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