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.