(Photo by kqedquest on Flickr)
The U.S. Department of Energy (DOE) is currently reviewing 34 applications submitted at the end of 2008 for the Advanced Technology Vehicles Manufacturing Loan Program (AVTMLP). Congress established this program last fall as part of its $700 billion bailout package with the dual aims of increasing fuel mileage and decreasing dependence on foreign energy sources. Two of the applicants, A123Systems and EnerDel, asked for more than $2 billion in low-interest loans out of the $25 billion available through the AVTMLP.
A123Systems requested $1.84 billion from the DOE to build a massive production facility near Detroit. This facility would span seven million square feet and employ more than 14,000 workers to meet the company’s ambitious production goals. If the DOE approves A123’s application, the company says that it could produce enough battery packs for up to five million hybrid electric vehicles by 2013.
The A123Systems application seems likely to be approved quickly by the DOE due to the agency’s history with the company. A123Systems received $100,000 in loans from the DOE when it started in 2001. The battery manufacturer would use increased productivity under the AVTMLP to help automaking partners like Chrysler and General Motors. As Congress begins to dole out billions of dollars in stimulus programs and tax cuts in 2009, the $1.84 billion request by A123 Systems seems like a mere pittance.
EnerDel’s $480 million request under AVTMLP also seems headed to approval in the next few months. EnerDel wants to increase production of PHEV and HEV battery packs to 600,000 per year by 2011 at its Indiana plant. The company also wants to build another plant in the United States that could produce 1.2 million HEV packs by 2015. The DOE can help EnerDel create jobs and green the economy by approving the AVTMLP request quickly.
DOE officials will follow a four-step process to determine if any of the 34 applications should receive federal loans. This process includes a review of each application for eligibility, an assessment of appropriate loan terms for approved applicant and a full evaluation of the proposed project. It is important for the DOE and other federal agencies to perform due diligence when handing out these funds. In the end, however, A123Systems and EnerDel seem like prime targets according to the stated mission of the AVTMLP. By loaning $2 billion to two established battery manufacturers in the United States, the AVTMLP would decrease battery costs, increase jobs for skilled workers and make the American auto industry a little bit greener.
