Ford’s goal of electrifying a portion of its fleet appears to be running on all cylinders. The company is creating battery electric versions of both of its recent award winners –the 2009 Car (Focus) and Truck (Transit Connect Van) of the Year. Because energy storage will make or break the arrival of electric vehicles, Ford has joined GM in bringing the battery pack assembly and management under its tent.

Ford is investing nearly $1 billion in manufacturing facilities in Michigan that will include producing hybrid, battery-electric, and plug-in vehicles as well as the lithium ion battery packs. Ford manager of global electrified fleets Greg Frenette explained that “there’s a strong tie-in marrying battery control… to the rest of propulsion, and we’re in the best position to manage that.”

He said that in addition to wanting to develop the software that controls battery performance and thermal management, the company also felt that managing pack assembly was also key to vehicle performance. “Packaging is a significant part of installed cost. Doing it ourselves will enable the quality of execution to be more consistent across battery packs.”

Ford, like GM, wants to control much of the intellectual property around its battery and propulsion systems. The company is using batteries from Johnson Controls-Saft for its current fleet of test plug-in hybrid Escapes, for the electric Transit Connect, and for a plug-in hybrid due out in 2012. But for the 2011 Focus BEV, Ford turned to another unnamed battery vendor. Frenette said the company will continue to look for more battery partners.

Spreading around the battery contracts is a smart strategy as it will force battery suppliers to compete aggressively on price, and safeguards against any supplier having production problems. The same goes for Ford considering multiple battery chemistries, which are evolving so quickly that any commitment to a single chemistry is likely to be premature. “Battery chemistries and development are fluid and dynamic, and [multi-sourcing] gives us the capability to go with cutting edge,” Frenette said.

Ford has not announced any target volumes for battery production when the facility goes online in 2012, but manufacturing the packs internally will enable the company to eliminate some of the margin that normally goes to battery manufacturers. Pike Research expects the installed cost of batteries to drop by about 10 percent during 2010 as manufacturing across the industry ramps up.

Ford is starting to live up to being the green company that Bill Ford (along with Kermit the Frog) promised several years ago. As another example, for the new “global platform Focus,” Ford is coming out with a new smaller turbocharged EcoBoost engine that is expected to improve fuel efficiency by 20 percent when compared to large engines with similar horsepower. Ford has shifted its turbocharger partner as well, having used Honeywell in the past, but now incorporating a Borg-Warner product.

Nissan is on tour promoting its upcoming electric vehicle, the Leaf, in select cities across the U.S. The 5-passenger EV will become available in December 2010, and faces many challenges in fostering a supporting vehicle charging infrastructure and creating consumer-friendly financing options, but thus far they seem to have a well-conceived plan. During an event in Portland this week I spoke with Nissan senior manager for corporate planning Brian Verprauskus about the Leaf launch plans.

Ensuring that consumers will be ready to charge on the day that they bring the vehicle home is a new challenge for Nissan and the other EV manufacturers. Nissan plans to partner with a nationally known company to provide the wall box for plugging in the vehicle and to manage matching vehicle owners with electricians. Nissan will choose a company that has experience going into consumers’ homes, and will likely announce the partner in early 2010. Consumers will need to connect the box to a dedicated circuit for EV charging, which requires carefully managing the process to reduce risk of a customer improperly plugging in a vehicle and causing damage to the vehicle or property. Nissan’s plan is smart because many consumers will need hand holding to understand the issues of EV charging, and a company with adept at customer relations will be key.

Nissan is putting the majority of the intelligence in the vehicle charging equipment, which enables them to monitor and manage charging. This includes delayed charging, a critical feature for utilities who fear EVs adding to peak demand. This is also necessary because today there are few standards for managing charging and for hardware and communications standards, so Nissan had to create its own technology until the rest of the industry catches up.

Nissan has elected to use cellular networks to send data between the vehicle and the company. This will also enable Nissan to send text messages to consumers to alert them if the vehicle is not plugged in when it is supposed to be. Consumers will also be able to pre-heat and pre-cool their vehicles through messages sent from their cell phones.

These features address a fundamental challenge with electric vehicles – they not only have to be emissions free to satisfy environmentally-conscious customers, but they also need to be the most geeked-out vehicles that most consumers have ever driven. The EV experience must be clearly differentiated from driving a gasoline car because consumers won’t save money driving EVs until the price of gasoline rises significantly.

Down the road Nissan will have to deal with contention between equipment as smart meters and smart wall boxes will also have features for managing charging. As new standards are passed, it will be a bit messy as auto manufacturers will have to upgrade equipment and react to potential hardware incompatibilities.

Another challenge for Nissan and other EV manufacturers is pricing the vehicles and the batteries. The company will lease the vehicles and batteries, sell the vehicles and lease the batteries, or sell the vehicles with the batteries. If Nissan attractively prices the batteries assuming that I can resell them after 5 years but cannot find a market, the company may have to write them off at a sizable loss.

Nissan has picked select markets including Portland, Seattle, San Francisco and Los Angeles to launch the Leaf, which will enable the company to work the kinks out before a nationwide launch. The support of business, civic, and political leaders for a charging infrastructure is critical for EV success. So far Nissan appears to be forming all of the right partnerships to make that possible.

Driving to work and flipping on a light switch may seem to unrelated activities, but very soon lithium ion batteries will assist in making both possible.

The nascent electric vehicle market is likely to standardize on lithium ion batteries. Today the cost of plug-in and all-electric vehicles is too high for many consumers thanks to batteries, which can add $10,000 or more to the price tag. The cost of batteries is only expected to come down after battery cells and packs are produced in sufficient volume to achieve economies of scale.

Despite the media attention around new vehicles such as the Chevrolet Volt and Nissan Leaf, Pike Research does not expect the combined sales of PHEVs and EVs in the U.S. to eclipse 100,000 units annually until 2013. As outlined in our new report “Electric Vehicle Batteries,” auto manufacturers will be slow to roll out the new vehicles, which will limit the size of their battery orders. Several of the new EV models have already been delayed, which forces battery manufacturers to adapt to sudden changes. Many of these companies are younger and not as well capitalized, so the margin for error if orders rapidly shrink or grow is smaller.

Utilities are now exploring using the same batteries that go in EVs to compensate for fluctuations in electric power transmission and generation. Just as different types of vehicles need batteries that can deliver high power (such as hybrids) as well as those that are energy dense (for EVs), grid applications also can benefit from different types of Li-ion batteries.

Grid storage will provide a more stable secondary market for EV batteries. While EV sales are likely to vacillate depending on the price of gasoline and government incentives, utilities will systematically add battery storage as they bring on new intermittent renewable power such as wind and solar, and as they upgrade the grid to make it smarter and more efficient.

Several battery companies, including EnerDel and A123 Systems, are simultaneously pursuing both markets and will benefit from the split strategy. Each of these companies has also received federal funds from the Recovery Act for project and manufacturing grants aimed at electrifying the transportation industry as well as for building a Smart Grid.

The EV industry may well waver depending on consumer acceptance of the new class of vehicles. If it does, the energy industry may be ready to take on a surplus in batteries.

Just as your mileage varies by where and how you drive, so might the performance of the Chevrolet Volt plug-in hybrid’s batteries.

The batteries in the GM vehicle due out in a year (November 2010) will have at least 10 years of life, according to company representatives who briefed the media on Tuesday. But vehicle owners who live in temperate climates are likely to see their batteries last much longer.

According to Andrew Farah, Volt chief engineer, after many months of tweaking battery cells (provided by supplier LG Chem) to optimize performance and lifespan, the lithium ion manganese spinel chemistry has been finalized. While customers will be be guaranteed 10 years of satisfactory battery performance, Volt owners in Arizona or Michigan may get considerably less out of their batteries in the long run than someone who lives in more temperate areas, such as the Pacific Northwest or Bay Area.

“10 years is the target life, but depending on where you live, you could see significantly more than that,” said Farah. “In more benign conditions — if you do more city driving — and if you are in a more temperate area, the battery would last significantly longer.”

When exposed to extremely high temperatures for extended periods, some lithium ion batteries (such as the chemistry GM chose) will lose storage capacity. So parking an electric vehicle in desert heat for hours at a time would slowly reduce the amount of energy that can be stored, which eventually translates to fewer miles driving in between charges. “Local weather is important,” said Farah.

GM will be very careful in rolling out these first of their kind production vehicles so that they can monitor vehicle performance and expectations. Battery suppliers whose products give any indication of underperforming may find themselves losing customers. The automotive OEMs are likely to multisource their battery contracts so that they could switch suppliers as needed.

GM has also signed off on the charging equipment that will come with the vehicle. The charge unit is recommended for ground fault protection (GFP) to prevent vehicle owners from getting shocked in places where moisture may be present.

A strong negative reaction by consumers to any model could jeopardize demand across the board for plug-in hybrid and electric vehicles. Automakers will proceed with caution, and may delay product launches if any uncertainty about reliability or safety presents itself in final testing.

The company has assembled 300 battery packs so far and has tested them without any cell failures, according to the company. GM will start taking delivery of the production cells in the beginning of 2010, and is expected to ship its first Volts by the end of the year.