Can Detroit go green?

With help from a $3.8 million state tax credit, CPI moved to Troy, Mich., from Colorado in 2005 to be closer to the Big Three automakers and related customers in the state. In April, the state approved $125.2 million in state tax incentives to allow CPI to expand its advanced battery manufacturing capabilities. The incentives were approved based on CPI’s plans to invest $200 million in such projects and create 300 new jobs in the state.

The incentives – and the opportunity to hire from Michigan’s automotive workforce – encouraged the company to expand its battery work in Michigan, says Damian Gardley, sales director for CPI. Three of CPI’s four top executives, including Mr. Gardley, previously worked for Detroit automakers or top-tier auto suppliers. Many of Magna’s 100 employees also have automotive experience. “That’s one of our advantages over our competitors,” he said. “We have a really in-depth knowledge of the auto industry.”

Manufacturing savvy is key

It’s this manufacturing capability – infrastructure plus know-how – that could prove crucial to Michigan’s efforts. Since this will be the first time that most auto companies will be using lithium-ion batteries in vehicles, success will depend on whether electric-vehicle companies can create reliable first-generation technologies, Mr. Cole says. That in turn will hinge on companies being able to produce high volumes of batteries at low enough costs to make affordable cars. And that’s the area where Cole believes Michigan has a clear advantage.

“It’s not the battery labs that will determine the winners and losers,” he says. “This is ultimately going to be determined in the manufacturing of these systems, and you never want to bet against those who know how to manufacture.”

This isn’t the first time a Detroit automaker has tried to go green. General Motors Corp. spent more than $1 billion from 1996 to 1999 to develop an electric car called the EV1. The program, developed in collaboration with AeroVironment in Monrovia, Calif., was killed in part because it wasn’t a commercial success.

Taking another crack at electrics

Will this time be different? Wally Rippel, who worked as one of AeroVironment’s lead engineers on the EV1 project and is now principal power electronic engineer at AC Propulsion in San Dimas, Calif., thinks so. Advanced battery technology is “still more art than science,” he says. So companies working on advanced batteries have a chance to improve the technology and use it to diversify their business to other industries that need alternative energy.

“It’s a good time to invest,” Mr. Rippel says. The technology “will likely show huge improvements in the next decade, if we put the effort in.”

Of course, market forces beyond the state’s control, such as oil prices, may well determine the outcome of its experiment, says Mr. Cooley of NextEnergy. But with the recent influx of stimulus money and projected growth for Michigan’s current green-auto companies, Cooley is optimistic: “I wouldn’t be here doing what I’m doing now if I didn’t think we had a chance of making this successful.”

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