UPDATE 1-Obama says electric car battery prices to tumble

Thu Jul 15, 2010 4:19pm EDT

* Obama sees price of EV batteries down by 70 percent

* White House price targets more aggressive than industry

* LG Chem sees pricing down 50 percent by 2015

By Bernie Woodall

HOLLAND, Michigan, July 15 (Reuters) - The cost of the high-powered batteries needed for a coming wave of electric cars is projected to drop by as much as 70 percent over the next five years, according to a U.S. government forecast.

The forecast was released as President Barack Obama attended a groundbreaking ceremony for a battery plant being built in Holland, Michigan by a U.S. unit of South Korea's LG Chem(051910.KS) and funded by the U.S. Department of Energy.

The Obama administration has provided more than $5 billion in grants and low-cost loans to battery manufacturers and auto companies to support projects intended to spur the development and sale of rechargeable electric cars and plug-in hybrids.

But the high cost of the lithium-ion batteries to power those vehicles has been seen as one of the biggest barriers to their widespread adoption.

The U.S. government had never set a target for the kinds of cost reductions it expected to see in the fast-developing industry it is attempting to jump-start with taxpayer funding.

"Because of advances in the manufacture of these batteries, their costs are expected to come down by nearly 70 percent in the next few years. That's going to make electric and hybrid cars and trucks more affordable for more Americans," Obama told an audience of politicians, business leaders and representatives of the 300 workers building the new plant.

The battery price declines projected by the Obama administration, which has set a target of putting 1 million plug-in hybrids on the road by 2015, run deeper and faster than most forecasts by outside analysts.

LG Chem Chief Executive Bahnsuk Kim told Reuters his company sees a 50 percent drop in battery prices by 2015, and he expected that would be enough to drive increased demand.

"In the next five years we see the prices in half. Our target is half," Kim said on the sidelines of the Holland, Michigan event.

In the terms tracked by the emerging electric vehicle industry, the Department of Energy said it expected battery costs per kilowatt hour to drop from about $1,000 in 2009 to $300 in 2015 and $100 in 2030.

Major U.S. automakers have set a long-term target of reducing costs on that basis to near $250, a price that would be in line with the cost to produce batteries for laptops and cell phones.

The lithium-ion battery that powers Tesla Motors Inc's (TSLA.O) $109,000 Roadster cost more than $33,000, according to the Department of Energy report.

The smaller battery LG Chem is supplying for the upcoming Chevrolet Volt from General Motors [GM.UL] cost $13,000 last year but will drop to $4,000 by 2015, the report said.

Both GM and Tesla have received Energy Department funding.

LG Chem's Compact Power unit has won deals to supply batteries for the Chevy Volt and the upcoming all-electric version of the Ford Motor Co (F.N) Focus.

It said that it had also been selected to supply batteries for hybrid systems which Eaton Corp (ETN.N) is developing for commercial trucks and buses.

Compact Power's Holland plant will have the capacity to supply batteries for up to 250,000 electric vehicles once completed and will employ 400 workers, the company said.

LG Chem and the U.S. Department of Energy split the costs of building the $303 million plant. The Korean chemical and battery maker invested $151.5 million and $151.4 million came from a U.S. government grant.

White House economists estimate that the United States accounted for 2 percent of global production of batteries for electric cars and hybrids in 2009. That share is expected to rise to 40 percent of global production by 2015. (Reporting by Bernie Woodall, writing by Kevin Krolicki, editing by Leslie Gevirtz)

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Comments (5)
GLCSchaefer wrote:
Did anyone bother to ask the mental giant where and how the dead batteries are to be disposed of? Of course not…. Why bother telling him about unintended consequences now. After all the man is on a roll shoving cr-p down our throats.

Jul 15, 2010 5:07pm EDT  --  Report as abuse
ronoz wrote:
Have you heard of recyling?
This is the type of jobs we need. Unlike the finance jobs created in the last 8 years by the $3 trillion tax cuts these jobs actually produce something that we can use and sell to others overseas. A good, cheap battery technology puts us much closer to energy independence.
We can not possible drill our selves to energy independence. We now use 20% of all the oil produced in the world. Wake up, all the easy stuff is gone we will have to drill farther and it is going to become more expensive with more risk. We need to count on American ingenuity to find better energy sources so we can quit paying $400 billon a year for foreign oil. America could once again export more then we import.
If we get serious about energy in15 years from now more energy can be produced by oil producing algae, wind farms, solar farms and a host of other technologies being investigated plus our natural gas reserves then we need. If the US succeeds in producing all our energy at home the price of oil would be back a $20 a barrel making deep ocean wells not cost efficient enough to make a profit. But we can not do that because it might mean more taxes, Gasp! If the same people would have been back in the 50s and 60s we would have never built our interstate freeway system.

Jul 15, 2010 5:17pm EDT  --  Report as abuse
Randster wrote:
Maybe the mental giant realized the material in a lithium-ion battery is recyclable, just like lead-acid batteries.

Jul 15, 2010 5:23pm EDT  --  Report as abuse
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