Some automakers have decided to design, develop and produce electric vehicle components in-house, rather than purchase subassemblies from suppliers.

Automakers and suppliers are scrambling to produce key electromechanical components, such as axles, controllers, steering sytems and climate-control systems.

A plain-looking warehouse near Detroit is being transformed into a state-of-the-art lithium-ion battery assembly plant. General Motors Co. (GM) is investing $43 million in the facility to mass-produce battery packs for the Chevrolet Volt and other extended-range electric vehicles. When the 160,000-square-foot facility opens next year, it will be the first lithium-ion battery manufacturing plant in the U.S. operated by a major automaker.

Lithium-ion batteries are today's hot technology in the auto industry. However, the devices have traditionally been expensive to produce. To capture a piece of the lithium-ion battery business, American manufacturers need to invest heavily in automated assembly lines.

Despite big challenges, the potential is huge.