Not Enough Juice for Electric-Car Batteries

Brace yourselves: A beneficiary of the Obama administration’s taxpayer-funded energy handouts doesn’t deliver, as promised. Advanced batteries for electric vehicles are the latest bad investment for Uncle Sam. Today’s Wall Street Journal reports,

Since 2009, the Obama administration has awarded more than $1 billion to American companies to make advanced batteries for electric vehicles. Halfway to a six-year goal of producing one million electric and plug-in hybrid vehicles, auto makers are barely at 50,000 cars.

The money funded nine battery plants—scattered across the U.S. from Michigan to Pennsylvania and Florida—that have few customers, operate well below capacity and, so far, have created less than a third of the jobs promised by 2015. 

President Obama heralded the “birth of an entire new industry” during the ceremonial opening of A123 Systems Inc.’sproduction plant in 2010. The president’s 2013 budget proposal asks for an increase in tax credits to car buyers to amp sales.

Getting to that electric-car nirvana is proving more difficult. A123 is scrambling to stanch losses and raise new money to stabilize its finances. Rival Johnson Controls Inc. used government grants to build a battery plant in Holland, Mich., but that facility is nearly idled now after its main customer went bankrupt. Korea’s LG Chem built a plant in Michigan to supply General Motors, but that plant, which employs 220 people, hasn’t yet begun production, a company spokesman confirmed.

Ener1 Inc., a battery maker that built a plant in Indianapolis with $54.9 million of a $118 million government grant, sought bankruptcy protection earlier this year. It has since exited Chapter 11 and its plant is operating, a spokesman said, albeit with 250 workers, well short of the 1,700 originally envisioned in 2009.

The Department of Energy, which oversees the administration’s advanced battery grants, says it is too early to judge the effort, and believes it will bear fruit when electric cars become a regular sight on American highways.

All told, the administration awarded $1.26 billion in matching grants toward the construction of these plants with the promise of creating more than 6,400 jobs. To date, the companies have spent about two-thirds of the total and have hired about 2,000 workers.

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