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  • Electric Car Batteries Going Nowhere

    Another green-energy-related company built on government subsidies is having trouble keeping its head above water.

    This time, the scandal surrounds Compact Power, a subsidiary of LG Chem.* In 2010, the Obama Administration proudly gave Compact Power a $150 million grant to build a vehicle battery manufacturing facility in Michigan. These batteries were to be used in two plug-in electric vehicles, the Chevy Volt and the Ford Focus.

    As President Obama put it, Compact Power was “leading the way in showing how manufacturing jobs [were] coming right back here to the United States of America.” Last week, Compact Power announced they are placing their 200 employees on rotating furlough.

    What happened between 2010 and 2012 to extinguish this beacon of hope for Michigan manufacturing and electric vehicles? For one thing, Compact Power did not produce a single battery.

    In an interview with FoxNews.com, LG Chem spokesperson Randy Boileau claimed that the Michigan plant has “spent the past two years building infrastructure and conducting pre-production ‘test runs.’” He added that battery production would begin when the Volt resumes production later this month.

    Compact Power’s battery manufacturing struggles demonstrate the problem with government investments in the energy sector. Subsidizing electric batteries does not bring about the demand needed to make that industry profitable—even though generous subsidies also exist to incentivize the purchase of electric vehicles. If the demand for electric vehicles and electric vehicle batteries did exist, the manufacturing facility wouldn’t need subsidies in the first place.

    Compact Power is not the only government-backed vehicle battery manufacturer that is struggling. In June, Heritage’s Lachlan Markay highlighted the struggles of battery manufacturer A123 Systems, which received $250 million in taxpayer money.

    This is only the most recent failure in a string of government-backed green energy flops. This past June, Abound Solar, which received a $400 million loan guarantee from the Department of Energy, filed for bankruptcy. Last September, Solyndra, which received $535 million in government loans, went bankrupt.

    As Heritage economist Nick Loris said, it is time to “remove the government—and the taxpayers—from the role of subsidizing research that should be the purview of the private sector.”

    *An earlier version incorrectly stated the name of the company.

    Vanessa Bazan is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit http://www.heritage.org/about/departments/ylp.cfm.

    Posted in Energy [slideshow_deploy]

    4 Responses to Electric Car Batteries Going Nowhere

    1. KJinAZ says:

      Most people are unaware that the batteries from a electric car are more toxic long term than the pollution from driving something as big as a Hummer. Electric cars are a LONG WAY FROM BEING GREEN! Their tailpipe may be cleaner, but that's where it stops.

    2. Another ridiculous article trying to tear down electric cars. Why not give them a chance? I like to say electric cars are a win all around for the economy. One lets say you buy a volt or a Tesla. They're both made here even the new leafs are made in a factory here. Then when you pay to purchase the fuel for the car it's all from here in the us. I live where we have a public utility so that money would go back into for city resources etc..etc.. They're good for the environment, and although not huge numbers yet, they selling in higher numbers every year. I don't understand why some conservatives waste their time on this issue. Get with it.

    3. Bobbie says:

      What gave government authority to invest in major failing companies with America's money in the first place? Exactly why "we" can't assume the mindset this government is "us" as the President says often "we" as if we're on the same page while he doesn't represent any part of "we?" "We" are not this government who only focuses on special interests of the government's own!

      Besides the loss of dignity, what criteria do businesses that take the hand of government have? "here's the money do as you please, just make sure "union" is involved for more expense to the employed?" Didn't the President mention Michigan in his first debate? Saying how good they're doing? while signs read "enter Detroit at your own risk?" Hasn't he proven dysfunctional in the realm of business? Yes, he has. The more control he has the more corrupt things are and left unsaid. Public private partnership is so oxy moron and corrupt. Once you take the government public dole, you give up the term "private"…

    4. kpk122 says:

      Electric cars must be looked at not only through the lens of operating cost, politics, and the environment but also energy independence. My primary reason for buying a Volt was being sick of sending money to the Middle East.

      Although in most states CO2 emissions are still much lower to run an electric car (including production), I'll concede there are other chemical trade-offs with the batteries. Politically, remember this car was in development long before Obama was elected and was championed by Bob Lutz.

      But there's no way to spin the oil argument. Even if money were being sent to S Korea indefinitely for gas (which it won't) and burning coal for electric (I'm 50/50 coal and solar), it would surely beat sending it to the worst regimes on the planet.

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