago was nowhere in the picture, Michigan was not considered a prime battery spot. In the last year, they've done a fabulous job, it's not an advertisement for MEDC, it's just a fact, if this industry develops, Michigan has a position at the forefront because of the work that's been done.

Smith says the new industry will create some white and blue collar jobs. But he says this is not a labor intensive industry. So it can never replace the tens of thousands of auto jobs Michigan has lost.

Bob Kruse has a different worry. He's head of alternative propulsion at General Motors.

"We need to also have, in my view, an energy strategy that causes consumers to want these kinds of vehicles," Kruse said.

Kruse says it needs to be more expensive for people to drive a traditional car. Otherwise, they won't buy more expensive hybrids and electrics. And automakers won't see a return on their big investments in lithium ion batteries. Kruse says people lots of hybrids when gas hit four dollars a gallon last year.

"And as gas started dropping back down to $2.00 a gallon, you just watched the hybrid sales fall off a cliff," Kruse said.

Higher gasoline taxes would help. Hybrid Autos-dot-com editor Bradley Berman says that will be a tough political battle. Still he thinks U.S. policy will support the new industry. For now, he's just pleased that automakers get it. The future is not the internal combustion engine. Just don't expect that future to arrive overnight.

"This is a slow road to the next generation of green vehicles," said Berman. "It's not like it's gonna be the solution for all that ails Detroit this year or next year or the year after."

Companies in Michigan are elbowing each other for a share of two billion dollars of federal stimulus money set aside for battery technologies. Last week, Michigan's entire Congressional delegation urged federal officials to use that money for a U.S. "battery center of gravity" in Michigan. © Copyright 2009, Michigan Radio