Now with more vehicles set to come on line, and the U.S. government parceling out $2.4 billion in grants for next-generation electric vehicles, the next phase in battery production is getting ready to move from Asia.

That includes an investment that could near $400 million for one battery manufacturer to shift battery cell production to Michigan from current supplies in Asia.

Compact Power Inc. already has a battery pack plant in Troy, Mich., that will be design and assemble up to10,000 lithium-ion battery packs annually by the end of 2010. It will supply the first battery packs for General Motors Corp.’s all-electric Chevrolet Volt. GM will build its own battery plant to eventually make its own packs for the Volt.

GM also has tapped Troy-based CPI — a subsidiary of South Korea’s LG Chem — to make li-ion batteries for a future unnamed Buick plug-in hybrid, which will hit the market in early 2011.

With that business coming on line, CPI will now not only make battery packs, but add further capabilities in North America by building a lithium-ion cell manufacturing plant, said Chief Executive Officer Prabhakar Patil in an Aug. 6 interview at the Center for Automotive Research’s Management Briefing Seminars in Traverse City.

Unlike battery pack plants, which cost $25 million to $50 million and take six to nine months to build, cell plants make individual battery parts including CPI’s proprietary coating for the polypropylene film separators inside each cell. The cell plants are far more complex and require clean room manufacturing capabilities, which add to the cost, Patil said.

CPI is getting $151.4 million from the federal government to help finance its Michigan cell plant. It is currently narrowing down three prospective Michigan sites in Holland, Pontiac and St. Clair.

The Department of Energy also is funding other battery plants, including Johnson Controls Inc., A123 Systems Inc., EnerDel Inc. and GM itself, with $105.9 million for its future battery pack program in the Detroit suburb of Brownstown Township, which will use cells made by LG and CPI.

But federal funds are not enough to make a business case to move cell production from Asia, Patil said. CPI also needed long-term customers.

“You never do set up something like that just because there is money available,” Patil said. “There has to be a sustainable business case justified by volumes. We’re in a fairly good position because a [production] Volt along with the [Buick] gives us confidence that this is something that is going to be a sustainable business.