GM and rivals spark race for new batteries

DETROIT (Reuters) - With major automakers including General Motors Corp touting high-profile plans for a new generation of environmentally friendly electric cars, skeptics have offered a running rebuttal: show me the battery.

GM picked Korea's LG Chem to build lithium-ion batteries for its all-electric Chevy Volt, the U.S. auto maker said on Monday. It expects to build the car in Michigan and introduce it in November 2010.

Upstart rival BYD, a five-year-old Chinese company, also said it was looking to begin manufacturing operations in the United States if demand for its low-cost lithium-ion phosphate batteries takes off.

The Chinese company took the spotlight on Monday at the Detroit show to showcase its plans for a plug-in hybrid and a pure electric car for the U.S. and European markets in 2011.

Other major automakers, including Toyota Motor Corp Ford Motor Co and Chrysler LLC, used the Detroit show to showcase their plans for electric cars.

Taken together, analysts and green car advocates said the announcements showed the auto industry was beginning to make needed advances in battery technology to put a first wave of rechargeable electric cars like the Volt on the road.

"I'm truly delighted that GM and others are going to make these cars and that we can now start the electric car race," said Felix Kramer, a California-based advocate for electric cars and founder of CalCars.org.

Designed to run 40 miles on a single charge when it goes on sale next year, the Volt has become the centerpiece of GM's effort to reinvent itself at a time when a brutal decline in its home market has pushed it to the breaking point.

"While we obviously have had some tough stuff to go through in the past few months, our teams, and particularly our technicians, have been hard at work on the things that we need to be competitive in the future," said GM Chief Executive Rick Wagoner.

LG Chem will build the Volt's battery cells at its existing plant in South Korea and the finished battery pack will be assembled at a GM facility it plans to build in Michigan if it can secure needed tax credits.

Wagoner said GM would also invest more than $1 billion in developing its own capacity to develop batteries, including plans to build the largest U.S. automotive battery lab near its Detroit headquarters.

The Volt battery contract has been closely watched as the first test for an emerging technology that is expected to generate billions of dollars in sales in the coming decades.

The 400-pound (181 kg) T-shaped battery pack is expected to be the Volt's most expensive element and most important component. The GM facility that will build it will employ about 100 workers, the company said.

Compact Power, the LG Chem unit awarded the Volt contract, expects to garner more than $1 billion in sales to the electric car market in coming years. It said its Volt battery would be ready to run at least 150,000 miles and last 10 years.

FIRST TO MARKET?

Fisker Automotive, a California start-up, has taken more than 1,000 orders for its Fisker Karma, a sleek, four-door, plug-in sedan with a starting price of $87,900.

The Karma, which will combine a 2-liter gas engine with a lithium-ion battery pack, is being designed to run 50 miles on battery power alone and is to start production in October.

Fisker, a joint venture between Fisker Coachbuild and Quantum Technologies, plans to sell 15,000 of its plug-in sport sedans annually. It has 22 U.S. dealers already signed on to sell the car, which will be manufactured in Finland by Valmet Automotive.

"I think we're trying to set a tone for the auto industry to say the future is not all doom and gloom," Fisker founder and Chief Executive Henrik Fisker told Reuters.

"Our aim was to go away from the notion that every time you talk about a green car it has to be small or underpowered," he said.

Other analysts said the battery developments being touted still showed automakers trying to compromise around issues like the size, range and cost of the power storage devices.

BYD's all-electric E6, for example, carries over 1,300 pounds (600 kg) of batteries -- just a few hundred pounds lighter than the total weight of the Smart minicar.

"I applaud GM and others, but I'm not looking for a breakthrough technology that's going to revolutionize the auto industry," Dennis Virag, president of the Automotive Consulting Group, said of the industry's widespread push to go electric.

(Reporting by Kevin Krolicki, Editing by Peter Bohan and Leslie Gevirtz)