Friday, November 13, 2009

Government Investment Fuels Greener Vehicles

The transition to advanced electric transportation systems is already underway. State capitals around the world are racing to ramp up domestic electric vehicle (EV) research and production.

To help with its goal of putting 300,000 EVs on French roads for 2012, the government of France is assuming a central role in Renault's zero-emission strategy. A letter of intent was signed between Nissan, the Atomic Energy Commission (CEA) and France’s Strategic Investment Fund (FSI) to set up a French joint venture focused on EV battery advanced research, industrialisation and recycling.

The Dutch Cabinet recently announced that it has earmarked 65 million euros to stimulate the development of electric transport. Prof. Cees de Bont, chairman of D-INCERT (Dutch Innovation Centre for the Electrification of Road Transport) and Dean of the Faculty of Industrial Design Engineering said, "It is encouraging that the government wants to take on the role of launching customer."

President Obama said, "If we want to reduce our dependence on oil, put Americans back to work and reassert our manufacturing sector as one of the greatest in the world, we must produce the advanced, efficient vehicles of the future." Vice President Biden, added, "For our nation and our economy to recover, we must have a vision for what can be built here in the future—and then we need to invest in that vision. That’s what we’re doing today and that’s what this Recovery Act is about."

The US President has indicated that he would like to see one million plug-in hybrid electric vehicles on the road by 2015. The billions of dollars of federal money being invested in EV research and production demonstrates that the Obama administration is serious about reducing vehicular emissions.

The Recovery Act represents the largest ever investment in EV battery technology and manufacturing. The Obama administration is investing $2.4 billion in EVs and recipients of the grants have agreed to match federal money for a total investment approaching $5 billion.

President Obama announced 48 new advanced battery and electric drive projects that will receive funding. The new awards include $1.5 billion in grants to US based manufacturers to produce batteries and their components and to expand battery recycling capacity. $500 million in grants to US based manufacturers for the construction of electric drive components for vehicles. $400 million in grants to purchase and test plug-in hybrids and EVs, as well as funding for the installation of electric charging infrastructure and workforce training.

These projects were selected through a highly competitive process developed by the Department of Energy. These investments are intended to accelerate the manufacturing and deployment of electric vehicles, batteries, and components in America and to establish American leadership in creating the next generation of advanced vehicles.

Energy Secretary Steven Chu reviewed the value of government investment with these words, "These are incredibly effective investments that will come back to us many times over—by creating jobs, reducing our dependence on foreign oil, cleaning up the air we breathe, and combating climate change. They will help achieve the president’s goal of putting one million plug-in hybrid vehicles on the road by 2015. And, most importantly, they will launch an advanced battery industry in America and make our auto industry cleaner and more competitive."

Government money can rapidly accelerate the adoption of low and zero emission vehicles. Under the federally sponsored US Cash for Clunkers program, 700,000 gas guzzlers were traded in to buy new fuel-efficient vehicles for a total of $2,877 million worth of rebates. The average fuel economy of the vehicles traded in was 15.8 miles per gallon and the average fuel economy of vehicles purchased is 24.9 mpg. This means the program improved America's fuel economy by 58%. These results led US Transportation Secretary LaHood to declare the program “wildly successful. This is a win for the economy, a win for the environment and a win for American consumers.”

Shai Agassi, founder and CEO of Better Place proclaimed, “For nearly a century, the automotive industry has been inextricably tied to oil. Today, we’re demonstrating a new path forward where the future of transportation and energy is driven by our desire for a clean planet and a robust economic recovery fuelled by investments in clean technology, and one in which the well-being of the automotive industry is intrinsically coupled with the well-being of the environment.”

However, government involvement is crucial if we are to radically reduce vehicle emissions in the shortest possible time frames. “The government is feeding the whole food chain for electric vehicles,” said Theodore O’Neill, an analyst at Kaufman Brothers in New York.

Nissan is staking its future on full electric cars, but Nissan executives also stressed that government support is necessary to launch its production EV, the Leaf, which it aims to sell world-wide in 2012. "We are asking governments to cover [the investment] up to the point when we can reach volume momentum—this will take several years," said Carlos Tavares, who heads Nissan's Americas operations.

The participation of government is essential if we are to replace the world's current estimated car and light road vehicle fleet of close to 900 million units with EVs. Nissan's CEO Carlos Ghosn summarized the future of EVs, saying: "it's going to depend not so much on the technology but on how willing governments are to push this technology."

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Next: Beneficiaries of US Government Investment in Electric Vehicles

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