Obama Administration To Award $2.4 Billion For Advanced Batteries
August 05 2009 - 5:30AM
Dow Jones News
U.S. President Barack Obama on Wednesday will announce $2.4
billion in grants to developers of next-generation car batteries
and parts, aiming to develop a domestic electric-vehicle industry
that creates U.S. jobs and reduces demand for oil.
The announcement comes as Obama administration officials fan out
across the country to talk up the economy and hail the progress of
the $787 billion economic stimulus package, which the White House
says is beginning to show results. Obama will take his pitch to
Elkhart, Ind., his second appearance in the town, which has been
battered by dwindling demand for the recreational vehicles long
manufactured there.
Senior administration officials declined to identify the
recipients of the money, which represents the total available for
batteries under the stimulus package. The applicants included
Johnson Controls Inc. (JCI), Ener1 Inc. (HEV), and A123 Systems
Inc., whose biggest investors include General Electric Co. (GE).
The grants will go, in large part, to Michigan and Indiana.
The U.S. lacks a vibrant car-battery industry, relying on
foreign companies for the batteries used in domestically produced
hybrid vehicles. The Obama administration wants to change that,
predicting that pumping money into an electric-vehicle program will
simultaneously create tens of thousands of jobs and help pull the
U.S. out of its worst unemployment in more than 25 years.
"It's recapturing the spirit of innovation that has always moved
America forward," said Diana Farrell, the deputy director of the
National Economic Council, in a call with reporters.
The spending will set up an important test of whether the Obama
administration's spending will have lasting results or will prove
fleeting. Rechargeable batteries come with challenges, such as
recycling and malfunctions. Another issue is how to generate high
levels of power from small, lightweight equipment. The U.S. also
lacks the infrastructure to allow drivers to recharge their
batteries on the road.
The grant money will be a boon to Michigan and Indiana, which
have been decimated along with the auto industry. Of 48 projects
that are to receive awards, 11 are located in Michigan and seven
are in Indiana, according to Matt Rogers, a senior Energy
Department advisor. The two states will receive the biggest chunk
of money.
That is promising for Johnson Controls, which is building a
battery factory in Michigan with support from Ford Motor Co. (F),
and A123 Systems Inc., whose manufacturing is largely based in
China but which also has plans to build a manufacturing facility in
Michigan. A Johnson Controls spokeswoman said that company
executives will be on hand on Wednesday in Detroit, where U.S. Vice
President Joe Biden is to speak.
Ener1, which has facilities in Indiana, is another company that
could benefit. Another award hopeful is Polypore International
Inc.'s (PPO) Celgard LLC, a supplier of parts that prevent
batteries from shorting by separating the anode from the cathode.
U.S. Energy Secretary Steven Chu will appear at Celgard in
Charlotte, North Carolina, on Wednesday.
The awards follow intense competition in which battery makers
hired lobbyists, appealed to home-state lawmakers, and hired
outside consultants. A total of 257 companies applied for the $2.4
billion in grants, with one out of every five projects receiving a
grant. Combined, the companies had sought $9.6 billion, many times
the amount available.
Michigan - whose U.S. Senators had lobbied hard to add the
battery money to the economic stimulus package - may have put
itself in an early position to capture the funding. By handing out
hundreds of millions of dollars in tax incentives earlier this
year, the state provided support that could have been crucial in
evaluating the financial status of each applicant. The Energy
Department's senior advisor said that companies receiving the $2.4
billion will come up with another $2.4 billion, investments that he
said would create tens of thousands of jobs.
-By Siobhan Hughes, Dow Jones Newswires; 202-862-6654;
Siobhan.Hughes@dowjones.com