August 2010 Featured Article
The Recovery Act -
Transforming America’s Transportation Sector:
Batteries and Electric Vehicles
The Department of Energy (DOE) recently released a report illustrating how Recovery Act funds, coupled with the Advanced Technology Vehicle Manufacturing Loan Program, have spearheaded projects to advance vehicle technologies in electricity and reduce our dependence on oil. These projects support the development, manufacturing and deployment of the batteries, components, vehicles and chargers necessary to put millions of electric vehicles on America’s roads.
According to the report, the Recovery Act included $2.4 billion to establish 30 electric vehicle battery and component manufacturing plants and support some of the world’s first electric vehicle demonstration projects. For every dollar of the $2.4 billion, the companies have matched it at a minimum of dollar for dollar. Additionally, DOE’s Advanced Research Projects Agency-Energy (ARPA-E) is providing over $80 million for more than 20 transformative research and development projects.
What does that mean for us? The DOE reported that before the Recovery Act, the only highway-enabled electric vehicle on the road cost more than $100,000. This was due, in part, to the high cost of the battery required for an electric vehicle. Within the next three years, the DOE expects battery costs to drop by half when Recovery Act-funded factories begin to achieve economies of scale. Within the next five years, the DOE is predicting that the cost of some electric car batteries will be reduced by nearly 70 percent. The same cost improvement will also apply to plug-in hybrids – cars that can travel roughly 40 miles on electricity before their gasoline engine kicks in. These decreased battery costs should result in more affordable electric cars. According to the report, by the end of this year consumers should be able to purchase electric vehicles that cost between $25,000 and $35,000 after tax credits. Further, the report concluded that drivers will save money over the car’s lifetime, since using electricity to power a car is only about 30 percent of the cost of using three-dollar-a-gallon gasoline.
Manufacturers can still apply for the DOE ‘s Advanced Technology Vehicles Manufacturing Loan Program (ATVM). The ATVM provides loans to automobile and automobile part manufacturers for the cost of re-equipping, expanding or establishing manufacturing facilities in the United States to produce advanced technology and ultra-efficient vehicles or qualified components, and for associated engineering integration costs.
The principal amount of the loan cannot be greater than 80 percent of reasonably anticipated total costs of the project. Total project costs may include any costs incurred in connection with the project, whether before or after submission of the application. Further, the initial principal payment date must occur no later than five years after the commencement of operations of the proposed project and the maturity period must be equal to the projected life of the proposed project, but no greater than 25 years.
For more information on the ATVM, visit http://www.atvmloan.energy.gov/.
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