I. Introduction

Study Objectives

The Advanced Technology Program (ATP) is a government-industry partnership that cost shares with private industry the funding of high risk R&D with broad commercial and societal benefits. These projects would not likely be under-taken otherwise because the risks are too high or the benefits would not accrue to private investors. Through a competitive selection process, ATP chooses projects by applying evaluation criteria, (1) scientific and technological merit (50 percent), and (2) potential for broad-based economic benefits (50 percent). ATP source evaluation boards are thus charged with assessing the potential economic benefits to the United States of projects under consideration for funding as well as the technical merit.

It is anticipated that the major benefits accrue through creation of new products and processes embodying ATP-funded technologies and their successful commercialization. Of primary interest to this publicly-funded program are the benefits to industries and individual consumers and users of these technologies, rather than to the individual companies that are funded directly. U.S. technology users benefit from goods produced off shore as well as those produced domestically. Nevertheless, offshore production will change the flow of benefits from a U.S. investment in R&D and may reduce the benefits to the United States. The ATP seeks to better under-stand the factors affecting commercialization of technology in the United States by U.S. companies as a means of:

• Providing guidance to the proposal evaluation and selection process;
• Aiding in monitoring the business opportunities progress of technologies currently under development; and
• Contributing to the development of U.S. science and technology policy.

This study uses the case of Lithium-ion (Li-ion) batteries to investigate factors affecting decisions of U.S. companies to set up production for new battery technologies. U.S. scientists have spearheaded R&D in areas where the dominant manufacturers are now abroad. Lithium-ion batteries, which power the devices of the digital revolution-including telephones, music players, digital cameras, and notebooks-are a case in point. Today's typical mobile phone owes its size and weight reductions largely to the advent of the Li-ion rechargeable battery. Yet despite many years of electro-chemical research in the United States, Japanese companies took commercial advantage of the innovation and transformed it into a useful product, while U.S. companies did not.

With the assumption that future battery and other technologies may be expected to experience commercialization path-ways similar to the Li-ion case, this study seeks answers to the following questions:

1. Why are there no large volume producers of rechargeable Li-ion batteries in the United States?
2. What are the factors affecting the introduction of new technology into the marketplace?
3. What are the implications of the findings for other developing technologies, for example, fuel cells, displays, and other electronic components?

Methodology

We conducted interviews with more than 40 individuals in the lithium-ion battery industry worldwide to establish the relative impact of various factors on investment and manufacturing decisions of Li-ion battery manufacturers and to identify the principal factors that have limited the development of large volume production of rechargeable Li-ion batteries for the portable electronic market in the United States .

The interviewees included individuals in industry, government, and academia. Individuals interviewed from industry included representatives from materials suppliers and electronics firms that use Li-ion batteries in their devices as well as representatives from battery manufacturers serving in technology, management, and marketing positions. Appendix 2 lists the company affiliations of the individuals interviewed.

Each interviewee received a list of questions in advance that served as a guide to the interview process. Appendix 1 lists the questions used to guide the personal interviews. Interviews did not always follow the sequence of the listed questions. The interviews were conducted in a free-flowing manner, allowing the experts to focus on what they considered to be most important factors influencing production decisions of Li-ion manufacturers.

Their responses assisted us in identifying and analyzing structural differences that appeared to account for disparities in Li-ion industry outcomes in the United States and Asian countries.

Date created: July 21, 2005
Last updated: August 4, 2005

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