LIVONIA, Mich. -- With climate legislation seemingly dead in Congress, many clean-energy advocates are going back to the drawing board. But the electric-car industry, which is relying on other federal incentives to get ahead, remains upbeat.
Industry officials have met just outside Detroit for the past two days to discuss the state of the growing industry: whether the United States can build enough batteries, at a low enough price, to compete globally. Michigan has enjoyed much of the early investment, initiating battery-manufacturing plants and starting to set up the supply chain for electric cars.
Those at the conference agreed that federal investment has set up a formidable amount of manufacturing and research in just two years. Yet in assessing what needs to come next, they called for more such investment -- not a price on carbon.
In a recorded video address, Michigan Gov. Jennifer Granholm (D) said, "We need help from Congress," namely, renewing the clean energy manufacturing tax credit and the tax incentives that make plug-ins cheaper to buy for consumers. She did not mention climate or energy legislation.
To be sure, the electric-car industry has never made a collective push for climate legislation. That may be because the climate bills were unlikely to cause an electric-car breakthrough by themselves.
Some modeling of the economywide bills suggested carbon prices would only add a few cents to the price of gasoline, widely considered short of what's needed to change fuel consumption.
A substantial price difference would be necessary to bring the economics in line with an electric car. Yesterday, General Motors Co. announced its Chevy Volt will cost $41,000 when it debuts this November.
Carbon prices 'don't move the ball' for vehicle sales
"It may not be as much of a driver or a benefit in the short term as we would like it to be," said Bill Van Amburg, senior vice president with CALSTART, a group promoting hybrids and electric-drive in trucks. He said some carbon markets trade at about $3 a metric ton today, which has a negligible effect on fuel prices. "That doesn't really move the ball for transportation."
Even prices around $30 to $40 may fall short of some of the cheaper fixes in the transportation industry, Van Amburg said. He said when fuel prices spiked in 2008, that really got drivers' and truckers' attention -- they all began to watch their driving as well as the cars they drove.
"I've encouraged companies as they've looked at this, don't build your business case around the carbon price. Make that an add-on to your business case," he said. "Really focus on what you're delivering, and then if you get some additional benefits from the carbon reduction, that's good. But it may not totally move the market, and that's what we've been concerned about."
Those in the industry, and in Michigan, are feeling better about the manufacturing side. The state estimates it's had almost $6 billion in battery-related public and private investment since 2008, and 16 battery companies have ongoing projects there. Officials speak of becoming the "battery capital of the world."
The White House, meanwhile, has taken credit for putting a down payment on the U.S. battery industry that may reduce battery prices in the coming years, thanks to the scale of the investment (ClimateWire, July 15).
Some of that investment will help General Motors, which is aiming to release a partly electric car in the next few months. The Volt's 40-mile battery will be built in Michigan.
A GM spokesman said a carbon price would advance alternative-fuel vehicles, and that GM formally supports the policy, but he disputed whether it was "essential" for the Volt to thrive commercially.
In an e-mail, GM's Greg Martin said, "Policy makers can do their part to speed the market acceptance of these vehicles as part of a much broader energy policy that sends a market/economic signal that places a premium on fuel efficiency. Could a carbon price be a part of such a policy? Yes. As well as consumer tax incentives."
Cautious optimism from the 'battery capital of the world'
At the Detroit-area conference, the general sense was that manufacturing has been kick-started, so now the industry wants to be sure there's a market for the cars.
Even if the batteries get cheaper, they warned, investors will turn sour if no one buys the cars.
One battery manufacturer, Boston-based A123Systems, has received hundreds of millions in government aid to set up a new plant in Livonia. Les Alexander, the company's general manager of government solutions, said federal spending on manufacturing and research is helping, but "if we do not have the vehicles being built, or customers buying those vehicles, it's a risk that this industry will go away."
Alexander's job is to convince the federal government to be a first market for electric-drive vehicles, such as the U.S. Postal Service and other government fleets.
The U.S. Army also sent several representatives to the conference -- it has roughly 400,000 vehicles, and leaders have begun to push for electric vehicles that can handle the battlefield.
Even so, others called for sweeter incentives that promote electric cars among civilians, since they're the bulk of the several hundred million cars that are on the road today.
Yesterday, Nissan announced that its Leaf, an all-electric car with a 100-mile range, will debut in California, Washington, Oregon, Arizona and Tennessee this December. It will have rolled out to nine more states and Washington, D.C., by April of next year; the car will be available nationwide in fall of 2011.
And Senate Majority Leader Harry Reid (D-Nev.) provided more encouragement that when those cars hit the streets, there could be more refueling stations waiting for them. Unveiling the latest version of his slimmed-down energy bill, Reid included more aid for "electrification deployment communities," or towns and cities that make a push to develop the infrastructure needed to convince people that pioneering the return of the electric car won't be as difficult as some imagine.
Robbie Diamond, president of the Electrification Coalition, said the bill, if passed, will ensure that electric cars will be successful beyond early adopters of the technology.