GM Reported Ready To Give Volt Battery Nod to Unit of LG Chem

The coveted Chevy Volt battery contract appears to be going to a unit of South Korea's biggest  battery maker.

Reuters news service and the independent Volt fan site, GM-Volt.com, both reported today that GM has decided to select Compact Power Inc., a Detroit-based subsidiary of LG Chem, to be supplier of the advanced lithium-ion batteries for the Volt (right), which is scheduled to begin production in late 2010.

Reuters said two unidentified but knowledgeable sources confirmed the deal and said it will be formally announced next month, providing terms of the supply contract are worked out with Compact Power.

The company was competing for the pact with a joint venture of German's Continental AG and Boston-based A123 Systems.  

The Volt contract is important because the batteries are the most important element of the car and their reliability will make or break GM's gamble to be the first company to put a plug-in -- or grid-rechargeable -- hybrid into the market.

The contract also represents one of the first major efforts to adapt lithium-ion technology, widely used in laptop computers and cell phones, for the demands of automotive use.

Electric vehicle batteries will be subject to far more heat, cold, moisture, vibration and rough treatment than are the batteries in consumer electronics.

Failure of the Volt would be disastrous for GM's image: the company has staked much of its future on an effort to reinvent itself as a leader in clean, green automotive technology.

The automaker has declined to comment on the reports, saying only that it has not make a final decision and that it expects to announce one by the end of the year.

Reuters said its sources told it GM and Compact Power are now discussing the details of a commercial agreement, including how to split warranty costs for the batteries.

Most of the Volt prototypes GM is testing are running with LG Chem batteries, the sources said, adding that the prototypes have continued to perform without any glitches.

Whatever its final deal wth Compact power, GM also could keep the Continental-A123 consortium doing battery development work for future versions.  Having two suppliers would help drive costs down.

The Volt, which GM prefers to call an extended-range electric vehicle, doesn't use its internal combustion engine for propulsion, relying entirely on an electric drive system.

It has been designed to run for up to 40 miles on a single charge of its lithium-ion batteries and then to keep running on juice provided by a 1.4iter, four-cylinder gas engine that serves as a power generator.

The batteries initially would be charged from the commercial grid - hence the "plug-in" designation -- and on longer trips would be repeatedly recharged by the on-board engine-generator.

Analysts have estimated that lithium-ion battery packs powerful enough to provide Volt-like performance could add as much as $10,000 to the price of a vehicle.

GM, which initially said the Volt could be marketed for about $30,000, now uses $40,000 as the base price and is counting on a just-approved federal tax credit of $7,500 to make the price more palatable when sales begin.

John O'Dell, Senior Editor

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John O'Dell October 23, 2008, 12:58 PM

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