Twelve years ago a group of U.S. businessmen and battery experts came together to create a consortium to make sure that American companies would be an important force in the global competition to dominate lithium-ion battery manufacturing. The founders named the consortium “NAATBatt”, at the time an acronym for National Alliance for Advanced Transportation Batteries.
The idea behind NAATBatt was based on the SEMATECH consortium founded by leading companies in the American semi-conductor industry in the 1980’s. SEMATECH was to help U.S. semi-conductor manufacturers fight off competition from an aggressive Asian competitor, which was seeking at the time, perhaps by nefarious means, to capture and push U.S. manufacturers out of the semi-conductor market. The “bad guy” back in those days, of course, was Japan.
SEMATECH proved highly successful and by most accounts it assured U.S. dominance of semi-conductor manufacturing for the better part of two decades. SEMATECH seemed an ideal model for the U.S. battery industry. The relationship between SEMATECH and NAATBatt was more than just passing. NAATBatt’s CFO at the time, and its CFO today, Sandy Kane, a former senior executive at IBM, was a founder of SEMATECH.
Unfortunately, twelve years ago the concept behind NAATBatt (and formerly the concept behind SEMATECH) was not well understood. NAATBatt was never intended as a consortium for manufacturing batteries. The idea was that American battery manufacturers would make the batteries. Those manufacturers would compete to design and manufacture the best batteries with the free market to determine the winners and losers.
NAATBatt’s role was to focus on one thing: The technology of making lithium-ion batteries. It was clear that the principal barriers to entry by U.S. companies into the lithium-ion manufacturing business in the 2000’s was the steep manufacturing learning curve and the huge capital investment in tooling and equipment that would be required to challenge Japanese and South Korean dominance of the industry (China not even being a factor at the time). By focusing exclusively on traversing that learning curve and by making the capital investments in tooling and equipment that for-profit companies were reluctant to make—and then by sharing freely the results of its learning and resources with its members in the same way as did SEMATECH—NAATBatt intended to get U.S. battery companies into the business of lithium-ion battery manufacturing.
Ultimately, in 2009-10, the U.S. government decided not to pursue the NAATBatt idea. Whether that was a good or bad idea at the time, we will never know. But we do know for certain that the following decade has been a disaster for the United States in lithium-ion battery manufacturing. Today the United States and U.S. companies are clearly losing the race to dominate what will be one of the most important technologies of the 21st Century.
Is it time for NAATBatt 2.0? The importance of lithium-ion technology is becoming increasingly clear to American leadership in government, at the Pentagon and in the automobile industry. The warning NAATBatt sounded back in 2009-10, “He who makes the batteries will one day make the cars”, is finding new resonance. The U.S. Department of Energy’s new Energy Storage Grand Challenge is discussing how to make the United States competitive in advanced battery technologies. But it is unclear whether that concern will manifest itself in much more than some increased funding for battery R&D.
The challenge the United States and U.S. companies face in lithium-ion battery manufacturing today is not a technological challenge of battery design. It is a commercial challenge. No one will out-innovate American entrepreneurs when it comes to designing better batteries. But to address the commercial challenge that bedevils U.S. industry, U.S. manufacturers need to be able to make lithium-ion batteries in the United States as cheaply and as consistently as anywhere else in the world. The U.S. government and U.S. industry must focus on that problem in order to get back into the lithium-ion battery race.
Perhaps it is time to take another look at the NAATBatt/SEMATECH model?