Michigan’s venture capital industry is still too small to provide funding for a capital-intensive industry like battery manufacturing.
Maria Thompson readily admits that.
Nonetheless, Michigan is still the best place in North America to research and manufacture new battery technologies. Thompson, who recently retired from leading A123Systems’ Ann Arbor operation, is convinced of that, too.
That explains why A123Systems - a firm nurtured and cultivated in the fast-paced, capital-rich entrepreneurial atmosphere defined by the Boston region - has embraced Michigan as the main catalyst for its growth.
Here’s a little secret in the tech world. Boston and Silicon Valley are still great places to get a company off the ground, find talent and secure funding. But once a company has advanced beyond startup phase, that firm is wise to consider seeking a home in a state that boasts a legendary work ethic and high quality of life at a fraction of the cost of coastal living.
A123 grew up in Massachusetts and, in 2006, acquired 15-year-old Ann Arbor-based nanomaterials startup T/J Technologies.
In the four years that followed that acquisition, T/J co-founder Thompson gradually convinced A123 that its future was in Michigan - not in Massachusetts or foreign manufacturing markets.
Thompson, honored Thursday night as the keynote speaker at the Michigan Celebrates Small Business event in Lansing, recently retired from A123 to spend more time with her family and pursue other interests.
But her leadership in nurturing A123 into a Michigan company is not be forgotten. She’s not ashamed about singing the state’s praises. She secured political support to help A123 win a $249.1 million federal grant in August, not to mention more than $130 million in tax credits from the Michigan Economic Development Corp. to support its growth here. Now, the company plans to hire 3,000 to 5,000 workers at battery manufacturing operations in Livonia and Romulus.
When Thompson became president of A123’s Ann Arbor division after the T/J acquisition, “they were not thinking about producing in Michigan,” she said.
But she aggressively promoted Michigan’s manufacturing workforce and argued that A123 should invest in domestic battery production to keep the U.S. competitive in this crucial market.
“They accused me of working for the MEDC,” she joked.
That facetious suggestion might actually sit well with MEDC CEO Greg Main.
He said Michigan has secured some $6 billion in battery plant expansions, including major companies like Johnson Controls, LG Chem and Dow Chemical. And A123, of course.
“The worst thing that could happen is if we traded our dependence on foreign oil for a dependence on foreign batteries. And that’s in danger of happening if we don’t nurture and grow this industry,” Main said. “We’ve got a great start. We’ve got lots of commitments.
"We’ve got to keep it going, because it will eventually migrate off shore if we don’t keep working at it.”
A123, it seems, is committed to domestic manufacturing operations. And committed to Michigan.
In fact, I asked Main, shouldn’t A123 just move its official headquarters to Michigan? The vast majority of its employees are here, so why not the headquarters?
“Well, we’ve suggested that to them,” he said. “But we’re content with getting all their manufacturing activity, as well.”
Nissan announced Tuesday that its Leaf electric car will come with a sticker price of $32,780. But after a federal tax credit of $7,500, the car will only set you back about $25,280.
That would make the Leaf considerably less expensive than General Motors' Chevrolet Volt, which is expected to cost around $40,000, or about $32,500 after the federal tax credit.
The Leaf expected to go on sale in December, one month after the Volt.
By keeping the sticker price low, the Leaf will be profitable for Nissan, said Mark Perry, Nissan's director of product planning. That means customers should expect more variants of the Leaf in coming years, he added.
Nissan has already said that there will be a luxury Infiniti version of the car.
Industry analysts have frequently said that electric cars would not be profitable for years to come because of the high costs associated with the vehicles batteries.
"We've been working in lithium ion car batteries for 17 years," Perry said. "So all that advanced research and engineering work we've [already] paid for."
The Leaf and Volt are not quite directly competitive, although both are electric battery cars. The Leaf is an all-electric car with an around-town driving range of about 100 miles. The Volt has a range of only 40 miles, enough for a typical days driving, but it also has a gasoline engine to generate electricity for further driving up to about 300 miles.
Nissan had previously said that it expected to price the Leaf competitively to similar gasoline-powered cars such as a well-equipped Honda Civic.
The Leaf's standard features will include navigation and Bluetooth telephone connectivity, said Perry.
Nissan already has a list of more than 80,000 people who have expressed interest in the Leaf, Perry said. And in coming weeks, Nissan will begin taking refundable $99 deposits for the car.
Those who submit deposits can have their homes inspected to make sure they have appropriate space and wiring to install a charging dock, Perry said. Nissan expects about half those expressing interest to submit a deposit, he said.
Nissan also expects many customers to lease the car. That way, they won't have to worry about filing or refiling their taxes go get the benefit since it will factored into the lease payments, Perry noted.
The car will lease for a $349 a month with an initial down payment $1,999.
"Our goal there was to get our total operating cost, vehicle, electricity charging station, all in, around $400 a month," Perry said.
In some states there are also state incentives for the purchase of an electric car. In California, for example, there is a $5,000 credit which would reduce the cost to just over $20,000, Perry said.
Nissan has partnered with an outside company, AeroVironment, to install home chargers for the car. Installation of the charger will typically cost $2,200, Perry said, but there is a tax credit that will cover half the cost up to $2,000.
In order to accelerate the R&D, manufacturing and deployment of hybrid electric vehicles, batteries, and components in the United States and create tens of thousands of new jobs, President Barack Obama announced last August- 48 advanced battery and electric drive projects that will receive $2.4 billion in competitive Department of Energy (DOE) funding through the Recovery Act, which will be matched with another $2.4 billion in cost share from the award winners. This stimulus funding will facilitate the country in achieving President Obama’s goal of putting one million (grid) plug-in hybrid vehicles on the road by 2015 in order to lessen greenhouse gas emissions and smog effects.
The primary stimulus funding grant categories are as follows:
1. $1.5 billion for U.S.-based manufacturers to produce batteries and their components and to expand battery recycling capacity
2. $500 million for U.S.-based manufacturers to produce electric drive components for vehicles, including electric motors, power electronics, and other drive train components
3. $400 million to purchase thousands of plug-in hybrid and all-electric vehicles for test demonstrations; to deploy them and evaluate their performance; to install electric battery charger infrastructure; and to provide education and workforce training to support the transition to advanced electric transportation systems.
The state of Michigan, home to the Motor City, was the big winner, as they received $1 billion in grants to companies and universities- the most of any state. Two companies, A123 and Johnson Controls (which also has a facility in the Phoenix, AZ area) will receive a total of approximately $550 million to establish a manufacturing base in the state for advanced batteries, and two others, Compact Power and Dow Kokam, will receive a total of over $300 million for manufacturing battery cells and materials.
The U.S. government is now spreading the wealth of R&D dollars, as opposed to primarily funding only national labs, universities and domestic automakers. Of course, the DOE never had anywhere near this amount of funding previously to allocate, since the Stimulus spurred the nation’s largest single investment in hybrid electric vehicle technology ever. Moreover, the past two Obama Administration fiscal year budgets significantly reduced funding levels for hydrogen fuel cell alternatives set by the Bush Administration, while supporting increases for advanced batteries instead.
Lithium ion batteries are receiving the majority of the stimulus funding emphasis with respect to battery options for hybrid electric vehicles, since they are presumed to be the top candidate but are not ready for prime time. These types of batteries are rapidly penetrating into laptop and cell-phone markets because of their unique electrical characteristics, high energy-efficiency, high temperature performance, and low self-discharge. What’s more, components of lithium ion batteries can also be recycled. These features are also beneficial for hybrid electric vehicle applications. However, to make them commercially viable for electric autos, significant R&D is necessary, focused on calendar and cycle life, cell and battery safety, abuse tolerance under harsh conditions, and acceptable cost for consumers.
EnerDel, an electric car battery manufacturer with three Central Indiana plants, was awarded a $118.5 million stimulus grant yesterday to develop lithium ion batteries for hybrid electric cars. The grant will allow EnerDel to buy equipment to expand its production from 1,200 batteries a year to 60,000 annually and is expected to generate 1,400 green jobs. As part of the project, 100 electric cars will likely be on Indiana roads by the beginning of next year and a thousand by the middle of 2012.
In opposition to this momentum for hybrid electric vehicles, T. Boone Pickens has been ramping up his campaign supporting the transition of the nation’s auto fleet to readily abundant domestic natural gas. He helped formulate the Natural Gas Act, which is still being considered in Congress, along with cap-and-trade and other alternative energy legislation that has been delayed by the health care debate after many months.
Governor Granholm Posts to Huffington that Michigan Will Lead the Green Economy in America
"Just Try to Keep Up" she Warns!
Huffington Post
Last May, I first posted here about how Michigan would lead the green industrial revolution. Some folks scoffed at that idea. They said I was too optimistic. They said Michigan would never lead in a green economy.
We're working to prove them wrong.
Today, I was in Midland, Michigan, as the Dow Chemical Company announced over $1 billion in clean-energy expansions - which, combined with nine other projects announced today, will create over 17,000 new jobs. In three separate ventures, Dow will help create the future of wind, solar, and advanced-battery technology in Michigan's Great Lakes Bay Region - a triple play for our nation's clean-energy future.
First, Dow announced it is moving forward on a truly game-changing product: It will build a $600 million full-scale production facility for its DOW™ POWERHOUSE™ Solar Shingle in Midland. These shingles have the potential to transform the way consumers get power by turning a typical home roof into a true powerhouse in every sense of the word. What makes the product revolutionary is its easy installation - no different from an ordinary shingle. That's why it was one of TIME magazine's "50 Best Inventions of 2009". It's a win for Michigan, for consumers, and ultimately, for our planet.
Dow is also a key player in Michigan's bid to be the advanced-battery capital of the world. Its Dow Kokam joint venture is investing $342 million to build a large-scale manufacturing site to help power the hybrid and electric vehicles of the future. Since we passed the first-in-the-nation advanced-battery credits, Michigan has seen more advanced-battery activity than any other state, meaning up to 40,000 great new jobs by 2020.
Last, but certainly not least, Dow has been designated a Center of Energy Excellence, a program we instituted in 2008 to help make Michigan the North American center of the clean energy industry. As Michigan's seventh Center of Energy Excellence, Dow will partner with the Oak Ridge National Laboratory to help tackle a major challenge for the wind-energy sector: making strong, light carbon fiber materials available for applications like wind turbine blades. This is a great opportunity for Dow to find a solution that can be used throughout the wind-energy industry.
The DOW™ POWERHOUSE™ announcement is the latest in a series of solar wins for Michigan. Hemlock Semiconductor, the world's leading producer of polycrystalline silicon (the critical component of solar panels), has invested $2.5 billion in the Great Lakes Bay Region over the years, spurring other development. Also headquartered in Midland is the world's leader in silicon product research, Dow Corning, where crucial research into the solar products of the future is conducted.
In three separate ventures, Dow will help create the future of wind, solar, and advanced-battery technology in Michigan's Great Lakes Bay Region - a triple play for our nation's clean-energy future.
Other companies are following Dow Corning and Hemlock Semiconductor's lead. In Midland, Evergreen Solar opened a new solar plant last year, and is ramping up production of its new "string ribbon solar wafer" technology. Last October, Suniva announced it would invest $250 million in a new solar manufacturing facility in Saginaw County. And just in December, GlobalWatt decided to locate its newest solar plant in Saginaw -- choosing Michigan over a competing site in Texas, largely because so many solar businesses are already in the area.
But, that's not all. Since targeting clean energy as a major sector to help diversify and grow Michigan's economy in 2006, we've made great strides. In fact, just since I posted here last May, we've made progress toward turning the green industrial revolution into a reality in Michigan:
• In June, General Electric announced its new advanced technology and training center outside Detroit, where new renewable-energy products will be researched and developed... meaning thousands of great, green jobs for Michigan.
• In July, I issued an executive directive to reduce Michigan's greenhouse gas emissions by 20 percent by 2020 and 80 percent by 2050, because going green isn't just good for the environment - it's good business.
• In August, Vice President Biden announced over $1.35 billion in Department of Energy grants funded by the Recovery Act for Michigan advanced-battery manufacturers - the largest share of any state in the nation.
• In September, I traveled to Japan and met with key executives considering clean-energy projects in Michigan. My previous investment missions to Austria, Belgium, Germany, Israel, Japan, Jordan and Sweden have resulted in more than 10,800 jobs created and retained.
• In October, Michigan State University restructured its MSU Extension, maintaining its traditional focus on agriculture while expanding its role in renewable-energy projects. After all, now is the time to "Go Green!"
• In November, Michigan was proud to host the American Wind Energy Association's Small and Community Wind Conference and Exhibition in Detroit, with over 112 exhibitors from around the world.
• In December, General Motors announced it would invest $336 million in its Detroit Hamtramck Assembly plant to begin building the Chevy Volt later this year. GM has invested $700 million in the eight facilities across the state involved in Volt production.
• Last month, as the world's gaze shifted to the future of the American auto industry at the North American International Auto Show in Detroit, Ford announced an investment of $450 million in expanding electric vehicle initiatives in Michigan... including moving battery assembly work from Mexico to Michigan.
We're becoming the hub for advanced-battery technology. Our solar-energy industry is rapidly progressing. This year, we will aggressively pursue companies in the wind-energy sector to give Michigan the competitive advantage that is so successful for our battery and solar sectors. We will continue to focus on leading the way to a clean-energy future here in Michigan. We are building the new Michigan economy, piece-by-piece, town-by-town, in communities across the state. Just click here to see some more examples.
And so, as I wrote last May: "Watch - Michigan will lead a green industrial revolution. I invite you to watch us, encourage us, and join us.
And the doubters?
I encourage them to just try and keep up."
Jennifer M. Granholm was elected governor in 2002 and re-elected in 2006. She began her career in public service as a judicial clerk for Michigan's 6th Circuit Court of Appeals. She became a federal prosecutor in Detroit in 1990, and in 1994, she was appointed Wayne County Corporation Counsel. Granholm was elected Michigan's first female attorney general in 1998.
Since becoming governor, she has worked to grow and diversify Michigan's economy, create jobs, ensure world-class educational opportunities for every Michigan student, create universal access to affordable health care, and stand up for Michigan workers and families during tough economic times. While aggressively pursuing her top priority of putting Michigan families first, she has also worked to ensure that state government spends every penny efficiently and has successfully resolved more than $6 billion in budget deficits.
The Dow Chemical Co. is starting preliminary construction in Midland County for a factory that will develop and manufacture advanced batteries for the automobile industry.
The 800,000-square-foot factory is planned for a location in Midland at the corner of Saginaw Street and Bay City Road.
The estimated $665 million project is a joint venture between Dow and a battery maker named Townsend Kokam.
Work is under way now to reroute underground power, fiber optics and steam utilities that are currently located within the planned battery facility site, Dow Chemical announced Wednesday.
Workers also will relocate the fence line since the battery plant site is located outside Dow’s current boundaries.
Johnston Contracting of Midland and Alloy Construction Service Inc., 401 Balsam in Carrollton were awarded work for the utility relocation. Dow expects to award further construction contracts in spring 2010.
The Dow Kokam venture has not begun hiring the estimated 800 people it needs to run the factory.
LANSING -- The following is a message from Governor Jennifer M. Granholm:
Governor Jennifer M. Granholm today signed legislation that increases tax incentives for companies that develop and manufacture advanced batteries. Today’s action puts Michigan in prime position to capture up to $2 billion in federal advanced-battery development grants.
“We are committed to making Michigan the advanced-battery capital of the world and the home of the next generation of green vehicles powered by them,” Granholm said. “This expansion of incentives will keep our momentum going and demonstrate that Michigan is uniquely qualified for a significant portion of the $2 billion in federal recovery money designated to build America’s advanced-battery infrastructure. We are aggressively going after that funding as part of our strategy to diversify Michigan’s economy and attract more high-tech jobs.”
The new law adds an additional $220 million in refundable tax credits for companies involved in the development and application of advanced-battery research, engineering, and manufacturing. The legislation expands the $335 million in tax credits that Governor Granholm signed in January, which were the first in the nation, bringing total incentives available to $555 million. The legislation signed today:
• adds an additional $220 million in tax credits to the $335 million approved in January;
• increases from $70 million to $90 million the maximum amount of tax credits for companies engaged in vehicle engineering to support battery integration, prototyping and launch expenses;
• allows the Michigan Economic Growth Authority (MEGA) to approve up to $300 million of the total $555 million in incentives for the construction of battery-cell manufacturing facilities.
In February, the Michigan Economic Growth Authority approved the first incentives from the original legislation for Ford and General Motors for pack engineering, integration and assembly, vehicle engineering, and advanced-battery technologies. Those incentives, which included tax credits to help produce the battery for GM’s Chevy Volt.
“This is an exciting time in Michigan as we are on the cusp of a new industry taking root,” MEDC President and CEO Greg Main said. “I want to thank Governor Granholm, our state legislators and our federal lawmakers for giving us the tools we need to grow this industry in Michigan and create thousands of new jobs.”
U.S. Senator Carl Levin and Congressmen Sander Levin applauded Michigan’s efforts to promote advanced battery development in the state.
“The $2 billion grant program passed by the Congress reflects our active efforts to create a vigorous partnership between the federal government, state government, and private industry to position our nation, its companies, and its workers in a leading role to develop the automotive technologies of the future,” said Congressman Sander Levin. “The legislation being signed today by the governor demonstrates that Michigan, the center of the domestic auto industry, is determined to be the fullest partner in this urgent national priority. Today, we are showing that we can dynamically link the need for a strong industrial base with action on vital environmental goals.”
“The state of Michigan has developed an innovative and generous set of refundable tax credits available for companies that will establish battery cell and battery pack manufacturing in Michigan,” said Senator Carl Levin. “These advanced-battery credits provide critical incentives that will attract companies to establish new manufacturing facilities in Michigan and should provide these companies a significant boost in competing for federal dollars provided by the American Recovery and Reinvestment Act. Michigan is the heart of automotive engineering and manufacturing. The incentives developed by the state of Michigan combined with the federal funding for battery manufacturing facilities are an essential part of continued Michigan preeminence in this field and will help to ensure that Michigan companies manufacture the green vehicle of the future and their critical components.”
The bills signed today are House Bill 4515, sponsored by State Representative Dian Slavens (D-Canton), and Senate Bill 319, sponsored by State Senator John Pappageorge (R-Troy).
