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EnerDel Applies for $480M in US Loan Funds to Expand Li-ion Manufacturing Capability; Targeting Capacity for 1.2M HEV Packs Annually by 2015

EnerDel, the lithium-ion battery subsidiary of Ener1, has applied for US$480 million in low-interest loans under the $25-billion Advanced Technology Vehicle Manufacturing Incentive Program (ATVMIP), which is administered by the US Department of Energy (DOE) (earlier post).

If granted, the funds will enable EnerDel to double manufacturing capacity to produce 600,000 hybrid electric vehicle packs per year at its existing plant in Indiana by 2011, and to build a second larger plant capable of producing battery packs for up to 1.2 million hybrid electric vehicles by 2015.

EnerDel is the first and currently the only advanced lithium-ion automotive battery manufacturer in the US; its manufacturing facilities are based in Indianapolis and Noblesville, Indiana.

The $25-billion ATVMIP program is designed to enable US auto companies and their suppliers to build or retool manufacturing facilities in order to improve the overall corporate average fuel economy (CAFE) of the American automotive industry.

Advanced lithium-ion battery technology is a basic need for every automaker in the world today, and that need will grow steadily. Building a strong US supply chain in this rapidly emerging industry is a top priority to maintain competitiveness vis-à-vis foreign manufacturers that have already invested very heavily in this linchpin technology.

Europe and Asia have committed vast resources to build production capacity, while the US is starting to fall behind. We have the technology, but we lack domestic production capacity. Failure to develop the lithium-ion automotive battery industry would be tantamount to exchanging dependence on foreign oil for dependence on foreign-made batteries.

—Charles Gassenheimer, Ener1 Chairman and CEO

The loans would be secured by project assets, and DOE is required by law to monitor progress closely to ensure the funds are used efficiently and effectively. If approved, the loan’s interest rate, estimated to be less than 4% per year, would be equal to the cost of funds to the US Treasury Department for comparable obligations over a period of 25 years or the projected life of the project, whichever is shorter. DOE would have first lien on all assets acquired with the funds.

Ener1 has successfully raised $200 million to date in the equity capital markets, but acknowledges federal assistance is necessary for Ener1 to accelerate its production capacity to be able to meet the US auto industry’s current forecasts for hybrid and electric vehicles, and remain competitive in a rapidly evolving global marketplace.

The ATVMIP was established under Section 136 of the Energy Independence and Security Act of 2007. Congress appropriated funds for the program in the fall under the Continuing Resolution; those funds are separate and distinct from the bailout loan funds approved by the White House for GM and Chrysler in December. ATVMIP loan applications for the first of three stages of the program were due December 31. Applications under the next stages are due at the end of the first two quarters of the current year.

Comments

ToppaTom

No way.
We need to save these funds for parachutes when the bankers retire.
Also $480M does not sound like nearly enough to properly fund the Job Banks.
But if we do this anyway, we should also lend money to Japanese and Chinese battery makers.

Ken

Seems a bit much.

The government clearly is going to be subsidizing in this field. And that is probably good.

But why not help Ener1 reach their goal of doubling capacity by 2011 first. See how that goes before deciding about loans for that second larger plant to be built by 2015?

If their product is good, if the market develops, and if their management is able, then by 2011 they will attract plenty of capital. And by then DOE should be able to better evaluate what to approve for 2015.

Count on PR. We begin 2009 with this great nonsense:

"The loans would be secured by project assets, and DOE is required by law to monitor progress closely to ensure the funds are used efficiently and effectively."


John Taylor

I notice they are making batteries for hybrid cars, but not for pure electric cars (even though they are the same batteries).

Perhaps the DOE is still a bit "Oil-focused" and not ready for the future.

HarveyD

This is a very positive approach to ramp up battery packs USA mass production instead of moving production abroard.

Altairnano, A123, ESStor and two or three other promising technologies should also be given appropriate start up funds. Half a dozen competing suppliers would be healthy and would promote quicker technology evolution and lower cost.

A total of $3 B to $5 B may be required to setup enough ESSU production capabilities within USA and Canada to meet HEV, PHEV and BEV progressive requirements.

Reel$$

Pres-Elect Obama is talking about change. Well, how about the novel idea of manufacturing stuff in the U.S. again? What're the other benefits?

Taxes create new jobs
Taxes remain at home
Taxes speed electrification
Taxes invest in technology leadership
Taxes cut need for foreign oil

Or, we could buy those shiny parachutes for the money changers.

ToppaTom

If this has ANY chance of making the US battery industry somewhat competitive with foreign, I am in favor.
Even if EnerDel is unionized. (Indiana is not a Right to Work state).
Even though they want the money up front (I assume this allows some foresight and planning that will attract private investment?).
What’s so sad is that after loans of $900B to the banks (with apparently no strings or oversight), and $15B+ “loans” to GM and Chrysler (both with dim futures), less than half a $B sounds like NOTHING (even if the likely hood of payback was small).
What does this mean for the US National Alliance for Advanced Transportation Battery Cell Manufacture (/Argonne National Laboratory, Johnson Controls, et al) and A123 etc?
It would be much better if this money was used to subsidize unit costs for (only) US made battery packs, but I assume this would run afoul of WTO regulations where a loan to EnerDel does not.

Andrey Levin

Why US does not make its own rechargeable batteries is kind of mystery. US produces most of battery manufacturing lines, used all over the world. Price of battery manufacturing is pretty the same all around the world, being it China, Japan, Korea, US or any other country. Majority of disposable batteries (Energizer, Duracell, etc.) are produced domestically in US.

Ziv

Sounds like a great idea to get a great domestic company started in the right direction, building battery packs right here in the US. And this is a low interest loan secured by the companies assets, not a give away. So the government actually makes money on the deal. How can this not be supported by everyone that wants to develop PHEV's and eventually,possibly, BEV's? By everyone that wants to see the US get some degree of independence from foreign oil?

Ziv

Sounds like a great idea to get a great domestic company started in the right direction, building battery packs right here in the US. And this is a low interest loan secured by the companies assets, not a give away. So the government actually makes money on the deal. How can this not be supported by everyone that wants to develop PHEV's and eventually,possibly, BEV's? By everyone that wants to see the US get some degree of independence from foreign oil?

jfinlayson

"EnerDel is the first and currently the only advanced lithium-ion automotive battery manufacturer in the US"

Aren't Altair Nanosystems and A123 considered advanced lithium automotive battery manufacturers?

Leon_Kennedy

I agree with ToppaTom. 2015 is a long way off. It seems to me automakers are hurrying to release hybrids and other fuel efficient vehicles as soon as possible to become competitive. Why not first get production rolling for 2011?

In any case, I hope EnerDel is successful in its endeavors.

Neil Maguire

We hope EnerDel is successful in getting a loan that is commensurate with their technological performance. As an FYI, there is another advanced lithium-ion company that launched a few weeks ago with a product that has 40% more energy density - Check out www.imaracorp.com.

Reel$$

The above is a puff page with no technical specifications. EnerDel is a viable entity with a reasonable plan for expansion which will give the US-based battery business a beginning.

Neil Maguire

Actually, there is a section under Technology called Performance Charts with comparisons to competitive cells in the power tool industry. EnerDel's lithium titanate system is a 2.5 V system versus Imara's Lithium NMC's 3.7 Volt system so you will not see these in power tools as energy density is important. Where it is not relevant, Enerdel may have a solution.

Qadir Tapra

The above is a puff page with no technical specifications. EnerDel is a viable entity with a reasonable plan for expansion which will give the US-based battery business a beginning.
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