What Does the Obama Stimulus Bill Mean for Green Car Lovers? Part I

 

Editor’s Note: Sebastian is the newest addition to Gas 2.0’s writing team. Welcome Sebastian!

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The 900-pound gorilla in the waiting rooms of the industries serving the green car market has been H.R. 1, or the Obama Stimulus Plan. Regardless of how much the Democrats ballyhooed it, or how much the Republicans maligned it, the bill will be signed into law by President Obama today.

So what does it really mean for the hybrid and electric vehicle industry? To reduce it to its essence: Mo’ money.





We always knew that there would be money for green industry, the trick was in waiting for the final version of the bill. In the meantime, some of you ignored the issue (smart), and some of you watched the pundits (sadly, we’ll never be able to replace the time you lost). But with the final version up on the internet now, it will be easy (or easier) to stop the speculation and find out what the bill says.

Along those lines, this is my first post of 2 or 3 on this bill. The actual law is 8-inches thick, so give me some time.

The first thing I’ll do is to look at the law’s provisions. I’ve taken it upon myself to dig into the 30+ MB set of PDF files, search for the words “hybrid,” tell you what I found, and what I interpret that to mean. I’m not a lawyer, but as you’ll see, some of this isn’t so much legal-ese.

So here we go. Page 59, Section A of the bill has the first mention of the word “hybrid”:

DEPARTMENT OF ENERGY 20 ENERGY PROGRAMS ENERGY EFFICIENCY AND RENEWABLE ENERGY

Provided further, that $2,000,000,000 shall be available for grants for the manufacturing of advanced batteries and components and the Secretary shall provide facility funding under this section to manufacturers of advanced battery systems and vehicle batteries that are produced in the United States, including advanced lithium ion batteries, hybrid electrical systems, component manufacturers, and software designers

That’s $2 billion dollars for companies that can make high capacity, low weight batteries. I imagine Elon Musk and the rest of the crowd at Tesla is ready to bid for some of that money, since they’ve signed the agreement to make batteries for the upcoming all-electric Smart Car.

Last December, a consortium of US battery companies was formed to spur growth and innovation of li-ion batteries domestically. That not only signals downward pressure on batteries, it means jobs for scientists, engineers, designers, etc. New facilities will have to be built, or existing ones expanded, which means jobs for construction workers and architectural and civil engineers.

To some, it’s not stimulus. To others, it’s an investment in new industry and sticking a thumb in the eye of those we import oil from. Me? I think that there would have been a lot of lethargy from banks and financiers who didn’t want to bet against Big Oil. $2 billion allows the industry to move forward largely unencumbered by the worries and misgivings of Wall Street. According to the Wall Street Journal, $2 billion is about what is needed to build a large li-ion battery plant. The consortium mentioned above planned to ask the government for $1 billion back in December. Think of the extra billion as “walking around money.”

The next mention of “hybrid” comes in a passage that I’m particularly excited about. We need more hybrid cars in commercial fleets. But more importantly for electric cars, the nation needs a large-scale, long-term test. Something where we look at how electric cars perform, maintenance, their impact on the power grid and the ability to charge them away from the garage.

And on Page 90 of Section A, come these words:

ENERGY-EFFICIENT FEDERAL MOTOR VEHICLE FLEET PROCUREMENT

For capital expenditures and necessary expenses of acquiring motor vehicles with higher fuel economy, including: hybrid vehicles; electric vehicles; and commercially available, plug-in hybrid vehicles, $300,000,000, to remain available until September 30, 2011: Provided, That none of these funds may be obligated until the Administrator of General Services submits to the Committees on Appropriations of the House of Representatives and the Senate, within 90 days after enactment of this Act, a plan for expenditure of the funds that details the current inventory of the Federal fleet owned by the General Services Administration, as well as other Federal agencies, and the strategy to expend these funds to replace a portion of the Federal fleet with the goal of substantially increasing energy efficiency over the current status, including increasing fuel efficiency and reducing emissions: Provided further, that the Administrator shall report to the Committees on the obligation of these funds on a quarterly basis beginning on September 30, 2009.

In a nutshell, the government will spend $300,000,000 on replacing a portion of the General Services Administration’s vehicle fleet with hybrid and electric vehicles — AND that they have 90 days to come up with a plan, as well as begin quarterly reporting on the plan on 9/30/09. Talk about trying to crush the will of sluggish bureaucracies.

What’s the impact of that? I think it will be instant demand for Ford Fusions hybrids, Chevy Volts and other domestic hybrid and electric cars. I have a sinking feeling that there may be some Priuses. But given the throes of the Big 2 + Chrysler/Fiat, and the taxpayer interest in getting value for the upcoming auto bailout, these vehicles will be built by Ford and GM.

I’ll stop there for now. There’s still Section B, as well as 2 other associated sections to come. In the meantime, be happy. Your patience is paying off. Green cars will be getting cheaper in the mid to long term.

Image Credit: GM





About the Author

  • Allen

    We give taxpayer money to the big 3 for them to develop hybrid/electric technology. But the fact is Japanese car makers will do a better job and will make better hybrid/electric cars. The resell value on foreign cars will be better also.

    So what does the taxpayer get for his money? NOTHING, nothing but propping up the Ford, GM and Chrysler a little longer.

    UN-American not to support the big 3, total BS. All foreign car makers have plants in the US making cars hiring Americans to do the job

  • Allen

    We give taxpayer money to the big 3 for them to develop hybrid/electric technology. But the fact is Japanese car makers will do a better job and will make better hybrid/electric cars. The resell value on foreign cars will be better also.

    So what does the taxpayer get for his money? NOTHING, nothing but propping up the Ford, GM and Chrysler a little longer.

    UN-American not to support the big 3, total BS. All foreign car makers have plants in the US making cars hiring Americans to do the job

  • Allen

    We give taxpayer money to the big 3 for them to develop hybrid/electric technology. But the fact is Japanese car makers will do a better job and will make better hybrid/electric cars. The resell value on foreign cars will be better also.

    So what does the taxpayer get for his money? NOTHING, nothing but propping up the Ford, GM and Chrysler a little longer.

    UN-American not to support the big 3, total BS. All foreign car makers have plants in the US making cars hiring Americans to do the job

  • As a domestic lithium-ion battery manufacturer based in California – http://www.imaracorp.com, I can tell you we are all in favor of investment in batteries. What concerns us on the phrasing of this bill is the lack of clarity between cell manufacturing and the packaging of cells into packs. This country has no cell manufacturing capability and the $2B should be used to establish cell coating lines. I am afraid that this money will end up funding the Chevy Volt pack plant where Korean cells are integrated into a pack – same goes for Tesla’s effort at integrating Japanese cells.

    Not saying they don’t deserve a leg up as well but let’s not be mislead. If the DOE interpretation of this congressional paragraph does not spell out cell manufacturing versus pack assembly then we are no less dependent on foreign energy sources and our auto companies (and other industries who use these batteries) are no closer to gaining a technology advantage.

    On the plus side, we have seen grossly overestimated figures (Consortium) for the cost of a battery manufacturing facility. Come to CA to see a mid-volume coating line and cell assembly facility funded by less than $20M of VC money. Therefore, 2$B could go along way.

  • As a domestic lithium-ion battery manufacturer based in California – http://www.imaracorp.com, I can tell you we are all in favor of investment in batteries. What concerns us on the phrasing of this bill is the lack of clarity between cell manufacturing and the packaging of cells into packs. This country has no cell manufacturing capability and the $2B should be used to establish cell coating lines. I am afraid that this money will end up funding the Chevy Volt pack plant where Korean cells are integrated into a pack – same goes for Tesla’s effort at integrating Japanese cells.

    Not saying they don’t deserve a leg up as well but let’s not be mislead. If the DOE interpretation of this congressional paragraph does not spell out cell manufacturing versus pack assembly then we are no less dependent on foreign energy sources and our auto companies (and other industries who use these batteries) are no closer to gaining a technology advantage.

    On the plus side, we have seen grossly overestimated figures (Consortium) for the cost of a battery manufacturing facility. Come to CA to see a mid-volume coating line and cell assembly facility funded by less than $20M of VC money. Therefore, 2$B could go along way.

  • ChuckL

    Allen,

    Perhaps you should try reading the Car & Driver comparison article on the Hybrid sedans. The Malibu wasn’t in the running, but the Japanese cars finished well behind the Ford Fusion Hybrid.

    Your rants against the American auto manufacturers are sounding more and more like a Microsoft fanboy’s rant against the Linux operating system.

  • ChuckL

    Allen,

    Perhaps you should try reading the Car & Driver comparison article on the Hybrid sedans. The Malibu wasn’t in the running, but the Japanese cars finished well behind the Ford Fusion Hybrid.

    Your rants against the American auto manufacturers are sounding more and more like a Microsoft fanboy’s rant against the Linux operating system.

  • ChuckL

    Allen,

    Perhaps you should try reading the Car & Driver comparison article on the Hybrid sedans. The Malibu wasn’t in the running, but the Japanese cars finished well behind the Ford Fusion Hybrid.

    Your rants against the American auto manufacturers are sounding more and more like a Microsoft fanboy’s rant against the Linux operating system.

  • Mark

    On what measures were the Fords better than Japanese cars? Kindly reference this. Your insult to various computer users is off topic. Prove your point. Otherwise, aren’t you being a fan boy as well?

    Car & Driver is a joke. It takes ads from the industry it “rates”. Try consumer reports some time, if you’d like unbiased opinions.

  • Mark

    On what measures were the Fords better than Japanese cars? Kindly reference this. Your insult to various computer users is off topic. Prove your point. Otherwise, aren’t you being a fan boy as well?

    Car & Driver is a joke. It takes ads from the industry it “rates”. Try consumer reports some time, if you’d like unbiased opinions.

  • Mark

    On what measures were the Fords better than Japanese cars? Kindly reference this. Your insult to various computer users is off topic. Prove your point. Otherwise, aren’t you being a fan boy as well?

    Car & Driver is a joke. It takes ads from the industry it “rates”. Try consumer reports some time, if you’d like unbiased opinions.

  • Doug

    @ Allen and Mark,

    Besides the fact Ford did NOT accept any federal money so we did not bail them out or prop them up. The new CEO of Ford had already assessed the fact that Ford was way behind the Japanese and Germans in environmental and electrical vehicles. He had already implemented most of the changes the Feds wanted well before the trip to D.C.. So please quit lumping them in there with GM and Chrysler.

  • Doug

    @ Allen and Mark,

    Besides the fact Ford did NOT accept any federal money so we did not bail them out or prop them up. The new CEO of Ford had already assessed the fact that Ford was way behind the Japanese and Germans in environmental and electrical vehicles. He had already implemented most of the changes the Feds wanted well before the trip to D.C.. So please quit lumping them in there with GM and Chrysler.

  • Doug

    @ Allen and Mark,

    Besides the fact Ford did NOT accept any federal money so we did not bail them out or prop them up. The new CEO of Ford had already assessed the fact that Ford was way behind the Japanese and Germans in environmental and electrical vehicles. He had already implemented most of the changes the Feds wanted well before the trip to D.C.. So please quit lumping them in there with GM and Chrysler.

  • Brett

    The discussion here about American vs. foreign manufacturers falls on deaf ears for me. Because cars are composed of thousands of parts, it’s more today about what % of a car is domestic vs foreign. For HEVs and EVs, I know some may want to think of the battery, because it is the core of the vehicle, as the new “oil.” I would prefer domestic battery manufacturers like Enerdel and A123 to succeed, but at the same time let’s not lose sight of the end goal here.

    The end goal is to foster a new industry in the US, and a new technology that will reduce emissions and dependence on foreign oil. Where the battery is made is but one part of the overall, bigger story.

  • Brett

    The discussion here about American vs. foreign manufacturers falls on deaf ears for me. Because cars are composed of thousands of parts, it’s more today about what % of a car is domestic vs foreign. For HEVs and EVs, I know some may want to think of the battery, because it is the core of the vehicle, as the new “oil.” I would prefer domestic battery manufacturers like Enerdel and A123 to succeed, but at the same time let’s not lose sight of the end goal here.

    The end goal is to foster a new industry in the US, and a new technology that will reduce emissions and dependence on foreign oil. Where the battery is made is but one part of the overall, bigger story.

  • Michael

    First the disclaimer !!!!!! I am a Prius owner and love the car. Having said that I think its great that Ford is coming out with a hybrid car. I do however, question Car and Driver’s position. They have always been bias toward US cars. I agree that Consumer eports might be a better gauge. However, the Ford sounds like it is a great car from what I read. The goal is to encourage non gas cars so this is good. Also both Toyota and Honda manufacture cars here, although not the Prius yet, and provide jobs ab tax revenue in the US.

  • Michael

    First the disclaimer !!!!!! I am a Prius owner and love the car. Having said that I think its great that Ford is coming out with a hybrid car. I do however, question Car and Driver’s position. They have always been bias toward US cars. I agree that Consumer eports might be a better gauge. However, the Ford sounds like it is a great car from what I read. The goal is to encourage non gas cars so this is good. Also both Toyota and Honda manufacture cars here, although not the Prius yet, and provide jobs ab tax revenue in the US.

  • Michael

    First the disclaimer !!!!!! I am a Prius owner and love the car. Having said that I think its great that Ford is coming out with a hybrid car. I do however, question Car and Driver’s position. They have always been bias toward US cars. I agree that Consumer eports might be a better gauge. However, the Ford sounds like it is a great car from what I read. The goal is to encourage non gas cars so this is good. Also both Toyota and Honda manufacture cars here, although not the Prius yet, and provide jobs ab tax revenue in the US.

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