Boston-Power Asks Feds for $100 Million to Build Better Batteries for Electric Vehicles; Filene’s Basement Warehouse Could Be Reborn as 600-Employee Factory

6/1/09Follow @wroush

The coming generation of electric and hybrid gas-electric vehicles will need safer, longer-lasting, faster-charging batteries. Boston-Power—the Westborough, MA-based known up to now mainly for its “green” lithium-ion laptop batteries—wants to supply them, and it’s pursuing federal stimulus money to fuel its bid.

At a planned media event today featuring Massachusetts Governor Deval Patrick, the company will introduce a new “green” lithium-ion battery for electric and hybrid cars called Swing. To build the new product, the company is unveiling plans for a 455,000-square-foot manufacturing facility to be located in Auburn, MA, a Worcester suburb about an hour’s drive from Boston.

Boston-Power says the proposed facility could create 600 new jobs, and both the company and state officials are describing it as a major step toward making Massachusetts into a vehicle battery mecca. “This is the state of innovation,” says Christina Lampe-Onnerud, Boston-Power’s founder and CEO. “It’s a state that is committed to clean technology and has been for a long time. We put Boston-Power’s headquarters here for the same reason. We believe manufacturing should be close to the innovation.” (Below is a complete interview with Lampe-Onnerud, who will also be a featured speaker at the June 24 Xconomy Summit on Innovation, Technology, and Entrepreneurship.)

Indeed, Boston-Power’s project, along with similar efforts at Watertown, MA-based A123Systems, could give the state a key foothold in the reborn auto industry if, as expected, federal bailout conditions force American automakers to retool for a new generation of greener vehicles. A123 landed a deal in April to supply Chrysler with lithium-ion batteries based on its MIT-bred nanophosphate technology. (Those batteries, however, will be built in Michigan rather than Massachusetts, thanks to a $100 million tax-credit lure extended by the Michigan Economic Development Corporation.)

Boston-Power's converted Ford EscapeBoston-Power’s plan to build in Massachusetts hinges on its ability to lasso a big chunk of federal stimulus cash. The American Recovery and Reinvestment Act of 2009, known colloquially as the stimulus bill, provides $2 billion for “facility funding awards” for “manufacturers of advanced battery systems and vehicle batteries that are produced in the United States, including advanced lithium ion batteries.” Boston-Power is applying for $100 million of that money. It also plans to hit up the Department of Defense for funds designated in the proposed 2010 federal budget for the construction of manufacturing facilities that contribute to national security.

The Commonwealth of Massachusetts has pledged up to $9 million for the Auburn facility—but that money is in the form of matching financing, meaning Boston-Power will have to secure the federal money first. The company says it’s “working closely” with state officials, including Governor Patrick, energy and environmental affairs secretary Ian Bowles, and Representative Jim McGovern (a Democrat who district includes Auburn), to pursue federal and state incentives.

Lampe-Onnerud says building the Auburn facility will cost far more than the $100 million the company is seeking from the U.S. government, but that “it’s enough to get private investors to believe that you can do battery manufacturing in the United States.” Without some pump-priming in the form of federal stimulus spending, she says, the financial markets might not back risky technologies in areas like energy and clean technology. “What I think the Obama Administration has realized, to its credit, is that if we want to be a player, the government has to help,” Lampe-Onnerud says. “It will not happen on its own.”

Boston-Power isn’t saying much yet about the Swing product itself, except that it will set new standards in the vehicle battery business for safety, lifetime, weight, cost, environmental sustainability, and energy density. (Lithium-ion batteries have a higher energy density, or energy output per weight, than most other battery technologies, and both A123 and Boston-Power have come up with engineering tricks that make it even higher.) But Lampe-Onnerud says the Swing builds on the same basic technology platform as the Sonata, which is marketed by Hewlett-Packard under the Enviro brand name. She adds that the manufacturing blueprints and procedures the company has already developed for its Sonata factories in Asia can be adapted relatively easily to make larger-format batteries for cars here in the United States.

And using an existing building—a warehouse off I-90 once used by the rapidly downsizing Filene’s Basement bargain clothing chain—will hasten the project, Lampe-Onnerud says. “This factory will be up and running full speed within three years, which is very fast in the battery industry,” she says. “We have experience with this type of manufacturing in Asia, so I think it’s a low-risk investment for the government.”

Boston-Power and other applicants for the battery-manufacturing grants have already submitted proposals to the government, and the Department of Energy plans to announce a list of grant recipients as early as July. Governor Patrick, Secretary Bowles, Rep. McGovern, Lampe-Onnerud, and other officials plan to promote the Boston-Power proposal at a noon ceremony today at the Auburn site.

Xconomy spoke with Lampe-Onnerud about the project Friday evening; a transcript follows.

Xconomy: How much of the actual cost of the proposed Auburn plant would be covered by the $100 million stimulus grant you’re seeking?

Christina Lampe-Onnerud: It’s not the whole amount, by far, but it’s enough to get private investors to believe that you can do battery manufacturing in the United States. For a company like ours, cash flow is everything. I believe that Boston-Power, 10 years out, will be a smashing success. But it’s tough in the early years because you’re growing the company at the same time you’re growing the top line. Revenue needs to grow and you need to establish market share at the same time as you’re innovating. This will allow us to … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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