Appearing at a groundbreaking ceremony for a new electric car battery plant in Michigan on Thursday, President Barack Obama said the cost of such batteries will fall by as much as 70% by 2015.
President Obama addressed a gathering of business leaders, elected officials and many of the 300 workers involved in the construction of the new plant. The plant was built by the U.S. division of LG Chem of South Korea and funded in part by the federal Department of Energy.
More than $5 billion in federal assistance has been given to automakers and battery manufacturers in the form of low-interest loans and grants to help with the development of advanced battery technologies and all-electric and hybrid vehicles.
The high cost of lithium-ion batteries is considered one of the biggest obstacles to widespread adoption of electric cars.
In his address, President Obama said, “Because of advances in the manufacture of these batteries, their costs are expected to come down by nearly 70% in the next few years. That’s going to make electric and hybrid cars and trucks more affordable for more Americans.”
Although the federal government has previously declined to set any target timeframes or cost reduction estimates for electric vehicle batteries, President Obama has repeatedly said that he wants to see 1 million plug-in hybrid vehicles on U.S. roads by 2015. Most analysts, however, have characterized the goal as overly-optimistic.
Even LG Chem’s CEO, Bahnsuk Kim, questioned President Obama’s target price reduction of 70% over the next five years. Instead, he predicted a 50% reduction in the price of lithium-ion batteries by 2015. Kim said, “In the next five years we see the prices in half. Our target is half,” but added that a 50% reduction in battery prices would be enough to spur demand for electric vehicles.
According to the D.O.E., the per kilowatt hour cost of electric vehicle batteries was about $1,000 in 2009. By 2015, it expects the per kilowatt hour cost to drop to $300 and to $100 over the next 15 years.
U.S. automakers have established a long-term cost reduction target for electric vehicle batteries of about $250. The agency recently reported that the lithium-ion battery pack that powers the high-end Tesla Roadster costs more than $33,000. The Roadster sells for $109,000.
The same report said that the lithium-ion batteries being manufactured by LG Chem for use in General Motor’s soon-to-launch Chevrolet Volt cost $13,000 in 2009 and are expected to cost about $4,000 by 2015. GM and Tesla have each received funding from the Department of Energy.
In addition to the Chevrolet Volt, LG Chem has been awarded a contract to produce the batteries for Ford Motor Company’s next generation all-electric Focus small car. It will also supply the batteries for commercial trucks and buses being developed by Eaton Corporation.
LG Chem invested $151.5 million in its new Holland, Michigan battery plant will have the capacity to produce 250,000 electric vehicles and will employ 400 workers. The federal government also provided an additional $151.4 in grant money for the project.
According to administration economists, the U.S. accounted for 2% of the world’s battery and electric vehicle production last year. By 2015, they estimate the U.S.’s share of global production to increase to 40%.
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