Photo: Battery: A123 Systems

BUZZ! DRILL! RRRIP!: Three A123 execs wield DeWalt’s potent new line of tools, which pack the company’s lithium‑ion cells. From left: CTO Bart Riley, CEO David Vieau, and Ric Fulop, VP of business development.

We knew from the start that we wanted to do auto batteries,” says Ric Fulop, a 30‑something entrepreneur with an electrical engineering degree and a curly mop of brown hair. “But we also knew that automakers only buy from companies with volume production and real customers.”

It’s a version of the old chicken-and-egg problem that has confronted would-be tech entrepreneurs for decades. But Fulop and company came up with a novel solution: “We had to do power tools first.”

In 2001, Fulop, then 26, set up A123 Systems in Watertown, Mass., with three partners, taking the position of vice president of business development. Late last year the company’s new design for lithium-ion batteries hit the market in a line of power tools aimed at professional builders from the DeWalt Industrial Tool Co. The batteries operate at 36 volts, twice the voltage of their predecessors, and hold 130 watt-hours per kilogram—twice as much as standard nickel-metal-hydride cells.

Lithium-ion cells are poised to take an increasing share of the auto battery market, just as electric drive seems set to begin a long, slow climb to become, at last, a serious power-train option. But what’s rarely understood is how much that second revolution depends on the first.

The auto industry transformation began modestly enough a decade ago with the Toyota Prius, the now wildly successful gasoline-electric hybrid. And if A123 and dozens of like-minded companies and research groups can deliver on the promise of lithium-ion batteries for vehicle propulsion, in four to 10 years plug-in hybrids could be capable of going substantial distances on electricity alone. Enthusiasm for the plug-ins being tested now, along with the 15- to 65-kilometer pure-electric range projected for their successors using lithium-ion battery packs, has raised hopes. Some analysts dare to contemplate the re-emergence of a mass-market electric car, perhaps within a decade.

Chalk it up to changing attitudes as much as breakthrough inventions. High gasoline prices have given regulators and drivers alike a reason to smile on hybrids. And investors in the currently fashionable green tech sector love new energy-storage technologies, so critical to electric-drive vehicles.

There are plenty of technical challenges—in the cells themselves, in the battery packs where they reside, and in the cars that will have to be engineered around them. The first to meet the challenges will be in the driver’s seat of tomorrow’s cars. A123, with its modest staff of 300 scientists and engineers, says its unique proprietary technology gives it a shot [see photos, "Battery Factory."

“The first vehicles to use lithium-ion batteries will come in 2009,” Fulop declares. “In 2010, there’ll be several. By 2015, most of the world’s hybrids will use them.”

A123 already has contracts to supply batteries to several European and American automakers, Fulop adds coyly, declining to identify the companies. He points out that early this year A123 received one of General Motors’ first commissions for R&D work on lithium-ion batteries.

In fact, in June, GM raised the stakes, announcing two more R&D contracts: one to Compact Power of Troy, Mich., which plans to use cells from Korean battery maker LG Chem, and the other to a division of the German auto parts maker Continental, which plans to build battery packs incorporating A123’s cells.

Experts agree that lithium-ion cells will power coming generations of cars—hybrid, plug-in hybrid, and pure electric. At first the car companies will put the new batteries in just a few standard hybrids, to test the waters, or they’ll use them to fill market niches, like the one for such dazzlingly fast sports cars as the Tesla Roadster [see sidebar “Tesla: Not for Geeks Alone,”]. Later they’ll put them in plug-ins—at first, in standard parallel designs, which drive the wheels with either the motor or the engine or some combination of the two. Then, perhaps, they’ll move on to the more radical series design, in which the electric motor drives the wheels, leaving the engine no other role than to recharge the batteries.

Cars won’t come until the batteries are affordable, and batteries won’t be affordable until the automakers purchase a lot of them. This year, though, the world’s top two automakers made firm commitments to lithium-ion technology.

Toyota, the world’s biggest and most profitable car company, said that late next year it will put lithium-ion batteries in an unspecified hybrid vehicle. It will also test a fleet of plug-in hybrids, using nickel-metal-hydride cells, that are able to run a few kilometers on batteries alone. Today’s Prius can do that for only a couple of minutes, and then only at speeds of less than 50 km/h.

General Motors is playing catch-up—but with a vengeance. Late this year, it expects to finally launch its first hybrids able to run in all-electric mode, if only for a minute or two. GM recently said it will “soon” offer a true plug-in, with an all-electric range of 16 km (10 miles), although it hasn’t committed to a launch date, saying that the batteries aren’t yet ready. GM is also planning to build a true series hybrid—the Chevrolet Volt, first shown as a concept vehicle in January.

Why aren’t the batteries ready for prime time? There are lots of reasons, including cell life and cost, but perhaps the biggest of all is safety. Remember last year’s vivid videos of flaming laptops? Nobody was hurt, but the resulting recall of millions of lithium-ion batteries was a black eye for Sony and other major vendors. If a lithium-ion powered minivan carrying a family were to burst into flames, the resulting fiasco could set the industry back a decade. And it’s no use arguing that something like 250 000 gasoline-powered cars catch fire every year in the United States alone. New products are held to a higher standard.

Safety is key, and it all comes down to preventing fires and explosions. These catastrophes happen when a cell shorts out, gets hot, and starts an exothermic oxidizing reaction that kicks the temperature to hundreds of degrees Celsius in a fraction of a second. The heat then shorts out adjacent cells to produce a runaway thermal reaction that can be spectacular (just ask Sony). And, unlike a gasoline fire, the conflagration can’t be smothered, because it gets oxygen from the cell’s intrinsic chemistry.

Field failures occur once in every 5 million to 10 million of the most common lithium-ion cells, those known as the 18650 design, according to Brian Barnett, a technology analyst at Tiax, a consulting firm. Of course, the more cells there are in a battery pack, the greater the chance of a problem. Although it’s clear that impurities introduced during manufacturing are largely to blame, the mechanism remains unclear.

There are several ways to make the new technology safe enough for cars. One, perhaps transitional, approach is to link large numbers of small cells in networks—as the Tesla does—with safeguards to ensure that a problem in one cell cannot propagate to others. A123 and some other start-ups instead chose to focus on the fundamental reactions in the cell.