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USA: GE Builds a Better Battery

What does it take to launch a better battery? Makers of electric vehicles, smartphones, and renewable energy gear want to know. For a 45-person internal startup at General Electric (GE), it took the financial backing and technical support of an AAA-rated company with more than $140 billion in annual revenue, not to mention the care and attention of Chairman and Chief Executive Officer Jeffrey Immelt. It also helped that the team chose a proven battery design that had been under development for 30 years before GE got involved. The result is the Durathon, a molten salt battery that went on sale in September 2011, providing backup power for cell phone towers, among other uses.

There are plenty of ideas for new batteries; the problem is commercializing them. Today’s cars still rely on lead-acid batteries that date back to experiments done in 1859, while consumer electronics are powered by alkaline batteries that trace their roots to 1899. Innovators come along regularly, but in the past year a slew of battery startups have hit rough patches. Ener1, which was pledged $118 million of federal aid to develop lithium ion batteries for electric vehicles, filed for bankruptcy in January. Battery maker A123 Systems (AONE) of Waltham, Mass., lost $125 million in the first quarter. At a U.S. Department of Energy conference in February that showcased new battery concepts, Microsoft (MSFT) Chairman Bill Gates warned that “the failure rates here are going to be well over 90 percent.”

Photograph by David La Spina for Bloomberg Businessweek
Experimental battery cells in a tray at a GE Global Research lab

Even with its built-in advantages, GE’s nascent Energy Storage Technologies business unit wrestled with the same challenges that afflict less pampered startups: a constantly changing business model, performance constraints imposed by the chemistry itself, finicky manufacturing processes, and heated arguments between different parts of the development team. GE’s Six Sigma manufacturing experts repeatedly clashed with team members who wanted to rush out prototypes for beta-testing in the market. The Six Sigma types seemed to be vindicated when the first battery sent to a customer in late 2010 broke during shipment. “At one point in 2010, I was feeling a little lost,” says Prescott Logan, the unit’s general manager and a 10-year GE veteran with an MBA and an undergraduate degree in economics. “We went through some fights, some serious fights.”


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