Detroit Auto Show: For Chrysler, Batteries Born in the U.S.A.

(MoneyWatch)  There are definitely lithium-ion batteries under the hood of the bright orange Dodge Circuit electric sports car that Chrysler unveiled at the North American International Auto Show in Detroit. But if the car goes into production they may well have another manufacturer's name on them.

Carmakers are being very cagey about their battery suppliers because they're in an international race to find the best technology, especially if it is accompanied by significant manufacturing capacity. Few carmakers are actually in the battery business, so they're unusually dependent on outside manufacturers, some of which are fairly recent startups.

On the floor in Detroit, Lou Rhodes, president of Chrysler's ENVI division, was standing next to the Circuit with a proprietary air. The company has shown no less than five electric and hybrid prototype vehicles (including a minivan and two Jeeps), and it says one will be in production by 2010, and three more on the market by the end of 2013.

"We haven't announced our battery supplier," he said. "But having a domestic source for the cells and the pack close to our production points is clearly preferable for us."

Chrysler wants to buy American. "Making lithium-ion batteries is a very automated process, so there's not a very big price advantage making them outside the U.S.," he said.

Since many of the leading lithium battery companies are either based in Asia or have their manufacturing there, this is definitely good news for U.S. startups looking for partners. Christina Lampe-Onnerud may have been born in Sweden, but her battery company, Boston-Power, is all-American.

The company supplies its long-lived Sonata batteries to HP laptop computers, but it hopes to get into the hybrid and electric vehicle market within three to five years. It announced $55 million in new venture capital funding today, from Oak Investment Partners, Venrock, GGV Capital and Gabriel Venture Partners.

"Absolutely, it can be profitable to make batteries here in the U.S.," she said. "We would love to be a part of creating a large domestic industry for automotive batteries. We can leverage the extraordinary can-do sense of innovation America has."

Of course, Boston-Power's batteries are now made in Taiwan, but for the right opportunity the company would start scouting locations right here in the U.S.A.