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Pennsylvania Battery Plant Cashes In on $3 Billion Micro-Hybrid Vehicle Market

Battery-maker Axion Power is riding the wave of the micro-hybrid car boom, signing deals with big automakers and climbing to the top of the emerging market

By Maria Gallucci, SolveClimate News

Apr 15, 2011
Micro-hybrid car

Fuel efficiency standards in the U.S. and Europe are driving up demand for "micro-hybrid" vehicles — conventional cars that boost gas mileage by adding hybrid technologies. The market's boom has meant big business for a little-known Pennsylvania battery plant.

The New Castle, Pa.-based subsidiary of Axion Power International has nearly doubled its facility space and added more than a dozen jobs recently to help accommodate the soaring interest from major automakers.

The firm makes a patented lead-carbon PbC battery that is well-suited for the charge-intensive nature of the start-stop technology used in micro-hybrids, especially when compared with traditional lead-acid car batteries.

The start-stop systems reduce emissions and improve fuel economy by minimizing the time a car spends idling. At stoplights or in heavy traffic, the engine automatically turns off and restarts as needed while keeping the headlights, air conditioning and radio running.

Germany's BMW has already tapped Axion to provide its lead-carbon batteries in micro-hybrid test models and is expected to strengthen the partnership over the next 18 months.

The auto giant is planning to introduce its start-stop M5 sports sedan later this month at a Shanghai car show, though Axion was not involved in that project. BMW's next-generation vehicle improves the earlier model's fuel economy by 25 percent.

Axion is also working with several other vehicle manufacturers, including one U.S. giant, though none can be named at this time, said Thomas Granville, Axion's CEO and president of Axion Power Battery Manufacturing.

European automakers like Mazda, Mercedes-Benz, Mini and PSA Peugeot-Citroën have already introduced start-stop technology into their fleets. In the U.S., Ford and General Motors are expected to introduce micro-hybrids in 2012.

"We've been working closely with [manufacturers] to try to see how our product can test," Granville told SolveClimate News. "This is an emerging proposition for us."

Axion to Produce 1 Million Batteries a Year

Axion has invested some $63 million in research and development since starting up in 2003. The company also recently acquired a 55,000 square-foot manufacturing facility for robotic electrode equipment and is upgrading its existing 75,000 square-foot battery manufacturing facility.

The plants together will have the capacity to produce 1 million batteries, or battery equivalents, per year — up from a 3,000-battery capacity in previous years.

Axion also added electro-chemists, engineers and other employees to its 74-person workforce with the expansion and aims to continue adding jobs each year.

Granville said the surge in demand for vehicle batteries began shortly after April 2009, when the European Union passed legislation on fuel emissions.

Axion had previously presented its small advanced battery to original equipment manufacturers (OEMs), but it wasn't until the standards were set that automakers really began to listen.

"That really got the attention of European OEMs, and it moved our lead-carbon PbC product to the forefront," Granville said.

It also gave the eight-year-old company a share of a lead-acid battery market widely dominated by two global giants: Milwaukee-based Johnson Controls Inc. and Exide Technologies in Milton, Georgia.

Under the European regulations, 65 percent of newly registered cars in 2012 must achieve an average fuel economy of 130 grams per kilometer (42 miles per gallon). The target rises each year before reaching 100 percent of new cars in 2015 and beyond.

The law also sets a limit of 95 g/km (57.6 mpg) for vehicles made in 2020.

Granville noted that automakers will be fined for each vehicle over the fuel efficiency limit, giving the car industry a hefty incentive to install some form of hybridization in new models.

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