"We're privately held, profitable for the last five or six years, and we're like a little secret," says Paul Beach, president of Sylmar, California-based Quallion. "The little engine that could." There are, of course, bigger battery companies in the U.S., but none larger that actually produce their batteries not in China or other parts of Asia, but domestically--in this case for the medical, military and aerospace industries.
Experience building batteries in the U.S. gives Quallion an advantage, Beach says, as it pursues an unspecified Department of Energy stimulus grant to build a new battery factory that could begin servicing the emerging electric vehicle (EV) market (and, in the near term, helping big trucks meet new anti-idling laws). Many others are applying for grants in this space, including Valence Technology, Boston Power and Ener1.
"The market conditions are globalized, but the operating conditions are localized," Beach says. "Other companies thin they can take their business plan for China and put it in the translator machine to start up operations here in the U.S., but it doesn't work like that."
Quallion is not disclosing how much it is asking for from the DOE, but sources say it could be up to $200 million of the full $220 million cost. Its factory would be on 10 acres of free land provided (along with $10 million in tax credits and incentives) by the city of Palmdale, California. With 125 employees, it would produce 20,000 five-kilowatt-hour batteries--which could be combined in packs for automotive applications--annually. Quallion should know if it has its government financing in place by the end of July.
Despite being a battery maker, Beach is not necessarily bullish on the swift emergence of a big market for vehicle cells. "The plug-in hybrid and EV markets are still evolving," he said. "Will it succeed? I don't know. You can offer incentives, but you can't force Americans to buy EVs. The federal fuel-economy standards--calling for cars to get 35.5 mpg by 2016--will be a big driver, but right now you can buy a Volkswagen diesel that gets 58 mpg."
Quallion's fallback is the anti-idling market. As states and municipalities pass laws against large diesel truck idling, a market is developing for battery back-up that can run accessories such as air-conditioning and in-vehicle electronics with a switched-off engine. "The anti-idling market is a near-term opportunity," Beach said, "an alternative for truckers who would otherwise have to purchase expensive lawnmower-type generators." In California, trucks can idle for only five minutes an hour, and a $100 fine awaits violators.
Another emerging player in truck idling is Firefly Energy, which makes lead-acid batteries.
Like EnerDel and A123, Quallion is playing a creative waiting game: waiting for government money, and waiting for the big EV boom, which we all know is just around the corner. In the meantime, there are niche markets to consider.
Flickr image/Cal Gecko