High fuel prices may force Congress to add dollars to the automotive research budget of the U.S. Department of Energy (DOE) for fiscal 2009. But the per-unit price of gasoline would probably have to hit $10 before legislators and the White House really commit the necessary funds to guaranteeing a quick ramp-up of lithium-ion (Li-ion) battery manufacturing capability.
Toyota Motor Corp. is way ahead of Detroit on Li-ion battery development even though the chemical technology was developed in the U.S. Li-ion batteries are being manufactured in Japan by Toyota and Panasonic. There is no U.S. Li-ion manufacturing capacity and none on the horizon, which seems to promise Toyota the same cost advantage for plug-in electric vehicles as it has with hybrids using the current nickel metal-hydride (NiMH) batteries. Don Hillebrand, Director of the Center for Transportation Research at Argonne National Laboratory, says that Toyota’s NiMH battery costs for the Prius are about one-third less than Ford Motor Co.’s (for the Escape, for example) because of Toyota’s Japanese manufacturing capability.
It is not that Congress fails to realize the consequences for losing the electric battery manufacturing business. Late last year, the House and Senate passed the Energy Independence and Security Act (EISA). That law authorizes six new battery R&D programs at a total of $230 million annually. In addition, it established a $90 million a year plug-in electric-vehicle demonstration program, plus a couple aimed at jump-starting domestic manufacturing.
However, President George Bush’s budget for fiscal 2009 (beginning October 1, 2008) contains funding for none of those new programs. Nor does it include an increase for its existing $50 million-a-year battery R&D program. What is worse, the DOE wants to reduce spending on its Hydrogen Fuel Initiative from $283.5 million in fiscal year 2008 to $236 million in fiscal year 2009. Energy Secretary Sam Bodman has explained that some of that $47 million has not really been eliminated; it has been moved over to the vehicles-technology program. But the vehicle-technologies program, which is where the $50 million battery program resides, gets only an $8 million increase in fiscal 2009, meaning some of the vehicle-technology programs are actually being decreased, which could imply problems for the $50 million battery fund.
U.S. Rep. Pete Visclosky (D-IN), Chairman of the House Appropriations Subcommittee, which has responsibility for the DOE auto R&D programs, on March 11 held hearings in which a number of DOE officials appeared. Visclosky and other members of the subcommittee asked about the absence of funding for EISA battery programs. But the Indiana Democrat made no commitment to add in some or all of the hundred millions authorized by the 2007 law.
That is why lower-level DOE officials and other auto experts sitting in Morgantown, WV, that week shook their heads in disbelief. They were at the National Energy Technology Laboratory judging proposals submitted in response to a DOE request in December 2007 for proposals for a plug-in-hybrid demonstration program along the lines of the one authorized by the EISA. But as they sat there going through the technical aspects of those submitted proposals, everyone around the table was wondering why they were going through the exercise, given the fact that there is no money in the DOE budget for the program, according to one participant.
Of course, U.S. auto companies and their suppliers are a little gun shy about funding the Li-ion battery basic, applied, and demonstration investments themselves, given the uncertain payback. Will consumers pay a premium for plug-in electric vehicles? Maybe Li-ion development would be priority number one if U.S. hybrids were flying off the shelves. But consumer paybacks are in some instances 10 years or more. Congress could help on that score, too, by passing a new $4000 tax credit for plug-ins that is part of the energy tax bill (H.R. 5351) that the House passed on February 27. The problem is that the oil companies are fighting the bill because the new tax credit (and some others in the bill) is funded by eliminating tax breaks for the five biggest oil companies. Republicans generally oppose the bill, meaning a likely override-proof Bush veto.
Toyota and Honda Motor Co., whose Civic hybrid has been just a little less popular than the Prius, highlight Japan’s advantage in battery manufacturing, and brings to mind how Japan was winning the semiconductor war in the 1970s. The U.S. responded then, and successfully, with the formation of Sematech, a collaborative applied integrated circuit R&D program that received federal funds for 10 years before they were phased out. Sematech still exists today. Argonne’s Hillebrand suggests that a similar effort is needed today “to help jump-start a homegrown battery-manufacturing industry in North America."