The Powerhouse: Inside the Invention of a Battery to Save the World (14 page)

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hamberlain could not forget a conversation he had back in 2006. He and a lab manager were admiring a new piece of prototyping equipment that could create the large batches of cathode material demanded by industrial customers before they would consider licensing a patent. Chamberlain, then new to Argonne, imagined that the equipment would prompt greater risk-taking innovation by the researchers, now able to demonstrate their inventions in a format that companies understood. It would play to Argonne’s advantage. “I imagine that your scientists take risks all the time,” Chamberlain said.

Perplexed, the supervisor glanced at Chamberlain’s direct boss. Then he said, “Oddly, it works the opposite of what you’d think. Yes, the jobs are safer than in industry, but the job is so good, why take a risk at all?”

Over the next couple of years, Chamberlain witnessed the problem himself—Argonne researchers suffered from a mortal fear of screwing up, or simply looking stupid, that often trumped the desire to make a big splash.

The aversion to risk did not seem to flow from the top. Three consecutive presidents—Bill Clinton, George W. Bush, and now Barack Obama—generously funded lithium-ion research, spurred on by optimism about electric cars. But Chamberlain said that, along the way, a couple of Department of Energy program managers were “whacked” for their risk taking. Their careers had been derailed. Memories of those bruises were still alive at Argonne and might have partly underpinned the hesitancy to gamble.

Given Amine’s inclinations, it was easy to imagine
him
wrestling with the temptation to make the jump and form his own company. But he discouraged this line of thought. “If I take one of the technologies that Argonne invented and spin it off and make a company, I will be successful. I’m pretty sure,” he said. “But if you move completely to business, you are more likely to be product-focused—you will focus on money. Your innovative brain will go down. It’s not my style. . . . I’m not really motivated just to earn money.” He said, “I’m not extremely wealthy, but I’m doing fine. A middle-class guy.” Amine was entrepreneurial within the confines of the lab. He was proactive and aggressive. But he lacked an appetite for the outside gamble.

Thackeray’s impulses were similar. He said he never contemplated a leap such as Kumar’s—raising venture capital, licensing his own technology, and building a business around it.

It was the same with the rest of the battery guys—and really the entire lab. Unlike their entrepreneurially frenzied university contemporaries in Austin, Boston, and the San Francisco Bay, the Argonne guys had no record of turning their ideas into profit-making enterprises.

But the option existed. In 1980, two American senators—Birch Bayh and Robert Dole—pushed through legislation that gave federally funded universities and laboratories the right to profit from their research. The Bayh-Dole Act was a response to the listless economy of the 1970s. American inventiveness meant the economy could eventually persevere, but the thinking was that it would help if scientists were motivated by personal profit as well as national honor. Prior to Bayh-Dole, federally funded researchers received no profit share from their inventions. Now they could. The precise cut depended on the institution. At Argonne, the allotment was 25 percent of licensing fees and royalties to the scientist or scientists and, as recognition of the general effort, the remaining 75 percent to the department and division in which they worked. That was how Thackeray, Amine, and the handful of other battery guys had pocketed more than a million dollars from the NMC patents. Yet by and large, the battery guys were timid.

It turned out that not just Argonne but the nearby university as well seemed to ignore the value of its intellectual property. Over the years, researchers at the University of Chicago had won fifty-five Nobel Prizes. Just one discovery—erythropoietin, a hormone used to treat anemia in dialysis patients—would eventually earn Amgen some $40 billion. But neither the university nor its discoverer, a researcher named Eugene Goldwasser, would earn any royalties, as the university hadn’t patented it.

In 1986, two graduate students from the University of Chicago moved into offices at Argonne. Clint Bybee and Keith Crandell were volunteers in a new initiative to shake up the sleepy lab and university and cultivate some start-up businesses. They called their firm ARCH, targeting unseen inventiveness at Argonne and the University of Chicago. Starting from scratch, the two men—both twenty-six-year-old business school students—would wander the long halls and collar a scientist. “Tell us what you’re working on,” Bybee would say. But after a number of fruitless encounters, Bybee came to understand that the Argonne guys simply “didn’t think of commercial applications for what they were doing very much.” They by and large aimed at the tastes of their principal funders—the Department of Energy or the Pentagon. “That’s who their customer was,” Bybee said. The ARCH men unearthed a dozen ventures, including four at Argonne, over the subsequent few years. They came up almost empty-handed.

As for the battery guys, they knew the ARCH team was around—they gathered it was a high-level scheme cooked up by the lab director and university officials. But almost nobody came face-to-face with either Bybee or Crandell. Bybee said neither he nor anyone else at ARCH found any battery technology sufficiently interesting to pursue, then or ever, and never took a glance at the NMC. “I never met them,” Thackeray said.

The battery guys were feeble entrepreneurs compared with their Silicon Valley counterparts, and so was Chicago’s VC community, even when embedded right in the lab. Sujeet Kumar and companies from Germany, Japan, and South Korea grabbed the NMC while the ARCH men were present but looking the other way.

 • • • 

Chamberlain had a stock of stories from his pre-Argonne days. He knew enough science to hold his own with the scientists but seemed to deliberately steer clear of their projects. He was there to create the conditions in which they could produce their magic and then marshal it into the market. Apart from the occasional pointed question that demonstrated he knew his stuff, he left them to the battery work. He was not really a “battery guy” was how he put it. Thackeray would repeat his flattering assertion that, no, by now Chamberlain
was
a battery guy; he had been around long enough. But that was just Thackeray as a gentleman. Chamberlain wrung his hands over his paucity of actual time in the laboratory. His bench time had been short—at Georgia Tech and a bit here and there in private industry jobs. Could he himself invent something new or write a profound scientific paper that drove peers to sit up? No one could say, and he had never put himself on the line to find out. Yet Chamberlain occupied a supremely respected place in the lab, anchored in his perceived appetite for risk and his grasp of business.

He was different from those around him.

Chamberlain regarded his entrepreneurial inclinations as “something genetic and probably environmental.” All his brothers had at one time or another started a business—one in fiber optics, another in chemistry, and the third working with their father at JA Chamberlain and Sons, his Florida marine engine shop. A string of companies had exploited Chamberlain’s people and leadership skills and his start-ups had gone some distance. When he arrived at Argonne at age thirty-nine, he soared. There simply was no one at the lab—apart from Khal Amine, and he was regarded with great suspicion—who was equipped with the salesman’s bone. So that when Chamberlain did what came naturally—ringing up senior managers of the major companies and winning them over—he became the most successful patent representative not only in the unit, but perhaps in lab history. For Argonne, he was the guy “from industry.”

He was largely tapping his formative experience in semiconductors. Although legend drew a straight line from Bell Labs to Silicon Valley to the iPhone, by the middle 1980s the American semiconductor industry was in fact dying. It was part of the narrative of industrial decline and the Japanese juggernaut that so consumed Americans. To fight back, American chipmakers proposed an experiment. They would band together along with the federal government and attempt to leapfrog the Japanese. In 1987, Ronald Reagan signed legislation that embraced the experiment. The law created Sematech, for Semiconductor Manufacturing Technology. Fourteen chipmakers and DARPA, a Pentagon research arm, went fifty-fifty on a five-year, $500 million effort to keep semiconductor manufacturing in the United States. American chip making surged back. Intel, led by Andrew Grove, regained dominance with first-rate, intricately designed microprocessors that captured the lucrative high end of the market.

After that triumph, Sematech became a paradigm like Apollo and the Manhattan Project, shorthand for how industry and government could collaborate to recapture a market from a foreign upstart.

In 2008, Chamberlain proposed the idea of a battery
Sematech to a Department of Energy supervisor. The consortium he had in mind would not
save
American battery making per se since virtually no lithium-ion capability had ever been established in the United States. Instead it would unite companies that together would
create
an American lithium-ion industry—battery start-ups, chemical makers, lead-acid battery makers, and so on. It would put the United States on a footing to compete with global battery makers. The supervisor understood Chamberlain’s idea and challenged him to “get industry to do it.”

And so he did. In spring, he invited the executives of a half dozen battery and chemical companies to a couple of meetings. At first the companies did not bite—notwithstanding the chipmakers’ positive experience, they wondered how they could possibly collaborate when they were rivals. None liked the idea of a five-year commitment, as Sematech had been. Yet they gradually coalesced around Chamberlain’s main idea and morphed it into their own, with the aim of establishing a foundry where battery teams could prove their materials, a single plant where they would all make lithium-ion batteries.

One day, Jim Greenberger, an outside member of the group with which Chamberlain was speaking, mentioned a vague boyhood link to a close ally of Senator Obama, whose presidential campaign was gaining momentum. Obama seemed to be intensely interested in batteries. Why not pitch the battery Sematech proposal to the senator’s team? Everyone agreed that it was a good idea.

The group found itself in a Chicago office before a single economic adviser to Obama. Greenberger described Sematech and the aim of beating the big Asian battery makers.

“Why do you think we can compete with the Japanese auto industry?” the adviser asked.

Chamberlain said American companies, while currently struggling, could recover and figure large in a reconstituted global industry. But he added that if electrics truly took off, Detroit, with its record of stodginess, “will go the way of the dinosaur.” They would not manage the transition to the new world.

“What kind of money do you need?”

The group had discussed this question. If they were modeling on Sematech, the sum should be around $500 million. But they wanted a cushion in case expenses were higher. So they decided on $1 billion. It was perhaps a hubristic price, but that was what they would request for the battery Sematech.

“Two billion dollars,” Greenberger said.

The rest of the group went quiet. Chamberlain could not see the expression on the Obama adviser’s face, and no one could fathom the origin of the new number.

“Okay,” the adviser said.

Outside, the group laughed. Why did Greenberger double the figure? “I don’t know,” he said. “It just felt right.”

As Obama was elected, the economic landscape transformed. The world was in financial collapse and the country in a panic. On taking office two months later, Obama quickly proposed, and Congress approved, a $787 billion economic stimulus package. It was meant to rescue the economy and plant the seeds of future industries. Chamberlain smiled as he studied the breakdown of spending. It included a $2.4 billion line item—a $2 billion lithium-ion battery manufacturing program plus $400 million for the development of electric-car–manufacturing processes.

Rahm Emanuel, Obama’s new chief of staff, had remarked that, politically speaking, no crisis should go to waste. The battery Sematech was a “go.”

It was and it wasn’t. The money would fund the creation of an American lithium-ion battery industry, just as Chamberlain and the companies envisioned. Only now, with the unexpected largesse of a $2.4 billion research-and-development fund, the companies changed their minds about working collaboratively. Johnson Controls received $249 million of the fund, EnerDel won $118 million, and $200 million went to A123. They would compete against one another for the market. There would be no battery Sematech—no industry-government consortium. But the United States would be in the battery game.

Steven Chu also saw no reason to squander the crisis. In his case, there was the matter of his dream to recreate Bell Labs. He proposed eight projects, each tasked to solve a single big problem, at a total five-year cost of $1 billion. For those who did not grasp the significance, he said, “We are taking a page from America’s great industrial laboratories in their heyday.” On paper, they would be called “innovation hubs.” But more explicitly, they were “Bell Lablets.”

One of Chu’s hubs was to be aimed at revolutionizing batteries. As impressive as NMC 2.0 was compared with its predecessors, it couldn’t power an electric car competitively with the internal combustion engine. After accounting for the loss of energy in combustion, a kilogram of gasoline contains 1,600 watt-hours of stored energy. State-of-the-art lithium-ion batteries, by comparison, delivered about 140. Thackeray’s goal for NMC 2.0 was to double current performance plus cut the cost. But even that would leave batteries still about a sixth the energy density of gasoline. The Battery Hub’s goal was to make the next big jump after lithium-ion—to 600 or 800 watt-hours a kilogram. Toward that goal, the Battery Hub would receive $25 million of federal funding a year for five years, $125 million in all. A competition would decide which university, national lab, or consortium would host the Hub.