ATP Working Paper Series
Working Paper 05–01
Abstract
The United States has been
an incubator for new technologies for rechargeable batteries, while Asian
companies have developed the manufacturing expertise and made the requisite
capital investment to profit from these technologies. This investigation
examines the circumstances attending lithium-ion (Li-ion) battery developments
as a vehicle to seek a better understanding of the factors affecting
decision-making of U.S. manufacturers, specifically addressing the question: "Why
are there no volume Li-ion battery manufacturers in the United States?" The
United States has been an incubator for new technologies for rechargeable
batteries, while Asian companies have developed the manufacturing expertise
and made the requisite capital investment to profit from these technologies.
This investigation examines the circumstances attending lithium-ion (Li-ion)
battery developments as a vehicle to seek a better understanding of the
factors affecting decision-making of U.S. manufacturers, specifically
addressing the question: "Why are there no volume Li-ion battery manufac-turers
in the United States?"
The conclusions are:
- The U.S. battery companies "opted
out" of volume manufacturing of Li-ion batteries, primarily because
of a low return on investment compared with their existing business,
the significant time and investment required from conception to commercialization,
and the time and expense required to establish a sales organization
in Japan to access product design opportunities and take advantage
of them. Labor costs were not a major issue impeding large-volume
production of the cells in the United States. The cost of labor in
the United States was essentially the same as for the Japanese manufacturers
domestically. The Asian strategy of providing facilities and loans
to establish manufacturing locally and create jobs was a more important
factor. Structural differences of the Japanese electronic products
industry compared with the U.S. counterpart create barriers for U.S.
firms seeking to market rechargeable batteries or battery materials
in Japan. In markets for rechargeable batteries, customers are large,
high technology-based electronics companies with their own battery
manufacturing capability. Developing a product requires close contact
with portable electronic device designers, which is more easily accomplished
within the vertically integrated Asian companies than in the U.S.
system where battery companies have little access to device designers.
The tendency could be for technological development to follow manufacturing
to East Asia, as a natural consequence of developing manufacturing
expertise. Primary as well as rechargeable battery production will
slowly shift to China, Korea, and Southeast Asia. U.S. manufacturers
pursuing other budding energy technologies, such as fuel cells, will
face similar issues.
- Opportunities still
exist for U.S. companies to successful-ly enter niche markets, such
as those with medical, military, or space applications. Mechanisms
for cooperation between government-academia and industry need to
be implemented to assure that advanced materials technologies have
the resources and direction to succeed
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Date created: July 21,
2005
Last updated:
August 4, 2005
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