VI. Implications for Other Technologies

To what extent are the factors affecting U.S. production decisions by the battery industry common to other U.S. industries? And what are the implications, particularly for budding energy technologies, but also for more mature electronics industries, such as flat-panel displays, which have been migrating offshore for some time?

Fuel cells

To avoid erosion of technological and economic leadership, North American companies will need to make sufficient investments to build the infrastructure for successful commercialization of emerging energy technologies. The findings of this study concerning Li-ion battery technologies can be applied directly to fuel cells. The U.S. government has identified fuel cells as a means to reduce dependence on imported fossil fuels. Development efforts in fuel cell technology are divided into three applications: 1) small power sources for portable electronic devices; 2) larger units for transportation; and 3) stationary power for providing electricity for buildings and homes on-site. Of these, stationary power generation demonstrates the most significant potential market. Viable market applications include uninterruptible power supplies to maintain critical processes that are intolerant of power interruptions. Fuel cell applications in portable electronic devices offer the strongest parallels to Li-ion batteries.

All Asian and European manufacturers of portable electronic devices have fuel cell programs. These companies have representatives in the United States that closely follow the technology developments on the U.S. scene while planning their own product development.

Fuel cell applications in portable electronic devices, specifically direct methanol fuel cell (DMFC) technology, have the strongest parallels to Li-ion batteries. The status of developing DMFC technology for small portable electronic devices clearly falls into the development phase. The electrolyte membrane needs improvement, the cost of the platinum-rhodium catalyst loading is too high, and the best cell con-figuration has not yet been determined. Furthermore, the best concentration of methanol is still being explored. This fuel cell technology is ready to transition into advanced development, which constitutes the first step toward commercialization. This stage requires a considerable investment in equipment and pilot facilities for assembly and testing of the DMFC prior to manufacturing. The present cell designs vary from one company to the next, and some aspects of their production lend themselves to hand assembly rather than automated production. Some phases of production can be automated; for example, roll-to-roll facilities must be designed and implemented.

Approaches representing a significant departure from present practices appear to have a chance for market success. For example, Neah Power, Inc., is pursuing a silicon-based fuel-cell technology. This shows some promise. The work of MTI under the auspices of an ATP award is making progress using pure methanol to avoid some water management problems. They have demonstrated a cellular phone charger.

It is impossible to predict with certainty what route fuel cells will take to commercialization. The fuel cell developers with deep pockets can afford to develop automated cell assembly. Once equipment design begins, it generally takes 18 to 24 months to commission a plant. If funds are unavailable, or if there is a rush to market, companies can be expected to explore hand cell assembly in Southeast Asia or China, as opposed to automated assembly in the United States, thereby taking advantage of low labor costs and minimizing investment in equipment. In this scenario, production can begin with a minimal investment in tooling and increasing production is just a matter of adding hand tooling and more people. Manual production results in greater variability in product quality than with automated production, but is generally acceptable with proper quality control.

At the present time, no U.S. company has committed to volume production of DMFC fuel cells. Although Motorola announced two years ago that it would have a methanol-based fuel cell in two years, they recently reduced their efforts and no longer have a timeframe for introducing such a product. All work is in the advanced developmental stage. An interviewee who works for a Japanese electronics company that has its own fuel cell program expects that the U.S. developers will not manufacture in the United States , but rather in Japan , Southeast Asia , or China . Several Asian companies appear to be close to commercialization, including Samsung, NEC, Casio, and Toshiba. NEC exhibited a DMFC-powered notebook computer at the WPC EXPO 2004. The date for their commercial introduction has not been set.

Micro fuel cells, as well as larger stationary units, in particular, have a window of opportunity to start manufacture in the United States.

Displays and chip fabrication

Commercial development of other technologies, such as displays and chip fabrication, can be expected to follow the same pattern that has applied to Li-ion batteries and might apply to fuel cells. Manufacturing in the United States will require investment in automated production. With such automated production, it is possible to produce high quality products at competitive costs. Like the structural advantages Asian firms enjoy at home in the Li-ion industry, similar advantages will be present for Asian companies in domestic display and chip fabrication production. The United States still enjoys the lead in chip manufacturing, where U.S. companies made a substantial investment following their lead in technology development. Assembly into electronic devices is now predominantly off shore, by U.S. and Asian OEMs.

The Japanese automobile companies have established a clear lead in developing hybrid gas-electric cars (HEV) using a Ni-MH battery for electrical power and regenerative breaking. Their second generation vehicles have substantially improved performance and are in the market. In the meantime, they are developing new low cost-high power Li-ion batteries for the next generation vehicles. Although government funded research on new materials in the United States has developed new high performance-low cost materials, no U.S. Li-ion battery manufacturer is positioned to supply this developing HEV market.

Further Work Needed

ATP and other agencies recognize that investment in research and development of new technologies entails considerable business uncertainties as well as technical risks. For many technologies, pathways to economic benefits for the United States will entail additional complexities as portions of the commercialization process occur offshore. A successful investment strategy will include realistic appraisal of the likelihood of commercialization:

• in the United States ;
• by U.S. firms abroad; and
• by non-U.S. firms where U.S. industry and individual consumers are significant beneficiaries.

The current study is an effort to identify some key factors in decisions to engage in offshore production in the commercialization of rechargeable battery and related technologies. Additional in-depth study is needed to explore specific path ways and to quantify benefits to the United States where significant commercialization activity occurs offshore.

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

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