The so-called "RV Capital of the World" may soon be able to bill itself the "EV Capital of the World." What a difference a letter makes.
Elkhart, Ind., about 155 miles southwest of Detroit, will soon be the new U.S. production center for Think, the Norwegian-based manufacturer that hopes to charge into the emerging market for battery-electric vehicles. The first of the maker’s two-seat City, an urban commuter car, will begin rolling off the new assembly line a year from now. If demand meets Think’s expectation, the company hopes to be turning out as many as 20,000 battery-electric vehicles, or BEVs, annually by 2013.
The announcement, earlier this year, that Think would settle in Indiana puts the spotlight on the Midwestern state’s broader effort to position itself as a leader in a technology that many believe to be the future of the auto industry. Indeed, Gov. Mitch Daniels has declared it one of his goals to turn Indiana into “the electric vehicle state.”
Indiana isn’t the only state chasing that goal.
“I don’t know a state that isn’t aggressively trying to get this business,” including both California and Michigan, the latter of which is still considered the home of the U.S. auto industry, said David Cole, director of the Center for Automotive Research in Ann Arbor, Mich.
“Indiana does have some advantages” though, added Cole.
That includes cash the state is willing to spend to get a business such as Think. After emerging from bankruptcy protection last year, the one-time Ford Motor Co. subsidiary decided it needed to build its BEVs in the U.S., rather than importing them from Europe, which would make the cars costly due to an unfavorable exchange rate. Think looked at a number of possible manufacturing sites but a key draw for Indiana was what chief executive Richard Canny cautiously described as a “competitive” incentive package — reportedly about $43 million in government assistance.
Canny was quick to add, however, “You don’t choose a location just based on incentives.”
Setting up shop in northern Indiana gives Think access to an enormous pool of trained labor, including many workers familiar with automotive manufacturing. The region has long been home to the nation’s recreational vehicle industry. But the virtual collapse of the RV market has left it with one of the nation’s highest unemployment rates and given Think a chance to pick and choose employees.
“If you were to start an electric car company, I would tell you it’s a good place to start,” said Jerry Medlin, chief executive of LC3, a small producer of so-called neighborhood electric vehicles, modified golf carts based in Fort Wayne, Ind.
Indeed, a number of start-ups are heeding that advice, including Bright Automotive in Anderson, Ind., which, among other things, has a contract to provide electric vehicles to the U.S. Postal Service.
Yet another advantage to Indiana is its central position in the traditional automotive supplier corridor. Though foreign-based automakers, like Nissan, Hyundai and Toyota, have largely set up bases in the South, the Midwest is still the nexus of American automotive manufacturing. What Indiana doesn’t make often can be found nearby in Ohio or Michigan.
And what the Hoosier State does produce includes many of the key components specifically needed for electric vehicles: motors, power controllers and batteries.
It's often forgotten that Indiana was a power in the early days of the auto industry, home to a diverse collection of manufacturers such as Packard, Stutz and Studebaker, pointed out Paul Mitchell, president of Energy Systems Network, which promotes the development of alternative energy businesses in Indiana.
While those classic nameplates have long been abandoned, Mitchell noted that the state’s role in the auto industry has remained significant. It was a pioneer in the development of electric propulsion. The GM EV1, a widely heralded experiment General Motors tried to market in the 1990s, was developed at a skunk works the company set up on the north side of Indianapolis.
Many of EV1’s key components, including its motors and electronic technologies, were produced in the state by what were then several GM subsidiaries, such as Delco-Remy.
In recent years, GM has spun off a number of those operations, but they haven’t necessarily gone away. Delphi’s Indiana operations produce key electrical and electronic systems, Allison Transmission is a major supplier of transmissions and other components for hybrid and electric vehicles, and Remy turns out electric motors and hybrid transmission components.
Although GM may have ultimately crushed the last of the EV1s it produced, “it didn’t crush the spirit or the intellectual horsepower of the people who worked here,” said Mitchell of Energy Systems Network.
Quite the contrary. Many of the “brains” from the EV1 program have gone on to other battery car-related ventures in Indiana, such as EnerDel. That firm’s facility in Fishers, a suburb of Indianapolis, has been the only one in the U.S. capable of high-volume production of the lithium-ion batteries that are essential for modern electric vehicles.
EnerDel will provide the LIon cells for the new Think City, and its parent company, Ener1, is one of the investors that helped the Think emerge from bankruptcy last year. The battery maker will also supply Volvo, which recently announced plans to produce a battery-electric version of its compact C30.
EnerDel President Rick Stanley said his company could have moved from Indiana — it even had offers of financial assistance.
But "Indiana is becoming more and more of a Silicon Valley... if you consider how companies collaborate and how people move from one company to another,” Stanley said.
In a highly symbolic event, President Obama came to Indiana in August to announce 48 advanced battery and electric drive projects that will receive $2.4 billion in funding under the American Recovery and Reinvestment Act. So far about $500 million of that money has actually gone to businesses in the state, Mitchell estimated. He believes Indiana could receive “hundreds of millions more” in federal money in the near future.
But analysts including Cole caution that Indiana by no means has a lock on the nascent electric vehicle market. Despite all its problems, California is in a particularly strong position because it is expected to be the biggest market for battery-electric vehicles, hybrids and other electric vehicles.
That’s led several aggressive start-ups to set up shop there, including Tesla Motors and Fisker Automotive. The former already is producing a high-performance battery-electric sports car, dubbed the Roadster; the latter is planning a series of models, starting this year with the Karma plug-in hybrid.
Fisker’s biggest planned venture, code-named Project Nina, will be based in Maryland, using a former General Motors plant purchased with a federal loan.
Michigan, meanwhile, is reaping an array of investments by GM, which will build the Chevrolet Volt extended-range electric vehicle in the state. Ford plans to produce battery versions of its Focus and Transit Connect models in Michigan too.
But with its brain trust, supply base, trained work force and supportive government, university and private organizations all kicking in, Indiana may be in a powerful position to achieve Daniels’ goal of becoming the electric vehicle state.