When we think of war, Iraq and Afghanistan usually come to mind. But other wars are going on as well. There is an open and vicious patent war, for instance, among high tech's high-flyers. There is an undeclared trade war with China. And there is an advanced battery and electric car war. As regards the latter, The U.S Department of Energy's Argonne National Laboratory yesterday won a small but important skirmish in what promises to be a long-running conflict.
As we've discussed previously, advanced batteries are the linchpin of one of the only known huge growth industries of the coming two or three decades: the hybrid and electric car industries. The United States dipped its toe in the water of the technology under President George W. Bush, and President Barack Obama subsequently plunged in with both feet with billions of dollars in support. The competition is stiff -- Japan was first into the game with lithium-ion technology and the Prius back in the 1990s, and the Chinese, characteristically, are now throwing all they have at becoming the biggest players in the world.
What happened yesterday was that General Motors and South Korea's LG Chemical announced that they are licensing advanced battery technology patented by Argonne. The technology -- known as nickel manganese cobalt, or NMC (see this good background at Green Car Congress) -- is for the GM Volt, which was launched last month, and includes a battery produced by LG at a plant in Michigan. No dollar figure was announced for the licenses, but I am told that it's in the millions, which isn't surprising. GM said that its interest is in using the technology for its next stage of development of the Volt.
The obvious first takeaway is that the United States, while a latecomer to the battery war, is a serious combatant. Yet, is one or two clients such an impressive feat? The answer, as it happens, is yes, because they are the first of a probable conga line.
Though none of the other coming NMC licensees are currently shouting about their interest, consider the strange facts of the GM-LG announcement. Over at Popular Science, Seth Fletcher notes that the technology is already embedded in the Volt, and in LG's suite of technology. This announcement has come after the fact (which makes one wonder what GM and LG would have done if Argonne did not wish to license its patent). Basically what happened is that both GM and LG ran a serious risk of transgressing a valuable patent, the inventors of which include a couple of Argonne's superstars -- Mike Thackeray and Khalil Amine -- and rather than hearing from unpleasant lawyers, they licensed the technology.
That is fine as far as it goes. But the thing is, GM and LG are not the only players using the Argonne technology. It turns out that the world's other major advanced battery-makers -- Panasonic, Samsung and Sanyo among them -- also appear to have Argonne's NMC embedded in their technology. They have been able to get away with it because Argonne holds U.S.-only patents, but nothing abroad on NMC technology. So these battery makers have been able to sell their batteries abroad with impunity. Going forward, however, if these other battery-makers want a piece of the U.S. market, which may become the second- or third-biggest electric car market in the world after China and Japan, they also are going to have to pony up. That would mean licensing from Argonne directly, or two companies overseas that have themselves paid for the right to license the Argonne technology -- BASF and Toda Kogyo.
But where do U.S. manufacturers come in? The United States at this point needs to be realistic. It has enviable technology, as we now know, but it is badly lagging in advanced-battery-manufacturing know-how. To win this game, it must leap-frog ahead, and one way of doing that is partnering up with others possessing complementary strengths. That would be the South Koreans, who are shoulder to shoulder with Japan in manufacturing. Which makes LG a strategic partner with the United States in the battery wars.
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