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U.S. affirms commitment to EVs but eases off time-frame goal

Source: Thomson Reuters Foundation - Thu, 31 Jan 2013 19:04 GMT
Author: Reuters
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By Ayesha Rascoe and Deepa Seetharaman

WASHINGTON/DETROIT, Jan 31 (Reuters) - The U.S. Department of Energy laid out a strategy on Thursday to promote green cars and lower their cost over the next nine years, but eased off its previously stated goal of putting 1 million electric cars on the road by 2015.

The plans, outlined by Energy Secretary Steven Chu in a speech at the Washington D.C. auto show, represent the first look at how U.S. auto policy will take shape during President Barack Obama's second term.

They also reflect what auto experts say is a more realistic outlook for the pace of electric vehicle adoption among American consumers, who have been cool to EVs because of high cost and the limited charging infrastructure in the United States.

"Whether we meet that goal in 2015 or 2016, that's less important than that we're on the right path to get many millions of these vehicles on the road," an Energy Department official said.

Shoring up the U.S. auto industry was one of the key pillars of Obama's first term, starting with the federally funded bankruptcies of General Motors Co and Chrysler Group LLC .

But promoting advanced vehicles has been a long-running focus for the White House, which has also pushed for more stringent standards on fuel economy that call for automakers to improve dramatically the mileage of their overall fleets.

During his 2011 State of the Union address, Obama also called for putting 1 million electric vehicles on the road by 2015. Overall, U.S. federal policies to promote electric vehicles will cost ${esc.dollar}7.5 billion through 2019, the Congressional Budget Office said in September.

That includes ${esc.dollar}2.4 billion in grants to lithium-ion battery makers and projects to promote electric vehicles as well as ${esc.dollar}3.1 billion in loans to auto companies, intended to spur production of fuel-efficient vehicles.

But demand for hybrids and electric vehicles has been weaker than expected, and analysts and industry executives have long been skeptical that Obama's goal of 1 million EVs on the road by 2015 was realistic.

Poor demand has hurt lithium-ion battery makers, pushing two DOE grant recipients, A123 Systems Inc and EnerDel, to file for bankruptcy protection. Dow Chemical Co took a ${esc.dollar}1.1 billion charge last year, related in part to a writedown of its lithium-ion battery business, Dow-Kokam LLC.

Under the new strategy outlined on Thursday, the DOE is supporting research into new battery technologies and manufacturing methods that would lower the cost of lightweight materials and improve vehicles' fuel-efficiency.

The DOE also confirmed its goal to lower the cost of lithium-ion batteries to ${esc.dollar}300 per kilowatt hour from the present ${esc.dollar}650.

Ultimately, the department's goal is to have about 500 companies offer workplace charging over the next five years. Several companies are already on board, including Google Inc and General Electric Co.

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