Incentives, Location Bring Battery Maker to Palmdale

A serious challenge to Asian dominance in the lithium ion battery market is being made in the Antelope Valley where Quallion LLC has proposed to build a new manufacturing plant. Quallion’s plans rely heavily on whether the U.S. Department of Energy picks the company as one of seven to receive stimulus funds promoting the development and manufacture of batteries or drive train components for electric vehicles. Just the announcement that Quallion, based in Sylmar, picked Palmdale as the location for the new facility created excitement in the community. Construction alone is expected to create 400 jobs with an equal number as the minimum working in the plant which is expected to be operational in 2012. The workforce could go as high as 1,000 people. Both Palmdale and the state of California are in Quallion’s corner in terms of the cost-sharing proposal presented to the Energy Department. If the federal grant comes through the California Energy Commission committed to a $9 million. Palmdale, through its redevelopment agency, has offered for $1 a 9.5 acre parcel in its Fairway Business Park where Quallion can build along with other incentives worth $10 million. The total cost for the proposed project has been put in the range of $220 million. “I can say that other than aerospace it is the biggest investment we have seen,” said Danny Roberts, the assistant executive director of the Palmdale community redevelopment agency. The batteries to be made at the Palmdale site will be used in electric vehicles and in large trucks subject to anti-idling laws across the nation. But as Quallion has been in the battery-making business for more than 10 years and already serves the military and medical device markets it is not dependent on what carmakers do to get vehicles using lithium ion batteries on the road. In the meantime, the infrastructure can be put in place and the company will continue to serve the immediate needs of the military and anti-idling markets. “When the plug-in hybrid market comes online we will be ready to go,” said Quallion President Paul Beach. Quallion was co-founded by Alfred Mann, a name synonymous in Southern California with innovation in the medical field through MannKind Corp., the company of which he remains chief executive, and Advanced Bionics and MiniMed, both of which Mann later sold. Not being able to find batteries that were suitable for devices implanted into the human body, Mann followed the path of any good entrepreneur: he decided to develop and make his own. As Japan is the foremost innovator of lithium ion batteries Mann looked to that country for the expertise to get Quallion started. Different kind of battery The lithium ion batteries Quallion makes differ from those consumers are most familiar with powering laptops, cell phone and other electronic gadgets. Quallion batteries are used in abusive environments where they must last for years and go through thousands of cycles. Which is another plus the company hopes will sway the Energy Department to award it a grant as electric cars and heavy trucks require batteries that can withstand a variety of circumstances. For instance, a battery used by a truck for a quick start will be different from the battery powering devices aboard a truck. “We bring to bear all the expertise we have at the chemical, cell configuration and battery level to custom design unique applications,” Beach said. Quallion is the largest producer of lithium ion batteries in the U.S. but relies on cells made overseas that get repackaged for high tech uses. That practice will end if the Palmdale facility does get built. “We’ll replace the foreign cells with our cells as soon as we are up and running,” Mann said. The company originally looked at Mann’s real estate holdings in Santa Clarita as the location of the new facility with Palmdale as the backup. Both Roberts of the redevelopment agency and Mayor Jim Ledford credit Dave Walter, the economic development manager, with keeping talks open with Quallion and offering enough to bring about a meeting between city and company officials. To Quallion, the Antelope Valley made sense because it was close to its aerospace customers operating out of Plant 42 and the Skunkworks and to rail lines that could get its batteries to the Port of Los Angeles. Palmdale could offer land in an enterprise zone and the tax credits and fee waivers that come with doing business there. More importantly, as the land is owned by the city all the necessary permitting and environmental review was already complete, which would allow for a quick start on construction. A building permit can be issued within 45 days of submittal of plans, Roberts said. “That’s what put them over the top,” Ledford added. The Energy Department is expected to make a decision on which seven companies receive funding by the end of July or early August. The Congressional delegation from the Antelope Valley is on board with its support although Ledford wants to see that expanded to include the two senators and Gov. Arnold Schwarzenegger. “If seven are being built then one has to come to California,” Ledford said.