Last month, in a speech before a joint session of Congress, President Obama highlighted the fact that as the United States pushes to expand its fleet of plug-in hybrid vehicles, it continues to import the batteries that power these cars from Korea. What is the industry doing right now to get the United States up to speed on the production of these batteries? Can the United States make affordable batteries, or will the consumer have to pay a premium for the "Made in America" tag? During today's OnPoint, Brian Wynne, president of the Electric Drive Transportation Association, discusses the progress being made in the United States on the development and production of plug-in hybrid batteries. He also addresses the public infrastructure hurdles that need to be overcome as more plug-in hybrids hit the road.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Brian Wynne, president of the Electric Drive Transportation Association. Brian, thanks for coming back on the show.
Brian Wynne: Always great to be here.
Monica Trauzzi: Brian, last week during his first address before a joint session of Congress the president highlighted the fact that as the U.S. tries to expand its fleet of plug-in hybrid vehicles we continue to be reliant on Korea for the batteries that power these cars. What is your industry doing right now to get the U.S. up to speed on the making of these batteries?
Brian Wynne: Yeah, it was a good point. The industry has got some terrific companies that are U.S.-based and all of them are looking at manufacturing in the U.S., so we have some terrific partnerships that are coming together. All of the automobile companies are reaching out to battery manufacturers and they're all looking at how do we get to manufacturing scale as quickly as possible, commercial grade manufacturing scale?
Monica Trauzzi: How far away is that process? I mean if they're just in the planning stages now when might we actually see these batteries in our vehicles?
Brian Wynne: Right, well, U.S. manufacturing capacity is going to take probably a good year, year and a half to begin to come online. And then the manufacturing will begin to accelerate from there. But I think that timing is actually pretty good because that's when most of the product announcements are being made as well. So some of the initial prototypes are being tested with batteries from overseas, but the intention here is for global manufacturing. For those auto companies that are producing here that means being able to reach out to local manufacturers.
Monica Trauzzi: Can we make the batteries as affordably here in the U.S. or is the consumer going to have to pay a premium to have American-made?
Brian Wynne: Well, I think everybody is kind of starting new with lithium-ion batteries because automotive grade lithium-ion batteries aren't being manufactured at scale really anywhere in the world. They seem to have jumped out in the lead in Asia, but I think we're going to get after that pretty quickly and we've got some help from the stimulus package. And, at the end of the day, you know you've got transportation costs associated with these batteries and the manufacturing, it's not like spinning up a new manufacturing plant from a lead acid battery plant. These are totally new manufacturing procedures, so it may be an advantage to start from green field status and develop an American base for lithium ion manufacturing here.
Monica Trauzzi: The U.S. automakers have a lot to think about these days. How far up on the list of priorities do you think this issue is?
Brian Wynne: I think it's very high up on everyone's priority list. I think everyone recognizes that we're going into an era where energy is a lot more expensive than it was in the past, so we've got to take new approaches. All of the auto manufacturers, all of the first-tier, second-tier suppliers in the automotive business, and some new players to that particular arena are focused on electric drive manufacturing. How do we get to scale as quickly as possible? So, unfortunately, we're trying to do that at a time when the automotive manufacturers are trying to shed capacity. So it's not an easy thing to do, but there are a lot of different partners that are coming into play and there's a lot of facilitation with the U.S. government.
Monica Trauzzi: So, in terms of funding and incentives, what more could the government be doing?
Brian Wynne: Well, what's coming online now, of course, we've had many companies put in for loan guarantees in the Section 136 package and we hope to start seeing that money available in the end of April, I think, beginning of May was what I heard most recently from DOE. In the stimulus package there are out right grants of $2 billion particularly for battery manufacturing. That's going to be really key in trying to attract the capital that's necessary in a very capital depleted marketplace, if you will. It's a big challenge right now to get capital from private sources. So I think all of those things are beginning to help move us down the road toward what everyone agrees is what's got to happen ultimately.
Monica Trauzzi: You mentioned the stimulus; the stimulus also included money for modernizing infrastructure. Will public infrastructure be developed in time to sort of meet the pace of the demands for these types of vehicles or are we sort of getting ahead of ourselves with the push for these cars without having the correct infrastructure to support them?
Brian Wynne: It's going to be interesting to see how the timing works out, but we're not talking huge numbers of vehicles plugging into the grid from one day to the next. So ultimately, we're hoping that with the stimulation that's going on via the government that we're going to start seeing deployment projects that will show us a path toward really market-based solutions. Ultimately, the consumers are going to say, you know, this is how I want to leverage this technology. This is what's really attractive to me about it. Utilities are very interested in how they can respond to this. They're working with auto manufacturers and they're trying to figure out how do I serve this shared customer that's out there that wants to now use my fuel in their vehicle? And how do I respond to that? Do I need to build out the infrastructure in public places? Do I need to support that through green buildings? Do I need to support that in residential? What kinds of programs are required? All of those things are now on the table for the utilities as well.
Monica Trauzzi: The U.S. car market really seems to be in a holding pattern at this point. Is the money that's in the stimulus for R&D enough to sort of give it that boost that it needs to get people back into the dealerships buying these greener cars?
Brian Wynne: Well, buying greener cars, we'd be happy if people just bought cars in some ways, but I think at the end of the day, what ultimately we're going to be seeing again, over time, is that people will recognize I need to leverage a different kind of technology here. I want to be moving toward a vehicle that is more fuel efficient, that's greener. You know we've got over a million hybrids out there today. People are thrilled with them. We've now got vehicles that are coming along that will leverage the grid, plug into the grid, and utilize the same technology, only built in such a way that it's much more electricity dominant than gasoline dominant. And I think ultimately we're going to have to see where the consumer comes out on this and a lot of it depends on the price of batteries and a lot of it depends on the price of gas. So, if you can predict those two things I think you can predict the rollout a lot more carefully or a lot more accurately and it's really difficult to call right now.
Monica Trauzzi: And if the government does not extend the bailout, what does that mean for this argument?
Brian Wynne: Well, let's face it all the automobile companies are in deep trouble right now and until consumers start buying vehicles and sending signals that they're interested in more advanced technology vehicles, it's difficult to justify the investment. That's where the government, given the nature of the public good that's available here through the displacement of petroleum, through the reductions in greenhouse gas, is going to move us down the road. A comprehensive policy strategy that sends the right signals to the consumer, that helps the consumer make those decisions, you know, we've seen that work with hybrids with tax credits. With hybrids that was very successful. We've now got some good demand that's being stimulated ultimately as the products roll out in the marketplace with plug-in electric drive tax credits. So, I think, at the end of the day it's about getting all the timing to work at the same time. But it's difficult to say exactly what's going to happen with gasoline prices. Everybody that I'm talking to thinks we have to be planning for a future where energy prices are going to be steeper and one way or the other we're going into an environment where carbon is going to start being factored into the price of transportation as well.
Monica Trauzzi: And to that point, let's talk about the CCS factor, because carbon capture and storage technology is not yet commercially available and these cars are going to be plugging into a grid that's getting a lot of its electricity from coal-fired power plants. Are we negating the positive impacts of these cars by plugging into a dirty source essentially?
Brian Wynne: Actually, no. The best study that we've got on this subject comes from the National Resource Defense Council and the Electric Power Research Institute, EPRI, and both of them did a very deep study on given where the grid is today, what's the impact of plugging a vehicle into the grid? And, of course, that's a very regional situation. In some places you've got renewables being adopted much more quickly than others. But even with today's grid, it's better to plug your vehicle in according to the results of this study. And that's very encouraging, given the fact that the grid is going to get cleaner over time and, one way or the other, it's easier to control a more finite number of central sources than it is all of these different mobile sources. So I'm very encouraged by that. I'm also very encouraged by all of the trends and, of course, my organization also includes utility companies, all of the trends that are happening on the grid side, to make the grid more efficient, to make it smarter, to leverage renewables, to build greater transmission. All of these trends make the electrification of transportation more sensible, more commercially viable. So, we're very pleased with that and that will be a virtuous cycle because the more battery storage we have, energy storage running around on four wheels, the easier it is to leverage renewables. The trick is to be able to send price signals to the consumer and to give the consumer the option to say I want my vehicle plugged in. I want it to be fueling at this particular time, the best way to do that, again, are market options.
Monica Trauzzi: All right, we'll end it right there on that note. Lots to think about.
Brian Wynne: Indeed.
Monica Trauzzi: Thanks for coming on the show again.
Brian Wynne: A pleasure.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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