It may not want to be known as the next Detroit, but Los Angeles is quickly and quietly developing as a new-age car capital.
As Detroit has slowed amid financial catastrophes at the makers of traditional vehicles, L.A. companies have sped ahead in the race to develop the coming generation of electric and hybrid-electric vehicles and components for them.
In recent weeks, a plant that makes electric trucks that service the ports opened in Harbor City, and an electric sport-car maker announced its intention to build a plant in Los Angeles County. Meanwhile, Miles Electric Vehicles Inc. in Santa Monica plans to introduce a mass-market car as early as this year while companies such as Quallion LLC in Sylmar are concentrating on advanced battery technology to serve electric vehicles.
They aren't alone. Calstart, a non-profit organization that advocates for improved transportation, counts more than 50 companies in the L.A. area that are involved in developing some kind of technology for alternative fuel vehicles. And more companies will likely spring up as the federal government pours billions of dollars into tech research and development.
In fact, Southern California Edison, a utility company that serves 13 million customers, is getting its grid ready for bigger electricity demand that will result when all these new cars plug in.
"There's going to be multiple nodes of the clean vehicle industry in the United States, and do I think Southern California will be one of them? Absolutely yes," said Bill Van Amburg, senior vice president at Calstart.
Los Angeles has attracted green vehicle companies for a slew of reasons. It has ready access to two of the largest ports in the world the Port of Los Angeles and the Port of Long Beach for imported materials, a large talent pool drawn from the aerospace industry, and renowned research universities such as Caltech and UCLA. Studios full of car designers are here, and Los Angeles is in a green-friendly state that has adopted strict vehicle emission standards, which has made the need for transportation innovation more urgent.
As the auto industry shifts away from gas-guzzling SUVs to eco-friendly cars, billions if not trillions of dollars are up for grabs. While it's difficult to quantify what the alternative fuel vehicle industry will be worth in the near future, the market for lithium rechargeable batteries the kind that will likely power the all-electric and hybrid cars of the future is now worth about $8 billion alone, and should double in six years.
"What's at stake is the next wave of manufacturing wealth because somebody, whether it's Taiwan or China or Korea, will be at the top of the new order of automobile makers," said Mike Madden, manager of industry development at the Automotive Consulting Group in Torrance. "And Los Angeles has all the natural facilities to be in on that."
Many green transportation companies are hiring employees and opening facilities even in the economic downturn, making them a rare bright spot in a county where unemployment is projected to edge toward 11 percent by 2010.
For instance, Tesla Motors Inc., a San Carlos company behind a high-end all-electric sports car, is considering opening a manufacturing plant at a defunct aerospace factory in Long Beach. That facility would employ hundreds and build 20,000 all-electric seven-passenger sedans a year.
In Monrovia, AeroVironment Inc., a company best known for making unmanned aircraft for the military, held a recruiting event a month ago for its energy research division that was attended by more than 400 people, said Steven Gitlin, AeroVironment's director of marketing strategy.
The company has started building fast-charge devices that can shorten the time it takes an electric vehicle to charge from a wall socket. AeroVironment envisions a future when drivers of electric and hybrid vehicles could pull up to charging stations scattered around the state and recharge their cars using devices manufactured by the company.
"We see significant potential in clean transportation," Gitlin said. "We have been growing, and we are very focused on enabling the electric vehicle infrastructure."
Among others in growth mode: Quallion, a company that says it's the largest maker of lithium ion batteries in the United States, hopes to soon open a plant in Santa Clarita that would employ 500 to 1,000 workers, and build 20,000 batteries a year for hybrid electric vehicles. The company has applied for $100 million to $200 million in Department of Energy funding to build the factory.
Founded and owned by billionaire entrepreneur Alfred E. Mann, Quallion for more than a decade has traditionally built batteries to power a range of equipment, from medical implants to space satellites. Since hybrid cars have entered the mainstream, the company has started eyeing the market for plug-in hybrid batteries.
Right now, Quallion has built only a handful of prototypes of its hybrid batteries. But that will change if the government approves the company's request for funding.
Company executives point to Quallion's track record it already turns out 70,000 to 80,000 batteries a year as a reason why they think it holds an edge over competitors.
"A lot of people are trying to develop new advanced batteries, but they're using unproven technology," said Chief Executive Hisashi Tsukamoto. "We have the proven technology."
But Los Angeles faces competition for the leadership role in new automotive technology.
States in New England, the South and in the Rust Belt a region that stretches from New Jersey to Illinois have offered incentives to lure car and battery companies. And Asian countries such as Japan and South Korea continue to be the world leaders in battery technology. Japanese companies, for instance, own most of the existing patents for lithium ion technology.
What's more, California's strict air quality standards ironically may make it expensive for electric car manufacturers to build plants in Los Angeles like their internal combustion predecessors once did in Michigan.
It's also questionable whether a boom in alternative fuel vehicles will help revive L.A.-area companies that made parts for the now-struggling Detroit automakers. That's because hybrid and electric vehicles often need new technology in everything from their engines to tires, which means not all traditional auto parts manufacturers will see new business, said Jack Kyser, founding economist at the Kyser Center for Economic Research at the Los Angeles Economic Development Corp.
Then there's the larger question of which technologies whether it's hybrid cars or all-electric models will ultimately win. Without a clear frontrunner, companies have to prepare for all the possibilities or bet big by backing one.
However, even if Los Angeles does become an industry hub, it will likely be three to four years before it has any significant impact on the region's economy.
"But there's a lot of potential there," said Kyser. "This is an opportunity for Los Angeles to get in."
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