Batteries are seen as key to future of electric vehicle market

This week at Detroit's auto show, nearly every major automaker, including General Motors Corp., Ford Motor Co. and Toyota Motor Corp., announced plans to develop more electric vehicles.

But amid all the chatter about charging times, range and 0-to-60 acceleration, an essential business question is emerging. Many industry experts say it could utterly change the complexion of the auto business: Who makes the battery?

"The battery is critical," said Larry Burns, head of research and development and strategic planning at GM.

Burns contends that because the battery is the most expensive and high-tech component in an electric car, the companies that make batteries well -- rather than those that can most efficiently weld together steel frames -- could emerge as the most powerful players in the industry.

The auto industry, Burns said, is not unlike the computer business, which was once led by hardware makers but now is dominated by software and services.

"If you look at the major industries that have been transformed," he said, "not many of the incumbents come out of that transformation strong."

Such predictions put a rather big target on the back of companies such as GM, Toyota and Ford. Might the next automotive behemoth be BYD Co.?

That Chinese company controls nearly a third of the world's cellphone battery market, but it recently decided to try its hand at making cars and now is pushing hard into electric transportation.

On Monday, BYD unveiled a battery-powered vehicle it claims can go 250 miles on a single charge. It will go on sale in China this year.

"Our leading position in rechargeable battery technology . . . has given BYD a unique advantage," said Wang Chuan-fu, chairman of the Shenzhen, China, company, which hopes to bring its electric car stateside in 2011 and to build plants in the U.S. soon thereafter.

The idea that expertise in the petroleum-fired engine may no longer dictate the industry's direction has many old-line companies on high alert.

"This is an absolute game-changer," said David Cole, chairman of the Center for Automotive Research. He says batteries will become so crucial that assuring they are produced in the U.S. will become a matter of national security.