A lost decade of innovation
Matt Rogers, the energy consultant who became DOE's chief official implementing the American Recovery and Reinvestment Act, believed "the United States' greatest competitive advantage is aligning technological innovation and high technology manufacturing to serve growing domestic and global demand."
"For the last decade, America lost sight of the important linkages along the innovation-manufacturing-deployment chain and lost global leadership in multiple industries as a result," he continued in a 2010 case study for Harvard Business School outlining DOE's approach.
In August 2009, DOE awarded $2.4 billion of stimulus funds to jump-start the U.S. industry. A123 got the second-largest grant, $249 million to build battery plants in Michigan.
In fourth place was Compact Power, a subsidiary of LG Chem, which got $150 million to build a Michigan plant of its own. When this plant is up and running, it will supply the cells for all 60,000 Volts that GM will build, annually, for the car's first edition. (Compact Power has since been absorbed as the North American division of LG Chem.)
From a policy point of view, the White House is where it wants to be. Last July, it released a report claiming its grants have begun building a U.S. industry from scratch. Factories in the United States supplied less than 2 percent of the world's advanced vehicle batteries before 2009, the report said, but they are on track to produce 40 percent in 2015.
Along the way, The White House expects battery prices to plunge through sheer manufacturing might and the research and development funded in the stimulus. Take an electric car with 100 miles of range: In 2009, its battery would have cost about $33,000. By 2030, the report said, that same battery will cost just $3,300. That cost cut would translate to smaller batteries like those in the Chevy Volt.
Are these figures realistic? The vagaries of battery chemistry and cost make it difficult to get a straight answer, or to make straight comparisons among the estimates by officials, companies, researchers and policy wonks.
But the ranges provided by most observers, within government and without, overlap in this range: $800 to $1,000 to produce a kilowatt-hour's worth of battery.
The next question -- how quickly this can fall -- is much more controversial. As usual, caveats apply: It depends what specific lithium-ion recipe you're talking about, how many you're making, and when.
One respected estimate, by Boston Consulting Group, says costs will slide to the $250 to $500 per kWh range by 2020. Another estimate last year, by a National Academy of Sciences committee, incensed electric-car supporters by claiming a kilowatt of battery costs between $1,250 and $1,700 today. These high prices, the committee said, would delay the cars' uptake until 2030, even in the most optimistic scenario.
Pushing down the cost curve
According to the Department of Energy's Vehicle Technologies Office, making lithium-ion batteries today at scale -- in batches of several hundred thousand -- costs about $800 per kWh. Patrick Davis, the office's program manager, and Dave Howell, its team lead for hybrid-electric technology, think the batteries can near $300 by 2015.
At first, this would occur at the factory level. With practice, factory managers can optimize the process. And once the plant reaches full bore, certain fixed costs get spread over the whole output, lowering the cost of an individual battery.
Then, Howell and Davis said, the scientists get to work. They'll look for ways to tweak the lithium-ion chemistry to get cheaper, more powerful, more long-lasting. "There is a lot of good things happening in the lab that point to the fact that you can do this," Davis said of the $300 mark. "No one knows where the true bottom of the market is, as far as lithium-ion. But it does get very difficult to reduce cost way beyond $300 per kWh."