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A two-year payback for buyers of future hybrids?

Car battery maker EnerDel says long-awaited advances in lithium ion batteries will make the decision to trade in a gas guzzler for a hybrid electric car more attractive.

Car battery company EnerDel predicts that consumers will start getting a two-year payback on hybrid electric cars, once a new generation of batteries are mass-produced.

Charles Gassenheimer, the chairman of parent company Ener1, gave a presentation at the Jefferies Global Clean Technology Conference on Thursday in New York, where he said lithium ion batteries in development will bring costs down substantially.

Click on the image to see a photo gallery of upcoming electric cars. CNET Networks

He said EnerDel intends to have a manufacturing line operating in 2010 that is capable of making 300,000 car batteries a year for hybrid electric vehicles that run partially on a battery and partially on an internal combustion engine.

With gasoline prices at about $4 per gallon, current market conditions would enable a person upgrading from an SUV to a Toyota Prius to recoup the initial cost in about seven years, according to a Wall Street Journal column Wednesday.

That figure subtracts the money received from unloading a tough-to-sell SUV. (See this online calculator at for a more general assessment.)

Gassenheimer at EnerDel said long-sought advances in lithium ion battery technology can bring that payback period down to fewer than two years. The auto industry is following what the consumer electronics business did in the early 1990s, when it moved from nickel-based batteries to lithium.

"Why we're shifting to lithium from nickel is because it's half the size, half the weight, and two times the energy density. Most important is a substantial reduction in cost," he said.

The company has a deal to supply car batteries to Think Global in the "2009-2010 time frame" for its all-electric towncar. Gassenheimer predicted that EnerDel will sign on to supply two more automakers with batteries before the end of this year.

EnerDel is designing batteries for hybrid electric vehicles like the Prius, as well as plug-in hybrids, which use the internal combustion engine to charge the battery that runs the car.

Gassenheimer claimed that the company's battery chemistry and design are safe, and promise better battery life and performance. A lithium ion cell phone battery can only take half its original charge after two years. But EnerDel batteries maintain the same capacity after 300,000 cycles, the equivalent of 10 years of life, he said.

Farther out, supplying utilities with energy storage "could be bigger than the auto market in front of us today," Gassenheimer claimed. Specifically, he said utilities need ways to store electricity generated by variable renewable sources, wind and solar power.

There are several other battery companies moving into the electric-vehicle market, some of which are using lithium-based batteries, while others, such as PowerGenix, are using nickel zinc because it promises lower costs than lithium ion.

Gassenheimer said that by 2011, there will be 75 car models with lithium ion batteries.

"It's pretty clear some real players are starting to commit real dollars to this space," Gassenheimer said.