John Adams might be forgiven if he feels like a character in 'Mission: Impossible.'
Adams, the president of GM Ovonic LLC, plans to launch production of nickel-metal hydride batteries for electric vehicles this summer.
Consider the obstacles. The battery is too expensive; a competitor has beaten him to the punch; and other advanced batteries may outperform his product.
But GM Ovonic cannot afford to wait much longer. The U.S. Advanced Battery Consortium will not fund further Ovonic research beyond this year, and Adams must find a market for the battery.
'We have got to take it from here,' Adams says. 'Now we've got to make this work.'
The fortunes of GM Ovonic reveal a deeper dilemma for the electric-vehicle industry. Although research grants have spawned innovations, a market for these vehicles barely exists.
And investors appear to be cautious. The stock of Energy Conversion Devices - corporate parent of GM Ovonic - is trading below $10 per share, down from a 52-week high of $30.62 and near its year-long low of $7.25.
'Because their revenue lags behind up-front costs, you would view this as a speculative investment,' says David Andrea, an analyst for Roney & Co., an investment firm in Detroit.
Adams figures he has a five-year window to develop a market, but his first hurdle comes later this year. Last December, General Motors announced it wanted to install nickel-metal hydride batteries in some EV1s this fall.
The automaker had been counting on GM Ovonic, a 60-40 joint venture between GM and Ovonic Battery Co., a subsidiary of Energy Conversion Devices. The battery's creator - inventor Stanford Ovshinsky - needed money and know-how to commercialize his product.
Enter John Adams. Before GM Ovonic was launched in 1994, he was chief engineer of manufacturing for GM's Delco Remy division in Indianapolis. More than 30 years ago, Adams had begun his career as a college intern in Delco's battery plant in Muncie, Ind.
At GM Ovonic, Adams' experience could be tested by several daunting obstacles:
Weak demand. Over the next five years, automakers are unlikely to sell more than a few thousand electric vehicles. Given such skimpy demand, battery makers will not generate savings from high-volume production.
High cost. A handbuilt Ovonic battery pack costs about $60,000. During pilot production, Adams hopes to cut that price below $9,000. However, that's still about twice the battery consortium's original cost target.
Tough competition. Ovonic must compete with Matsushita Electric Industrial Co., a Japanese manufacturer with very deep pockets.
Better technology. The Ovonic
battery could be overshadowed by the introduction of a lithium battery, which has the potential to offer greater range and lower cost. Sony Corp. has developed a lithium battery for Nissan Motor Corp. U.S.A.
The battery consortium has identified lithium as a promising long-term technology. But the nickel-metal hydride battery has one big advantage: It's available now.
Moreover, the battery has demonstrated its potential. Last year, a Solectria Corp. car powered by Ovonic batteries ran 375 miles on one charge. Under ordinary driving conditions, the Ovonic battery can deliver a range of 100 to 130 miles, easily topping conventional batteries.
The Ovonic battery should last four or five years before being replaced, exceeding the two-year life span of most lead-acid batteries.
In fact, nickel-metal hydride batteries meet or approach all but one of the battery consortium's performance goals. That unmet goal is cost.
Adams hopes to deal with that problem this summer. In a small plant in Troy, Mich., he is installing machinery to replace the workers who assemble prototype batteries by hand.
He will tinker with a production system at one-tenth the scale of a full-fledged plant. If he can bring costs down, GM Ovonic will build a full-scale plant in Ohio.
For the moment, however, employees in Troy fabricate the batteries by hand.
Adams can mechanize that production step without too much trouble. But the real production bottleneck occurs during the final operation.
GM Ovonic must charge and discharge the prototype batteries repeatedly before shipping them. This process causes a chemical reaction which prepares the battery for regular use.
This currently takes up to 14 days, although Adams says he can cut it to three.
GOAL: $4,500 BATTERY PACK
Another problem is the cost of the materials, which include titanium, zirconium, and nickel hydroxide. Adams says he can reduce the amount and cost of the metals in each battery.
But Adams acknowledges he may never achieve the consortium's goal of $4,500 for an EV1-sized battery pack. That could be a big problem when GM Ovonic markets the battery, says John Wallace, director of Ford Motor Co.'s alternative vehicle program and a consortium spokesman.
'We think we can get the cost down, but not nearly as much as we need,' Wallace said.
In 1999, Ford hopes to sell 400 electric Ranger pickups equipped with nickel-metal hydride batteries. Wallace wants to encourage competition among battery makers, and says he is impressed by Matsushita's battery.
'They have a good product, and we are considering it,' Wallace said.
Honda also is encouraging competition. The automaker is buying Matsushita's nickel-metal hydride batteries for the EV Plus coupe, which goes on sale this month. But Honda is evaluating GM Ovonic's battery, too.
Adams says he is hopeful, but declines to predict whether GM or Honda will be the first customer. GM has said it will use nickel-metal hydride batteries in some EV1s. But a company executive has told Saturn dealers in California not to expect the advanced battery in any large volumes.
TEST FLEETS ON THE ROAD
As if that weren't enough, the Big 3 are encouraging development of lithium batteries. Sony will beat them to the punch. Its lithium battery for Nissan 'is very impressive, but it's not like a NASA battery' - that is very costly, Wallace sys.
Despite their grumbling, automakers have promised to put small fleets of electrics on California roads. Seven major automakers agreed to do so after state regulators dropped their insistence that electric vehicles amount to 2 percent of all new vehicles sold in California, starting in 1998.
As part of the deal, the California Air Resources Board agreed to offer extra credit to automakers that sell vehicles equipped with advanced batteries.
That gave the automakers an incentive to buy nickel-metal hydride batteries. But other customers may be less forgiving.
Electric utilities may buy a couple of thousand electric vehicles. But the utilities face heavy pressure to cut costs as the industry deregulates.
Adams has tested smaller, cheaper battery packs. Last fall, GM Ovonic equipped a Solectria car with a 15-battery pack, rather than the usual 25.
The car averaged 106 miles at 45 mph. During typical stop-and-start driving, a motorist using the air conditioner would have gotten significantly poorer mileage.
Yet another cost-cutter involves recycling. After the used batteries are removed from cars, the batteries could be sold to factories, hospitals or schools that need backup sources of power.
GM Ovonic will have a window of five years or so to develop a market, Adams predicts. After that, his corporate sponsors may decide to pull the plug. Nevertheless, he says he remains confident.
'We have to be creative,' he said. 'I'm starting to see the light at the end of the tunnel.'