The Wall Street Journal-20080206-Electric-Car Makers Wait For -Green- Light From U-S-

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Electric-Car Makers Wait For 'Green' Light From U.S.

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Faced with a mandate to improve passenger-vehicle fuel efficiency by 25% before 2020, auto makers are chasing advances in new-battery technology. To do so, they are looking for financial help from Washington.

"We in the industry are ready to step up and do our part," Jonathan Lauckner, General Motors Corp. vice president of global program management, told a Washington audience last week. "What we're looking for is the government to step up and do its part . . . and get the nation and the world past oil dependence."

Proponents of plug-in electric vehicles say they can achieve anywhere from 55 to 150 miles a gallon, and they claim the electricity needed to power them will produce 50% less greenhouse-gas emissions than what now pours from the tailpipes of conventional vehicles.

Ford Motor Co., Toyota Motor Corp., and GM are all developing plug- in vehicles they hope will be ready for the market by 2010 or shortly thereafter. But technical problems and entrenched consumer mindsets make it uncertain whether the technology will ever take off -- and that is where the government comes in.

The Department of Energy's funding for research on battery and related technologies has doubled since 2006, reaching about $80 million for this year. Much of that amount the DOE doles out through grants and partnerships with private business.

For example, through a program announced in January, the agency will offer $30 million in grants to teams of battery makers, auto manufacturers, and public utilities willing to share costs to develop test fleets of plug-in vehicles.

Far more substantial financial incentives could be on the way, as the energy bill President Bush signed into law in December contains several new programs aimed at propelling plug-in technology forward. It authorized a total of about $6 billion, including loans and grants to retool older facilities for the production of advanced battery and vehicle systems.

But Congress will determine through the appropriations process how much funding to actually make available.

Presidential candidates vying for the "green" label are talking even bigger figures: Sen. Barack Obama (D., Ill.) pledged $2 billion for battery research, and Sen. Hillary Clinton, D., N.Y.) has proposed $20 billion in so-called green bonds to finance auto plant retooling for cleaner technologies like electric vehicles.

As the federal pot of funds available for battery research grows, so does the draw of having a lobbying presence in Washington.

A123 Systems, a Watertown, Mass., firm founded by a Massachusetts Institute of Technology professor, last year retained powerhouse law firm Skadden Arps and Washington lobbying shop Butera & Andrews. That led to separate meetings, with President Bush and Energy Secretary Samuel W. Bodman, in which the firm was able to demonstrate a hybrid car powered by one of its own lithium-ion batteries.

With funding from a DOE grant, A123 is among firms competing to provide the battery technology for GM's much-anticipated electric Volt.

"We've spent a lot of money and time on this effort to get the word out," said David Vieau, chief executive of A123.

Mr. Vieau says the technology is within reach for a lithium-ion battery that can power a vehicle for 40 miles before recharging. But such a battery, at current prices, would add $10,000 to the cost of a vehicle over and above today's prices for gasoline/electric hybrids.

What is needed is to invent materials and manufacturing processes that will reduce that cost to put the vehicles within reach for more consumers.

"We're moving out of the engineering laboratory, and manufacturing technology will be the next challenge," said Mark Wagner, vice president of government relations for Johnson Controls Inc., another big player in development of lithium-ion batteries for plug-ins.

Conventional gasoline/electric hybrids such as Toyota's popular Prius use nickel-metal hydride batteries that are recharged by a combustion engine also on-board the vehicle. Plug-ins are designed to be charged by electrical outlets at home, though they will also include a gasoline engine to power the vehicle when the battery power is exhausted.

Industry officials also say consumer tax incentives will be essential to offset the high costs of the new technology and get more plug-ins in people's driveways. GM's Lauckner, after his remarks to the Center for American Progress last week, stopped short of saying GM won't be able to sell the Volt without such a tax credit.

But "it would be very helpful," he said. A $3,000 tax credit for plug-in vehicles is part of energy-tax legislation that was struck from the energy bill in 11th-hour Senate maneuvering last year.

Plug-in vehicle technology, however, has its detractors. John German, manager of Environmental & Energy Analysis for Honda Motor Co.'s American division, predicted plug-in vehicles are the latest "technology du jour" that will fade when policymakers become enamored of some other clean-car technology.

"This pattern of expecting quick results from new technologies and then abandoning them when they don't produce results, it's very disruptive, very wasteful," Mr. German said, also in a speech to the Center for American Progress.

Some policymakers, while eager to see battery technology advance, also have another agenda. They want advanced batteries produced commercially in the U.S., instead of China or South Korea where most batteries are now made.

"Alarms should go off when we have a major auto company building a hybrid and they can't buy the batteries here in the United States," said Sen. Debbie Stabenow, (D., Mich.), in a recent briefing for reporters.

Sen. Stabenow helped enact, as part of the new energy legislation, loan guarantees to help finance the construction of advanced-battery manufacturing facilities in the U.S.

Sen. Stabenow said she will use her seat on the Senate Budget Committee to try to secure funds for the program, up to $500 million, within the budget baseline.