"We want Michigan to be positioned as the battery capital of the world," Granholm told reporters at the North American International Auto Show just before signing the bill offering up to $335 million in refundable tax credits.
Advanced batteries are a crucial component in the new hybrid and electric cars that were displayed prominently at the show.
Granholm has been trying for years to attract more high-tech activities to Michigan to offset a drop in auto manufacturing as Detroit's Big Three downsize their operations. Last year alone, Michigan lost 38,000 manufacturing jobs through November.
But Asian companies have established a commanding lead in the battery sector because they supply big manufacturers of battery-operated appliances and handheld devices concentrated in the Far East.
This week, General Motors Corp. said it would assemble batteries made by LG Chem of South Korea to power its Volt extended range electric car.
The Asians' dominance in battery technology has prompted concerns among U.S. politicians and auto executives that the United States risks trading its reliance on imported oil for a dependence on imported batteries if it does not encourage the development of advanced technologies.
Commenting on the recent $9 billion linkup of Sanyo and Panasonic of Japan, the governor's office said it would dominate the field for nickel-metal hydride and lithium-ion batteries.
"What we want to have is energy independence in America," Granholm said at a brief news conference before signing the bill.
In addition to the tax credits, Granholm is trying to nurture the development of advanced battery manufacturing by selecting and funding "centers of energy excellence" projects around certain companies, such as A123 Systems.
Granholm also is forming an alliance with Oakridge National Laboratories, the U.S. defense and energy departments, the government of Sweden, and private companies to tackle issues posed by lithium-ion and other new battery technologies.
Energy-storing batteries have been in use for centuries, but scientists continue to look for better formulas packing more power into smaller cells while ensuring safety and reliability.
In addition to battery assembly operations, such as GM's deal with LG Chem, Granholm is trying to attract research activities and production of the battery cells to Michigan.
Cell production "is where the real high-tech, high-value jobs are," said Mike Omotoso, a powertrain analyst at J.D. Power and Associates.
The new law provides $335 million in refundable tax credits for research, development and manufacturing of battery packs, vehicle engineering to support battery integration and related activities.
In a speech in Washington to the Transportation Research Board, Larry Burns, GM vice president for research and development, called for a public-private partnership to nurture key automotive technologies.
Burns said the partnership should include the U.S. government, automakers and suppliers, the energy and infrastructure industries.
The partnership's focus, he said, should be to support technologies for electrically driven vehicles such as advanced batteries, electric motors and power electronics.
"The transformation to electrically driven and connected vehicles is both exciting and necessary," Burns said, and public-private cooperation is needed to "ensure the U.S. continues to be a leader in this vital area of national interest."
