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Continental: "Good chance"' for Chevrolet Volt EV Win

DETROIT, May 8, 2008; Kevin Krolicki writinfg for Reuters reported that Auto supplier Continental AG, in the hunt to supply advanced battery packs for the upcoming all-electric Chevrolet Volt, sees a "good chance" of winning that high-profile contract from General Motors Corp, the company's chief executive said on Thursday.

"We are positioned to be one of the major players in the automotive area," Continental Chief Executive Manfred Wennemer told Reuters.

With rising oil prices and heightened environmental concerns driving demand for electric cars, Continental sees the contract to supply the crucial component for the highly anticipated Volt as a a major milestone, Wennemer said.

"It is not going to be decisive for the future of our battery unit, but it would be very, very important for us to be the one," Wennemer said of the contract for the Volt, which is expected to go into production in 2010.

"We think we have a good chance," he said.

GM is currently testing two competing battery packs for use in the Volt, one supplied by Continental, using battery cells developed by Massachusetts-based A123 Systems, and the other supplied by a division of Korea's LG Chem Ltd.

GM is designing the Volt to run 40 miles on battery power alone, reducing or even eliminating the need for drivers to fuel up a gas-powered engine designed to recharge the battery.

That raises the stakes for GM's suppliers, who are working to show the lithium-ion batteries now widely used in consumer electronics can be safely and efficiently bundled into a 400-pound package for the Volt.

Lithium ion batteries can store more energy in less space, but their use in vehicles has also raised safety concerns highlighted by consumer recalls involving overheating laptop computers that burst into flames.

Both Continental and LG Chem say their batteries for the Volt will be more chemically stable than those used in current-generation consumer electronics.

Wennemer said Continental sees its expertise in adapting lithium-ion batteries for use in cars, taking advantage of work it already does in supplying power management systems and related equipment for hybrids.

"Bring it into the car. Make sure it can work in an automotive environment. Make sure it doesn't explode. Make sure it doesn't create fires in your car. This is where we feel Continental's competence is," he said.

A123 is just one of several battery development specialists with which the German supplier is working, Wennemer said.

Johnson Controls Inc is supplying battery cells for Continental as part of a contract to supply lithium-ion batteries to Daimler AG for the Mercedes-Benz S400. Daimler expects to launch that luxury hybrid sedan next year, making it the first to market with a lithium-ion battery.

"We think this development is so fast at the moment that it would be wrong to go and decide on one partner," Wennemer said.

He said it remained uncertain how large the auto battery market could become in the near term, but said he expected the growth to be fast. "It's going to grow rapidly because right now it's zero and it can only go in one direction," he said.

Wennemer said if Continental wins the Volt contract it would build production facilities in the United States to supply GM.

GM Chief Executive Rick Wagoner said last month that the automaker was moving closer to picking a winner for the Volt battery contract. But he also said GM wanted to see multiple suppliers around to compete for future business.

Editing for Reuters by Carol Bishopric