From Green Right Now Reports
As mass-produced electric cars begin to become a reality, the need for more and better batteries is expected to ramp up as well. But will demand justify the Obama Administration’s considerable investment in those batteries as part of the economic stimulus program?
In deflecting criticism of the $814 billion stimulus, the administration has trumpeted the battery industry as one of its success stories. The most recent test case is this week’s opening of the A123 Systems Inc.’s lithium ion battery plant in Livonia, Mich., where about 300 employees — many of them laid-off auto workers – embarked on new careers. The Watertown-Mass.-based company received $249 million in stimulus money and has plans to open a second facility in Romulus, Mich., next year.
Johnson Controls Inc. started shipping batteries made at a Holland, Mich., facility built with the help of $299 million in federal grants. The factory expects to employ 90 workers by late next year.
The Energy Department estimates that the 48 advanced battery and electric drive projects announced last year under the $2.4 billion program could lead to the production of about 75,000 batteries by next year and 500,000 batteries annually by 2014. Michigan, Indiana, Ohio and South Carolina are the states with the largest share of the projects.
Despite current enthusiasm, the industry faces numerous challenges. Gas-electric hybrid vehicles represent about 1 percent of new vehicle sales, many plug-in hybrids and battery electric cars are just entering the market, and costs remain high. According to government estimates, a battery with a 100-mile range costs about $33,000, although stimulus money could bring that down to $10,000 by the end of 2015.
Matthew Rogers, an Energy Department senior adviser who has overseen the battery grants, said the administration was “very confident” that the demand for the vehicles — both for typical consumers and commercial fleet customers — will keep the factories operating. “The prices of these batteries are coming down faster than we expected,” he said.
The companies say federal incentives played a major role in opening the plants in the United States. Otherwise, they likely would have turned to Asia, where the vast majority of electronic batteries and components are now built.
“This money was instrumental in the decision to put manufacturing in North America,” said David Vieau, A123 Systems’ chief executive. “We think that without this, it’s very unlikely that plants of this size and nature would have been happening in the U.S.”