One of the world’s largest corporations, General Electric Co, is increasing its exposure in batteries investments with a U.S. $170 million factory. This facility would make the firm the largest maker of electric turbines, which the company foresees as a key element in its burgeoning energy business.
The conglomerate is planning to unveil its factory on Tuesday and said that it was increasing its investment in the site from its original U.S. $100 million investment planned in 2009. The increase in the investment would double the capacity of the plant’s production.
The company is located at Schenectady, New York and would employ four hundred fifty individuals at full capacity. The factory is expected to spearhead a projected U.S. $1 billion revenue return for the company.
This is but another move for GE Chief Executive Jim Immelt, who has spearheaded up GE’s focus on energy projects in the last two years. These include an astounding U.S. $11 billion in takeovers from 2010 and 2011. Other investments that the company has undertaken include a stake in A123 Systems Inc. and a lithium ion battery maker for electric and hybrid cars. The purchases were funded by proceeds from the sale of a majority stake in the NBC Universal media operation as well as U.S. $15 million in funding from New York state authorities as well as U.S.$5 million from local officials.
The company has also confirmed that it has received its first order of batteries from Megatron Federal, a South African engineering firm. The order amounts to 6,000 units to be used as backup power supplies for its telecommunication sites. The total amount of the order remained undisclosed.
This move by GE seems to echo a projected decrease in the cost of batteries used in electric vehicle platforms. The decrease in the price is foreseen to amount to a seventy percent by 2025, with increasing oil prices and stricter fuel efficiency standards are pushing carmakers to build more cars of this design.
The study was conducted by McKinsey and Co and it stated that manufacturing these batteries on a greater production scale represents one third of the total price decrease by 2025. There is also an expected increase in the number of companies participating in this sector together with the creation of new technology taken from consumer electronics makers can also provide more impetus to cut the costs of lithium ion battery creation.
The report stated, “Cheaper batteries could enable the broader adoption of electrified vehicles, potentially disrupting the transportation, power and petroleum sectors.”
The consultancy firm is projecting that the price of a lithium ion battery array could be as low as U.S. $200 in 2020 and U.S. $160 in 2025 per kilowatt-hour. Current prices range between U.S. $500 to U.S. $600 per kilowatt-hour. Should gasoline prices remain at U.S. $3.50 per gallon or even higher, carmakers that can purchase battery arrays at U.S. $250 per kilowatt hour can provide electric vehicles at prices competitive enough against advanced internal combustion engine powered cars and trucks.
The costs for batteries remain one of the biggest issues to the continued increase in electric vehicle adoption, according to the consultancy firm. The current U.S. Department of Energy goal is to aim for the reduction of the cost of a battery array to just U.S. $300 per kilowatt-hour by 2014. The standard 23-kilowatt hour battery used in Ford Focus Electric costs about U.S. $652 per kilowatt-hour totaling between U.S. $12,000 and U.S. $15,000 for each vehicle.
The experts say, “It’s the consumer electronics industry as much as any other industry that’s driving the costs lower.” Let’s all wait and see.