President Obama visiting a California electric vehicle test center. He announced a $2.4 billion program to support battery car development.
The nascent battery-car industry is about to get charged up with your money. During a visit to Southern California, President Barack Obama not only lent his support to the proposed electrification of the automobile – but also announced $2.4 billion in grants for the development of the underlying technologies.
The Department of Energy program will help fund research and development work on motors and related systems, but the vast bulk of the money will go to promote the development of a U.S. high-performance battery infrastructure. It is unknown how this program will differ from the failed “Partnership for a New Generation of Vehicles” initiative of the 1990s,which spent billions of dollars of taxpayer money on developing the systems for green vehicles at Chrysler, Ford and General Motors that never appeared.
Appearing at a Southern California Edison facility used to test prototype battery-electric vehicles, or BEVs, the president noted that the grant program should help meet his goal of putting one million plug-in vehicles on the road by 2015, a stunning number given current sales rates, the state of the economy and previous consumer acceptance of electric cars.
On Thursday night, during an appearance on the Tonight Show, President Obama added that the administration wants to stop ceding dominance to other countries in the rush to electrify. Currently, there is only one facility in the entire country which can produce lithium-ion cells, while other operations simply package batteries produced overseas, mostly in China, Japan and South Korea. In fact, it was the exclusion of the Japanese from participating in the Partnership for a New Generation of Vehicles that spurred the Japanese government to help Toyota develop its innovative hybrid car, Prius, and its battery industry.
During his various appearances on Thursday, the President made numerous references to the American auto industry and its importance to the nation. At the Edison facility, he appeared to signal the direction his administration will take when it comes time to decide on the additional aid requests from General Motors and Chrysler.
“Even as our American automakers are undergoing a painful recalibration, they are retooling and re-imagining themselves into an industry that can compete and win, because millions of jobs depend on it,” said Obama.
“We are betting our company” on the success of the Chevrolet Volt, a senior General Motors executive told TheDetroitBureau.com when asked about the move to electrification. He did not want to be quoted directly.
Earlier this week, GM CEO Rick Wagoner said that the Volt program remains on target for launch in late 2010, despite the company’s financial problems. However, prototypes originally promised a year ago are just now appearing. Meanwhile, GM is looking at ways to expand the use of its “Voltec” extended-range electric vehicle architecture to other products, such as the prototype Cadillac Converj.
Chrysler, meanwhile, has promised to put its first fully-electric vehicle into production by the beginning of the next decade, and claims to be developing an array of battery-powered products through its new ENVI unit.
Ford, the only one of the Big Three to reject federal loans thus far, has an assortment of electrified products in development, including plug-in hybrids – which would permit commutes of up to 40 miles solely on electric power — and pure battery-electric vehicles. Its existing hybrid vehicles license technology from Toyota.
Meanwhile, there is an assortment of potential new players in the domestic market, such as the Silicon Valley start-up, Tesla Motors, which recently began producing its 2-seat roadster. Tesla’s first entry is costly, at around $100,000, but shows that battery power can produce vehicles with tremendous performance — a 0-60 time of 4.0 seconds — and extreme fuel efficiency.
The new, $2.4 billion program, with funds coming from the Obama stimulus package, follows another program, passed last year, to encourage the development of all types of “green” powertrain technologies, including more efficient internal combustion engines. But political momentum from the green side of the Democratic Party is clearly moving in the direction of electrified vehicles — a category that comprises everything from “mild” hybrids to full battery cars.
“We’ve been at times feeling maybe a little lonely out there with our support for electric transportation,” Edison International Chairman Ted Craver Jr. said, not without self interest, after showing Obama around the plant. “To have this recognition, this exposure of electric transportation and what we have been able to accomplish is just a real thrill for the company.”
Making the transition to electric power won’t be easy, observers and insiders agree. It will take tremendous effort to come up with competitive technology, especially the batteries needed to compete with time-tested gasoline engines. Without that, it will be difficult to spur consumer demand. Even then, costs are expected to remain high, at least in the near-term, though Richard Canney, CEO of Think Global, another EV maker trying to emerge from receivership, estimates a $20,000 battery pack today will come down to as little as $4,000 in the next decade. Federal and state tax credits are further expected to encourage consumers to “plug into” the new market. But a market built on artificial subsidies — witness the current collapse of ethanol refining — cannot last long unless taxpayers are willing to keep paying and paying.
How big will that market be? Nissan CEO Carlos Ghosn has suggested the global demand for plug-ins and EVs could amount to 10% of worldwide production, or about 8 million vehicles a year, by 2020, which also means a record total global vehicle market of 80 billion. Retiring GM Vice Chairman Bob Lutz has suggested it could push 20%, but no one really knows. Such numbers, like politician’s promises, come easily — in speeches.
The U.S. is by no means alone in encouraging the EV industry’s development. Governments from China to Germany are lending their support.
The switch to electric power could also require new business models and new partnerships. Nissan and Think are both considering selling vehicles to consumers, but leasing the all-important batteries to keep costs down. Meanwhile, the President told Tonight Show host Jay Leno, a battery car owner might plug his vehicle into the grid, during a time of high electric demand and sell some of that juice back to the local utility. Experts say that would help with so-called “peak loading,” which would reduce the need to build new plants to prevent brown-outs and black-outs.
Peak loading will become even more critical if the nation’s power providers switch to renewable power, primarily wind and solar, which can ebb and flow at different times of the day. Some EV proponents imagine millions of batteries, no longer needed in vehicles, being used to store solar or wind power until it’s needed during peak hours. Critics point out that U.S. power comes from burning coal, oil and natural gas, with some nuclear generation, and that the industry has no intention of changing that. Click here for an editorial on the need to lead in batteries.