GM bets on cheaper electric car batteries with Envia, leads $17M round

Riding high on a bout of good press for its Chevy Volt, GM is putting $7 million into its next big bet on electric cars: cheaper, higher-energy batteries.

In his state of the union address yesterday, President Obama called for the U.S. to be the first country to put one million electric cars on the roads by 2015. While there’s great interest in electric cars, mass adoption is still hobbled by availability, battery prices and consumer concerns about range limitations.

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Today, GM announced it had invested $7 million in Envia Systems, a Newark, Calif.-based maker of lithium-ion cathode technology that it says can increase energy density of battery cells by one-third and for less money. Envia says it uses cathode materials that store more energy per unit of mass than current cathode materials, meaning less of it can be used, yielding a cheaper battery. GM also licensed Envia’s advanced cathode material for use in future GM electric cars.

The company’s venture capital arm led a $17 million round of fundraising for Envia with investors that included Asahi Kasei and Asahi Glass; and current investors Bay Partners, Redpoint and Pangaea Ventures.

“Skeptics have suggested it would probably be many years before lithium-ion batteries with significantly lower cost and higher capability are available, potentially limiting sales of electric vehicles for the foreseeable future,” said Jon Lauckner, president of GM Ventures in a statement. “In fact, our announcement today demonstrates that major improvements are already on the horizon.”

Mass-produced electric cars kicked off in December with the all-electric Nissan Leaf, which goes about 100 miles on a fully charged battery and is the first all-electric car widely available by a major automaker. The Volt also went on sale last month; it’s a range extender that goes 25 to 50 miles on battery, then switches to gas. The Ford Focus Electric and an all-electric sedan by startup Coda are slated to go on sale later this year.