With gas prices soaring, and sales of hybrid vehicles expected to double this year, Johnson Controls is moving to cash in on the battery assisted car boom with a new $4 million laboratory.
With gas prices soaring, and sales of hybrid vehicles expected to double this year, Johnson Controls is moving to cash in on the battery assisted car boom with a new $4 million laboratory.
The company today will unveil the lab that will be used as a proving ground for next-generation hybrid batteries, a potential source of big business in the years ahead.
The center of activity is three small rooms tucked inside its Battery Technology Center, adjacent to Johnson's corporate headquarters. During a recent tour, managers showed off the computers, diagnostic equipment and ovens that will put future batteries through a variety of tests before they're ready for market.
Johnson Controls is looking to parlay its market-leading role in supplying conventional lead-acid batteries -- and its strong longstanding relationship with automakers as an auto parts supplier -- to catapult it past electronics companies now supplying hybrid batteries.
"This is a good market for us, That's why we're in it," said Michael Andrew, manager of the company's hybrid battery development program. "Hybrids are here to stay."
Johnson Controls is part of the effort by U.S. auto suppliers and automakers racing to catch up to Toyota and Honda, which have had hybrid electric cars, led by Toyota's Prius, on the road for several years.
Surging gasoline prices, up 35 percent in the past year, are causing many drivers to take a second look at hybrids, which supplement a conventional gasoline engine with an electric motor that can help propel the car, saving fuel and improving mileage.
"When gas got over $2.50, people start to get nervous," Andrew said. "At over $3, people get more than nervous -- they get scared."
Andrew has been researching clean-burning and alternative-energy cars for years, and he recalls neighbors feeling sorry for him when he would steer an early-model electric-powered car into his driveway. Attitudes have changed as the price of gas has jumped.
When Andrew drives home a hybrid he's test-driving, the car, and its miles per gallon, are turning heads, he said.
"Now it's cool," he said.
A study this summer by J.D. Power and Associates projected that rising gas prices are prompting automakers to respond by adding more hybrids to their pipeline of new vehicles planned for future years. The report said the number of hybrids on the market is expected to surge from 10 today to 44 by 2012.
Hybrids accounted for 0.5 percent of the new vehicle market last year, but that is expected to jump to 1.3 percent in 2005, because J.D. Power projects more than 220,000 hybrid vehicles will be sold this year.
That will nearly triple, to 627,000, by 2010, when hybrids will account for about 3.5 percent of all new vehicles sold, said Peter Dadlani, a J.D. Power spokesman. Johnson Controls cites industry projections that sales of hybrids could reach 6 million in North America and Europe within a decade.
Johnson Controls is already the biggest maker of automotive batteries in the world, with a 30 percent market share globally and 15,000 employees. But when it comes to hybrids, so far the company has no customers, no contracts, and no orders.
For now, Johnson Controls is competing with other suppliers vying to crack into the realm of Panasonic and Sanyo, Japanese electronics suppliers that are making batteries for hybrid cars on the road today.
The company is having "serious discussions" with a variety of companies about a nickel-metal hydride battery being developed by its European unit in Hannover, Germany. The company has developed a system pioneered by Varta, a German battery company Johnson bought several years ago.
For more than a decade, Varta has supplied nickel-metal-hydride batteries for hybrid-electric buses in Europe. Johnson Controls believes lithium ion technology is likely to replace nickel-metal-hydride as the battery technology of choice in hybrid-electric and electric vehicles as the hybrid battery technology of choice.
Lithium-ion is lighter and more powerful than NiMH, giving lithium-ion batteries the potential to last 15 years, instead of eight to 10 years for a current hybrid vehicle battery. And in part because supplies of lithium are more plentiful than nickel, Johnson Controls projects they won't be as costly.
Johnson Controls sees several advantages to lithium-ion: It weighs less, so it can provide "good power capability without a lot of weight," Andrew said. Vehicle manufacturers are always in the hunt for ways to make cars lighter without sacrificing power.
"The challenge is to get out ahead" of the industry's conversion to lithium ion, Andrew said.
"And this is evidence of that," he said, gesturing at the new machines and diagnostic testing equipment in the new hybrid testing lab. In a small room nearby, batteries are being inserted into ovens that will heat the batteries and conduct other tests using models designed to simulate 15 years of a battery's life in just two years.
Putting batteries to a full-life test in two years' time, Andrew said, "enables us to get ahead of the curve in lithium ion. It provides us an edge our competitors don't have."
Andrews said hybrids are likely to be powered by nickel-metal-hydride batteries for the next five to eight years.
"At that point you're going to see a transition from NiMH to lithium-ion," he said. "It's important for our customers to have this."
The lab will conduct tests on various designs of batteries made from lithium ion, including both cylindrical coils and other shapes, said Glenn Trischan, manager of materials and analytical support.
The company is in the process of testing a battery for the U.S. Advanced Battery Consortium, a partnership of the U.S. Department of Energy and major automakers including Ford, General Motors and DaimlerChrysler.
The test battery pack consists of 12 cells stacked together would provide enough power to run a mid-sized sedan such as a Ford Taurus, Andrew said. By comparison, the nickel-metal-hydride technology would require five times as many cells to run the same type of car.
The Glendale lab employs 26 people from a variety of backgrounds, including chemists as well as chemical, electrical, mechanical and materials engineers, Andrew said. It's unclear how many more will be hired if and when the company secures production contracts and begins producing hybrid batteries.
Johnson is joining a string of suppliers and automakers that have made announcements about their involvement in hybrid and clean-diesel vehicles, as auto industry players race to demonstrate they are ready to serve consumers' growing appetite for fuel-efficient vehicles. Ford Motor Co. Chairman Bill Ford announced last week that Ford would sell 250,000 hybrid vehicles a year by the 2010, a tenfold increase.
Earlier this month, other manufacturers vowed to work together by pooling their resources to develop hybrid engine technology jointly. The partnership, to be based in Troy, Mich., includes General Motors, DaimlerChrysler AG and BMW.
"We view that as a positive development," Andrew said. "For us it's going to pull the market forward. When you've got three powerful companies like that going together on a common approach, that's good for us," he said.
To see more of the Milwaukee Journal Sentinel, or to subscribe to the newspaper, go to http://www.jsonline.com.
Source: Knight Ridder/Tribune Business News
