The Wall Street Journal has been slower than other media in reporting on PHEVs, though it did a lengthy profile on Andy Frank after the launch of Plug-In Partners, and has reported on other developments. Now one of its top automotive reporters positions the story in terms of the competition between the U.S. and Japan over advanced lithium batteries. (The continuation of the story is headlined "New Hybrid Batteries Jump-Start Old Fueds.")

The article shows up prominently on of Page One of the paper's second section. Its large photo shows a black Prius proclaiming "Plug-In Hybrid/150+ Miles per Gallon/Powered by A123 Systems." (Notably, as when it was shown at the White House, though presumably after-market conversion company Hymotion built the car, its name doesn't appear.)

In Quest for Better Battery, Keep an Ion Nationalism
By NORIHIKO SHIROUZU
April 13, 2007; Page B1
http://online.wsj.com/­article/­SB117642662763068592.html

CAPTION: Toyota Prius fitted with A123 Systems' lithium-ion batteries In 2005, General Motors Corp. executives -- blue over their company's less-than-green reputation and envious of eco-darling Toyota Prius -- began searching the world for advanced batteries they hoped would power a new generation of gas-electric hybrid cars.

Most roads led them to Japan, the leader in battery technology and Toyota Motor Corp.'s home turf. Several GM engineers and executives describe their experience at Panasonic EV Energy Co. Ltd., one of the top makers of hybrid-car batteries, as typical of the reception they received there: When GM team members asked for detailed information about the company's most sophisticated automotive lithium-ion batteries, Panasonic EV refused.

A Panasonic EV spokesman says that as a matter of company policy it only discloses that kind of information to its parent company, Toyota.

The car business may have gone global, but the rush to develop new technology to reliably and inexpensively electrify 21st-century cars has rekindled some 20th-century-style economic nationalism. Facing growing pressure to curtail greenhouse-gas emissions, U.S. auto makers are increasingly worried that the critical battery technology they'll need to compete is getting locked up by Japanese rivals who moved more quickly to develop gas-electric hybrid vehicles.

"It's important to have the knowledge base on advanced automotive battery technology and manufacturing capacity right here locally in the U.S." says Beth Lowery, GM vice president of Environment and Energy.

So now, GM, which sells more than half its vehicles outside the U.S. and has an aggressive strategy to shift more purchasing and engineering to Asia, is talking up the importance of an American solution to the problem of building longer-lasting, more-reliable, less-costly automotive batteries, and looking for help from the federal government to subsidize those efforts.

One beneficiary of this battery war is a small Watertown, Mass., start-up called A123 Systems, which has developed a small pack of lithium-ion batteries that can be retrofitted into the spare-tire well of a Toyota Prius. The batteries turn the Prius into a "plug-in hybrid," which can be recharged through an electrical outlet and run almost exclusively on electricity in the first 40 miles of driving. During a test drive around Watertown, near Boston, there is nothing noticeably different about how the converted black Prius drives, except for a screen in the center of the car's dashboard that flashes its eye-popping fuel economy, sometimes 100 miles to the gallon and at other points 150 miles to the gallon.

This is the kind of technology GM wants to use, to develop, among other future vehicles, a Saturn Vue Green Line plug-in hybrid SUV and a real-world version of the Chevrolet Volt show car the company has been promoting to demonstrate its seriousness about clean technology.

Nearly all hybrid vehicles sold today, including the Toyota Prius, are equipped with a less sophisticated kind of technology, nickel metal hydride batteries. But these batteries and the accompanying technology are heavy and expensive -- adding $2,000 or more to the cost of a car. Moreover, nickel metal hydride battery systems can't power the car very far on electricity alone, which means the fuel savings are relatively modest, especially if the car is driven mainly at highway speeds.

Auto makers are looking to lithium-ion batteries to take hybrid vehicles to the next level by allowing them to be recharged from the electrical grid, theoretically reducing total carbon emissions. The batteries would be able to pack more electricity in the same space and weight as the current generation, enabling them to power the vehicle for longer distances on electricity alone.

Toyota, considered the industry's hybrid leader, is looking to adopt lithium-ion technology in the redesigned Prius, due to be launched as early as the second half of 2008. Rivals, from GM to Honda Motor Co. to Ford Motor Co. to DaimlerChrysler AG, are fighting to match Toyota and are expected to come out with their own lithium-ion hybrids by the end of the decade.

As with many other technology wars -- from computer operating systems to video recorders to music players -- each of the combatants wants to be the winner that sets the industry standard, giving it an edge as the market moves from old technology to new. The key will be finding the chemical recipe that makes lithium-ion technology safe, durable and reliable enough to power cars under a wide range of road and temperature conditions without breaking down.

"There's a global economic challenge for our competitiveness" with lithium-ion batteries, said Alexander Karsner, assistant secretary of energy efficiency and renewable energy of the U.S. Department of Energy. He believes it's critical for the government and the private sector to invest in the technology because U.S. companies are falling behind Japanese rivals in commercializing high-powered, lightweight automotive batteries.

The U.S. Department of Energy, in collaboration with the U.S. Advanced Battery Consortium, which is made up of Detroit's three auto makers, last year awarded A123 a $15 million contract to develop its version of lithium-ion technology for hybrid-electric vehicle applications. In addition to the A123 contract, the Energy Department has requested $41 million this year to continue advanced battery research. There are also broad energy programs under which that could provide loan guarantees to battery companies.

Meanwhile, in Japan, the Ministry of Economy, Trade and Industry last year moved to consolidate various state-sponsored battery projects into a single national battery project with a focus on automotive use and a first-year budget of 4.9 billion yen ($42 million).

Haruhiko Ando, the Japanese trade ministry official who spearheaded the move, believes the global leadership positions of Sanyo Electric Co. and Panasonic EV in advanced automotive battery technology happened in part because of Japan's long-standing strategy to make batteries a top research priority.

"Detroit is belatedly realizing the true importance of having an edge in electrification of vehicles," Mr. Ando said.

South Korea, China and the European Union also have government-supported advanced battery projects, according to U.S. and Japanese government officials and documents. And a joint venture between Johnson Controls and French battery cell producer SAFT, a €560 million ($751.9 million) a year maker of batteries for industrial and electronics uses, also is vying to supply GM.

A123 was founded in 2002 by Massachusetts Institute of Technology professor Yet-Ming Chiang, former American Superconductor executive Bart Riley and entrepreneur Ric Fulop. The company, which has 250 workers compared with about 1,000 at Panasonic EV, has raised $100 million in capital from investors, including Sequoia Capital, a Menlo Park, Calif., venture capital firm, and General Electric Co.'s commercial-finance unit. It already has more than $150 million of orders for its breed of lithium-ion batteries, which Black & Decker Corp. now uses in its popular power tools.

"We feel pretty good about the company, as well as a few others in the market today," says Joe LoGrasso, engineer group manager of GM's hybrid energy storage systems, of A123.

Prof. Chiang says "a key differentiator" for A123's technology is a design that makes it less likely the batteries will overheat and catch on fire -- a problem that has bedeviled computer makers and a concern if an auto maker tries to apply lithium-ion battery technology to vehicles.

While blessed with strong private backing and the benefit of Prof. Chiang's technology, A123 Chief Executive David Vieau believes the company couldn't have accomplished the progress it has made without financial assistance from the U.S. government.

"Every bit of government assistance helps," Mr. Vieau says.

Write to Norihiko Shirouzu at norihiko.shirouzu@...