Battery company bankruptcy refuels electric car debate

Oct 18, 2012

Tuesday’s bankruptcy announcement by A123 Systems Inc. has many taking another look at the prospects of the electric car.

Conservative commentators have taken the opportunity to bash the Obama administration for its green energy investments.

In 2009, A123 received a $249 million grant from the Department of Energy.

An opinion piece from the Wall Street Journal argues that Obama’s attempts to pick winners—or losers as Mitt Romney quipped in the first presidential debate—overlooks the realities of the electric car market.

The technology and market for such an industry didn't and still doesn't exist for commercially profitable levels of production. Electric-battery storage in particular has bedeviled technologists for decades. But rather than fund basic research—arguably a role for government—Mr. Obama and his green friends decided to play venture capitalist and industrial planner. With your money.

As David Shepardson of the Detroit News reports, the Obama administration awarded $2.4 billion in stimulus money for advanced batteries and electric vehicles in August 2009.

He sees high upfront costs and the scarcity of recharging stations as limiting factors to electric car sales.

Others say consumers have been scared off by short battery ranges. The Nissan Leaf can go 73 miles on one charge, while the makers of the Chevy Volt have avoided the range problem by installing a small gas engine.

All of this has led to slumping sales and lack of political consensus for the vehicles Shepardson says.

But not everyone is decrying the death of the electric car.

David Friedman from the Union of Concerned Scientists sees the potential for growth in the plug-in sector, especially for plug-in hybrids.

[Model Year] 12 sales of plug-ins are about triple those of last year. With sales of over 37,000 units in their second year on the market, plug-ins have about doubled the sales of hybrids from back in MY01, their second model year on the market. It is hard to make any exact comparison with a decade in between, but I remain very impressed at the strength of the early electric vehicle market especially considering the myriad of bigger barriers they face than did hybrids 10 years ago.

Fellow Concerned Scientist John Rogers notes that really the administration's clean tech grants have funded more "winners" than "losers." Of the 30 battery and electric drive firms that have received federal funds, just two have filed for bankruptcy.

Other proponents highlight the pace of auto innovation generally.

In the Detroit News, John Voelcker, editor of GreenCarReports.com, said that any big change will take time.

"Major powertrain changes for the global auto industry—think, for instance, automatic transmissions or fuel injection—usually take a couple of decades to work their way through the system," he said.

"Similarly, electrified drivetrains—from hybrids through plug-in hybrids to battery electric vehicles—will take a decade or more to reach even noticeable volumes."

Friedman and others maintain that the race being run by the electric car is a marathon, not a sprint.

Let us know what you think. Will you be driving an electric car within the next decade?

- Jordan Wyant, Michigan Radio Newsroom