Zoomi Life

Two manufacturers of lithium-ion battery technology here in the U.S. have applied for federal loans through a Department of Energy program.

Lithium-ion manufacturer Ener1 has applied for $480 million in low-interest federal loans to spur the development of the next generation of batteries for alternative vehicles.

EnerDel, which is the battery-making arm of Ener1, applied for the loans under the Advanced Technology Vehicle Manufacturing Incentive Program (ATVMIP), administered by the U.S. Department of Energy. This program was designed to help auto companies and their suppliers build or retool manufacturing facilities to improve fuel economy in the vehicles produced.

Ener1 wants to be at the forefront of the U.S. supply of lithium-ion batteries and needs the federal money to do that. They want to double EnerDel’s current capacity to 600,000 vehicle packs per year (mostly for hybrids) and build another plant to expand that to 1.2 million by 2015.

Lots of justifications for using federal money are given, including how many jobs could be created (up to 1,300) and how gasoline would be saved were all these batteries actually being used ($600 million worth).

No word yet as to why private funding for such a venture isn’t available, though Ener1 has been able to raise $200 million in the equity capital markets. This is especially interesting, since the company claims a minimum of a 1:4 return ($4 for every $1 invested) in profit.

Meanwhile, not to be outdone, A123 Systems (another battery manufacturer) has applied for $1.48 billion in loans through the same program. They’re bullying their idea by planning to build their new battery production plants near Detroit. They plan to build enough batteries to supply 5 million hybrid cars or 500,000 all-electrics. A123 was started on government grants and is a spin off of technology developed at MIT.

I guess that since Congress decided to create a $45 billion incentive program for these kinds of loans through the DoE, companies are going to go after them. Not to get too political, but isn’t this what caused the housing bubble? Government circumventing the private sector in order to “incentivize” something? Just a thought.

Sources: 1, 2