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Battery Technology Fuels the Electric Vehicle Debate : Business: Manufacturers say they need mandate to attract investors. Air resources board decides this week.


AUSTIN, Tex. — Deep in the heart of Texas, where oil is king, a little company is developing an advanced battery for electric vehicles that it hopes will leave gas guzzlers on the roadside like so many dead armadillos.

After more than a decade of research and development, Electrosource Inc. is nearing completion of a pilot plant--the first of its kind--that the company hopes will prove its advanced lead-acid batteries can affordably be mass-produced within two years.

California is counting on Electrosource and other battery developers to succeed. Their progress will be center stage in Los Angeles on Thursday and Friday, when the California Air Resources Board decides whether to uphold its mandate requiring major auto makers to produce zero-emission vehicles--electrics now being the only option--for sale beginning in 1998.

The decision is a watershed in determining whether Californians--and residents of the heavily populated Northeast states that are following Sacramento's lead--will have a new vehicle choice in less than four years.

"This is the biggest issue facing the auto industry today," said Richard Klimisch, vice president of the American Automobile Manufacturers Assn., the Big Three's lobbying group.

Auto makers and the oil industry oppose the mandate, which requires 2% of vehicles--about 25,000 cars--offered for sale in California to be zero-emission in 1998, rising to 5% in 2001 and 10% in 2003. Electric utilities, environmentalists and others want to stay the course.

The political stakes are high. The auto makers have taken their case to Gov. Pete Wilson, and lobbying on all sides has intensified in the days leading up to the hearings. Seven of 11 board members have been appointed since the last review two years ago, including ARB Chairwoman Jacqueline Schafer, lending an element of uncertainty to the decision.

But for all the high-powered politics, the debate largely revolves around one issue: battery technology.

There are few clear answers. Strides have been made in just a few years of aggressive research. But whether batteries with adequate power, energy and durability can be mass-produced for 1998 is hotly debated.

The auto industry says it cannot be done. If the mandate stands, car makers say, they will be forced to spend hundreds of millions of dollars to build vehicles that consumers won't want.

But the ARB's staff contends that a variety of good batteries--not only advanced versions of the lead-acid ones used in cars today, but also nickel-metal hydride, nickel-sodium-chloride and sodium-sulfur units--should be at the auto makers' disposal by 1998. Vehicles with these batteries can go far enough for most daily uses and cost the same to operate as gasoline-powered cars, the staff contends.

Just as important, electric vehicle proponents argue that the zero-emission rules must be maintained to keep forcing the technological development of electric vehicles and to attract venture capital to the effort.

"Potential investors are sitting on the sidelines waiting to see what happens," said Richard Schweinberg, manager of transportation research for Southern California Edison Co. "If the mandate is delayed, the money will dry up."

Electrosource, one of scores of firms racing to bring better batteries to market, is a front-runner in the commercialization of advanced lead-acid batteries. But its history is as full of ups and downs as the nearby Texas hill country. Just three years ago, the company ran out of cash and temporarily stopped operations. It has never made money and is in constant search of investors and partners.

Nonetheless, Electrosource officials remain effervescent about the company's prospects. "If the market develops, I guarantee we will be a major player," said President Benny Jay, a former defense industry executive turned entrepreneur.

Such optimism is not unusual among small companies seeking a niche in the fledgling electric vehicle market, where claims of technological breakthroughs are thrown around like confetti at a Texas high school football game.

Electrosource and its backers acknowledge that its technology still must be proved through rigorous testing. The company also must show that the battery can be affordably manufactured.

"We are close," said Jack Guy, manager of commercialization for the Electric Power Research Institute, a nonprofit utility group that provides funding to Electrosource. "It's a slow process, but it is doable."

That process began in the early 1980s at Tracor Inc., an Austin-based defense contractor, where researchers working with composite materials developed a new process to bond lead onto fiberglass thread. Seeking to commercialize the discovery, Tracor in 1987 formed a public company, Electrosource, which soon said it had found a way to enhance the life, energy and power of lead-acid batteries.

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