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Arts and Culture

How the Stimulus Revived the Electric Car

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Posted on Jan 31, 2012
Chevrolet

By Michael Grabell, ProPublica

This story was adapted from Michael Grabell’s new book “Money Well Spent?: The Truth Behind the Trillion-Dollar Stimulus, the Biggest Economic Recovery Plan in History,” published Tuesday by PublicAffairs. It was produced by ProPublica.

A common criticism of President Obama’s $800 billion stimulus package has been that it failed to produce anything—that while the New Deal built bridges and dams, all the stimulus did was fill some potholes and create temporary jobs.

Don’t tell that to Annette Herrera. She was 50 when the auto supplier she worked for in Westland, Mich., closed its factory and moved the work to Mexico. Then, after being unemployed for 2½ years, she got a job in October 2010 with A123 Systems, which had received $250 million in stimulus money to help open a new lithium-ion battery plant in nearby Romulus, Mich. 

“The first thing I did was call my husband and tell him, ‘You’re never going to guess! I got a job!’” Herrera recalled. “And then it was like celebration time.”

One success the Obama administration can duly claim is the rebirth of the electric-car industry in the United States. Automakers have unveiled a number of mass-market electric cars, which have seen small but rising sales. Battery and parts manufacturers are building 30 factories, creating thousands of new jobs. A123 has hired 700 workers at Herrera’s plant and a second one in nearby Livonia, and plans to hire a couple thousand more people over the next few years. 

If it wasn’t for the stimulus, the companies say, they would have built these plants overseas. 

It was all part of an effort to promote “green” manufacturing and put a million electric cars on the road by 2015.

The question is: Will it last?

Elkhart, Ind., once believed it would. It saw electric vehicles as its salvation after watching its unemployment rate hit 20 percent. Eager to seed a new industry, the county witnessed electric-vehicle ventures sprout out of nowhere as the stimulus took off in 2009. 

But by late summer 2011, what had sprouted were weeds. The parking lot of the Think electric-car plant was full of them, some more than a foot high growing from the cracks. Out front were two pickups and a motorcycle.

Hundreds of laid-off factory workers were supposed to have found jobs churning out the Norwegian company’s bug-like, plastic-bodied cars, which ran solely on electricity.

Today the Elkhart factory employs two. Its parent company filed for bankruptcy in June. Its largest shareholder and battery maker, Ener1, which received $118 million in stimulus money, did the same last week.

A second life

Electric cars began appearing on California roads in the mid-1990s after state regulators mandated that a certain percentage of automakers’ fleets include zero-emissions vehicles.

But within a few years, they were deemed a failure by car companies, which stopped making them and took back those they had leased.

Much had changed in the eight years leading up the stimulus package. The lead-acid and nickel-metal hydride batteries that weighed as much as 1,200 pounds were replaced with lithium-ion batteries that weighed as little as 400 pounds.

In the early 2000s, gas hadn’t even passed $2 a gallon. Less than a decade later, it was twice that. Toyota had proven the demand with its long waiting list for the Prius hybrid. 

Government policy had changed, too, with a 2007 energy bill that increased fuel-efficiency standards and provided $25 billion in loans for automakers to upgrade their plants.

But until the economic stimulus package was passed in 2009, the manufacture of electric cars and their batteries in the United States was nearly nonexistent. 

The United States had only two factories manufacturing less than 2 percent of the world’s advanced batteries. Most were made in Korea and Japan. In America, only Tesla manufactured an electric car—which sold for a cool $100,000. Across the entire country, there were a mere 500 electric charging stations. 

But as the stimulus kicked in, there was suddenly no better environment for the electric car to thrive.

With more than $2 billion in federal grants, matched by another $2 billion in private investment, the Obama administration was supporting electric cars from the mine to the garage. 

Chemetall Foote Corp., which operates the only U.S. lithium mine, received $28 million to boost production at its plants in Nevada and North Carolina. Honeywell received $27 million to become the first domestic supplier of a conductive salt for lithium batteries. More than $1 billion was spent to open and expand battery factories, many of them in hard-luck towns across Michigan. Through a separate federal program, automakers received loans to retool their assembly lines.

Customers could receive a $7,500 tax credit for buying an electric car. The stimulus provided funding for 20,000 electric charging stations by 2013. In many cities, drivers could get a home charger for free.

Although electric cars would not make up for the generation-long loss of manufacturing jobs, at least not yet, it was novel to see companies creating jobs in the Rust Belt instead of outsourcing them.

In July, Johnson Controls opened the first U.S. factory to produce complete lithium-ion battery cells for electric vehicles. Compact Power is building a $300 million factory in Holland, Mich., to produce batteries for the Chevy Volt and the electric Ford Focus. A123 now supplies the luxury electric carmaker Fisker Automotive and the manufacturers of electric delivery trucks used by FedEx and Frito-Lay. “Quite simply, if we didn’t get that grant, we wouldn’t have built [the factory] in the U.S.,” A123 spokesman Dan Borgasano said.


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By alertelectrical, March 13, 2012 at 12:54 am Link to this comment

The stimulus might have injected some life into the electrical vehicle industry, but I do not think the benefits will last for the foreseeable future. The question that begs to be answered, will the EV market last? Knowing that Lithium reserves are depleting, can manufacturers continue producing EVs at the same rate?

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By caravan insurance, March 5, 2012 at 8:44 pm Link to this comment

I see a glimmer of hope with the electric car industry. Even though the automobile has taken a beating in recent years, there is still a chance that car manufacturing can make a comeback through manufacturing of electric vehicles. With the stimulus package benefiting green companies and manufacturers, there is still hope that jobs can still be created there.

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By carl quinlan, February 5, 2012 at 12:04 pm Link to this comment
(Unregistered commenter)

“The Auto Industry destroyed the inter-urban transportation that allowed our grandparents and great grandparents the ability to travel from out laying towns into the cities promptly for decades in the late 19th and early 20th century. Private car ownership has become a burden on the average working person and yet there is little in the way of alternative to this. We talk of energy deficits and yet we continue to light up our cities and suburbs like it is high noon. We either change our patterns or we will surely die.”

Thank you! One of the smartest comments I’ve seen on truthdig. Mandatory private car ownership is killing us. Rather than more and more cars, and more and more roads and bridges, and more and more parking lots, why not develop other ways of moving people around? Trolleys, light rail, rebuild our rail system… Enough of the henry ford madness. Enough of the cars, gas, electric, or chicken poop. Enough of the cars. Teenagers, senior citizens, the disabled… we don’t need more mandatory motoring, and our towns being disfigured by adapting to cars.

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By driving bear, February 3, 2012 at 9:02 pm Link to this comment

On the local news a few weeks back ( I live in east tennessee)  their was a report that there were 250 electric cars in Tennessee . However the tax payers had paid for 500 public chargers. Already people and some politicians are drawing their guns and ready to kill the electric car again

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By PaulScott, February 2, 2012 at 4:30 pm Link to this comment

Anon asked, “Why are electric cars a good thing?  They basically run on coal and
owners don’t pay gasoline taxes for the roads they use.”

EVs run on electricity, not coal. There are many ways to generate electricity
cleanly and renewably. In the U.S., about 45% of our electricity is generated
from coal, but that percentage varies considerably depending on where you
live. In CA, coal represents less than 8% of our electricity, so our grid mix is
very clean compared to most states. The Pacific NW is even cleaner with their
predominance of hydro power.

Many EV drivers power their homes and cars on sunlight using solar panels to
generate electricity. I’ve been doing this for over 9 years. My electric bill
averages a mere $100 per year for both my house and car. I’ve driven 101,000
miles on sunlight and haven’t been to a gas station since 2002.

As for taxes, eventually we’ll need to tax them on a weight/mile basis, but for
now, we need to incentivize them to level the playing field. Oil has been
subsidized for over a century keeping gas priced well below its cost to society.
The military cost of oil alone is $80 billion per year. This works out to 55
cents/gallon that you don’t pay when you buy gas. BTW, this is exclusive of the
$trillion+ Iraq war.

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By eugene, February 2, 2012 at 4:24 pm Link to this comment
(Unregistered commenter)

A year ago, I talked with an electrical engineer.  An assignment in a post graduate course was to calculate the size batter it would take to run a car the size of a Ford Taurus at high way speeds for the distance a tank of gas would power it.  Answer:  A 7000 pound battery.  Anyone who thinks electric cars are ever going to be practical, in comparison, to a modern gas power vehicle is either an industry shill or someone who really doesn’t know what they’re talking about.

Short runs like 20 miles each way is practical when, and I mean when, the infrastructure is in place, the necessary additional power plants are built, etc, etc.  I know, I know, we’ll charge them at night, future technology will develop better batteries, etc, etc.  The reality is they are simply, and never will be, practical for the modern lifestyle.

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By anon, February 1, 2012 at 11:24 am Link to this comment
(Unregistered commenter)

Why are electric cars a good thing?  They basically run on coal and owners don’t pay gasoline taxes for the roads they use.

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By Jim Yell, February 1, 2012 at 8:06 am Link to this comment
(Unregistered commenter)

I recently watched a spokesperson speaking against alternate energy and its high cost compared to gasoline power. We already have a record of the auto industry and others destroying efforts to turn away from the Petroleum Industry and have lost decades of research in the process.

The fact is in the case of nuclear and petroleum power the true cost of production is never born by the industry, but is transfered to the victims of its use.

It isn’t that people don’t want a car that doesn’t spend all its life in the repair shop and doesn’t destroy the environment, but the cost of these cars are astronomical! But, worse still the infrastructure to give on the road charging has not been built and so the car is of use only to people who travel very short distances.

The Auto Industry destroyed the inter-urban transportation that allowed our grandparents and great grandparents the ability to travel from out laying towns into the cities promptly and adlib for decades in the late 19th and early 20th century. Private car ownership has become a burden on the average working person and yet there is little in the way of alternative to this. We talk of energy deficits and yet we continue to light up our cities and suburbs like it is high noon. It can not be sustained and neither can cars and this also goes back to outrageous reproduction of people that leaves no bare ground to stand on. We either change our patterns or we will surely die.

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By diman, February 1, 2012 at 6:44 am Link to this comment

Here is a misleading title for a book with “Truth” being the key word. Let me tell you something, even the government doesn’t know where the fucking money went much less the author of this asswipe of a “book”.

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