U.S. Battery Consortium Seeks $1B—Is It a Waste?

Fourteen U.S. chemical and electrical companies have banded together to seek $1 billion in federal aid to jumpstart an effort to make advanced batteries for cars, according to, among others The Wall Street Journal. While some of the money will undoubtedly go to research, much of it will be dedicated to building supply chains, prototype factories and job training.

Right now, most of the battery industry is in Asia. In the past few years, a number of venture-backed startups—Boston Power, International Battery, Valence Technology, Altair Nano, A123 Systems, PowerGenix, ZPower—have sprung up in the U.S. with products and plans to improve batteries and bring batteries to the car market. Some of these companies focus on new types of battery chemistries and some focus on improving the overall performance while tinkering with the electronics to improve efficiency. Some such as PowerGenix have started selinig products.

Former Intel CEO Andy Grove is also prompting the company to get into the market for car batteries.

This may work, but it also has a lot going against it. Here are some of the reasons:

1. There is no Moore’s Law for batteries, people. Get used to it. Semiconductors can double in performance every two years because engineers have found ways to steadily decrease the size of transistors. It’s a lucky combination of hard work and physics.

Battery chemistry doesn’t work that way. Batteries improve about 6 percent every year—thus they double in performance every 10 years. At least this is what people like Elon Musk (CEO, Tesla Motors) and Christina Lampe-Onnerud (CEO, Boston Power) have told me.

Hence, tossing money at the problem won’t necessarily solve it.

2. Federal funding is great for research, but often misfires when used to build a market or factories.  Back in the ‘80s, 14 chip companies got together to form Sematech, which was supposed to make the chip and chip equipment industries competitive again. The U.S. did regain the edge over Japan in chips, but it wasn’t because of Sematech. Sematech opened up dialog between competitors, but other factors changed the market. It’s tough to find people to sing its praises these days.

“They’ve got a very short string to show on results,” said Robert Graham, the chief executive of Novellus Systems said back in 1991.

If this money were given directly to national labs and universities to train people in energy storage, it’d be great. It would be the proverbial New Deal on energy we keep talking about. But it will slip through the fingers as a biz dev project.

3. Electric cars are going to take a long time regardless of what the U.S. does. It’s hard to see that this will accelerate it much.

4. Silicon valley guys and startups hate the government and always complain about government. So let’s listen to them for once.

Sorry to be a pain, but battery chemistry just won’t be solved with flag waving.