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Why $2.4 Billion of Battery Grants? To Get US Competitive in Electric Cars

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GM Battery Lab, Warren Technical Center

GM Battery Lab, Warren Technical Center

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It's now clearer than ever: Electric cars are coming to showrooms near you. They will be fully competitive, their makers are deadly serious, and they will be "real cars" rather than the golf carts people seem to worry about.

At GreenCarReports.com, we've experienced the 2011 Chevrolet Volt mule, the 2011 Coda Sedan, powertrain from the 2012 Nissan Leaf, the 2012 Ford Focus EV prototype, even the disappointing Mini E. Many more will follow, and soon.

But in the aftermath of US government rescues of General Motors and Chrysler, policymakers worry about whether US automakers and other manufacturers can remain (or become) globally competitive as electric cars move into the mainstream.

Can the US compete?

That's the reason President Barack Obama announced $2.4 billion of grants yesterday, to makers of automotive-scale lithium-ion cells, the battery packs that will house them, the electric-drive components they will power, and the vehicles that will use them.

The funds, "to Accelerate the Manufacturing and Deployment of the Next Generation of U.S. Batteries and Electric Vehicles," must help US companies get up to speed in an industry where more than half of all lithium-ion cells are designed and manufactured in Asia.

These grants differ from the $8 billion of low-interest loans for advanced auto technology announced in June by the Department of Energy loans. Those funds, which must be repaid, went to Ford, Nissan, and Tesla to re-equip factories to build more efficient cars.

Underlining the focus on the US domestic auto industry, over half the battery funds ($1.3 billion) will go to companies and universities in the state of Michigan. Covering 48 separate projects in 25 states (out of a total of 122 applications), the grants address three broad areas:

• $1.5 billion for battery cell, battery pack, and component production, as well as battery recycling.

• $500 million for production of components, motors, and electronics for electric-drive vehicles.

• $400 million for demonstration purchases of plug-in hybrids and electric vehicles, charging infrastructure, and training.

Ford Focus EV - battery pack under rear seat, from inside

Ford Focus EV - battery pack under rear seat, from inside

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What's important?

In analyzing key decisions throughout the long list of grants, plug-in hybrid advocacy group CalCars focused and summarized the most important points as follows:

• Battery and materials manufacturing grants go to a range of lithium-ion chemistries, most to large, well-established cell makers and packagers, as well as two grants for lead-acid development for micro or mild hybrids.

• General Motors gets $240 million in three grants, Ford gets $92.7 million, and Chrsyler gets $70 million. Smaller US integrators and manufacturers, including Tesla Motors and Fisker Automotive, didn't receive grants.

• Most component maker grants went to the largest and best-established suppliers.

• Oregon, Washington, California, Arizona and Tennessee will get 12,500 battery charging stations.

• Grants will fund purchase of 5,000 Nissan electric cars, 220 Chrysler plug-in hybrid pickups and minivans, 378 trucks and shuttle buses in southern California, 400 Navistar electric delivery trucks, 130 Ford Escape Hybrid Plug-Ins, and 500 Chevrolet Volt extended-range electric vehicles for consumers plus 125 for utilities.

Focus: Big auto and parts companies

Some criticism was directed at awards that benefit non-US companies, including Compact Power Inc. (owned by Korea's LG Chem), which got $150 million to produce components for the battery pack to be used in the 2011 Chevrolet Volt.  Another is Saft Groupe, which manufactures lithium-ion cells in France in a joint venture with US automaker Johnson Controls Inc.

The focus on large, established companies also troubled some smaller applicants whose did not receive grants. They pointed out that technology innovation often comes from small or start-up companies. Countering that, analysts noted that building, validating, and selling automotive components at acceptable cost customarily requires a deep base of experience--which start-ups may not have.

DOE battery grant recipients

DOE battery grant recipients

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[MORE: White House press release and remarks, Department of Energy list of grants (PDF), EDTA, EDTA, CalCarsAutomotive News (requires subscription), Detroit News, Wall Street Journal, TheCarConnection.com]

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Comments (3)
  1. How much money did we give to AIG? And now why are we only investing 2.4 billion in alternative transportation then? Anyways, in his speech, Obama says smaller businesses are more innovative, then why is the majority of the grant money going to the Big 3 automakers? GM built an electric car 10 years ago, and destroyed it (read about the EV1). They don't deserve a dime of our tax dollars.
     
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  2. I'm glad to see that Obama looked beyond Michigan, despite his efforts to revive the industry in that whole area. There are some great Li-Ion developments occurring elsewhere and it's great to see a handful of them recognized here (too bad ZAP! cars isn't on the list, though, since they're looking to beat Tesla to the market with a more economical, freeway-ready EV). I agree with Two cents per mile, though, there should have been way more small biz here.
     
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  3. Agree with 2 Cents Per Mile. Ridiculous that the Big 3 get any money! Were throwing our tax dollars away giving them anything.
     
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