US Battery companies “shocked” by low demands and high costs ?

An article in the Wall Street Journal (Dec 5, 2011) describes the plight of US battery companies, funded by over $ 2.4 billion in Federal grants, but struggling to win contracts from automakers. In the case of Ener1, low sales of the automaker Think Global generated low demand. For A 123 systems, losing a contract from GM, which went to LG Chem of South Korea, created low demand. The article claims that the close to 20 year lead for foreign battery manufacturers puts their costs at $ 400 per kwh vs the current US manufacturer cost of $ 1000 per kwh.  The key – the learning curve associated with the higher production volumes. Should the US govt strategically source batteries for all of its needs to increase production volumes for US battery companies ? Is the battery industry worth developing domestically to increase the odds of more green supply chains in the US ? Should the battery companies be allowed to fail to permit creative destruction in the industry or sheltered to enable their survival ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , , , . Bookmark the permalink.

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