[Senate Hearing 110-671]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-671
 
                 VEHICLES POWERED BY THE ELECTRIC GRID 

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                   TO

 RECEIVE TESTIMONY REGARDING THE CURRENT STATE OF VEHICLES POWERED BY 
 THE ELECTRIC GRID AND THE PROSPECTS FOR WIDER DEPLOYMENT IN THE NEAR 
                                 FUTURE

                               __________

                           SEPTEMBER 16, 2008


                       Printed for the use of the
               Committee on Energy and Natural Resources

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46-014 PDF                       WASHINGTON : 2008 

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota        LARRY E. CRAIG, Idaho
RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana          JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           BOB CORKER, Tennessee
KEN SALAZAR, Colorado                JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
JON TESTER, Montana                  MEL MARTINEZ, Florida

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
              Frank Macchiarola, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel






















                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Balkman, Thad, General Counsel and Vice President, External 
  Relations, Phoenix Motorcars, Ontario, CA......................    27
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Dalum, Joseph T., Vice President, DUECO, Waukesha, WI............    18
Domenici, Hon. Pete V., U.S. Senator From New Mexico.............     2
Kjaer, Edward, Director, of Electric Transportation, Southern 
  California Edison Company, Rosemead, CA........................     9
Wimmer, Robert, National Manager, Toyota Motor North America.....    14
Wynne, Brian P., President, Electric Drive Transportation 
  Association....................................................     4

                                APPENDIX

Responses to additional questions................................    51


                 VEHICLES POWERED BY THE ELECTRIC GRID

                              ----------                              


                      TUESDAY, SEPTEMBER 16, 2008

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m., in room 
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. OK, why don't we get started here.
    This hearing is to hear testimony on the current state of 
the electric vehicles and their prospects for widespread use in 
the United States. It is hard to find an article in a newspaper 
lately about the automobile industry that does not mention 
hybrids, plug-in hybrids, or the future of the industry. So we 
thought it was a good time to talk about how close this 
electric car future actually is, and also a good time to talk 
about the issues, since people are understandably focused on 
the high price of gasoline and wondering when they are going to 
have real alternatives to that.
    So the case for seriously reducing our reliance on foreign 
oil is exceptionally strong. We make that case ourselves here 
on a daily basis. We consume roughly a quarter of the world's 
oil production, and obviously this is a serious economic 
problem for our country in the long term.
    Let me indicate that electrification of the transportation 
sector I think is held out as one of the great hopes for 
dealing with several of our problems. Obviously, there is a 
benefit to consumers as they would pay costs estimated to be 
less than a quarter of what they now pay in order to get 
around. You add to this the benefits to the country, both with 
regard to the balance of trade and national security and 
reducing our need to import such large amounts of expensive oil 
and allowing instead the use of abundant domestic electricity, 
I think there clearly are great benefits there.
    Let me also indicate that we have examples of the 
technology that is going to be talked about here outside the 
northwest corner of the Russell Building that some of our 
witnesses have arranged for us, and these will be displayed for 
a time following the hearing. There is, as I understand it, a 
two-wheeled electric vehicle from Vectrix. If I misstate this, 
correct me. There is a four-wheeled, low-speed electric vehicle 
from Chrysler's GEM brand, which is also there. There is a 
plug-in hybrid electric Prius from Toyota, and there is a plug-
in work truck from DUECO, and we appreciate you making those 
available for us to look at. I'm hoping if we can complete the 
hearing at a good hour, we will have time to go see those 
before the noontime.
    So let me defer to Senator Domenici for any comments he 
wants to make, and then I will introduce our witnesses.

   STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW 
                             MEXICO

    Senator Domenici. Thank you very much, Mr. Chairman. I 
apologize to the witnesses for not joining you down there to 
shake their hands and thank them for coming. As you know, 
Senator Bingaman has a few years of youth over me, and he can 
walk around and greet people while I sit down. That is a pretty 
good working relationship.
    In any event, let me suggest that today the American people 
are more focused on energy policy than at any other point in 
the 36 years that I have been a United States Senator and with 
good reason. Over the past year, gasoline prices have reached 
unprecedented levels. The transportation sector is the largest 
user of petroleum in the United States--we all know that--
totaling 70 percent of all consumption. Moreover, the 
transportation sector accounts for about one-third of the 
greenhouse gas emissions in this country.
    Sometimes we do not agree on much around here, but one 
thing we all agree on is that we must reduce our reliance on 
imported oil. It seems quite obvious that what follows after 
that is we must find some way to use less crude oil to get 
around and less crude oil for the daily transportation needs of 
the United States people.
    It is no secret that I am a strong advocate of increasing 
domestic production through offshore drilling, and I am also a 
strong supporter of more investment in advanced technologies. 
More conservation of our resources will be needed if we are to 
meet our long-term energy challenges. I have been part of 
enacting legislation over the past few years that helps achieve 
both of these goals, and I have introduced legislation this 
year to do even more.
    Last year we took action by increasing the fuel efficiency 
standards by 40 percent for the first time in 32 years, 
establishing a 36 billion gallon renewable fuels standard and 
dramatically increasing funding for clean energy technologies. 
While Congress has made considerable progress in advancing 
policies that will strengthen our Nation's energy security, we 
must go further to address our Nation's energy challenges.
    Over the past several months, I have talked a lot about a 
bridge of increased domestic production that is needed to 
sustain the country until we have developed new technologies. 
On the far side of that bridge lies an age when clean energy 
technologies like plug-in hybrid electric vehicles are 
available and deployable on a wide scale across the country. We 
must continue to take greater steps toward implementing 
policies that speed our path across this bridge.
    The Gasoline Price Reduction Act, which I introduced along 
with Senator McConnell and 42 Republicans, authorized $500 
million over the next 5 years to develop a better battery 
technology.
    In response to high gas prices, Americans have curtailed 
their behavior by driving less. This has been rather amazing. 
They are also trading in their gas-guzzlers for more efficient 
cars. The marketplace is speaking.
    Today, as we will hear from our witnesses, nearly every 
major manufacturer is in production or development of some kind 
of hybrid electric technology. According to the Electric Drive 
Transportation Association, increasing the number of electric 
and hybrid vehicles into our fleet could reduce our petroleum 
fuel consumption significantly. I believe you all think that is 
true.
    Plug-in vehicles, with their potential to reduce our 
Nation's consumption of oil and our greenhouse gas emissions, 
have generated a great deal of excitement. However, technology 
hurdles from battery manufacturing to grid infrastructure 
improvements remain. I am hopeful that this new technology will 
benefit from the loan guarantee programs that we set up in the 
Energy Policy Act of 2005.
    In addition, through the appropriation process, we are 
working with other colleagues to provide short-term assistance 
such as loans to help auto manufacturers retool and adjust to 
the new mandates and the marketplace.
    I thank the witnesses, each one of you, for appearing 
today. This is a gloomy day not only because of the clouds, but 
obviously because of what is going on on Wall Street. You 
probably would much prefer to be elsewhere, but we will have 
some good testimony today.
    Who knows when we will make that breakthrough that is 
generally needed for the United States in terms of our 
excessive use of petroleum products.
    Thank you very much, Mr. Chairman. I am pleased to be with 
you this morning.
    The Chairman. Thank you.
    Let me introduce our witnesses and then call on them each 
to make their statement.
    Brian Wynne is the President of the Electric Drive 
Transportation Association. Thank you for being here.
    Edward Kjaer--is that the correct pronunciation? Kjaer is 
the Director of Electric Transportation with Southern 
California Edison. Thank you for coming.
    Robert Wimmer--is that correct?
    Mr. Wimmer. Wimmer.
    The Chairman. Wimmer, the National Manager, Technical and 
Regulatory Affairs, in the Energy and Environmental Research 
for Toyota Motor North America. Thank you for coming.
    Joseph Dalum----
    Mr. Dalum. Dalum.
    The Chairman. Dalum, Vice President of DUECO in Waukesha--
--
    Mr. Dalum. Waukesha.
    The Chairman. Waukesha, Wisconsin.
    Thad Balkman, who is General Counsel and VP for External 
Relations with Phoenix Motorcars in Ontario, California. Thank 
you for being here.
    If each of you could take about 5 or 6 minutes and give us 
the main points that you believe we need to understand about 
this issue, we would appreciate that. We will include your full 
statement in the record as if it were read, but we would 
appreciate you summarizing it if you could.
    Mr. Wynne, go right ahead.
    [The prepared statement of Senator Domenici follows:]

  Prepared Statement of Hon. Pete V. Domenici, U.S. Senator From New 
                                 Mexico
    Good morning. Thank you all for being here. Thank you also to 
Chairman Bingaman for convening this oversight hearing on plug-in 
electric vehicles--technology with tremendous potential.
    Today, the American people are more focused on energy policy than 
at any other point in my 36 years as a United States Senator. And with 
good reason. Over the past year, gasoline prices have reached 
unprecedented levels. The transportation sector is the largest user of 
petroleum in the United States, totaling 70% of all consumption. 
Moreover, the transportation sector accounts for about \1/3\ of the 
greenhouse gas emissions in the country. Sometimes we don't agree on 
much around here. One thing we all agree on, however, is that we must 
reduce our reliance on imported oil.
    It is no secret that I am a strong advocate for increasing domestic 
production through offshore drilling. And I am also a strong supporter 
of more investment in advanced technologies and more conservation of 
our resources will be needed if we are to meet our long term energy 
challenges. I have enacted legislation over the past few years that 
helps achieve both of these goals. And I have introduced legislation 
this year to do even more.
    Last year, we took action by increasing the fuel efficiency 
standard by 40% for the first time in 32 years; establishing a 36 
billion gallon renewable fuel standard; and dramatically increasing 
funding for clean energy technologies. While Congress has made 
considerable progress in advancing policies that will strengthen our 
nation's energy security, we must go further to address our nation's 
energy challenges.
    Over the past several months, I've talked a lot about a bridge of 
increased domestic production that is needed to sustain the country 
until we have developed new technologies. On the far side of the bridge 
lies an age when clean energy technologies like plug-in hybrid electric 
vehicles are available and deployable on a wide scale basis across the 
country. We must continue to take greater steps toward implementing 
policies that speed our path across that bridge. The Gas Price 
Reduction Act, which I introduced along with Senator McConnell and 42 
other Republicans, authorizes $500 million over the next five years to 
develop better battery technology.
    In response to high gas prices, Americans have curtailed their 
behavior by driving less. They're also trading in their gas guzzlers 
for more fuel efficient cars. The marketplace has certainly spoken. 
Today, as we'll hear from our witnesses, nearly every major 
manufacturer is in production or development of some kind of hybrid 
electric technology. According to the Electric Drive Transportation 
Association, increasing the number of electric and hybrid vehicles into 
our fleet could reduce our petroleum fuel consumption significantly.
    Plug-in electric vehicles, with their potential to reduce our 
nation's consumption of oil and our greenhouse gas emissions, have 
generated a great deal of excitement. However, technological hurdles--
from battery manufacturing to grid infrastructure improvements--remain. 
I am hopeful that this new technology will benefit from the loan 
guarantee program that was set up in the Energy Policy Act of 2005. In 
addition, through the Appropriations process I am working with my 
colleagues to provide short-term assistance such as loans to help auto 
manufacturers re-tool and adjust to the new mandates and marketplace.
    I thank the witnesses for appearing before us today. I look forward 
to your testimony on the state of today's technology and what we can 
strive for in the near-term.

    STATEMENT OF BRIAN P. WYNNE, PRESIDENT, ELECTRIC DRIVE 
                   TRANSPORTATION ASSOCIATION

    Mr. Wynne. Thank you, Mr. Chairman, Ranking Member 
Domenici, members of the committee. My name is Brian Wynne. I 
am President of the Electric Drive Transportation Association, 
which is located here in Washington. I am very pleased to be 
here today to talk with you about our industry's 
accomplishments, plans, and vision for electric drive 
transportation.
    The electrification of the transportation sector brings 
together a range of interests and industries. At the Electric 
Drive Transportation Association, we represent auto 
manufacturers, battery and other technology developers, 
utilities, energy companies, and others. I am pleased to say 
that all of the witnesses this morning are members of my 
organization.
    I am also pleased to report that we are on track to build 
new technologies and markets at a rapid pace. But building a 
new transportation sector will require industry and Government 
to work together and it will not happen overnight.
    Grid-connected vehicle technology is moving forward very 
quickly. There are plug-in vehicle options available today, 
including the ones that the chairman referenced that are 
outside the Russell Building, and a significant number are 
coming, which I am going to list. They are coming to market in 
the next 3 years.
    Major manufacturers have established ambitious vehicle time 
tables. Battery manufacturers are looking to scale up 
production, and electricity providers are making changes in 
order to integrate vehicles into their customer base.
    I will give a brief summary of what you can expect in the 
next few years, but first let me explain a bit about electric 
drive.
    In electric drive vehicles, electricity provides either all 
or part of the motive power for a vehicle. Electric drive 
vehicles are not just cars. They can be large trucks and 
neighborhood electric vehicles and everything in between. They 
get power from the grid or recharge on board. While there is 
enormous diversity in the technology, all the vehicles share a 
common benefit: they displace oil with electricity.
    Vehicles that run on electricity from the grid, our focus 
here today, can be battery electric or plug-in hybrid vehicles. 
Battery electric vehicles operate entirely on their electric 
drive motor and have various range and speed capabilities. For 
instance, thousands of low-speed battery electric vehicles are 
in use today, like the Global Electric Motorcars neighborhood 
electric vehicle, and they provide a petroleum-free option for 
urban commuters across the country. Electric motorcycles, such 
as the Vectrix, are changing the two-wheeled fleet.
    Also available is the Tesla Roadster, which goes 0 to 60 in 
just 4 seconds and travels 220 miles on a charge. Next year 
Phoenix, Suburu, and ZENN are planning to begin production of 
full-speed battery electric vehicles. The field will expand 
considerably in 2010. Toyota plans a Prius plug-in hybrid for 
the model 2010 year. Ford will put its plug-in hybrid Escape 
into production in the same year. Daimler has announced plans 
for production of a battery electric Mercedes-Benz and smart 
car. Tesla will begin producing their four-door family sedan. 
Nissan is rolling out a battery electric vehicle for fleet use 
with mass market introduction expected in 2012. Also in 2010, 
GM will begin production of the Saturn Vue plug-in hybrid and 
the battery electric Chevy Volt.
    The Volt is different than a plug-in hybrid because the car 
will be propelled solely by the battery. It will have an 
internal combustion engine that only functions as a range 
extender by providing backup power to the battery. So that 
gives you a sense of some of the flexibility of the technology.
    The 2010 production model of the Volt is being unveiled in 
Detroit this morning actually. It is a passenger vehicle with a 
range of about 40 miles on a single charge and that would cover 
the average commute for most Americans. GM is expecting that 
production will reach 60,000 units a year in 2012.
    Hyundai is expecting a hybrid production over the next 4 
years and is planning to commercialize plug-in hybrids sometime 
after 2013.
    We are excited about the expanding availability of plug-in 
electric drive options, but how quickly they can reach 
commercial scale depends on a number of factors.
    First, there are technology challenges that manufacturers 
and issue suppliers must address. The most obvious is 
performance and supply of new battery technologies. Some of the 
emerging plug-ins and the next generation of electric vehicles 
will use lithium-ion batteries. We need to ensure that they are 
as safe, durable, and affordable as the vehicle market demands. 
We should also work to make sure that they are manufactured 
here in the United States.
    The shift to electric drive technology also requires 
significant investment in manufacturing infrastructure. Large 
scale production of electric drive vehicles and components in 
the United States will require new materials, new processes, 
and new production facilities.
    In the utility and energy industries, grid-connected 
transportation will also require changes in electricity 
infrastructure and business models.
    Changing transportation is a major undertaking. The right 
Federal policies can help us achieve it sooner. EDTA supports 
policy initiatives in three broad areas.
    First, we support market initiatives to help industries and 
consumers invest in electric drive.
    Second, we need reliable R&D support to advance the 
technology.
    Finally, Federal policy can expand deployment in public and 
private fleets.
    I have details on each of these three areas, which I would 
be more than happy to provide during the question and answer or 
for the record.
    This is just a sampling of the work that the electric drive 
industry is doing to bring grid-connected vehicles to 
production, grow them to commercial scale, and prepare the grid 
for a plug-in vehicle future. Working together with 
policymakers we can make it happen even sooner and realize the 
economic, security, and environmental benefits of displacing 
oil with electricity.
    Thank you very much for your attention this morning.
    [The prepared statement of Mr. Wynne follows:]

    Prepared Statement of Brian P. Wynne, President, Electric Drive 
                       Transportation Association
    Mr. Chairman, Ranking Member Domenici, members of the Committee. My 
name is Brian Wynne, I am president of the Electric Drive 
Transportation Association and I am very pleased to be here today to 
share with the Committee our industry's accomplishments, plans and 
vision for electric drive transportation.
    The electrification of the transportation sector brings together a 
range of industries and interests. At the Electric Drive Transportation 
Association, we represent auto manufacturers, battery and other 
technology developers, utilities and energy companies and universities. 
All of these companies and organizations are committed to realizing the 
economic, security, and environmental benefits of displacing oil with 
electricity.
    The reasons we need to pursue this course are painfully clear. Gas 
prices reached record highs this year, at one point reaching almost 
$140 a barrel. While they were headed down recently, we know that OPEC 
or Ike can change that any day.
    More than the price of oil, the COST of oil to our security is 
enormous. Close to 60% of the petroleum we use is imported. If we 
switched over the U.S. light duty fleet--cars and SUVs--to electric 
drive vehicles--a combination of plug-in and standard hybrids, battery 
electric and fuel cell vehicles, we would cut liquid fuel consumption 
by 83%.
    Environmentally, electrification of transportation makes sense as 
well. The transportation sector accounts for about a third of the 
greenhouse gas emissions in the U.S. and about 80% of urban air 
pollution.
    A recent study conducted by the Electric Power Research Institute 
with the National Resources Defense Council found that plug-in electric 
drive vehicles running on electricity from today's power grid would 
produce \1/3\ less greenhouse gas emissions than vehicles running on 
traditional combustion engines.
    Understanding the potential of plug-in electric drive, we are here 
to discuss the current state of the industry and how to get these 
vehicles on the road in substantial numbers.
    Grid-connected vehicle technology is moving forward at a rapid 
pace. There are plug-in vehicle options available today, including the 
ones that are outside, and a significant number coming to market in the 
next three years.
    Major manufacturers have established ambitious vehicle timelines; 
battery manufacturers are looking to scale up production and 
electricity providers are making changes and plans for integrating 
vehicles into their customer base.
    I am going to mention some specific vehicles (it is not a complete 
list) that you will be seeing on the road in the next couple of years. 
Along the way I would like to clarify what the differences are in these 
emerging technologies and why it's important to keep that diversity in 
mind when you are building policies to help accelerate their adoption.
    As an introduction to the technology, let me explain that in 
``electric drive'' vehicles, electricity provides either all, or part, 
of the motive power that propels the vehicle. Electric drive vehicles 
are not just cars; they can be trucks, forklifts, scooters, buses, 
neighborhood electric vehicles and even trains. They can get power from 
the grid, or recharge on board.
    While there is enormous diversity in the technology, all the 
vehicles share a common benefit--they displace oil with electricity.
    There is tremendous flexibility in electric drive and, as this 
panel indicates, different technology and market paths are emerging. 
The focus here today is on vehicles that run on electricity from the 
grid. These vehicles can be battery electric or plug-in hybrid 
vehicles.
    Battery electric vehicles operate entirely on their electric drive 
motor and have various range and speed capabilities.
    For instance, thousands of low speed battery electric vehicles in 
use today, like the Global Electric Motorcars neighborhood electric 
vehicle, provide a petroleum-free option for urban commuters across the 
country. Electric motorcycles, such as the Vectrix maxi-scooter, which 
gets between 35 and 55 miles per charge on a nickel metal hydride 
battery, are changing the two-wheeled fleet.
    At the top end of the speed scale is the Tesla Roadster, which 
operates on lithium-ion battery technology. The Roadster can go to zero 
to 60 in just 4 seconds and can travel 220 miles on a charge. This car 
is available today and is the fore-runner of the company's planned line 
of battery electric sedans, the first of which is the Whitestar--that 
is being developed as--and priced more like--a family sedan.
    Nissan has made a commitment in their mid-term business plan to be 
``the leader in zero emissions vehicles'' and is rolling out a battery 
electric vehicle in late 2010. They plan for select fleet use at first 
and mass market introduction in 2012.
    Phoenix, Subaru and Zenn have both announced 2009 production plans 
for full-speed battery electric vehicles.
    Mitsubishi plans to produce a battery electric vehicle (the iMiEV) 
in 2010.
    Daimler has announced plans for serial production of battery 
electric Mercedes-Benz and smart cars in 2010 and has entered into a 
joint agreement to provide more than 100 in Berlin in 2009.
    The 2010 production model of GM's Volt is being unveiled in Detroit 
this morning. It is 4 door passenger vehicle with a range of about 40 
miles on a single charge, which would cover the average American's 
daily commute.
    The Volt, it is important to note, is a range-extended battery 
electric vehicle. Although it has an internal combustion engine, it is 
not a ``plug-in hybrid.'' The engine will only be used to provide 
backup power to the battery. It will not provide any propulsion, as the 
engines in plug-in hybrids do.
    Plug-in hybrid vehicles also connect to the grid, but include 
additional on-board power sources that can move, or assist the battery 
in moving, the vehicle.
    Some examples of these include the planned Saturn Vue plug-in 
hybrid, Ford's Plug-in hybrid Escape, and Toyota's Prius Plug-in Hybrid 
Vehicle. These manufacturers have all announced 2010 production plans.
    Hyundai is expanding its hybrid production over the next four years 
and is planning to commercialize plug-in hybrids sometime after 2013.
    We are excited about the expanding availability of plug-in electric 
drive options, but how quickly they reach commercial scale depends on a 
number of factors.
    First, there are technology challenges that manufacturers and 
energy suppliers must address. The most obvious is the performance and 
supply of new battery technologies. Some of the emerging plug-ins and 
the next generation of electric vehicles are likely to use lithium-ion 
batteries. These batteries, which are used today in laptop computers 
and mobile phones, hold more energy than their conventional 
counterparts. We need to ensure that they are also as durable, safe, 
and affordable as the vehicle market demands.
    We should also be working to make sure they are manufactured here 
in the United States.
    The shift to increasing electric drive technology also requires 
significant investment in manufacturing infrastructure by the vehicle 
and battery manufacturing industries. Large scale production of 
electric drive vehicles and components in the U.S. will require new 
materials, new processes and new production facilities.
    In the utility and energy industries, grid-connected transportation 
will also require changes in electricity infrastructure and business 
models. Utilities need to make infrastructure investments to upgrade 
the transmission grid to bring new renewable sources from remote 
locations to urban centers where the power is needed.
    They also will need to invest in smart meters to monitor the flow 
of electricity to the consumer household. These meters will allow 
consumers to recharge their vehicle batteries during off-peak times for 
energy savings. And, they potentially allow electricity providers to 
use the stored energy for load management.
    Policymakers can accelerate the shift toward electrification by 
working with us to address these challenges. Specifically, accelerating 
policies include:

   Market incentives, to help industries and consumers invest 
        in electric drive;
   Reliable R&D support to advance the technology; and
   Expanded demonstration and deployment in fleets.

    Market incentives are a powerful tool in promoting manufacturing 
development and making new technologies more affordable for consumers.
    To help buyers overcome the first-cost hurdle of new technologies 
and to build market acceptance, a performance-based consumer tax credit 
should be available for purchases of all plug-in electric drive 
vehicles.
    As I noted earlier, there are a variety of electric drive 
technologies in--and coming to--the market. Tax incentives should 
reward performance (in reducing petroleum consumption with electricity) 
without picking a winning configuration. The credit should include all 
grid-connected transportation options--including battery electrics and 
hybrids and including large vehicles and small ones. The threshold for 
eligibility should not prejudice the development of the technology. 
They all will play a role in advancing the technology, building 
consumer acceptance and promoting infrastructure development.
    Incentives also need to be provided upstream. Tax policies 
promoting the significant investments in electric drive technologies 
and facilities will accelerate the growth of the industry, for 
instance, by encouraging battery manufacturers to site their facilities 
in this country and by helping automakers to expand and establish their 
production facilities.
    The bipartisan bill, S. 1617, of which Senator Cantwell is a 
coauthor, captures the key elements of effective tax incentives for 
consumers and manufacturers. Some of the proposals emerging in these 
last few weeks have included refinements to the concept that EDTA could 
potentially support. There are also some new provisions being offered 
that would actually limit plug-in technology development and vehicle 
options. These we would oppose.
    Congress, and this Committee, included other critical support for 
electric drive in the 2007 energy bill, the Energy Independence and 
Security Act (EISA). EISA authorizes important grants, loan guarantees 
and direct loans to manufacturers of advanced vehicles and components.
    These programs can provide a real boost to domestic capacity--but 
only if they are actually funded. We hope that Congress acts as quickly 
as possible in making these programs a reality.
    In addition to market incentives, consistent and substantial 
federal investment in research and development will speed the 
development of necessary technologies.
    EISA authorized approximately $300 million/year for research, 
development and demonstration projects for electric drive efforts, 
including plug-in vehicle research, advanced battery research, and 
medium and heavy duty vehicle R&D. The bill also authorized substantial 
investments in smart grid research and development programs.
    These programs can make the difference in what is ``near-term'' 
technology and what is not. As I said previously, the sooner we can get 
these programs underway, the sooner we can address the technology and 
infrastructure challenges that come with rethinking transportation.
    Along with R&D, Federal, state and local governments can expand 
efforts to deploy electric drive vehicles in private and public fleets. 
These ``real world efforts'' provide energy and environmental 
benefits--and they also help to identify what works well and what needs 
to be improved in a new technology.
    Federal support for demonstration projects can help utilities and 
manufacturers work together to demonstrate grid-connected technologies. 
Today, Ford, Johnson Controls and Southern California Edison are 
partnering on a demonstration of the plug-in hybrid Escape. GM is 
working with EPRI and a group of utilities to address the 
infrastructure and charging issues raised by plug-in vehicles.
    These kind of collaborative efforts are critical to launching a 
transportation shift that requires changes in vehicles, in fuel 
providers and even drivers.
    This is just a sampling of the work that the electric drive 
industry is doing to bring grid-connected vehicles to production, grow 
them to commercial scale and prepare the grid for a plug-in vehicle 
future. Working together with policymakers, we can make it happen even 
sooner and realize the economic, security and environmental benefits of 
displacing oil with electricity.
    I thank you for the opportunity to testify today and look forward 
to answering any questions you may have.

    The Chairman. Thank you very much.
    Mr. Kjaer, go right ahead.

STATEMENT OF EDWARD KJAER, DIRECTOR OF ELECTRIC TRANSPORTATION, 
        SOUTHERN CALIFORNIA EDISON COMPANY, ROSEMEAD, CA

    Mr. Kjaer. Good morning. Chairman Bingaman, Ranking Member 
Domenici, members of the committee, my name is Edward Kjaer and 
I am the Director of Electric Transportation at Southern 
California Edison. Thank you for the opportunity to speak 
briefly to you today.
    For over 20 years, Edison has been a leading supporter of 
electric transportation. Today Edison operates the Nation's 
largest and most successful private fleet of electric vehicles, 
having traveled over 16 million EV miles on electric power.
    Our Electric Vehicle Technical Center, unique in the 
utility industry, is one of only several facilities recognized 
by the United States Department of Energy to evaluate all forms 
of electro-drive technology.
    Edison is working in partnership with EPRI and automakers 
such as Ford, General Motors, Mitsubishi, and others to 
evaluate and demonstrate prototype plug-in vehicles and their 
connection with and control by the grid.
    So what are some of the challenges we face as we connect 
transportation to the grid?
    First, helping the industry get to a sustainable business 
case. The stark reality is that while most major automakers are 
working to develop and commercialize plug-in vehicle 
technology, few see a sustainable business case without 
critical Government, State, NGO, and private sector incentives 
and support. Simply put, without adequate and sustained 
incentives, many of which Mr. Wynne has just referred to, and 
support, there is no guarantee that we can quickly transition 
from early adoption low volumes to the mass market high volumes 
we need in the marketplace.
    The second challenge is getting multiple markets plug-in 
vehicle ready. Edison Electric Institute held a utility CEO 
Transportation Taskforce meeting several days ago, chaired 
jointly by our Chairman, Ted Craver, and Progress Energy CEO 
Bill Johnson. The goal is to generate industry-wide support for 
appropriate and sustained plug-in vehicle policy in partnership 
with EDTA, automakers, and major vehicle launch markets. In 
addition, the utilities will and are working with their local 
States to develop sustainable incentives to attract automakers 
to launch plug-in vehicles in their respective markets.
    The third challenge is creating industry standards for 
effective load control of plug-in vehicles. Today the electric 
grid is changing dramatically across the country. We are seeing 
the development of smart grid technologies designed to improve 
the reliability and efficiency of the electrical system while 
at the same time delivering more customer control of their 
energy use and ultimately their monthly energy bill.
    Part of this effort is so-called smart meters. Edison will 
deploy 5 million next generation advanced meters called Edison 
SmartConnect by 2012. Smart meters will help control vehicle 
fueling load, optimizing it to generation plant utilization and 
infrastructure needs. This real-time control will be achieved 
through vehicle and grid communications, customer rates and 
incentives and other technologies designed to optimize the 
integration of transportation into the energy system. Edison, 
in partnership with EPRI, leading automakers and the Society of 
Automotive Engineers, is working to socialize industry-wide 
vehicle and grid communication requirements today.
    The fourth challenge is products and technologies to test 
in the utility lab. Today we have several plug-in vehicle 
prototypes and more coming to Edison's unique EV Technical 
Center. However, we have virtually no data on the communication 
and load control of plug-in vehicles. It is critical that we 
get industry stakeholders together to fully vet the emerging 
technologies and communication protocols before they are 
implemented in vehicle design.
    The fifth challenge is addressing the high cost of 
batteries. Edison is actively exploring whether advanced 
batteries developed for the auto industry have other uses 
outside of the vehicle for stationary applications such as 
emergency backup and home energy storage. The vision is to 
combine early market battery volumes for the automakers and 
potentially for the utilities to help reach economies of scale 
faster, helping to strengthen the business cases for plug-in 
vehicles in the early years.
    The sixth challenge is addressing the needs of home and 
public refueling infrastructure. Edison, EPRI and the 
automakers are working to assess the infrastructure needs of 
plug-in vehicles. The industry is working to finalize a single 
connector standard and working on a single communication 
standard, as I have mentioned. Additionally, markets around the 
country are determining the need for public charging and in 
some areas have already committed to construction. Again, 
successfully deploying appropriate infrastructure will likely 
need both policy and financial support in the early years.
    The seventh and final challenge is integration of smart 
grid technology and future electric transportation. Smart grid 
technology is required for the long-term vision of so-called 
vehicle-to-grid systems and energy storage systems where 
millions of batteries, both in the vehicles and in stationary 
applications, have the capacity to move stored energy backward 
and forwards in the grid.
    But these applications are many years away. First, we must 
get the batteries to simply drive the wheels and last the life 
of the vehicle reliably. We believe that with continued 
engineering advances and appropriate public policy support, the 
widespread use of advanced batteries in plug-in vehicles and in 
stationary storage applications will become one of the Nation's 
most effective strategies in the broader effort to address 
energy security, reduce greenhouse gas emissions and reduce air 
pollution.
    We congratulate the committee for the work you did last 
year on the energy bill. Of course, now we need to secure 
appropriations for the provisions authorized in 2007.
    We also need Congress to pass legislation providing for 
consumer tax incentives and tax credits for renewables and 
accelerated depreciation of smart meters. The House and Senate 
have passed their own bills, but so far haven't reached 
agreement. Even before all this, though, we need manufacturing 
incentives to encourage a domestic supplier and production 
base, as Mr. Wynne mentioned.
    Edison is committed, as we have been for almost 20 years 
now, to working with the committee, industry organizations such 
as EDTA, EEI, EPRI, and Federal and State agencies to realize a 
plug-in transportation future.
    Thank you.
    [The prepared statement of Mr. Kjaer follows:]

       Prepared Statement of Edward Kjaer, Director of Electric 
    Transportation, Southern California Edison Company, Rosemead, CA
    Chairman Bingaman, Ranking Member Domenici, Members of the 
Committee, my name is Edward Kjaer and I am the Director of Electric 
Transportation at Southern California Edison.
    Thank you for the opportunity to speak to you today.
    Let me begin by describing the efforts of Southern California 
Edison and our industry associations to address the challenges we face 
over the next two to three years integrating transportation in to the 
electric energy system.
    For over 20 years Edison has been a leading supporter of electric 
transportation. Initially, this support was based on the need to clean 
up the air quality in California. Since then however it has become 
clear that this nation has a significant energy security challenge and 
a growing concern around climate change. As a recent EPRI study 
demonstrated, electrifying the wheels of this nation's transportation 
future could be the single biggest move we make to reducing our 
dependence on foreign oil, reducing CO2 and improving the air we all 
breathe.
    Today, Edison operates the nation's largest and most successful 
private fleet of electric vehicles, having traveled more than 16 
million miles on electric power.
    Our Electric Vehicle Technical Center, unique in the utility 
industry, is one of only several facilities recognized by the U.S. 
Department of Energy to evaluate all forms of electro-drive technology. 
It is an ISO-certified facility that is widely known for its battery 
and prototype plug-in vehicle testing. Now the Center is focused on 
evaluating ``smart charging'' and building industry-wide consensus 
around vehicle/grid connection, communication and control in 
conjunction with next generation utility advanced meters.
    To this end, last year SCE and Ford announced an industry leading 
collaborative to help evaluate and demonstrate plug-in hybrids (PHEVs) 
and their connection and control by the grid. EPRI was added to this 
partnership in April 2008 and they are now identifying up to seven 
major utilities across the country willing to participate and co-fund 
this first-of-a-kind program. The U.S. Department of Energy (DOE) is 
providing up to $10 million in co-funding support for this important 
effort.
    In addition, SCE is part of a broad 37 utility partnership with 
EPRI and General Motors working to prepare the retail market for the 
upcoming and much anticipated Chevy Volt and Saturn Vue plug-in 
vehicles.
    Recently Mitsubishi and SCE announced a partnership to evaluate and 
demonstrate Mitsubishi's new iMiEV battery EV prototypes. This vehicle 
will go into production in 2009 in Japan and Mitsubishi is assessing 
the U.S. market for EVs. I was in Japan meeting with automakers several 
weeks ago and I had the opportunity to test drive the iMiEV. I'm very 
excited about the potential of this vehicle here in the U.S.
    Nissan is also intending to launch EVs to the U.S. market in the 
2010-2012 timeframe. Other automakers have announced either research, 
prototype demonstration or production programs for plug-in vehicles 
including Toyota, BMW, Daimler, Chrysler, Audi, Think and Tesla Motors 
to name a few.
    SCE will shortly announce additional automaker partnerships as we 
continue to collaborate with the auto industry, helping ensure that the 
grid is ready to connect, fuel and control mass market volumes of plug-
in vehicles.
    What are some of the challenges utilities face however as we 
connect transportation to the grid?

          1. Helping industry get to a sustainable business case.--The 
        stark reality is that while most major automakers are working 
        to develop and commercialize plug-in vehicle technology, few 
        see a ``sustainable'' business case without critical 
        Government, State, NGO and private sector support. Brian Wynne 
        from Electric Drive Transportation Association (EDTA) has 
        touched on the importance of early market Federal and State 
        incentives to encourage domestic jobs through a robust 
        manufacturing and supplier base as well as consumer incentives 
        to help buy down the early introduction cost of these 
        inherently more expensive technologies. Without adequate 
        support there is no guarantee that we can quickly transition 
        from early adoption low volumes to the mass market high volumes 
        we need to sustain this technology in the marketplace.
          2. Getting multiple markets ``plug-in vehicle ready''.--
        Edison Electric Institute (EEI) held a utility CEO 
        Transportation Taskforce meeting several days ago chaired 
        jointly by our Chairman, Ted Craver and Progress Energy CEO 
        Bill Johnson. This taskforce of major investor owned utility 
        CEOs is now working to engage utilities across the country in 
        the electric transportation movement. The goal is to generate 
        industry-wide support for appropriate and sustained plug-in 
        vehicle policy in partnership with EDTA, automakers and major 
        vehicle launch markets.
          3. Creating industry standards for effective load control of 
        plug-in vehicles.--Today the electrical system is changing 
        dramatically across this country. We are seeing the development 
        of ``smart grid' technologies designed to improve the 
        reliability and efficiency of the electrical system while at 
        the same time delivering more customer control of their energy 
        use and ultimately their monthly energy bill. Edison will 
        deploy 5 million next generation advanced meters called Edison 
        SmartConnect TM by 2012. These meters will help 
        Edison and our customers manage the energy system. With plug-in 
        vehicles we do not see a large system-wide challenge fueling 
        the vehicles however we do see early adopter concentrations of 
        vehicles that may challenge the local distribution system in 
        some areas. To effectively and efficiently manage the system, 
        utilities will want to ``control'' vehicle fueling load, 
        optimizing it to generation plant utilization and 
        infrastructure needs. This real time control will be achieved 
        through vehicle and grid ``communications'', customer rates and 
        incentives and other technologies designed to optimize the 
        integration of transportation in to the energy system. Edison, 
        in partnership with EPRI, leading automakers and the Society of 
        Automotive Engineers (SAE) is working to socialize industry 
        wide vehicle/grid ``communication'' requirements'' today. But 
        there is still much work to be done and very little research 
        and evaluation data available.
          4. Products and technologies to test in the utility lab.--As 
        mentioned, Edison has a unique EV Technical Center that is 
        exploring the convergence of transportation and grid 
        technologies. Today we have several plug-in vehicle prototypes 
        and more coming. We have been bench testing advanced lithium 
        battery modules for over three years now in the lab. However we 
        have virtually no data on the communication and load control of 
        plug-in vehicles. It's critical that we get industry 
        stakeholders together to fully vet the emerging technologies 
        and communication protocols before they are implemented in 
        vehicle design.
          5. Addressing the high cost of batteries.--Edison is actively 
        exploring whether advanced batteries developed for the auto 
        industry have other uses and system benefits for the electrical 
        grid such as emergency backup and energy storage. To develop 
        data in this area, Edison has recently constructed a ``Garage 
        of the Future'' lab at our EV Technical Center. This lab will 
        begin modeling the convergences of residential PV, home energy 
        storage devices, vehicle energy storage and advanced meter 
        control and communication. By combining battery volumes for the 
        automakers and potentially the utilities, we may reach 
        economies of scale faster, helping to strengthen the business 
        cases for plug-in vehicles in the early years.
          6. Addressing the needs of home and public refueling 
        infrastructure.--Edison, EPRI and the auto makers are working 
        to assess the needs of plug-in vehicles. Battery EVs, because 
        of their 240 V charging requirements, dictate the need for more 
        complex infrastructure development that the plug-in hybrid 
        charging at 110 V. The industry is working to finalize a single 
        connector and connection standard. Additionally markets around 
        the country are determining the need for public charging and in 
        some areas have already committed to construction. Again 
        successfully deploying appropriate infrastructure will likely 
        need both policy and financial support in the early years.
          7. Integration of smart grid technology and future electric 
        transportation.--Smart grid technology is required for the 
        long-term vision of so-called ``vehicle-to-grid'' systems, and 
        energy storage systems where millions of batteries both in the 
        vehicles and in stationary applications have the capacity to 
        move stored energy back to the grid.
          In essence, these mini power plants become integrated into 
        the future energy system as distributed energy resources. Plug-
        in vehicles and even stationary batteries may further enhance 
        electrical system reliability by providing temporary power to a 
        homeowner when outages do occur.

    Plug-in vehicle technologies are not just for passenger vehicles. 
In fact, in the near term, we are likely to see significant growth in 
heavy duty trucks, buses, seaports, airports and truck stop 
electrification. For instance, SCE has one of about 25 prototype heavy 
duty hybrid utility bucket trucks built by Eaton and International that 
are presently being tested. A medium duty plug-in hybrid is also being 
built on a Ford 550 Chassis by Eaton and EPRI. SCE expects to have its 
prototype by the end of this year. These technologies also require 
public policy support.
    We believe that with continued engineering advances and appropriate 
public policy support, the widespread use of advanced batteries in 
plug-in vehicles and in stationary storage applications will become one 
of the nation's most effective strategies in the broader effort to 
address energy security, reduce greenhouse gas emissions and reduce air 
pollutants.
    We congratulate this Committee for the work you did on last year's 
energy bill. Let us just take a minute and recall all the good things 
that bill achieved last year.

          i. $295 million per year for six different R&D programs on 
        electric transportation including both vehicles and stationary 
        energy storage applications.
          ii. $95 million in grants per year for transportation 
        electrification, such as truck stops and ports.
          iii. $90 million per year for early demonstrations of PHEVs 
        and battery EVs.
          iv. Grants and loans for manufacturing PHEVs, BEVs, and EV 
        components in the United States and grant funds for PHEV smart 
        grid investment costs.

    Of course now we need to secure appropriations for these 
provisions. We also need Congress to pass legislation providing for 
consumer PHEV tax credits, as well as tax credits for renewables and 
accelerated depreciation of smart meters. The House and Senate have 
passed their own bills, but so far haven't reached agreement. We need 
appropriations for fleet acquisition incentives to help buy down early 
costs to fleet operations of this new technology. Even before all of 
this, though, we need manufacturing incentives to encourage a domestic 
supplier and production base.
    Edison is committed to working with this Committee, industry 
organizations such as EDTA, EEI, EPRI and Federal and State agencies to 
realize a plugged-in transportation future. These and other 
organizations help bring together automakers, utilities and industry 
stakeholders so we can effectively address the common energy and 
environmental concerns of this country.
    Thank You.

    The Chairman. Thank you very much.
    Mr. Wimmer, go right ahead.

  STATEMENT OF ROBERT WIMMER, NATIONAL MANAGER, TOYOTA MOTOR 
                         NORTH AMERICA

    Mr. Wimmer. I would like to thank Chairman Bingaman and the 
Senate Energy Committee for inviting Toyota to testify at this 
hearing on a topic we feel passionately about, electric drive 
vehicles.
    Though the average price of a gallon of gasoline has 
declined from record highs over the summer, consumers continue 
to demand greater fuel efficiency in their vehicles. This has 
led to an increased interest in vehicle electrification as a 
way to reduce petroleum consumption.
    But as far back as the early 1990s, when a gallon of 
gasoline was less than $1.50 a gallon, Toyota was investing in 
vehicle electrification by developing both hybrid and battery 
electric automobiles. This type of forward thinking is 
summarized in the phrase, ``Today for Tomorrow.'' Said another 
way, think for the future, but act now. This is one of Toyota's 
core philosophies and the basis for our environmental vision.
    Since Toyota introduced our first hybrid, the Prius, in 
Japan in 1997, we have sold over 1.5 million hybrids around the 
globe. These vehicles have saved over 660 million gallons of 
gasoline and eliminated 13 billion pounds of CO2 
emissions. In the United States, fuel savings alone have saved 
Americans nearly $1 billion.
    Once considered science experiments by some and novelties 
by others, hybrids are now mainstream vehicles for Toyota. We 
currently sell 6 fuel-saving hybrids in the United States, 3 
Toyota and 3 Lexus models, and they account for over 10 percent 
of our United States sales. Next January in Detroit, we will 
introduce our third generation Prius, plus an all-new dedicated 
Lexus hybrid vehicle.
    Future hybrid goals include global sales of a million a 
year in the next decade, and sometime in the 2020s, we expect 
hybrid drivetrains to be offered as either standard or optional 
equipment in all of our passenger vehicles.
    Hybrid is a core technology for Toyota and will serve as 
the foundation for the next generation of vehicles such as 
plug-ins, battery electrics, and fuel cells. This evolution of 
mainstream technology will allow us to shorten development time 
and maximize use or shared components that will result in lower 
production costs and broader market penetration of these new 
technologies.
    When considering the benefits of new technologies, we must 
understand the relationship between sales volume and fuel 
savings. For example, if we doubled sales of a hybrid model, 
the cumulative fuel savings is greater than doubling its fuel 
economy with no change in sales volume. Therefore, it is 
critical that new technologies, such as plug-ins, battery 
electrics, or fuel cells, are introduced at a price point and 
utility that allow for high volume sales. Otherwise, their 
petroleum savings and environmental benefit will be negligible.
    Mass market appeal is the basic philosophy behind the plug-
in prototype Prius we have on display today. With minimal 
software changes and the addition of a second battery pack, the 
vehicle demonstrates the plug-in potential of Toyota's hybrid 
vehicle design. The vehicle operates in a manner similar to the 
current Prius, switching between electric mode to gas engine 
mode to a blended gas/electric mode. The larger battery allows 
the plug-in Prius to store greater amounts of electricity and 
to be charged by plugging into a standard electrical outlet. 
With more power in reserve, the vehicle is capable of operating 
in pure electric mode for longer periods of time and speeds up 
to 60 miles an hour. This means substantial gains in fuel 
economy and a reduction in total tailpipe emissions versus 
conventional hybrid systems.
    Battery experts have estimated the cost of batteries for 
plug-in hybrids to be between $500 and $1,000 per kilowatt 
hour. As such, the size of the battery pack will greatly 
influence the retail price of the vehicle and therefore its 
market viability and sales potential.
    The energy tax package, released by the Finance Committee, 
places an arbitrary 6 kilowatt hour minimum on battery pack 
size and redefines plug-in electric vehicles to seemingly 
eliminate the consumer tax credit for all but one plug-in 
vehicle design. Toyota believes this approach is 
counterproductive. It will discourage manufacturers from 
developing and consumers from purchasing blended plug-ins that 
are affordable to the greatest number of consumers. We believe 
consumer incentives should encourage all plug-in designs and 
allow the consumer market to select winners not legislation.
    Before high-volume production can begin, significant 
challenges such as battery cost, durability, and safety must be 
addressed. We intend to examine these issues when we introduce 
our next generation plug-in hybrid with lithium-ion batteries 
as a 2010 model. A significant number of these vehicles will be 
deployed in commercial fleets around the world to help Toyota 
quantify real-world durability and performance and customer 
acceptance.
    To realize the full promise of plug-in hybrids or battery 
electric vehicles, they must use green electricity. From an 
energy security standpoint, certainly any substitution of 
domestically produced electricity for gasoline is beneficial. 
Carbon reduction, on the other hand, varies greatly depending 
on how the electricity is generated. In France, where over 80 
percent of the electricity comes from nuclear power, the plug-
ins and battery electrics can significantly reduce carbon 
emissions. On the other extreme, if the electricity comes 
mostly from coal-fired plants, the reduction in carbon 
emissions is modest at best.
    Let me conclude with a brief description of Toyota's fuel 
cell hybrid vehicle, another evolution of our basic hybrid 
drive technology. This vehicle is based on the previous 
generation Toyota Highlander SUV but with a fuel cell, one of 
Toyota's own design and manufacture in place of the 
Highlander's gasoline engine. The combination of an advanced 
fuel cell system with our hybrid drive technology more than 
doubles the vehicle's fuel efficiency with zero tailpipe 
emissions.
    As with plug-ins, challenges must be resolved before fuel 
cell commercialization can begin. Costs must drop significantly 
while system power density and durability must increase. Also, 
a coordinated effort is required between the auto industry and 
energy providers and governments to assure hydrogen refueling 
infrastructure is in place to support fuel cell vehicle 
development.
    So why does Toyota continue to invest millions in long-term 
technologies? It goes back to our ``Today for Tomorrow'' 
philosophy that drives us to develop technologies and products 
today that improve society for tomorrow.
    I would again like to thank Senator Bingaman and the Senate 
Energy Committee for inviting Toyota to be part of this 
hearing.
    [The prepared statement of Mr. Wimmer follows:]

  Prepared Statement of Robert Wimmer, National Manager, Toyota Motor 
                             North America
    I am Robert Wimmer, a National Manager in Toyota's Washington DC 
office, working on energy and environmental research, and with over 15 
years' experience in hybrid and fuel cell vehicle development. I would 
like to thank Chairman Bingaman and the Senate Energy Committee for 
inviting Toyota to testify at this hearing on a topic we feel 
passionately about: Electric Drive Vehicles.
    Though the average price of a gallon of gasoline has declined from 
record highs over the summer, consumers continue to demand greater fuel 
efficiency in their vehicles. This has led to an increased interest in 
vehicle electrification as a way to reduce petroleum consumption. But, 
as far back as the early-1990's when a gallon of gas cost less than 
$1.50/gallon, Toyota was investing in vehicle electrification by 
developing both hybrid and battery electric automobiles.
    This type of forward thinking is summarized in the phrase ``TODAY 
for TOMORROW.'' Said another way--think for the future, but act now. 
This is one of Toyota's core philosophies and the basis for our 
environmental vision.
    Over the last 15 years of hybrid development, we have established 
more than 700 hybrid patents and hybridized more than a dozen vehicle 
models globally. Perhaps more importantly, we believe hybrid technology 
will be the foundation for our emerging electric propulsion systems.
    Since Toyota introduced our first hybrid, the Prius in Japan in 
1997, we have sold over 1.5 million hybrids around the globe. These 
vehicles have saved over 660 million gallons of gasoline and eliminated 
13 billon pounds of CO2 emissions. In the US, fuel savings 
alone have saved Americans nearly a billion dollars.
    Once considered science experiments by some and novelties by 
others, hybrids are now mainstream vehicles for Toyota. We currently 
sell six fuel-saving hybrids in the US--3 Toyota and 3 Lexus models, 
and they account for over 10% of our US sales. Next January in Detroit, 
we will introduce our third-generation Prius plus an all-new dedicated 
Lexus hybrid vehicle.
    Future hybrid goals include global sales of a million a year in the 
next decade. And sometime in the 2020s, we expect hybrid drivetrains to 
be offered as either standard or optional equipment in all our 
passenger vehicles.
    Hybrid is a core technology for Toyota and will serve as the 
foundation for the next generation of vehicles such as plug-ins, 
battery electrics and fuel cells. This evolution of mainstream 
technology will allow us to shorten development time and maximize use 
of shared components that will result in lower production costs and 
broader market penetration for these new technologies.
    When considering the benefits of new technologies, we must 
understand the relationship between sales volume and fuel savings. For 
example, if we double sales of a hybrid model, the cumulative fuel 
savings is greater than doubling its fuel economy with no change in 
sales volume. Therefore, it is critical that new technologies, such as 
plug-ins, battery electrics or fuel cells, are introduced at a price 
point and utility that allow for high volume sales. Otherwise, their 
petroleum savings and environmental benefit will be negligible.
    Mass market appeal is the basic philosophy behind the prototype 
plug-in Prius we have on display today. With minimal software changes 
and the addition of a second battery pack, the vehicle demonstrates the 
plug-in potential of Toyota's hybrid design.
    The vehicle operates in a manner similar to the current Prius, 
switching from pure-electric mode, to gas-engine mode, to a blended 
gas-electric mode. The larger battery allows the plug-in Prius to store 
greater amounts of electricity and to be charged by plugging into a 
standard household electrical outlet. With more electric power in 
reserve, the vehicle is capable of operating in pure-electric mode for 
longer periods of time and at speeds up to 60 mph. That means 
substantial gains in fuel economy and a reduction in total tailpipe 
emissions versus current conventional hybrid systems.
    Similar vehicles were recently given to two California universities 
for research and testing to evaluate real-world customer use, to help 
determine the optimal balance between electric mode range, charge time, 
battery size and cost.
    Battery experts have estimated the cost of batteries for a plug-in 
hybrid to be $500-$1000/kW-hr. As such, the size of the battery pack 
will greatly influence the retail price of the vehicle and therefore, 
its market viability and sales potential. The Energy Tax package 
released late last week by the Finance Committee places an arbitrary 
6kW-hr minimum on pack size before receiving a consumer tax credit. 
Toyota believes this is counterproductive. It will discourage 
manufacturers from developing smaller, lower cost plug-ins that are 
affordable to the greatest number of consumers. Toyota agrees the 
amount of tax credit should be based on battery size, but it should 
begin at approximately two times the size of a typical hybrid battery, 
1.2-2.0 kW-hr. This way the consumer market will drive plug-in vehicle 
design, not legislation.
    Before high-volume production can begin, significant challenges 
such as battery cost, durability and safety must be addressed. We 
intend to examine these issues when we introduce our next generation 
plug-in hybrid with Li-Ion batteries as a 2010 model. A significant 
number of these vehicles will be deployed in commercial fleets around 
the world to help Toyota quantify real-world durability, performance 
and customer acceptance.
    Toyota is also re-examining battery electric vehicles. Between 1998 
and 2003 Toyota delivered more than 1200 RAV4-EVs to customers in 
Arizona and California. Many of these were sold--not leased--to the 
general public, making Toyota the only Original Equipment Manufacturer 
at the time to sell full-performance EVs. With many of these still on 
the road and millions of miles of cumulative experience, Toyota 
understands the opportunities and challenges of producing and marketing 
battery EVs.
    To realize the full promise of plug-in hybrids or battery electric 
vehicles, they must use green electricity. From an energy security 
standpoint, certainly any substitution of domestically produced 
electricity for gasoline is beneficial. Carbon reduction, on the other 
hand, varies greatly depending how the electricity is generated. In 
France, where over 80% of the electricity comes from nuclear power, 
plug-ins and battery electrics can significantly reduce carbon 
emissions. On the other extreme, if the electricity comes mostly from 
coal fired plants, the reduction of carbon emissions is modest at best.
    Let me conclude with a brief description of Toyota's Fuel Cell 
Hybrid Vehicle . . . another evolution of our basic hybrid drive 
technology. This vehicle is based on the previous-generation Toyota 
Highlander Hybrid SUV but with a fuel cell, of Toyota's own design and 
manufacture, in place of the Highlander's gasoline engine. The 
combination of an advanced fuel cell system with our hybrid drive 
technology more than doubles the vehicle fuel efficiency with zero 
tailpipe emissions.
    Toyota has made great progress over the last decade improving fuel 
cell technology. Our next generation fuel cell vehicle will be able to 
start from -30 degrees Centigrade and will have a driving range of over 
400 miles between refuelling.
    As with plug-ins, challenges must be resolved before fuel cell 
commercialization can begin. Cost must drop significantly, while system 
power density and durability must increase. Also, a coordinated effort 
is required between the auto industry, energy providers and governments 
to assure a hydrogen refuelling infrastructure is in place to support 
fuel cell vehicle deployment.
    So, why does Toyota continue to invest millions in a technology 
like fuel cells, which is more than a decade away from commercial 
viability? It goes back to our ``Today for Tomorrow'' philosophy that 
drives us to develop technologies and products Today to improve society 
Tomorrow.
    I would again like to thank Senator Bingaman and the Senate Energy 
Committee for inviting Toyota to be part of this hearing and am happy 
to take your questions.

    The Chairman. Thank you very much.
    Mr. Dalum, go ahead.

STATEMENT OF JOSEPH T. DALUM, VICE PRESIDENT, DUECO, WAUKESHA, 
                               WI

    Mr. Dalum. Good morning, Chairman Bingaman, Ranking Member 
Domenici, and distinguished committee members. Thank you for 
inviting me here today.
    My name is Joe Dalum and I am Vice President of DUECO. 
DUECO, headquartered in Waukesha, Wisconsin, is one of the 
largest final-stage manufacturers of utility trucks in the 
country. We produce aerial devices, digger derricks, and cranes 
that are sold to electric utilities for the maintenance of 
their power lines. DUECO also provides equipment and services 
for the telecommunications market, other industries, and the 
government.
    In 2006, DUECO began to assess alternative hybrid 
technologies, which led to a collaborative effort between DUECO 
and Odyne Corporation, a developer of plug-in hybrid electric 
vehicle powertrains for medium- and heavy-duty trucks that 
weigh over 16,000 pounds. Our efforts resulted in the 
introduction of the utility industry's first commercial plug-in 
hybrid medium-duty truck in the fall of 2007.
    While you have already received my more extensive written 
testimony, this morning I will focus on our development of 
plug-in hybrid medium- and heavy-duty trucks.
    There are several factors that favor the introduction of 
plug-in hybrid trucks, including rising fuel prices, increased 
pressure to reduce emissions, including greenhouse gas 
emissions, and the national priority to improve energy 
security. The photo in my written testimony shows a plug-in 
hybrid heavy-duty bucket truck used to help maintain power 
lines. I invite you to see a similar plug-in truck on display 
outside today.
    The truck is unique in that a very large battery system of 
approximately 35 kilowatt hours, more than 15 times larger than 
one used in a conventional hybrid, provides power to help 
propel the vehicle along with a diesel engine and provides 
power for equipment on the truck. When the truck returns to the 
garage, domestically generated electricity recharges the 
battery system, offsetting the need for petroleum. The size of 
the battery system and the ability to recharge using grid power 
differentiates the plug-in hybrid system from a conventional 
hybrid. Using energy from the large battery system reduces fuel 
consumption and emissions during driving and provides for an 
all-electric stationary mode. The system completely eliminates 
fuel consumption and emissions at the job site for a typical 
day while also reducing noise.
    Fuel savings and corresponding reduction in greenhouse gas 
emissions are dependent upon the application. The current 
vehicle reduces fuel consumption, resulting in an estimated 
savings of approximately 1,400 gallons of fuel per year per 
vehicle for a typical utility application, or approximately 
20,000 gallons of fuel over the projected life of the vehicle.
    DUECO plans to deploy 25 plug-in hybrid trucks to early 
adopters for evaluation, 10 of them produced to date. Our first 
unit was delivered earlier in the year. Several major utilities 
will test the units soon. We plan to ramp up production 
significantly in 2009 and beyond and expand the use of the 
technology into other applications.
    Other manufacturers are also working on development of 
plug-in hybrid trucks. There are several challenges that affect 
wide-scale deployment of plug-in hybrid trucks, including 
battery system cost and performance challenges, infrastructure 
requirements for charging large numbers of high-capacity 
battery systems, and high costs for research, development, and 
investment in production systems.
    DUECO encourages the Federal Government to implement 
programs that help the development of plug-in hybrid systems 
for medium- and heavy-duty trucks that are open to final stage 
manufacturers and other entities. The creation of tax 
incentives for customers, loan guarantee programs to support 
investment, and modification of Government purchasing policies 
to favor the acquisition of plug-in hybrid trucks can also 
accelerate deployment.
    Commercial fleets consume large amounts of fuel. Developing 
more efficient trucks that utilize domestically sourced power 
from the Nation's energy grid would have several benefits. The 
development of this technology in the United States would 
provide opportunities for job creation, export opportunities, 
reduce the cost for businesses competing in a global market, 
reduce greenhouse gas emissions and emissions of other 
pollutants, reduce dependency on foreign oil, reduce noise 
within our cities, and potentially improve productivity for 
certain applications such as electric crews who could perform 
work at night in residential areas.
    This is potentially an historic opportunity to develop and 
deploy the technology needed for the electrification of medium- 
and heavy-duty trucks. I ask for your support of the proposed 
measures outlined in my written testimony and legislation such 
as the Heavy-Duty Hybrid Vehicle Act that would help to 
accelerate research in the plug-in hybrid technology and 
encourage partnerships between manufacturers, utilities and the 
government.
    Thank you.
    [The prepared statement of Mr. Dalum follows:]

     Prepared Statement of Joseph T. Dalum, Vice President, DUECO, 
                              Wakuesha, WI
                              introduction
    Good morning Chairman Bingaman, Ranking Member Domenici, and 
distinguished members of the Committee on Energy and Natural Resources. 
Thank you for inviting me here today. Also thank you for the 
opportunity to offer the views of DUECO and for soliciting the views of 
others on the current state of vehicles powered by the electric grid 
and the prospects for wider deployment in the near future.
    My name is Joe Dalum, and I am Vice President of DUECO. 
Headquartered in Waukesha Wisconsin, DUECO is one of the largest final 
stage manufactures of utility trucks in the country, with facilities 
also located in South Dakota, Minnesota, Indiana, Ohio and 
Pennsylvania. We produce aerial devices, digger derricks and cranes 
that are sold to electric utilities for the maintenance of their 
transmission and distribution power lines in a 15 state region and are 
also used by utilities throughout the country through UELC, our rental 
and leasing company, with direct facilities in Florida, Texas and 
California. DUECO also provides equipment and services for the 
telecommunications, contractor, electric cooperative, municipality, gas 
utility and tree care markets.
    In 2006, DUECO began to assess alternative hybrid vehicle 
technologies. Those activities lead to a collaborative development 
program between DUECO and Odyne Corporation. Odyne Corporation is a 
developer of Plug-In Hybrid Electric Vehicle (PHEV) power trains for 
medium and heavy duty trucks that weigh over 16,000 pounds. Our efforts 
resulted in the introduction of the utility industry's first commercial 
plug-in hybrid medium duty truck in the Fall of 2007.
    Trucks consume a disproportionately large amount of fuel. Plug-in 
hybrid technology can substantially reduce fuel consumption, emissions 
and noise for many truck applications. Electricity, generated from 
domestic sources, partially displaces the use of petroleum. The 
technology is particularly beneficial for trucks that can be positioned 
close to the power grid when not in use to allow for recharging, are 
operated in stop and go driving, and/or idle for extended periods.
    Plug-in hybrid technology for medium and heavy duty trucks is in 
the very early stages of testing and deployment. Low production volume 
and high cost threaten wide-scale adoption. In order to rapidly 
accelerate the use of plug-in hybrid trucks in the next five years, a 
large increase in resources directed toward research, development, 
engineering and production will be required.
    A close partnership between manufacturers, utilities and the 
government can help increase wide-scale deployment of plug-in hybrid 
medium and heavy duty trucks. The government in particular can help 
accelerate the use of plug-in hybrid trucks by providing additional 
funding for research, by creating incentives for consumers to purchase 
medium and heavy duty plug-in hybrids through tax credits, by 
supporting private investment through loan guarantees and by 
encouraging federal, state and local governments to purchase medium and 
heavy duty plug-in hybrid trucks. The U.S. can lead the world in plug-
in hybrid technology for medium and heavy duty trucks if we take strong 
and decisive action now.
                               background
    According to the Department of Energy, approximately 80 percent of 
all the goods transported in the U.S. are moved by truck. In total, the 
U.S. consumed approximately 140 billion gallons of gasoline and about 
40 billion gallons of diesel fuel for on-road transportation in 2004. 
Trucks consume billions of gallons of fuel annually, and ``there exists 
today great potential from several heavy-duty hybrid truck technologies 
to significantly reduce fuel consumption and emissions.''\1\ Plug-in 
hybrid technology is one of the technologies that have great potential 
to reduce fuel consumption for large numbers of trucks.
---------------------------------------------------------------------------
    \1\ Testimony for the U.S. House Committee on Science and 
Technology, Energy and Environment Subcommittee, prepared Statement of 
Terry Penney Technology Manager, Advanced Vehicle Technologies, 
National Renewable Energy Laboratory, June 10, 2008
---------------------------------------------------------------------------
    Truck fuel economy, power requirements and duty cycles often can 
differ depending upon the application. A duty cycle, the proportional 
time during which a truck is operated, in particular varies depending 
upon the application. Trucks may spend much of their time idling to 
power heating or cooling for the cab, or to operate truck mounted 
equipment. U.S. trucks idle an average of 1830 hours per year and 
idling of commercial vehicles is estimated to consume more than 2 
billion gallons of fuel annually, while producing unwanted 
emissions.\2\ Although the number of trucks is small compared to 
passenger vehicles, their fuel consumption and emissions are 
disproportionately large. According to figures by the Oshkosh Truck 
Corporation there are approximately 90,000 refuse collection trucks in 
the U.S. but their collective fuel consumption is roughly equivalent to 
2.5 million passenger vehicles (based on 10,000 gallons/year per 
truck).\3\
---------------------------------------------------------------------------
    \2\ Testimony for the U.S. House Committee on Science and 
Technology, Energy and Environment Subcommittee, prepared Statement of 
Terry Penney Technology Manager, Advanced Vehicle Technologies, 
National Renewable Energy Laboratory, June 10, 2008
    \3\ Committee on Science and Technology, Subcommittee on Energy and 
Environment, U.S. House of Representatives, Hybrid Technologies for 
Medium-to-Heavy Duty Commercial Trucks, Tuesday, June 10, 2008
---------------------------------------------------------------------------
    There are more than 6,000,000 medium and heavy duty trucks in the 
U.S., excluding road tractors (18 wheelers). Medium and heavy duty 
trucks are trucks that weigh 14,001 pounds or more.
    Trucks are used in a wide variety of applications and are often 
specialized. Trucks may perform numerous functions, resulting in a 
variety of types, such as parcel and postage delivery trucks, utility 
trucks, refuse haulers, beverage and refrigerated goods delivery 
trucks, road maintenance and other work or service trucks, dump trucks, 
concrete mixer trucks, liquid or gas transport trucks, shuttle and 
school buses, military vehicles and over the road trucks. Trucks also 
are built in many different configurations, sizes and weights.
    Medium and heavy duty trucks are typically manufactured and 
marketed to customers much differently than cars and light duty trucks. 
Medium and heavy duty trucks, used by the utility industry and other 
vocations are typically built in multiple stages. During the first 
stage an original equipment manufacturer builds an incomplete vehicle, 
commonly known as a chassis. The vehicle is then often completed by a 
different company, referred to as a final stage manufacturer. Final 
stage manufacturers typically evaluate the intended application of the 
vehicle, perform engineering analysis, and then install an appropriate 
body, equipment and interface components with chassis systems in a 
manufacturing operation.
    Medium and heavy duty trucks may also have multiple companies 
involved in marketing the final product. A chassis manufacturer may 
market directly to an end user and a final stage manufacturer may also 
market to the same end user. Multiple companies involved in the 
manufacturing and marketing of medium and heavy duty trucks tend to 
result in less integration of the overall process and more 
customization in comparison to cars and light duty trucks.
    Hybrid drive systems for medium and heavy duty trucks differ in 
design. Some systems are primarily designed to be installed during the 
chassis manufacturing process by the original equipment manufacturer. 
Other systems are designed to facilitate either an installation during 
the chassis manufacturing process or in a later stage of manufacturing 
by another entity, such as an intermediate or final stage manufacturer. 
DUECO installs the plug-in hybrid drive system and interfaces the 
system with the chassis and installed equipment during the latter stage 
of manufacturing.
    Hybrid drive systems for medium and heavy duty trucks can also 
either be installed on new vehicles or designed to be retro-fit on an 
existing chassis for certain applications. The plug-in hybrid system 
developed by DUECO and Odyne can be either installed during the 
manufacturing process of a new truck or it can be installed as a retro-
fit on an existing chassis. Retro-fit applications must be carefully 
engineered, installation of a system on an existing truck requires 
sufficient payload, packaging space and specific chassis data 
communications interfaces.
    Trucks used by utilities typically drive to a job site and then 
conduct stationary operations. In a conventional truck, the diesel or 
gas powered engine provides the sole source of propulsion for the 
vehicle and is also used to power truck mounted equipment, such as an 
aerial device, digger derrick, crane, compressor, winch or other 
equipment. While at the job-site, the vehicle may idle for many hours 
to provide power for the equipment and provide heat or air conditioning 
in the cab. A medium duty truck may average approximately 8 mpg while 
being driven and while at idle will typically consume approximately 1 
gallon per hour or more.
    A plug-in hybrid electric vehicle (PHEV) is a hybrid vehicle with 
batteries that can be recharged by plugging into our nations electric 
power grid. It shares the characteristics of both conventional hybrid 
electric vehicles and battery electric vehicles, having an internal 
combustion engine and batteries for power.
    Hybrid systems used in larger trucks, greater than 16,000 pounds 
have typically utilized two basic design configurations--a series 
design or a parallel design.
    Series design configurations typically use an internal combustion 
engine (heat engine) with a generator to produce electricity for both 
the battery pack and the electric motor. There is typically no direct 
mechanical power connection between the internal combustion engine and 
the wheels in an electric series design. Series design hybrids often 
have the benefit of having a no-idle system, include an engine-driven 
generator that enables optimum engine performance, typically lack a 
transmission (on some models), and accommodate a variety of options for 
mounting the engine and other components. However, series design 
hybrids also generally include a larger, heavier battery; have a 
greater demand on the engine to maintain the battery charge; and 
include inefficiencies due to the multiple energy conversions. Parallel 
design configurations have a direct mechanical connection between the 
internal combustion engine and the wheels in addition to an electric or 
hydraulic motor to drive the wheels.
    Parallel design hybrids have the benefit of being capable of 
increased power due to simultaneous use of the engine and electric 
motor or hydraulic motor, having a smaller engine with improved fuel 
economy while avoiding compromised acceleration power, and increasing 
efficiency by having minimal reduction or conversion or power when the 
internal combustion engine is directly coupled to the driveshaft, 
typically through a transmission. However, parallel design hybrids 
typically lack a no-idle system and may have non-optimal engine 
operation (e.g., low rpm or high transient loads) under certain 
circumstances. Existing systems on trucks that have a gross vehicle 
weight rating (GVWR) of greater than 19,500 pounds have traditionally 
not had a system that combines the benefits of a series system and a 
parallel system.
    DUECO has produced plug-in hybrid electric trucks, hybrid electric 
trucks and conventionally powered trucks for the utility industry.
The need for plug-in hybrid trucks
    There are several factors that favor the development and use of 
plug-in hybrid trucks:

   Rising fuel prices.
   Increased pressure for environmentally friendly and green 
        operations with lower carbon emissions.
   A national priority to reduce foreign oil dependency and 
        increase energy security.
   Increased maintenance costs.

Differences between plug-in hybrid electric trucks and hybrid electric 
        trucks:
    The following compares some of the benefits of a plug-in hybrid to 
that of a conventional hybrid. The primary difference between the plug-
in hybrid and the conventional hybrid is the size of the battery system 
and the ability to recharge the battery system from the domestic power 
grid.
    While a plug-in hybrid truck offers some of the same benefits as a 
conventional hybrid truck, plug-in hybrids offer advantages in several 
areas:

   Reduced fuel consumption
    --A plug-in hybrid system has a large battery system that operates 
            in a charge depleting mode. The energy from the battery is 
            typically used to help propel the vehicle and operate 
            equipment. Energy required to recharge the battery is 
            ideally provided by the power grid or from regenerative 
            braking, displacing the use of petroleum. A vehicle with a 
            large enough battery system could potentially eliminate 
            fuel consumption by operating in an all electric driving 
            mode for a limited distance and operating in an all 
            electric stationary mode. All electric trucks are available 
            in Europe, while there are disadvantages such as limited 
            range; electric trucks demonstrate that the technology is 
            available for emission free operation.
    --A conventional hybrid typically uses power from the diesel and 
            gas engine to recharge the battery or may be recharged from 
            regenerative braking. Since much of the energy in the 
            battery system results from recharging through the engine, 
            fuel consumption may be higher.
   Reduced emissions, potentially eliminates emissions at the 
        job site.
    --A plug-in hybrid typically reduces fuel consumption and 
            corresponding CO2 emissions during urban driving 
            and has a large battery system that can allow the engine to 
            stay off the entire day at the job-site. The large battery 
            system is used to power truck mounted equipment such as an 
            aerial device or electrically powered air conditioning 
            system. Electricity to recharge the battery system may be 
            generated by sources with lower emissions; some utilities 
            generate a sizable portion of power from non-emitting 
            sources. As an example, PG&E generates over 50% of their 
            energy from renewable sources.
    --A conventional hybrid due to a smaller battery system often may 
            need to restart the engine at the job-site to recharge the 
            battery and may not have enough energy in the battery 
            system to power large loads, such as an electrically driven 
            air conditioner, with the engine off. When the engine is 
            started periodically for short durations in the field to 
            recharge the smaller battery system, emission systems may 
            not be at optimal effectiveness, potentially resulting in 
            greater emissions of harmful pollutants.
   Lower noise levels during stationary operations.
    --The engine typically stays off with a plug-in hybrid, resulting 
            in lower noise levels. This increases the safety for 
            linemen and offers quieter operation for working in 
            residential areas. A conventional hybrid may require the 
            engine to restart to charge the batteries.
   Uses low cost, domestically produced energy from nation's 
        electric grid.
    --Off-sets fuel consumption by displacing petroleum with 
            electricity. Ability to recharge at off-peak hours.
   Maintains a charge or is recharged at any time with 
        conventional engine.
    --While a plug-in hybrid is typically designed to deplete the 
            charge in the battery system and recharge through the grid, 
            the system can be designed to maintain a minimum state of 
            charge in the battery system by recharging through the 
            engine if needed. This allows extended operations in the 
            field during situations where it is impossible to recharge 
            through the grid. In other words, while it is desirable to 
            recharge a plug-in hybrid through the grid, it is not 
            necessary to plug it in. Charging using the engine is 
            similar to how a conventional hybrid recharges.
   Improved vehicle acceleration.
    --Electric motors provide additional power and torque to the drive 
            train of the truck. The larger battery system of a plug-in 
            hybrid provides more energy for extended use of the 
            electric motor. The smaller battery system of a 
            conventional hybrid may become depleted more quickly, 
            reducing available power when needed for climbing grades or 
            other demanding situations.
   Standby power capability: option for 9 kW or more exportable 
        power for applications such as job site power tools, lighting 
        and temporary restoration of power to facilities.
    --The large battery system of a plug-in hybrid offers the ability 
            to export power from the vehicle for external uses. In the 
            more distant future it may be possible to export power from 
            the vehicle to the grid (Vehicle to Grid, or V2G) to reduce 
            peak loads on grid generation systems. The smaller battery 
            system in a conventional hybrid typically does not have 
            enough energy for export without turning on the engine to 
            provide additional power.
   Reduced maintenance costs.
    --Utility vehicles often are serviced based upon hours of engine 
            operation. A plug-in hybrid truck has reduced hours of 
            engine operation, potentially extending maintenance 
            intervals.

Benefits of Electricity as a Fuel
    A plug-in hybrid electric truck uses electricity to supplement or 
replace the use of fossil fuels. There are several benefits to using 
electricity as a fuel.
   Electricity is typically produced from domestically sourced 
        fuel or energy.
   Feed Stock diversity promotes stability
    --Hydro, Wind, Bio-Mass, Natural Gas, Coal, Nuclear
   portion of our nations existing generation fuel mix is 
        currently CO2 free.
    --Example: approximately 56% of PG&E's energy portfolio is 
            CO2 free
   Recent and ongoing legislation promotes cleaner generation 
        mix over time
    --Renewable Portfolio Standard (RPS) legislation enacted in over 20 
            states
   Low fuel cost and minimal additional infrastructure required
    --Preferential rates for off-peak consumption
   Projected future renewable energy sources tend to be an off-
        peak energy resource
    --Wind can often produce more energy at night

    A plug-in hybrid electric medium duty bucket truck* is shown above. 
This type of truck is typically used by utilities of maintenance and 
installation of power lines. The truck has many of the benefits listed 
previously. Specifically this vehicle has the following features:
---------------------------------------------------------------------------
    * All pictures and diagrams have been retained in committee files.

   Hybrid launch assist and regenerative braking
   All Electric Operation at a job-site for a typical day
   35 kWh Energy storage (note: a traditional hybrid may have 2 
        kWh of energy storage)
    --Electrically powered hydraulic system moves Aerial lift & 
            outriggers, this function is also known as E-PTO
    --Electrically powered air conditioning
   110/220VAC Electric shore power 9 kW, more optional. Also 
        referred to as exportable power.
   Interfaces with an Allison transmission, the system may also 
        interface with other transmissions (testing with other 
        transmissions has not been completed).
   Modular design with standard components.
   Enhanced reliability with redundant power for critical 
        operations.
   Advanced diagnostics & data acquisition available, ability 
        to monitor vehicle via satellite
   Very versatile design:
    --Basic system design can be used on for a variety of truck weight 
            classes from approximately 16,000 pounds to over 33,000 
            pounds, GVWR. Testing of the system on vehicles with a GVWR 
            of 19,500 pounds and those of 33,000 pounds or greater has 
            begun.
     Basic design can be used on a variety of chassis 
        configurations: 2x4, 4x4, tandem. Testing has begun on the 2 
        wheel drive application, testing on the tandem will begin 
        within the next year. Testing on the 4x4 has not been 
        scheduled.
    --System should be able to interface with multiple power trains 
            from multiple chassis manufacturers. Testing has begun on 
            GMC and International units and on chassis with gas and 
            diesel engines.
   Ability to tow trailer.
   No special diagnostic software.
   Enhances stability of vehicle for aerial device 
        applications.
   Utilities can power their fleet with their own fuel: 
        Electricity
   Charges in less than 8 hours using a 220--240 VAC 3 phase 
        power source and charging station.

    Fuel savings are dependent upon the application and unique duty 
cycle of the vehicle. The current vehicle reduces fuel consumption 
during driving in urban areas by approximately 10--15%. The vehicle 
will typically save 100% of fuel consumption during stationary 
operations at a job site, resulting in approximately 1 gallon per hour 
or more of reduction. There is little to no fuel savings during higher 
speed highway driving.
    Anticipated fuel savings for a plug-in hybrid in comparison to a 
conventional truck depend upon many factors such as the type of system 
architecture, size of battery and field application. The following is 
an estimate for two types of plug-in systems, one with parallel system 
architecture and one with series system architecture. The sample 
application is a 20 mile drive, a 5 hour idling period, and an 
additional 20 mile drive.
    Parallel system with plug-in battery system compared to a 
conventional truck:

          Stated Assumptions:

          Conventional chassis: approximately 8 mpg fuel efficiency 
        during driving and approximately 1 gallon per hour fuel 
        consumption during idle.
          Parallel system with plug-in: approximately 12% decrease in 
        fuel consumption for a plug-in hybrid during driving and 0 
        gallons per hour fuel consumption during idle.
          Estimated fuel savings: 56% reduction in fuel consumption, or 
        approximately 1400 gallons of fuel saved per year, based upon 
        250 work days per year. Over 15 years, estimated fuel savings 
        exceed 20,000 gallons per truck.

    Series system with plug-in battery system compared to a 
conventional truck:

          Stated Assumptions:

          Conventional chassis: approximately 8 mpg fuel efficiency 
        during driving and approximately 1 gallon per hour fuel 
        consumption during idle.
          Series system with plug-in: 50% decrease in fuel consumption 
        for a plug-in hybrid during driving and 0 gallons per hour fuel 
        consumption during idle.
          Estimated fuel savings: 75% reduction in fuel consumption, or 
        approximately 1875 gallons of fuel saved per year, based upon 
        250 work days per year.

    Due to the large amount of savings, medium and heavy duty trucks 
with plug-in hybrid technology may be able to reach an attractive 
return-on-investment more quickly than other vehicles.
    A diagram of a plug-in hybrid electric system for a truck is shown. 
Electrical energy is used to increase efficiency while driving through 
hybrid launch assist and regenerative braking. Electrical energy also 
powers equipment loads at a job site, potentially eliminating the need 
to run the engine.
Deployment of Plug-In Hybrid Trucks
    DUECO has started to deploy 25 plug-in hybrid medium duty trucks to 
early adopters. A number of major investor owned utilities across the 
country have agreed to use the plug-in hybrid bucket trucks in field 
evaluations. Ten units have been built as of September 2008; the 
remaining units are targeted for completion before the end of the year. 
DUECO completed delivery of the first unit to Adams Electric 
Cooperative earlier in the year. The unit has been operated by Adams in 
regular fleet operations to maintain power lines. Using a large 35 kWh 
battery system and interfacing with an Allison transmission, the plug-
in hybrid system provides launch assist, regenerative braking, power 
for hydraulically operated equipment, electrically powered air-
conditioning, and 120/220 VAC exportable power. DUECO plans to 
significantly ramp-up production of units in 2009 and beyond.
    In June of 2008, DUECO introduced the first medium duty PHEV digger 
derrick. The unit is currently undergoing testing, production is 
planned for 2009. Digger derricks are used by utilities to drill holes, 
set poles and lift large loads. The demand for power from the plug-in 
hybrid system can be very high during certain operations, such as 
digging in rocky terrain.
    Other manufacturers have begun to test plug-in hybrid drive systems 
and all electric power trains.
    According to testimony provided by Mr. Eric M. Smith on June 10, 
2008, Eaton was working with the Electric Power Research Institute to 
develop commercial PHEV trucks and was also working on the development 
of a PHEV for use in utility truck applications.
    European truck manufacturers Modec and Smith Electric Vehicles have 
produced all electric commercial vehicles.
Prospects for wider deployment in the near future
    While plug-in hybrid technology for medium and heavy duty trucks 
offers numerous benefits, there are several technical and commercial 
hurdles that must be overcome to enable the wide-scale deployment of 
plug-in hybrid trucks in the near term. Near term is considered to be 5 
years or less.
    DUECO believes that these challenges can be overcome, or largely 
mitigated, in the short term with a focused effort and the proper 
partnership between industry and government.
Major technical and commercial hurdles for wide-scale deployment of 
        plug-in hybrid trucks
    Although current plug-in hybrid technology has the potential to 
provide significant benefits for many applications, short comings in 
certain areas decrease the value proposition of plug-in hybrid systems 
for medium and heavy duty trucks. Wide scale deployment must be driven 
by demand. It is necessary to improve the value proposition by 
providing greater performance and fuel savings for less incremental 
cost.
Battery system technology
    Existing battery technology either tends to offer battery systems 
that are relatively low cost, but heavy, large and of limited life or 
are relatively expensive, but much lighter, smaller and with 
potentially longer life. While certain applications of trucks may be 
able to carry lower cost, heavier battery systems, it is generally 
desirable to minimize battery system weight, size and cost. Development 
of cost effective larger advanced battery systems, potentially with 
energy storage in excess of 35 kWh, or even in excess of 100 kWh, would 
improve the performance and reduce the operating cost of plug-in hybrid 
trucks.
    In order to accelerate deployment of plug-in hybrid trucks using 
existing technology, it may be desirable to design battery systems that 
are modular, that allow for newer technology battery systems to be 
placed on existing vehicles when the original battery system no longer 
performs to acceptable standards.
    Battery systems for commercial trucks must operate in different 
conditions and duty cycles than those in automotive applications. 
Trucks must often locate the larger battery system on the exterior of 
the truck, exposed to the elements. Trucks may also operate for much 
longer duty cycles. Commercial vehicles may be driven 12--16 hours per 
day, or operate for multiple shifts. Cars used for commuting may only 
operate for a few hours per day.
System architecture
    Existing hybrid systems for trucks tend to utilize system 
architectures that are similar in many ways to that of existing truck 
power trains. The internal combustion engine typically remains 
operating while the vehicle is driven to power auxiliary loads such as 
power steering systems, brake systems and HVAC systems. Keeping the 
engine running while stationary or in low speed stop and go traffic 
increases fuel consumption. Some vehicles also do not have a clutch in 
between the internal combustion engine and the transmission. While such 
systems utilize an automatic transmission, it may be desirable to 
create a method to uncouple from the transmission from the engine for 
improved regenerative braking or an all-electric drive mode.
    In order to improve fuel economy further, different system 
architectures that are designed for high volume production in which the 
internal combustion engine can remain off during driving need to be 
developed. The development of electrically driven sub-systems such as 
braking, power steering, HVAC and others need to be brought to high 
volume production for medium and heavy duty trucks.
    Existing parallel hybrid electric vehicle systems for trucks also 
tend to use relatively small electric drive components with relatively 
low power output, compared to the power provided by the internal 
combustions engine. Larger electric motors and higher capacity battery 
systems may allow smaller engines to be used that operate at higher 
efficiency without a reduction in vehicle performance, or allow the 
vehicle to be driven entirely by electric propulsion. Future system 
architectures could also combine the benefits of plug-in hybrid 
technology, which requires battery systems with high energy densities, 
with that of hydraulic hybrids that have high power densities. The 
combined plug-in electric hybrid system with hydraulic hybrid 
components could offer high horsepower during acceleration and 
recapture more energy during braking while providing enough energy for 
sustained operation with the engine off.
    Alternative power train architectures, such as a combined series/
parallel hybrid system with a plug-in battery system are also 
recommended for consideration. A combined series/parallel system would 
allow the vehicle to operate in an all electric mode, a series hybrid 
configuration or a parallel hybrid configuration, depending upon which 
is most advantageous given operating requirements.
Utility infrastructure
    While studies tend to indicate that there is sufficient capacity in 
the nation's energy grid at off-peak periods to provide power for 
charging a large number of plug-in vehicles, there has been little 
testing on the effects of charging a large number of commercial plug-in 
hybrid trucks. A commercial fleet of 1000 vehicles, each with a 35 kWh 
battery system, could require approximately 25,000 kWh (or 25 MWh) of 
energy to recharge overnight. Assessment and testing on the effects of 
charging a large number of plug-in hybrid trucks is suggested, along 
with an assessment of the interface with Smart Grid technology and 
associated advanced metering systems.
    Commercial trucks with large battery systems also typically require 
higher charging voltages in order to recharge overnight. The lack of 
higher voltage circuits in existing truck storage areas could create 
barriers and increase the cost to deploy such technology.
Research into specific medium and heavy duty applications
    Plug-in hybrid technology for medium and heavy duty trucks has the 
potential to reduce fuel consumption and emissions in a wide variety of 
applications. Besides aerial utility trucks and delivery trucks, other 
truck applications such as those that use cranes, compressors, welding 
equipment, or are used in gas utility maintenance, refrigeration, 
rescue, refuse and construction may benefit from plug-in hybrid 
technology.
    Specific information about the energy required for various mobile 
and stationary applications is typically not available. In order to 
optimize the design of a plug-in hybrid medium or heavy duty truck, it 
is recommended that data be collected on actual fleet utilization, 
including miles driven, time at idle, power requirements, fuel 
consumption and other operational factors. The development of plug-in 
hybrid systems for vehicles that operate at especially low efficiency 
should be a priority and testing should be undertaken to validate 
improved efficiency and reliability.
Accelerated testing
    Plug-in hybrid technology for medium and heavy duty trucks is 
relatively new and still under development. Assistance is needed to 
accelerate testing and reduce the costs of large scale field tests.
Investment requirements
    Development of new technology and manufacturing capability requires 
significant investment. The cost of capital for development has 
increased for a variety of reasons. Assistance such as funded loan 
guarantee programs backed by the government can enable companies to 
continue development in difficult economic times. Needed investment is 
estimated to be well in excess of $300 million, excluding additional 
investment needed for battery development.
    Grants can also accelerate investment in the development of new 
plug-in hybrid technology. DUECO strongly encourages the Senate to 
adopt and support ``The Heavy Duty Hybrid Vehicle Act'' H.R. 6323 or 
similar legislation.
Low initial production volume and high cost
    Low initial production volume, combined with high start-up costs 
can prohibit companies from pursuing plug-in hybrid technology. As 
volume increases, fixed costs are spread over more units, resulting in 
lower unit costs. Tax incentives can accelerate demand by lowering the 
initial cost to the consumer. DUECO encourages the government to 
consider tax incentives that result in lower costs to the market for 
large PHEV systems in vehicles with GVWR of 19,500 lbs. or greater and 
battery system sizes of up to 60 kWh or greater.
Additional weight
    The large battery systems required for medium and heavy duty trucks 
add weight to the vehicle. Since newer technology battery systems with 
lower mass may not be ready at a commercially viable price in the near 
term, heavier batteries with shorter effective life may be the only 
cost effective alternative. The additional weight of less advanced 
battery systems can cause a truck to exceed 33,000 lbs., the weight 
limit for exemption from Federal Excise Tax. The government should 
consider waiving FET on vehicles that have plug-in hybrid drive 
systems. This will further reduce the effective cost to the consumer 
and accelerate deployment of PHEV technology in trucks.
DUECO's experience with government technology development programs and 
        how the federal role can be enhanced
    Federal technology development programs focused on plug-in hybrid 
systems for medium and heavy duty trucks have been very limited. DUECO 
has not obtained federal assistance in this area, with the exception of 
possible general research tax credits. Most of the funding in this area 
has focused on the development of plug-in technology for automobiles or 
has been focused on large original equipment manufacturers. The medium 
and heavy duty truck industry is unique in that many of its products 
are often manufactured in multiple stages and brought to market by 
companies that are not directly affiliated with the original equipment 
manufacturer.
    DUECO encourages the federal government to develop programs that 
help to specifically fund research into the development of plug-in 
hybrid systems for medium and heavy duty trucks used in specific 
applications and that are open to final stage manufacturers and other 
entities. Assistance with testing, certification, the creation of tax 
incentives for customers, and modification of government purchasing 
policies to favor the acquisition of more fuel efficient trucks using 
plug-in hybrid technology can also accelerate development and 
deployment.
    Commercial fleets consume large amounts of fuel, developing more 
efficient trucks that utilize domestically sourced power from the 
nation's energy grid would have several benefits.
    The development of this technology in the United States would 
provide opportunities for job creation, export opportunities, reduce 
the costs for businesses competing in a global market, reduce 
greenhouse gas emissions and emissions of other pollutants, reduce 
dependency on foreign oil, reduce noise within our cities and 
potentially improve productivity for certain applications, such as 
electric crews who could perform work at night in residential areas.
    This is potentially a historic opportunity to develop the 
technology needed for the electrification of medium and heavy duty 
trucks. I ask for your support of the proposed measures that would help 
to accelerate deployment of plug-in hybrid technology for medium and 
heavy duty trucks and encourage the development of partnerships between 
manufacturers, utilities and the government.

    The Chairman. Thank you very much.
    Mr. Balkman, go right ahead.

STATEMENT OF THAD BALKMAN, GENERAL COUNSEL AND VICE PRESIDENT, 
       EXTERNAL RELATIONS, PHOENIX MOTORCARS, ONTARIO, CA

    Mr. Balkman. Thank you, Mr. Chairman. Good morning, members 
of the committee. I am Thad Balkman. I am Vice President of 
External Relations with Phoenix Motorcars. As a former State 
legislator, I am a little bit used to these hearings, albeit on 
a much smaller scale and sitting on the other side of the dais.
    But I appreciate the opportunity to come this morning and 
give you the perspective of a small startup electrical vehicle 
company.
    We are based in Ontario, California, and we manufacture 
freeway speed, full-sized battery electric vehicles. We make a 
sports utility truck and a sport utility vehicle. We will get a 
picture of the sports utility truck over here. Our vehicles 
sell for $47,500. We are beginning to build on a demonstration 
fleet and expect to begin production in early 2009.
    Mr. Chairman, last week you asked about game changers. The 
electric vehicle is a game changer. The EPA estimates gives us 
a rating of 135 miles per gallon. It is 135 miles per gallon on 
a single charge of the battery. No gas is required. The major 
benefit of the electrical vehicle is that electricity costs 
about one-sixteenth the cost of gasoline. So I can charge the 
sports utility truck. It is going to cost me about $4 to charge 
the battery, whereas when I go back home and go to fill up my 
Hyundai Sonata, I am going to pay about $64 to refill the gas 
tank. So electrical vehicles give consumers a great amount of 
choice, but also a cash back.
    So I guess one of the points I want to emphasize is that--
and it has been emphasized by other members of this panel--by 
adopting electrical vehicle transport, we are going to be no 
longer dependent on foreign oil. Instead, we are going to be 
using electricity and start using domestic resources, domestic 
coal, domestic natural gas, wind power, hydroelectric power, 
solar power, which gives us obvious benefits of national 
security. Best of all, it is a lot cleaner. In fact, in 
California, our vehicles qualify for the California zero 
emission vehicle gold standard and does a lot to clean up the 
smog that we have in Los Angeles and even here in Washington, 
DC.
    Our sports utility truck and sport utility vehicles can be 
charged two ways. You can plug them in at home and let them 
charge overnight. It takes about 4 to 6 hours. Or you can 
actually use a rapid charge device, and they are recharged in 
as little as 10 minutes. This really helps address some of the 
concerns of range anxiety because with the rapid charge you can 
go a lot longer than the 130 miles on a single charge for a 
battery.
    I want to also address some suggestions I have for the 
Senate. They are outlined in my written testimony.
    But I want to encourage members of this committee and the 
rest of the members of the Senate to follow the House and pass 
the $7,500 tax credit. I know there is a number of energy 
measures out there, but this will do a lot because what it does 
is it gives people that purchase electric vehicles up to $7,500 
in tax credit.
    I put a little plus sign there because we would actually 
like to ask you to lift that cap for battery electric vehicles. 
Pure battery electric vehicles have twice the battery capacity, 
twice the energy independence, and have twice the benefits for 
global warming concerns. Therefore, we would hope that they 
would earn twice the credit. By doing that, you are actually 
going to be bringing down that cost I mentioned earlier. They 
run about $47,500. By lifting that tax credit, you are going to 
make the vehicle and price just about the same price range as 
its internal combustion gas counterpart.
    Also, we would like to ask the Senate to help level the 
playing field with other alternative energy sources and create 
an alternative refueling investment tax credit.
    We would also encourage the Senate to--I have heard a lot 
about greening the capital. We would like to see the Government 
fleet green and purchase electric vehicles for use in various 
Government departments, including here at the United States 
Capitol.
    I would also suggest that we bring electric vehicles into 
the refueling fuel standard. Including renewable energy into 
the RFS encourages more investment in solar and wind power, 
which is used to recharge or in some cases used to recharge 
electric vehicles.
    Also, I know there has been a lot of discussion about a cap 
and trade program. When you all figure out the details on that, 
I would hope that you would include electric vehicles in any 
future cap and trade program and allow electric vehicles a 
carbon allowance that would help reduce the incremental costs 
that we are faced with in electric vehicles these days.
    Also, another suggestion would be to create a Government-
backed battery guarantee program. We have heard some of the 
members of the panel talk about how battery technology is still 
in its infancy, and by creating such a guarantee program, it 
would help address some of those concerns because, quite 
frankly, the biggest cost of the electric vehicle is in the 
battery.
    Finally, we would ask you to increase investment in 
advanced technology, particularly in the battery development. 
Today, unfortunately, the United States lags far behind other 
countries in the world in battery development. We would like to 
change that.
    Like I said, I have put more detail into the written 
testimony and I would ask you to look at that.
    I would be happy to answer your questions and also would 
like to invite each one of you, next time you are in southern 
California, to stop by. We would like to give you a drive in 
one of our sports utility trucks. We plan on bringing them out 
here in December, and you will also be invited to take a ride 
at that time too.
    Thank you very much.
    [The prepared statement of Mr. Balkman follows:]

Prepared Statement of Thad Balkman, General Counsel and Vice President, 
           External Relations, Phoenix Motorcars, Ontario, CA
    Mr. Chairman and members of the Committee, this document 
supplements and expands upon my oral testimony during today's hearing. 
Thank you for your invitation to share with you what Phoenix Motorcars 
is doing to meet the dual challenges of our nation's dependency on oil 
and global climate change. We join all Americans in applauding your 
interest in learning about the current status of vehicles powered by 
the electric grid and the prospects for wider deployment. Based upon 
our experience in developing an advanced all-electric Sport Utility 
Truck, we at Phoenix Motorcars are convinced that all-electric vehicles 
present the best near-term solution to eliminate our dependence on oil 
and tackle the difficult challenge of climate change. We hope that the 
information we share with you this morning will be of value as you 
consider legislation to address these important issues.
                   introduction to phoenix motorcars
    Phoenix Motorcars was founded in 2001 in Southern California. Our 
mission is to develop best in-class, zero emission vehicles (ZEV) for 
the U.S. commercial and government fleet markets initially and then 
later expanding into the consumer market. Phoenix is headquartered in 
Ontario, California. Our team of employees has over 300 years of 
collective experience working on vehicle and alternate fuel programs 
for leading automotive companies.
    After six years of research and development work into full 
performance battery electric vehicles, Phoenix began the 
commercialization process of our Phoenix Sport Utility Truck model with 
the assistance of many strategic partners including Energy CS, 
Altairnano Technologies, AeroVironment and many other innovative 
companies. The accumulated effort of Phoenix and our partners has 
produced a truly best in class electric vehicle that will set the 
milestone for battery electric vehicles (BEV) to come. A few highlights 
about our BEV:

   Range of 100+ miles per charge
   Top speed of 95 mph
   High crash test safety rating
   Battery charging in as little as 10 minutes with off-board 
        fast-charging equipment
   $3 cost per charge using the on board charger
   A projected EPA rating of 135 mpg
   0 to 60 mph in 10 seconds

    Phoenix is now set to begin production in the fourth quarter of 
this year with deliveries beginning in the first quarter of 2009. Our 
demonstration fleet is currently under build to complete testing prior 
to vehicle production. These demonstration vehicles use the Altairnano 
lithium titanate battery and demonstrate a Phoenix BEV's ability to 
rapid charge and perform in real world applications. The price of the 
Phoenix SUT and SUV are $47,500 and $54,000 respectively.
                            life cycle costs
    The retail costs of the Phoenix SUT and SUV are a bit higher than 
their gasoline fueled counterparts, mainly due to the cost of the 
battery pack. However a comparison of the life cycle cost of electric 
vs. gasoline shows that the owner of a Phoenix saves a considerable 
amount of money--with a payback in about 2 years. Per mile, electricity 
is 1/16th the cost of gas. The owner of a Phoenix BEV who drives 15,000 
miles per year can expect to save approximately $4,000 in gasoline 
costs. Furthermore, BEVs have less than 10% of the moving parts when 
compared to gasoline powered cars. BEVs don't have pistons, 
transmissions, engine oil, spark plugs, valves, starters, clutches, 
distributors, oil filters, fuel pumps, fuel filters, air filters, water 
pumps, timing belts, fan belts, catalytic converters, or mufflers. No 
fumes, no exhaust, no smog tests, no oil changes, no radiator flushes, 
no loud engine, no warm-ups, and no gas lines. Maintenance savings 
equal about $1500 per year. Coupled with available incentives like 
California's $5000 tax rebate and the federal $7500 rebate under 
consideration, and the purchaser of an BEV realizes a payback in less 
than 2 years.
                      rapid charge infrastructure
    Phoenix Motorcars is currently the only electric vehicle 
manufacturer that has safely demonstrated the ability to rapid charge a 
vehicle in 10 minutes, using fast-charging technology developed by 
AeroVironment, Inc., which like Phoenix Motorcars is a home grown 
American BEV technology leader. This unique ability requires industrial 
480V 3 Phase power and a 250kW off-board charger that is controlled by 
the vehicle's battery management system. Because our advanced Li-Ion 
batteries can be fully recharged in 10 minutes with no impact on 
battery calendar or cycle life, so-called ``range anxiety'' is 
eliminated. Our vehicles can be recharged in the same time it takes to 
fill the tank of a gasoline vehicle. Even with this ability, some 
utilities have expressed concern about the potential impact on the grid 
of many Phoenix vehicles ``rapid charging'' during peak power use. 
However, duty-cycle studies show that most of our vehicles will be 
recharged overnight when electricity demand is low. According to the 
U.S. Department of Energy's National Renewable Energy Laboratory, the 
large-scale deployment of plug-in hybrid electric vehicles will have 
negligible impact on the electric power system which has sufficient 
available capacity to electrify up to 84% of our nation's cars, pickup 
trucks, and SUVs for the daily 33 mile driving distance of the average 
American. For the small percentage of electric vehicles that will be 
``rapid-charged'' at central charging stations, Phoenix has developed a 
technical solution that will enhance penetration of renewable energy 
such as solar and wind power, and is based on an electrical storage 
variation of the traditional gas station model.
    Today, gasoline stations rely upon underground liquid petroleum 
storage tanks. When the driver realizes she's low on fuel, she simply 
pulls into a conveniently located gas station and purchases a desired 
amount of fuel for her vehicle. The capital cost of storage and 
dispensing equipment at these gas stations typically exceeds a million 
dollars. But, if one also considers the external costs associated with 
groundwater contamination, smog and its associated disease and property 
damage, the total cost of each service station is millions of dollars.
    The electric vehicle ``rapid charge'' station concept developed by 
Phoenix follows a similar model but with a fraction of the capital cost 
and none of the external human health and environmental cost. Instead 
of petroleum storage tanks to hold gasoline and diesel, multi-megawatt 
battery banks will be installed below or above ground to fill the need 
for daily electric vehicle charges. These batteries can be recharged 
from the utility grid during off-peak distribution times (such as in 
the middle of the night), from solar panels, wind power or other 
electricity power generation methods. An electric vehicle driver 
finding her vehicle in need of a quick charge will pull into a charging 
station, connect the charging cable to the vehicle, and begin 
transferring energy from the stationary battery bank to the electric 
vehicle battery. The same credit card system we use today in gasoline 
stations will be used to purchase the charge and return the driver back 
on the road in a matter of minutes.
    This charging station model will provide real benefits to electric 
vehicle owners as well as to federal and state governments. Batteries 
will present no lingering environmental concerns for the sites they are 
located on. Rapid charging stations will hasten and assist mass 
adoption of electric vehicles and will create synergy for the adoption 
of renewable electricity from wind and solar technology. Battery banks 
at recharging stations also will provide a second life for older 
vehicle batteries no longer suited for transportation but which are 
still viable for stationary applications. Battery banks will feed 
energy back onto the energy grid under certain conditions. Cost of the 
energy can be regulated and controlled domestically, on US soil. In 
this way, batteries will provide power sources distributed across the 
nation that can be deployed as temporary power sources during 
emergencies.
                          forecast for future
    Phoenix has received over 600 orders from fleet customers and more 
than 20,000 individual reservations. These orders represent billions of 
dollars in domestic production. Among those placing orders are: City of 
Fresno, City of Santa Monica, Waste Management, and Clark Pest Control. 
We are also on the GSA list and have begun discussions with numerous 
federal agencies interested in greening their fleets.
    Our current business plan sets the following sales targets for both 
the fleet and consumer markets:

    2009:     2,500 vehicles
    2010:     10,000 vehicles
    2011:     51,000 vehicles

                           challenges we face
    Phoenix BEVs incorporate the following core technologies: BEV 
integration, vehicle drivetrain, accessory components, battery systems, 
battery tray, vehicle integration module, battery management system, 
drive-by-wire, climate control operations, and vehicle certification. 
While some of these components are common to traditional ICE vehicles, 
the market and supply chain for batteries and electric motors is still 
in its infancy and is limited. This is especially true here in the 
United States. And the cost for these essential components is still not 
competitive. The Center for Automotive Research estimates battery costs 
alone add $7,000 to $10,000 per vehicle.
                      past attempts to address evs
    In order to overcome these barriers to market and to promote energy 
independence for our nation, Government must take bold steps to adopt 
an alternative fuel policy agenda that places BEVs front and center and 
elevates them to at least the same level if not higher as other 
alternative fuels supported in the past.
    Nearly 32 years ago, in the face of our last energy crisis, 
Congress passed the Electric and Hybrid Vehicle Act of 1976, which 
declared that the era of the electric vehicle had arrived and that it 
was the policy of Congress to:

          (1) encourage and support accelerated research into, and 
        development of, electric and hybrid vehicle technologies;
          (2) demonstrate the economic and technological practicability 
        of electric and hybrid vehicles for personal and commercial use 
        in urban areas and for agricultural and personal use in rural 
        areas;
          (3) facilitate, and remove barriers to, the use of electric 
        and hybrid vehicles in lieu of gasoline and diesel powered 
        motor vehicles, where practicable; and
          (4) promote the substitution of electric and hybrid vehicles 
        for many gasoline-and diesel-powered vehicles currently used in 
        routine short-haul, low-load applications, where such 
        substitution would be beneficial.

    The Act created a new loan guarantee program to encourage the 
commercial production of electric and hybrid vehicles. The new program 
authorized DOE to guarantee principal and interest on loans for the 
purposes of:

          (1) research and development related to electric and hybrid 
        vehicle technology;
          (2) prototype development for such vehicles and parts 
        thereof;
          (3) construction of capital equipment related to research on, 
        and development and production of, electric and hybrid vehicles 
        and components; or
          (4) initial operating expenses associated with the 
        development and production of electric and hybrid vehicles and 
        components. See 15 U.S.C. Sec. 2509.

    Unfortunately, the loan guarantee program utterly failed. Since the 
passage of the Act in 1976 (following an over-ride of President Ford's 
veto), precious little has been done to help create the market for 
BEVs. This is not to say that the Congress has not tried. In fact, 
since 1976, various Congressional committees have convened more than 40 
hearings and received tens of thousands of pages of testimony from the 
automobile industry, academia, government laboratories, government 
agencies and other experts seeking an answer to the same question we 
face today: how can our Nation break our addiction to petroleum? A 
sampling of these various Congressional hearings follow:

    November 24, 1979: Hearings on Storage Batteries for Electric 
Vehicle Applications;
    March 7, 18, 1980: Hearings on World Auto Trade: Current Trends and 
Structural Problems;
    April 15, 1980: Hearing on Automotive Average Fuel Economy 
Standards;
    May 2, 1980, Hearings on Automotive Technology and Fuel Economy 
Standards;
    May 28, 1980: Hearings on National Automotive Research Act;
    July 17, 1985: Hearings on Rollback of CAFE Standards and Methanol 
Vehicle Incentives Act of 1985;
    September 14-16, 1988: Hearings on the Global Environmental 
Protection Act of 1988;
    May 2, 1989: Hearings on Global Warming and CAFE Standards;
    September 7, 1989: Hearings on Motor Vehicle Efficiency Act of 
1989;
    January 11, 1990: Hearings on Alternative Fuels
    September 23, 1990: Hearings on Electric Vehicle Technology and 
Commercialization;
    October 24, 1990: Hearings on Energy Policy Implications of the 
Middle East Oil Crisis;
    February 21, 1991: Hearing on Motor Vehicle Efficiency Act;
    April 26, 1991: Hearings on Global Warming and Other Environmental 
Consequences of Energy Strategies;
    May 16, 1991: Hearings on HR 1538, National Electric Vehicle Act of 
1991;
    June 11, 1991: Hearings on Electric and Hybrid Vehicle 
Technologies;
    May 11, 1993: Hearings on Status of Domestic Electric Vehicle 
Development;
    September 29, 1993: Hearings on Alternative Transportation Fuel 
Additives;
    June 30, 1994: Hearings on Electric Vehicles and Advanced Battery 
R&D
    June 14, 2000: Hearings on the Clean Air Act: Environmental 
Benefits and Impacts of Ethanol
    January 2, 2001: Hearings on National Energy Policy: Conservation 
and Energy Efficiency;
    March 21, 2001: Hearings on the Clean Air Act Oversight Issues;
    May 30, 2001: Hearings on Innovative Environmental Technologies;
    June 22, 2001: Hearings on National Energy Policy: Conservation and 
Energy Efficiency;
    June 12, 2001: Hearings on Effect of Federal Tax laws on the 
Production, Supply and Conservation of Energy;
    July 18, 2001: Hearings on National Energy Issues;
    December 6, 2001: Hearings on Corporate Average Fuel Economy (CAFE) 
Reform;
    January 24, 2002: Hearings on National Security, Safety, 
Technology, and Employment Implications of Increasing the CAFE 
Standards;
    June 2, 2002: Hearings on Department of Energy's Freedom Car: 
Hurdles, Benchmarks for Progress and Role in Energy Policy;
    March 5, 2003: Hearings on The Path to a Hydrogen Economy;
    March 6, 2003: Hearings on Energy Use in the Transportation Sector;
    March 3, 2004: Hearings on Reviewing the Hydrogen Fuel and Freedom 
Car Initiatives;
    February 9, 2005: Hearings on Improving the Nation's Energy 
Security: Can Cars and Trucks Be Made More Fuel Efficient?;
    May 15, 2005: Hearings Public Policy Options for Encouraging 
Alternative Automotive Fuel Technologies;
    July 28, 2005: Hearings on Automotive Technologies and Energy 
Efficiency
    October 20, 2005: Hearings on U.S. Foreign Policy, Petroleum and 
the Middle East
    May 17, 2006: Hearings on The Plug-In Hybrid Electric Vehicle Act 
of 2006
    March 7, 2006: Hearings Energy Independence
    October 3, 2007, Hearings on Energy Storage Technologies: State of 
Development for Stationary and Vehicular Applications;
    January 3, 2007: Hearings on Transportation Sector Fuel Efficiency;

    After 32 years of hearings and debate it is time for action. Today, 
our Nation is perilously dependent upon foreign oil to fuel our cars 
and trucks. In June of 2008 the Energy Information Administration 
reported that in 2007 we imported 12 million barrels of foreign oil 
each day. With crude hovering at $100 per barrel Americans sent $120 
million per day of their hard-earned wages to foreign countries. This 
dependency poses both a security risk and an economic crisis never 
before experienced by our Nation. The urgent nature of the problem 
compels Congressional intervention to finally catalyze the market for 
electric vehicles. No other near term automotive technology offers the 
ability to immediately end dependence on foreign oil, drastically cut 
smog and global warming emissions, and avoid a massive decades-long 
investment in new fuel distribution infrastructure.
    Phoenix Motorcars understands that Congress is appropriately 
reluctant to legislate winners and losers among competing technologies. 
However, battery electric vehicles should be the one exception to this 
rule. It is the only technology that can solve our problem of petroleum 
dependency and global warming emissions within 10 years. The battery 
technology enabling high density energy storage has finally arrived and 
is steadily improving. The supply infrastructure to refuel the vehicles 
exists in every home and business across the Nation. At the very least, 
Congress must give electric vehicles equal treatment with the other 
alternative fuel options. With the right mix of market incentives, an 
historic opportunity exists to change fundamentally our transportation 
paradigm away from petroleum and toward electricity supplied from 
renewable sources.
    It is only with decisive action by the Congress will our Nation 
finally begin to solve its twin Achilles Heels of dependence on foreign 
oil and runaway carbon emissions. The time for more hearings, more 
debate, and more study has passed. Meaningful legislative action is 
needed.
                       how government can assist
    Cost is the principal barrier to rapid adoption of BEVs. Our 
vehicles cost about $15,000 more than their gasoline counterparts 
largely because economies of production in battery manufacturing and 
vehicle integration have not yet been achieved. This incremental cost 
is a big barrier to commercialization of the technology because data 
show that consumers will not pay extra for more fuel efficient vehicles 
unless the pay-back is 2.5 years or less. The pay-back must be 
relatively immediate or consumers will not pay the higher price. This 
means that BEVs with incremental costs upwards of $15,000 may not sell 
and manufacturers, facing an uncertain market, will not produce them.
    Phoenix Motorcars is pleased that the House passed a tax credit for 
plug in vehicles in the energy extenders bill earlier this year. But 
this tax credit does not go far enough. Phoenix Motorcars believes that 
a key to accelerating the adoption of BEVs is to foster fairer 
competition among the various alternative fuels within the Federal 
Government's existing fuel diversification policy framework. Electric 
vehicles currently receive less incentives than other alternative fuel 
vehicles even though they release no pollution, require no massive 
investment in new fuel infrastructure, and cause no price disruptions 
in our food supply.
    Following are a number of additional tools that Congress should 
provide to help expedite the commercialization and wider deployment of 
battery electric vehicles in the near future.

   Congress should not cap the tax credit for BEVs at $7,500. 
        The existing proposed tax credit of up to $7,500 for qualified 
        plug-in hybrid electric drive vehicles consists of a base 
        credit of $2,500 for each qualified plug-in hybrid electric 
        drive vehicle plus $400 for each kilowatt hour of battery 
        capacity above 4 kilowatt hours. As structured, the credit 
        treats BEVs the same as hybridelectric vehicles even though 
        BEVs eliminate the use of gasoline entirely, have zero 
        emissions, and are more costly, all due to their larger battery 
        packs which eliminate the need for internal combustion engines. 
        By lifting the $7,500 cap for BEVs only, Congress would provide 
        greater incentives for the production of all-electric vehicles 
        because the cost premium would be substantially reduced. Thus, 
        the Phoenix Motorcars SUT, which uses as 35kWh battery, would 
        qualify for a $15,000 credit. The Tesla sports car, which uses 
        a 53kWh battery, would qualify for a $22,000 credit. Due to 
        their higher cost, BEVs will have a much smaller market 
        penetration in the next few years when compared with PHEVs 
        unless they receive tax credits proportional to their larger 
        battery size and energy-independence benefit. Raising the tax 
        credit limit for BEVs would require additional funding for the 
        legislation, but not by a substantial increment given the low-
        volume production which is projected over the next five years.
   Congress should bring electric vehicles charged with solar, 
        wind, or other renewable electricity, into the Renewable Fuels 
        Standard program under Section 211 of the Clean Air Act. The 
        Energy Independence and Security Act of 2007 amended the RFS 
        created by the 2005 Energy Policy Act by requiring refiners to 
        ramp-up production of ethanol to 36 billion gallons by 2022. 
        The RFS program provides for credit trading between refiners 
        subject to the RFS standard. Certain other fuels that are not 
        even blended into gasoline also qualify for credits, including 
        biodiesel and biogas. However, renewable electricity used to 
        fuel BEVs currently is not included in the RFS. By making 
        renewable electricity eligible under the RFS, the Congress 
        would encourage more investment in solar, wind, and other 
        renewable energy sources to recharge electric vehicles. In 
        turn, petroleum refiners subject to the RFS mandate would have 
        more options available to satisfy the RFS mandate by purchasing 
        credits generated by solar and wind electricity. This, in turn, 
        would help alleviate some of the economic pressure to divert 
        corn crops to the production of ethanol. The diversion of 25-
        35% of the domestic corn crop to ethanol production is a prime 
        factor in the recent increase in global food prices.
   Congress should mandate government fleet purchases of BEVs, 
        with particular emphasis on Air Quality Control Districts with 
        severe ozone non-attainment issues to leverage the co-polluton 
        reduction benefits of BEVs. This could be accomplished by 
        revising the alternative fuel vehicle (AFV) fleet program 
        created by the Energy Policy Act of 1992. The AFV fleet program 
        was intended to reduce our dependence on foreign oil by forcing 
        government agencies, oil refiners and energy utilities to buy 
        alternative fuel vehicles. By legislating market demand, the 
        AFV fleet program was expected to induce the automobile 
        industry to manufacture AFVs at scale, thereby leading to a 
        gradual conversion of our Nation's vehicle fleet to AFVs. 
        Unfortunately, as with the loan guarantee program of the 
        Electric and Hybrid Vehicle Act of 1976, the AFV program has 
        failed. The only mass-produced alternative fuel vehicle 
        technology inspired by the program is a $100 change to the fuel 
        system of gasoline vehicles to enable so-called E85 ``flex-
        fuel'' capable vehicles. Ninety-eight percent of the Federal 
        Government's AFV purchases in 2006 were E85 flex-fuel vehicles 
        that run on ethanol only a tiny fraction of the time due to 
        limited ethanol delivery infrastructure. By mandating that a 
        specified percentage of government AFV purchases be all-
        electric vehicles, the Congress would create the kind of market 
        demand first envisioned by the 1992 Energy Policy Act.
   Congress should include BEVs in any future CO2 
        cap & trade program thereby monetizing their lifetime 
        CO2 benefits and creating additional value that 
        would reduce their high incremental cost. CO2 
        allowances could be awarded to BEVs at the point of initial 
        sale under a ``lifetime bonus allowance set-aside.'' We suggest 
        an initial bonus allowance set-aside ratio of 4:1. Under the 
        bonus concept, certain valuable technologies are allocated 
        allowances at a ratio greater than one allowance to one ton of 
        CO2 reduced or sequestered. The bonus concept is 
        consistent with the Carbon Capture & Storage provisions of the 
        Lieberman-Warner bill. Using EPA data, we estimate that a 
        single Phoenix Motorcars SUT or SUV eliminates roughly 35 tons 
        of CO2 over 150,000 miles as compared to an average 
        light-duty gasoline powered vehicle at 20 miles per gallon, a 
        CO2 emissions rate of 19.4 pounds/gallon, and the 
        national average CO2 content of the electric grid. 
        At a projected allowance price ranging between $22 and $61 per 
        ton in the year 2020 under various future cap and trade 
        scenarios, monetizing the lifetime CO2 reductions of 
        BEVs under a bonus allocation of 4:1 would reduce incremental 
        cost by roughly $3,000 to $8,500. Making BEVs eligible for 
        lifetime CO2 bonus allowance set-asides within the 
        CO2 cap and trade system--at least until economies 
        of production scale are achieved--would create a direct 
        incentive for OEMs to produce BEVs and would reduce incremental 
        cost by monetizing their CO2 reduction benefits. By 
        capturing the discounted value of the total amount of avoided 
        CO2 emissions over the lifetime of a BEV, the 
        incremental cost of BEVs could be reduced and the technology 
        could enter the market more quickly. The lifetime 
        CO2 reduction benefits could be monetized through a 
        prepaid forward contract approach, under which the buyer of a 
        commodity stream over time prepays the seller for the entire 
        stream up front. This prepaid forward contract approach is 
        often used in energy markets, such as natural gas volumetric 
        production payment contracts, which enable energy traders to 
        hedge price risk. As applied to BEVs the prepaid forward 
        contract approach would enable the estimated income stream from 
        the CO2 allowances generated each year over a 
        specified period to be monetized, discounted to present value, 
        and transferred at the vehicle point-of-sale. The associated 
        ``income'' from the sale of the lifetime pollution reduction 
        benefits would be revenue neutral.
   Congress should consider creating a government-backed 
        battery-guarantee program, which was suggested by David 
        Sandalow of the Brookings Institute in his book ``Freedom from 
        Oil.''
   Congress should increase investment in advanced 
        technologies, namely advanced battery development.
                           final observations
    Loan guarantees, basically direct subsidies to large OEMs, will not 
create the necessary competitive market conditions to foster innovation 
to create truly advanced vehicles, like the Phoenix Motorcars SUT and 
SUV. This kind of subsidy program did not work with the 1976 Electric 
and Hybrid Vehicle Act, nor did it work more recently with the 2005 
Energy Policy Act, Title 17 of which had a similar $2B loan guarantee 
program for ``production facilities for fuel efficient vehicles, 
including hybrid and advanced diesel vehicles.'' Tellingly, none of the 
Big 3 applied for loan subsidies under either of these programs.
    It is also doubtful that massive retooling really is necessary to 
produce electric vehicles at scale. The basic components of both the 
Phoenix Motorcars SUT and SUV, for example, the body, electric motor, 
and battery pack are produced and supplied by third-party vendors. The 
same is largely true for the Chevrolet Volt, the motive power for which 
will be supplied by an electric motor and a battery pack produced and 
supplied by third parties who have the expertise and manufacturing 
know-how in electric motors, power electronics, and battery chemistry. 
Therefore, Phoenix Motorcars does not perceive a true need to retool 
drive train manufacturing facilities to produce electric vehicles like 
the Volt, because the engines and mechanical transmissions are entirely 
eliminated with electric vehicles. Instead, Phoenix Motorcars believes 
it would be far more effective if Congress would implement market-based 
measures such as those advocated previously in this testimony.
    One-hundred years ago, there were dozens of American automobile 
manufacturers who were primarily vehicle integrators not unlike Phoenix 
Motorcars, Tesla, Miles Electric, Zap Electric, and the handful of 
other entrepreneurial companies today who are working on the 
commercialization of electric vehicles. Much like the start-up 
companies of today, these early pioneers assembled bodies and engines 
produced by independent third-party suppliers. This fostered innovation 
and enabled start-up firms to enter the market with minimal barriers. 
If you had a better idea you could find the capital and run with it. 
Steam-powered, electric, and gasoline-powered automobiles all competed 
for predominance. While petroleum-based transportation ultimately won 
the day, and dozens of competing American firms were consolidated into 
three, many believe that this was only because petroleum was cheaper 
than electricity and was more capable of being stored.
    Today, we are witnessing a total reversal of the underlying 
fundamentals that drove transportation toward petroleum. No longer is 
gasoline cheaper than electricity. In fact, depending literally on the 
day, it is four to five times more expensive than electricity. And, as 
we have come to learn, its true external cost in the form of national 
security costs, human health costs, and climate costs, make petroleum 
far more costly than electricity. Finally, as our electricity is 
supplied by ever-more diverse forms of generation, from solar, wind, 
biomass, natural gas, nuclear, and coal, electricity-based 
transportation is the ultimate fuel diversifier.

    The Chairman. Thank you very much. Thank you all for your 
excellent testimony.
    Why don't we do a 5-minute round of questions here?
    Let me start with you Mr. Kjaer. You say in your testimony 
that the industry is working to finalize a single connector and 
connection standard. Could you indicate when that is going to 
be done?
    Mr. Kjaer. The connection standard is basically done now, 
Mr. Chairman. What we are starting to focus on now is the 
communications standard. That is what is going to be so 
critical. So J1772 I think it is--J1772 I think is the 
connection standard. That is basically done. But what we need 
work on now, between the utility industry and the auto 
industry, is how these vehicles are going to communicate with 
the grid and the grid communicate with the vehicle. That is a 
combination of work under the Society of Automotive Engineers, 
utilities like Edison which is leading the progress toward the 
communication standard, and then two core global alliances, 
Home Plug and ZigBee. ZigBee is a wireless communication 
protocol. Home Plug is a power line carrier. So what we have 
done is we have worked to bring these two global alliances 
together, and now work with the auto industry on a 
communication protocol for the vehicles.
    The Chairman. Mr. Dalum, you talked about other 
applications for your technology, as you see it, that you are 
going to be exploring. What are some of those other 
applications that----
    Mr. Dalum. There is a diversity of trucks that are 
operating in the United States obviously. So our company is 
going to be looking at what is called a gas crew truck, which 
is another nice application for this technology. Those are 
trucks are used by gas utilities to service the infrastructure 
of the gas lines themselves. Those trucks typically operate at 
a job site stationary. The engine idles all day to operate 
large pieces of equipment. Our technology will have enough 
power to operate that type of on-board truck-mounted equipment.
    There are other applications like refuse trucks and 
obviously shuttle buses and things like that that are 
applicable for plug-in hybrid technology in my opinion.
    The Chairman. Mr. Wimmer, as I understand your testimony, 
the vehicle you have out there for folks to see today is a 
nickel metal hydride battery and that is not what you would 
intend to bring to market as a plug-in electric vehicle. Is 
that right?
    Mr. Wimmer. Correct. Our next vehicle generation vehicle, 
which we will introduce late next year, will use lithium-ion 
batteries that are being produced by our joint venture company 
with Panasonic EV.
    The Chairman. That would be available for purchase by 
consumers when?
    Mr. Wimmer. The plan is to introduce a fair number of these 
vehicles, in the hundreds, to commercial fleets both in Japan, 
United States, and Europe in the 2010 timeframe. Based on how 
those vehicles perform, we would then look very carefully at 
introducing a consumer version. But we need to confirm the 
battery durability and how the operators are using the vehicle 
before we move forward.
    The Chairman. What distance range do you expect to have 
without use of the engine?
    Mr. Wimmer. We have not said specifically on that vehicle 
the range of that vehicle. That information has not been 
released yet. But we have said publicly that a 15- to 20-mile 
range for a plug-in--electric range is a good target.
    The Chairman. Mr. Balkman, let me ask you. Do you have any 
purchases by Federal agencies for your sport utility truck, any 
contracts to purchase?
    Mr. Balkman. We are on the GSA list and we have actually 
had a lot of Federal agencies come and talk to us. I do not 
know that we are able to disclose those, but it is safe to say 
that there are quite a few Federal agencies that have expressed 
an interest and cannot wait to get their new Phoenix when we 
start production.
    The Chairman. You are starting production early this next 
year.
    Mr. Balkman. Yes.
    The Chairman. How many do you expect to produce, say, in 
2009/2010?
    Mr. Balkman. We expect to produce 2,500 vehicles in 2009 
and then ramp up to about 10,000 in 2010.
    The Chairman. Are the components of that--are you doing 
assembly if they are in Wisconsin, or are you doing actually 
manufacture of most of----
    Mr. Balkman. We have an assembly production facility in 
Ontario, California. The auto body actually comes over overseas 
as a body part. Then we assemble the electric motor and the 
battery pack in the vehicle. That is all done in Ontario, 
California.
    The Chairman. The battery pack comes from where?
    Mr. Balkman. Altairnano. That is a Reno, Nevada company.
    The Chairman. Very good. Thank you again for the testimony, 
all of you.
    Senator Domenici.
    Senator Domenici. Thank you, Mr. Chairman. Thanks to all of 
you. A very interesting panel, and I think we will have enough 
time, Mr. Chairman, to go take a look, if that is what you 
would like to do.
    Let me just ask any of you or all of you--how is the United 
States positioned in advanced battery technology? Do you want 
to start at your end, anybody that thinks they can contribute 
to the----
    Mr. Wynne. Good news and bad news, Senator. I think we have 
some excellent technologies coming available particularly in 
the lithium-ion area and some that actually leverage old lead-
acid technology but with new nanomaterials, et cetera. There 
are a variety of technologies that are coming to market, I 
think as many as 23 or 24 different chemistries that leverage 
lithium-ion, which is not as energy-dense as gasoline, but it 
is a lot better than the batteries than we have been working 
with.
    The challenge that we are going to have is the 
manufacturing because there is very limited manufacturing today 
with lithium-ion batteries, partly because it is relatively 
new. It has been proven technology in cell phones and laptops, 
but we need to get to automotive grade and we need to get the 
volumes in order to bring those battery prices down to levels 
where it is reducing the premium associated with these 
vehicles. That is going to be the big challenges: 
infrastructure, developing the infrastructure. A new battery 
plant could cost as much as $300 million of investment and that 
is what we are asking for Government support with, along with 
industry investment.
    Senator Domenici. I do not want to use the whole time. I do 
not want to take a lot of time, but just give me your own views 
real quick, going on to you, Edward.
    Mr. Kjaer. Senator Domenici, I think one of the things that 
we need to be concerned about is are we swapping reliance on 
imported petroleum for reliance on imported batteries.
    Senator Domenici. Yes, sir.
    Mr. Kjaer. So we definitely need to be focused on how to 
encourage domestic supplier and manufacturing base in the 
United States to, Mr. Wynne's point, automotive grade. That is 
five nines production quality. Every single cell in every 
single module in every single pack has to be of consistent 
quality. Otherwise, that pack will not perform in the harshest 
of environments imaginable being the automobile. So this is not 
a cell phone battery. It is not a laptop battery. It is a 
considerably different proposition. We do not have domestic 
capacity today.
    Senator Domenici. Are you the right people? I will get 
right to you, Mr.--how do you say your name?
    Mr. Wimmer. Wimmer.
    Senator Domenici. Wimmer. You are at Toyota. Right?
    Mr. Wimmer. Yes.
    Senator Domenici. I could call you Mr. Toyota.
    Mr. Wimmer. No, no.
    Senator Domenici. If you know, tell me; if not, pass to the 
next person. I am very concerned about the very point you have 
made. This is happening in a couple of areas. We are moving to 
a new technology, but it looks like maybe somebody else will 
take over that technology and we move away from the use of 
crude oil to a new one. But we do not own the new technology.
    Now, with appropriate partnership funding by the United 
States, can we make a good, competitive case for advanced 
technology and advanced batteries in the United States? Where 
would we get the estimate for how much that might cost?
    We have been talking about putting up a lot of money, and 
we talk about advanced battery R&D and technology. We have to 
know how to do that. Are you the ones to tell us, or are there 
other experts to tell us how?
    Mr. Kjaer. Nobody here is a battery manufacturer. I mean, I 
would strongly recommend----
    Senator Domenici. Is that where we should go?
    Mr. Kjaer. Absolutely. Johnson Controls-Saft, A123.
    But I was just in China 2 weeks ago--China and Japan. The 
governments of China and Japan and Korea, for that matter, are 
very, very focused on this issue of energy storage technology, 
maturing energy storage technology, creating industry around 
energy storage. Sadly, we are not there yet, and so that is a 
big concern to us, that we are losing this race before we even 
launch the cars in the United States market.
    Senator Domenici. Does anybody want to comment on my 
question? I am going to go ahead and yield back in a minute. I 
will just make an observation myself.
    Mr. Balkman. I will just add as a domestic producer, we 
would like to buy domestic batteries. In fact, we are using 
Altairnano. They are a great R&D company. They do lack a 
manufacturing capacity. That is one of the concerns we have. 
But we want to buy American. Unfortunately, there are just not 
a lot of choices.
    Mr. Dalum. I would just add that one of our primary 
concerns is the current cost of the technology. For us I would 
consider it prohibitive for many of our customers.
    Senator Domenici. Might I ask, Senator Bingaman, do you 
remember where we are right now with reference to money for 
advanced batteries? Do we have it in an appropriation bill now? 
Does anybody know?
    The Chairman. My impression is we have a significant amount 
in the defense appropriation bill, both current year and the 
upcoming year. We also have a smaller amount in the energy and 
water appropriation that you are responsible for. We have 
various proposals legislatively to try to integrate those two 
and have a national program that coordinates those because we 
are not spending near the amounts we should in this area. Of 
course, as we all know, we wind up authorizing a lot of stuff 
we do not appropriate.
    Senator Domenici. That is right.
    Mr. Wynne. Senator, if I might. My testimony does get into 
this in some detail. I would like to thank the committee for 
your leadership, particularly in the EISA bill. There was a 
very significant authorization for battery technology R&D which 
we supported. All of the companies that have been mentioned 
here, A123, Johnson Controls-Saft, Electrovaya, et cetera are 
members of EDTA, and we have been pushing very hard for this. 
But we do need those authorizations appropriated. That is what 
we are working on today.
    Senator Domenici. I do not think there is any Senator 
Bingaman is correct in his summary. We have a lot of 
authorization, but we have to put up the dollars and it has to 
be more than 1 year. We cannot put the dollars up for more, but 
we could have a program that indicates we are committed for 2 
or 3 years at least with the battery companies.
    I thank you, Mr. Chairman. I yield.
    The Chairman. Senator Craig.
    Senator Craig. Thank you very much, Mr. Chairman.
    Gentlemen, your testimony is fascinating. I sense when you 
hear questions coming from Senator Domenici or Senator 
Bingaman, there really is an obligation on the part of your 
industries collectively to awaken us to the needs and to stay 
at it and stay at in a very focused way, whether it is through 
your associations collectively or individually.
    I say that because we are making a variety of assumptions 
here that may or may not develop but could develop and develop 
much more rapidly if we were to not only incentivize, Thad, 
like you are suggesting and do more of it more aggressively, 
but also focus resource or create the incentives that allows 
resource to focus.
    I am not sure you should rely as heavily on us for the 
dollars and cents as you should for allowing us to help you 
direct the traffic. We spin our tires here a great deal and it 
is not through electric power that we spin them. We tried to 
put a loan guarantee program together in the Department of 
Energy, and finally some of the industry just left. They did 
not need it anymore because they had to wait too long. Please 
do not wait on us.
    But more importantly, I become very excited. I tell my 
children and grandchildren that there will be the day when they 
drive and they will only own an electric car. I suspect that 
will happen based on what you are telling us and what is going 
on in the industry, and the marketplace is adjusting for that.
    Have there been any studies done--because we make these 
assumptions that there is this abundance of electricity sitting 
out there at night. We can all go plug into it. Have there been 
any studies done that would say there is an abundance, but it 
peaks out at about a certain volume of plug-in? Because we have 
an obligation also to create policy that keeps the grid 
growing, that keeps the supply of electricity going.
    Mr. Wimmer, I know you ought to be proud of the Prius. It 
is a fine vehicle. At the same time--and yes, you did displace 
a lot of carbon, but the point has been made when you plug 
these cars into the grid, if you really want a green car, then 
the power has to be green. Sixty percent of it is not today, or 
somewhere in that vicinity, or more or less.
    So would any of you respond to how many million cars can 
plug into the current electrical infrastructure we have before 
we max it without focus on the grid and the production and 
generation of electrical power in that respect? Has any of that 
kind of work been going on?
    Mr. Kjaer. Yes, it has, Senator Craig. The Department of 
Energy did a study about 12 months ago, I believe, and they 
looked at the United States grid and suggested there is enough 
excess capacity off peak in the United States grid to fuel 
about 73 percent of all of the light-duty cars and trucks on 
the road today.
    Senator Craig. So we have got substantial capacity there.
    Mr. Kjaer. Somewhere in the neighborhood of about 160 
million/170 million vehicles could connect to the grid 
tomorrow, and we would not have to build one new powerplant. 
This is a really important point.
    The electrical grid is a national energy security asset. Of 
all of the alternative fuels that we are excited about in this 
country, ethanol, methanol, biodiesel, natural gas, hydrogen, 
electricity, there is only one that has a ubiquitous 
infrastructure today, and that is electricity. That 
infrastructure has a lot of excess capacity because we have a 
very peaking system.
    The operative phrase, though, is going to be we have the 
capacity with control. So it is going to be important that we 
create the communication standards, the technology that, as 
these vehicles connect to the grid, the market design, the 
right incentives to encourage the right customer behavior so 
that they do soak up that excess capacity first before we start 
putting charging on peak.
    Senator Craig. You also mentioned the ability of the 
automobile to communicate to the grid. Put some more to that 
for my own interests and knowledge. What are you talking about?
    Mr. Kjaer. This is kind of really an interesting notion. 
Today we consume electricity, and 30 days later we get a bill. 
We look at it, and we really do not understand what we did to 
cause the bill to be what it is. We have no concept of what 
electricity costs, and we have little concept of how to control 
those costs.
    With advanced meters, we are going to have the ability for 
two-way communication. So now for the first time, we are going 
to send information and incentive programs and education 
through to the customer, and they are going to be able to look 
at this on their laptop or their PDA or their cell phone, and 
they are going to be able to understand cause and effect in 
much more real-time terms, not 30 days after they have 
consumed, but hour by hour.
    Senator Craig. I assume that they will be able to go sit in 
their car, push a button on the screen. It will also show it? 
Cars are going to do that?
    Mr. Kjaer. What is amazing--it is called human interface 
technology. What is amazing is the computing power on board the 
vehicle and the ability with this communication standard and 
protocol that I am talking about to send data bursts to the 
car. So, for instance, with your key, you could go in, turn 
your electric car on or your plug-in hybrid car, and it could 
say, good morning, Mr. Craig. Yesterday you consumed X kilowatt 
hours and it cost you $1. Your wife could go and do the same 
thing and she could get some different information. So this is 
all kind of added features and benefits and communication and 
education that the auto industry is working on in conjunction 
with the utility industry.
    Senator Craig. So I am also making the assumption--and I 
think several of you talked about it. Thad, you had mentioned 
it--the ability to fast charge because out West, when you guys 
talk 20 and 40 miles and even 100 miles, I begin to say maybe 
at 100 you are beginning to talk interest. I want something 
that does 400 miles or I want something that does 300 miles. 
That is just a trip across a quarter of my State. So I need 
some capacity, folks, before you are really going to excite me. 
Commuting? Different story.
    I want to fast charge but not at my meter. I want to fast 
charge down at the office, but I am not going to bill the 
office for my transportation or they are not going to bill me. 
Does my car send a message that it is charging somewhere else 
and that I should be billed because me, the car, is charging 
somewhere else other than at my own home meter? Are we doing 
that kind of capability?
    Mr. Kjaer. That is the kind of capability that is being 
engineered into this communication protocol. That is called 
roaming. Think of it as your cell phone. It is kind of a cell 
phone model. So as long as that car is connecting to a ``smart 
grid,'' there will be the ability for that car to identify 
itself relative to you as the owner wherever that car travels. 
That is the goal.
    Senator Craig. Yes, because if you can recharge me in a few 
minutes, I could stop and have a cup of coffee along the way 
and wait for a new power source to build up so I could go a 
little further.
    Mr. Kjaer. Those are other issues. That is kind of fast 
charging. I mean, I was talking about the communication and the 
billing. But fast charging is a whole other issue.
    Senator Craig. I can see the routine pattern here of home 
to work to home, but when you want to get beyond that pattern, 
the concept of a smart--or roaming, that begins to make a lot 
of sense. You have got to do it.
    Mr. Kjaer. Yes. You have the battery electric car for urban 
commuting and then you have the plug-in hybrid for both urban 
commuting and highway travel.
    Senator Craig. Thank you, gentlemen. Please, go ahead.
    Mr. Dalum. Yes. I would just like to add that one of the 
considerations that you have when you have a very large battery 
system--we have a 35 kilowatt hour battery system--in order to 
charge that, you do need higher voltages. Not every customer 
has that type of capability where they are going to be charging 
these vehicles. So I just want to bring that to your attention. 
Especially for trucks, that is a factor that as you put larger 
batteries in there, you need higher voltages.
    Senator Craig. So truck stops take on a whole new 
character.
    Mr. Dalum. Potentially, or truck depots, you know, where 
they store their trucks that they require 220, 240, or even 
higher voltage.
    Senator Craig. Thank you.
    Mr. Balkman. If I could chime in, that is one of the 
reasons why one of our suggestions was that we expand the 
investment tax credit into these refueling stations so that we 
can help develop an infrastructure.
    Senator Craig. Thank you.
    The Chairman. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    If you come up north to Alaska, at our public parking lots, 
at the school parking lots, you have got the plug-ins. Every 
car has a head bolt heater. You have got to keep warm. A little 
bit different but kind of the same in the sense of you are not 
charging from your home, but if you did not have it, you would 
be losing employee time by going outside and heating your car 
anyway. That is up north.
    But I do want to ask a question about the technology and 
where we are right now. I think in your testimony, Mr. Wimmer, 
you indicated that Toyota is looking to the technology and 
where we are with those batteries that can withstand the colder 
temperatures. I think I had seen that you are looking at 
perfecting the fuel cell vehicle that can start and run in cold 
climates down to 30 below. Where are you with that technology? 
What is the situation right now with the plug-ins that we have 
now? Do we see a loss in storage capacity and performance at 
colder temperatures, and where are we in understanding the 
performance?
    Mr. Wimmer. I think the industry is beginning to understand 
the performance degradation that particularly lithium-ion 
batteries have at cold temperatures. Now, based on the 
chemistry, some perform better than others at very low 
temperatures, but there is--at least our experience, most 
lithium-ion chemistries will have a reduction in performance at 
sub-zero temperatures. But because these are plug-in hybrids, 
if they are charging, you could program the vehicle to preheat 
or precool so the cabin temperature is comfortable when you 
choose to leave. That will also help prewarm the battery to 
allow you to have greater all-electric range in very cold 
temperatures.
    Senator Murkowski. Is it going to affect your range then? I 
mean, if you've got a vehicle that can theoretically go 100 
miles in colder temperatures, would you only be able to do 75? 
I am trying to understand----
    Mr. Wimmer. For a pure electric vehicle, for a pure battery 
vehicle, yes, that would affect your range, but with the plug-
in concept, the engine starts and the vehicle operates normally 
as a standard hybrid vehicle.
    Senator Murkowski. So you are working on developing that.
    Mr. Wimmer. Yes. That is the plug-in technology that we are 
developing. We are also reexamining battery electric 
technology.
    Senator Murkowski. Let me ask a question--I don't know--
maybe to you, Mr. Balkman, or any of you can join in. You have 
suggested or you have encouraged us as policymakers to move 
forward with the tax credit for individuals so that they can 
purchase the vehicles, whether it is a $7,500 offset toward the 
purchase. Is that where we should be putting the Federal 
dollars, to help the consumer there, or should we perhaps be 
putting those incentives to help with the technology to develop 
the battery so that we can get the cost down? I suppose you are 
going to throw that back at me and say, well, that is for the 
policymakers to decide.
    But right now, people are kind of looking at what is going 
on out here. They get excited when they see nice flyers like 
this and think about the technology, but then they hear that, 
well, it is going to cost me $47,000. Maybe I wait. Maybe I 
hold off and do not make this purchase. So we are kind of a 
little bit of a limbo.
    Where should we be putting the incentives? Do we want to 
incent people to buy now and that encourages you to do more, or 
should we be putting more into that R&D, more into the credits 
for the manufacturers so we can get the prices down to the 
consumers? What end do we----
    Mr. Balkman. I will take a stab at that. You know, I think 
the tax credits are a big help because there is clearly a 
market for these. We have done very little by way of sales and 
marketing. We have a waiting list of some 6,000 people who 
said, hey, I want one.
    You kind of have to look at the electric vehicles and the 
battery technology as the same place where laptops were 10 
years ago. Laptops were a lot more expensive. The batteries did 
not last as long. They had issues with overheating. We have 
come a long way in addressing those. There is still a long way 
to go in perfecting the art of the batteries for vehicles. But 
I think the best way you are going to get people to be early 
adopters and to broaden the deployment of these vehicles is put 
the cost down.
    We are not talking large scales. I told you our numbers. 
Next year--or 2010, we expect to have 10,000 vehicles. That 
will be great for us. That is not a lot of cars in the grand 
scheme of things. Primarily those cars will be on the west 
coast in California. So that is still a small scale. Let that 
experiment work, and I think as more people start driving and 
increase demand, things will follow.
    But the best answer is we want both. We would like to have 
tax credits and more research and development in the battery 
because it is all part of the same picture.
    Senator Murkowski. Mr. Dalum.
    Mr. Dalum. Yes. I would like to comment on the heavy truck 
side. In my opinion, I agree we need both. Research assistance 
would be very helpful and also tax credits.
    On the research side, there is in the House the Heavy-Duty 
Hybrid Vehicle Act. Much work has been already done. That 
provides competitively awarded grants. The proposal would be 
for competitively awarded grants for the development of medium-
and heavy-duty hybrids. It would be open to also plug-in 
hybrids. So that is one that is underway that I think has a lot 
of promise.
    Then on the tax credit side, some of the legislation that I 
have seen has not specifically addressed medium-and heavy-duty 
trucks, and I would encourage to look at larger battery systems 
and the overall gross vehicle weight of the vehicle and offer 
incentives that address some of these unique characteristics of 
a medium-duty truck, a larger battery system and heavier 
weight.
    Mr. Wynne. Senator, if I might, I would just put a broader 
context around it, that we are competing with a very mature 
technology, the internal combustion engine, a very well 
entrenched fuel system. It is difficult to pick and choose. We 
really have barriers here to market entry that tax credits will 
help us address. We have R&D challenges that will help us move 
that technology down the road and get it more competitive. 
Ultimately deployment helps us with greater scale that helps 
with all of these things. So it is difficult for us to pick and 
choose.
    I think to Senator Craig's point before, the industry, as 
you can see, is moving down the road. The question is how many 
of these things can we work with Government on to accelerate 
that progress.
    Senator Murkowski. Thank you.
    Mr. Wimmer. Senator, Toyota generally supports consumer-
based tax incentives as a way to increase volumes and to 
maximize the affordability of the technology to the largest 
number of consumers. Our hybrid program, for example. We have 
been selling hybrids for over a decade now, and due to the high 
volumes, we are still improving the technology, bringing costs 
down. So from our standpoint, it is really high-volume 
production that helps bring the cost down to be competitive 
with gasoline.
    The Chairman. Senator Sessions.
    Senator Sessions. Thank you.
    Senator Domenici. Senator Sessions.
    Senator Sessions. Yes.
    Senator Domenici. Would you yield for 1 second?
    Senator Sessions. I would be glad to.
    Senator Domenici. I have to leave now, and I was just 
telling the Senator I would be leaving. But I did want to make 
a statement for the record.
    On funding for battery research, what we can find out so 
far is that there is $100 million in the energy and water 
appropriation bill that is a $50 million increase over what was 
in the executive branch bill. That is to go for battery 
research. That might not be enough, but I just want to report 
that that is what is in there. That bill is waiting 
consideration and match-up with the House and see what they 
have done.
    As I leave, I am going to try to go see your vehicles and 
meet some of you out there. I want to thank you again.
    Thank you, Senator Bingaman. You are probably in the most 
exciting part of trying to help with the oil problem. We have 
rocked along for so many years, but it looks to me like you are 
on the threshold here. This is going to be something for real. 
How quickly you can go I do not know, but I wish you wonderful 
luck next year.
    Thank you.
    The Chairman. Senator Sessions.
    Senator Sessions. Thank you.
    This is, indeed, exciting. As I have had my town hall 
meetings and heard the pain really of consumers in Alabama with 
high energy prices, we think about the negative impact it has 
had on our economy, our balance of trade deficit. Half of that 
is fuel. We need to do better.
    I have been saying that I consider the thing that is most 
close to success to become practical that could virtually 
eliminate a huge portion of our demand for fuel would be plug-
in hybrids.
    But the question is this. Maybe, Mr. Dalum, I will just ask 
you. We could pass a law that says we are going to incentivize 
hydrogen or incentivize eliminating the law of gravity, and we 
might not be able to get there yet. I was at the University of 
Alabama Transportation Center, and one professor told me that 
on conventional battery technology, there was not--his best 
judgment was--a lot of increase possible. It was going to take 
a breakthrough technology.
    How would you as a consumer--I guess you are a little bit 
of a skeptic here. Give us your view of how much--are the 
lithium-ion batteries today--you use them in your vehicles, 
which are utility vehicles, I guess, mostly. What is your best 
judgment about whether we are ready for prime time with the 
lithium-ion and how much improvement is necessary?
    Mr. Wimmer, maybe I will ask you to comment also.
    Mr. Dalum. Let me first state that there is a variety of 
different battery technologies available. Lithium-ion is one of 
the most promising. From our company's standpoint, as I 
previously stated, lithium-ion is an extremely expensive 
technology, and that is probably one of the primary limitations 
that we have right now.
    Our company has chosen, in order to accelerate production, 
to go with a different, more conventional technology. Because 
of the large truck you can carry much larger payloads, so we 
have gone with the more conventional advanced lead-acid 
battery, an AGM lead-acid battery, that is modular, that can be 
exchanged because it does have a limited life. So we have 
chosen to go a different direction until, in our view, lithium-
ion is ready.
    So I think there is a variety of different approaches. It 
just depends on, quite frankly, what kind of constraints you 
put on your design.
    Senator Sessions. Mr. Wimmer, in your view, is the battery 
technology available today that would make a plug-in hybrid 
practical and feasible, and if not, what kind of improvements 
in the battery would be necessary and how much, what kind of 
percentage increase?
    Mr. Wimmer. I think the lithium-ion battery technologies 
that are out there today, although they are expensive and 
durability has yet to be proven, they have the potential to 
satisfy the requirement of a light-duty plug-in electric 
vehicle. But longer term, if we are looking at true battery EVs 
that can compete with gasoline vehicles for range and 
durability, that is really going to take a battery 
breakthrough, new technology.
    Toyota feels strongly about that and has actually created a 
research division now to study these next generation batteries 
just to try and find the breakthrough that will get us to a 
battery that is low cost and durable enough to compete with a 
conventional gasoline vehicle.
    Senator Sessions. So you were saying it is not quite there 
yet?
    Mr. Wimmer. We are working hard on it, and hopefully will 
determine in, as I mentioned, our commercial fleet test program 
whether our battery will be durable enough.
    Senator Sessions. Now, the plug-in hybrid, as I understand 
it--if your commute is, say, less than 20 miles and the goal 
would be to be able to go 40 miles, about there, without any 
utilization of a liquid fuel and after that, there would be an 
engine that would carry you an indefinite distance. Is that 
what we are talking about?
    Mr. Wimmer. It depends on the system design. Our approach, 
which is a blended design, will provide vehicle speeds up to 
approximately 60 miles an hour just off the battery. If you 
wanted to go faster than that, the engine would start and 
supplement the battery. If you are running in, let us say, a 
lower speed, urban type of mode, that range could be in--we 
feel it should be in the 15 to 20 mile range before the engine 
would start and the vehicle would operate as a conventional 
hybrid vehicle.
    Senator Sessions. So you would have an unlimited range 
ultimately----
    Mr. Wimmer. Correct.
    Senator Sessions [continuing]. With the plug-in hybrids.
    But what about cost? Would we have a shortage of the 
components that would go into a battery if we made large 
numbers of them?
    Mr. Wimmer. There have been some studies that have 
questioned the supply of lithium if we were to double the 
quantities of lithium that is currently being used today for 
the consumer electronic market, if we were to double it with 
battery vehicles. I have not looked at a number of studies to 
draw a conclusion myself. But lithium is currently only 
produced in a number of Latin American countries, only a couple 
of sites in the entire world. So there are some limitations 
there on lithium.
    Senator Sessions. Mr. Kjaer or Mr. Wynne, one question. 
Would you agree? Both of you, I think, would see the advantage 
to move forward with electric or hybrid vehicles. Should we be 
looking at things other than the lithium-ion battery? Do we 
have enough funding and research going on in other kinds of 
battery technology that could be this breakthrough technology 
that would be a leap ahead of traditional battery systems?
    Mr. Wynne. I think there are other types of battery 
technologies that are being explored. There is no question 
that--again, lithium is not as energy dense as gasoline. So at 
the end of the day, if you are going to compare them one on 
one, that is the benchmark.
    My perspective on this is we must not let the best be the 
enemy of the good, and the beauty of electric drive--forgive 
for being one of its greatest fans--is it is so flexible, and 
it can be configured many, many different ways. There are lots 
of different vehicles and drive cycles in the fleet today.
    So I think what you are seeing here is as many different 
approaches as I have mentioned manufacturers to electric drive 
aiming perhaps even at different areas of the market and 
different demographics. So the plug-in hybrid or even the 
battery EV with a range extender is sort of an effort to 
leverage the technology that exists today, including improving 
lithium-ion battery energy storage technologies, but certainly 
there is room for improvement going forward and that is being 
explored.
    Senator Sessions. Mr. Kjaer.
    The Chairman. Senator Sessions, let me just indicate I am 
going to have to leave. Why don't you go ahead and ask any 
remaining questions and then conclude the hearing?
    Senator Sessions. I would be pleased to.
    The Chairman. Great. Thank you all very much for being 
here. We appreciate it very much.
    Mr. Kjaer. Senator Sessions, we have lithium-ion batteries 
from a number of major battery companies in our labs now bench 
testing. The longest test we have had running is over 3 years 
for plug-in hybrid modules, battery modules. We are seeing good 
cycle life that would be commensurate with the life of the 
vehicle. We do not know yet about calendar life. But I think 
the technology is maturing quite rapidly.
    The automakers that are the most aggressive about plug-in 
technology feel that the vehicles will definitely be ready 
somewhere between that 2010-2012 time period. Some of them are 
saying that they feel that the batteries will absolutely be 
ready as well.
    The Japanese Government and I think the Chinese Government 
are very focused on not just maturing lithium technology, but 
to your point, what is the next whiz-bang technology after 
lithium technology. The Japanese Government is very, very 
focused on that area and have set targets to get to over the 
next, I think, 10 or 15 years. We should be also concerned 
about that and be thinking about what are we doing here in the 
United States We absolutely have the capability of doing it. 
This is not a question of can we do it. It is a question of 
will we do it.
    I think it comes back again to that fundamental point that 
I made earlier on, and that is that we need a much more robust 
focus domestically on energy storage technology because it will 
be a fundamental game changer not just to the transportation 
industry, but also to the utility industry.
    Senator Sessions [presiding]. So you would say that it is 
possible to make a quantum leap, a major step forward, but it 
would take a new technology probably and we should be investing 
in that?
    Mr. Kjaer. I think we absolutely should be investing in the 
lithium technology today because that will help to get these 
cars out on the road that will start to create new applications 
in the energy system around energy storage. But we should not 
take our eye off the ball about what is the next step 10, 15, 
20 years from now.
    Senator Sessions. The implication is in your testimony we 
are not doing enough of that in the United States. Is that a 
function of governmental incentives, and should we have more? 
Briefly. I do not want to take too long.
    Mr. Kjaer. I do not think it is just incentives. I do not 
think we can lay all of the blame just on incentives or lack of 
incentives. I think we need to get focused as a Nation around 
the issue of energy storage and what that can mean to us from 
an energy security perspective and from an energy efficiency 
perspective.
    Senator Sessions. Mr. Wimmer, I saw something that Toyota's 
Camry had the quickest payback of any battery car. I do not 
know if you want to comment on that.
    But how do you feel about this question of should the 
United States be doing more? Surely we should pursue the 
lithium-ion or any traditional type batteries, but should we be 
looking for more of a breakthrough technology?
    Mr. Wimmer. I think when we are talking about battery 
breakthrough technology, it is a global challenge. Scientists 
have been working on batteries for centuries. I mean, it is 
hundreds of years of development. So with that type of 
challenge, it is going to take all the nations and all the 
scientists to jump beyond where we are today with the next 
generation of batteries.
    So I think DOE's basic energy sciences activities is 
working on battery materials. A number of the national labs are 
working on these advanced materials. I think all of that is 
going to be very useful in finding the material breakthroughs, 
as well as the basic electrochemistry breakthroughs that are 
going to be necessary.
    Senator Sessions. But just throwing money at that does not 
mean we are going to solve the problem next year.
    Any other comments on that particular question? Mr. 
Balkman?
    Mr. Balkman. Yes, Senator Sessions. I just want to point 
out that I testified earlier that we will begin production in 
2009. Another pure electric company out in California, Tesla, 
is actually delivering electric cars that are on the roads 
today. We are beginning this now. It is not perfected, but it 
is here.
    I would add--and I do not know the specifics of all the 
battery technology, but I can tell you this, that if the 
Congress and if our Federal Government will put as much effort 
behind this technology, specifically battery technology, to 
drive electric transport, as we have in other alternative 
energy sources, just level the playing field and pay as much 
attention to this as we have other things, I think we will see 
a lot more progress a lot quicker, and we will be a lot closer 
to electrifying our fleet not just in years from now, but maybe 
as soon as next year and a lot closer, a quicker.
    Senator Sessions. I offered legislation that would require 
the Department of Energy to evaluate all our incentives and 
make some recommendations as to which ones they think have the 
best prospect. I have not heard from them. But I really think 
it is difficult for us as nontechnicians, nonscientists, to be 
sure exactly where we should put the research dollars.
    Mr. Wimmer, one thing I would ask you is I believe you made 
reference to nuclear power. It seems to me, without any doubt, 
that nuclear power emits no greenhouse gases or other 
pollutants into the atmosphere and has virtually unlimited 
capacity to expand and comes out cost effective. I am convinced 
that it is at least as cheap as coal will be. So would that not 
be a wonderful future in which we have a nonpolluting nuclear 
electric generation with battery automobiles that could run on 
that clean power?
    Mr. Wimmer. I think clean power is key, or cleaner power. 
Whether that is from nuclear or renewables, it really depends 
on the flexibility of the power grid and what makes the most 
sense from an economic standpoint, as well as potentially from 
a regulatory standpoint. But clearly, as the grid becomes 
greener, the amount of CO2 produced generating 
electricity and therefore driving these advanced electric 
vehicles will come down and they will become more 
environmentally friendly.
    Another concern is, with this pending climate change 
legislation, how the credits for electric vehicles would be 
handled. Would that be given to the utilities, or would that be 
given to the auto manufacturers? I think that is something that 
we need to work out here as we move forward. Or to the 
customer?
    Senator Sessions. That is an honest--you are correct.
    Any more brief comments on the nuclear question?
    [No response.]
    Senator Sessions. Thank you very much.
    Chairman Bingaman does such a good job of having hearings 
on important issues. I really compliment him on that. He is 
seeking the truth, and that is what we have been trying to do 
today.
    I am so excited about the possibility of plug-in hybrid 
technology and would hope that we can see that develop and 
become a big part of what we do. But I know it is maybe not 
perfectly ready today to do everything we would like, but maybe 
we can make those breakthroughs and continue to do so. That 
will be a very feasible future for us.
    Thank you so much and I appreciate your excellent 
testimony.
    [Whereupon, at 11:28 a.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

      Responses of Edward Kjaer to Questions From Senator Bingaman
    Question 1. It's notable that many of the nearer term entrants we 
are likely to see are ``city cars'' or other shorter range vehicles. 
One might imagine that cities where these would be the most useful 
would also likely be places where housing is dense a substantially 
smaller part of the population have garages to plug in vehicles at 
night. Is this true, and if so are there programs to address this?
    Answer. Various studies suggest between 30--60% of the U.S. 
households have access to a plug for ``home refueling.''
    The issue of providing metered charging facilities in high-density 
housing (apartments, condos, etc) situations is one of the important 
actions required of plug-in vehicle (PEV) infrastructure development. A 
few startup companies, several cities (San Jose and San Francisco, CA), 
and some utilities are beginning to address how to deal with this 
aspect of vehicle charging infrastructure. In general, much more work 
needs to be done in this area to understand planning, placement, and 
costs to install and operate this kind of charging infrastructure. 
Adoption rates for PEVs will likely be modest in the early years as a 
result of technology cost and product availability/choice. It is 
anticipated that early adopters will have access to home refueling 
plugs.
    In the mid-to-long term, understanding how to support all types of 
charging infrastructure (residential, workplace, fleet and public 
charging) is critical to effectively supporting mass market adoption of 
electric vehicles (EVs) and plug-in hybrids (PHEVs). Planning, combined 
with a strategically timed rollout of infrastructure to support 
developing populations of plug-in vehicles is likely to result in the 
most effective use of available public and private capital resulting in 
higher vehicle owner satisfaction.
    There is substantial risk in broad pre-deployment of public 
charging facilities without the vehicle population to adequately use 
these facilities. This will tie up near-term capital that could be 
better applied to support home-based charging infrastructure (this will 
better serve most early adopters) and creates a strong possibility of 
poor station location or negative public perceptions of plug-in 
technology (unused, reserved parking locations resulted in poor public 
perceptions of electric vehicles in the 1990s in CA).
    Question 2. In your testimony you discuss your efforts in 
developing `smart charging' where vehicle charging is controlled 
remotely in order to best match generation availability. Where are you 
in respect to developing Vehicle-to-Grid (V2G) technology where a plug-
in can take energy from the grid AND put it back on the grid?
    Answer. While the potential of V2G is intriguing, we are many years 
away from realizing a scalable model across the U.S. Most challenging 
is how to control a complex and diverse system of vehicles sending 
energy back to the grid.
    However SCE is exploring with several automakers the potential of 
Vehicle-to-Home (V2H). In this scenario small amounts of energy may be 
drawn occasionally from the vehicle's battery (without impacting 
battery life) for residential ``peak shaving'' or ``emergency backup''. 
However, the energy would not be sent back to the grid, but only back 
to the home.
    We believe it is a matter of prioritization. We believe that there 
is much work to be done on ``grid-to-vehicle.'' In others, we need to 
focus on getting the vehicle to be successful, before focusing on long-
term value propositions.
    Question 3. What are the main challenges, both for technology and 
policy that you see in developing V2G?
    Answer. Like any other RD&D project, V2G will have to go through 
all the phases of development from proof-of-concept to large-scale 
demonstrations. The complexity of managing energy from millions of 
vehicles will have to be addressed. Automakers will need to be brought 
into the process, as the V2G capable vehicles will need large kW 
discharge capability, battery warranties, and other issues to be 
addressed. If this technology is proven, then policies at FERC and 
other agencies will need to be revamped.
      Responses of Edward Kjaer to Questions From Senator Domenici
    Question 4. In your testimony you said that you do not see a large 
system-wide challenge fueling plug-in electric vehicles. Can you 
explain that in more detail? For example, if we saw a significant 
increase in the number of electric vehicles, say 50% of the light duty 
vehicle fleet, what would that represent in terms of increased energy 
demand with all other things being equal and how does that translate 
into the number of new power plants required?
    Answer. A joint study by Electric Power Research Institute (EPRI) 
and the Natural Resources Defense Council (NRDC) studied the 
environmental and energy impacts of large fleet penetrations of PHEVs. 
The range of electrical energy demand possible by converting the light-
duty transportation fleet to PHEVs or EVs is relatively modest in the 
context of the full electric sector--if 10 million plug-in vehicles 
with 40 miles of electric range (similar to the Chevy Volt) 
materialized on today's grid they would represent less that 0.5% of 
total U.S. electrical demand.
    EPRI and NRDC also found that large market penetrations of plug-in 
hybrids (as much as 80%) would create at most a small need for 
additional capacity, between 1.2% and 4.6%. This equates to 19-72 GW in 
total new capacity added over a forty-year period (an average 
nationwide annual increase of 475 to 1800 MW from 2010 to 2050).
    The above number is based on a very conservative scenario where 25% 
of the charging occurs on-peak. However, defective implementation of 
smart charging technologies and customer programs to incentivize off-
peak charging will have the potential to minimize the need for new 
power plants while improving generation plant utilization. Off-peak 
charging is defined primarily as minimizing charging load during the 
weekday peak hours in the summer months or winter for cold-weather 
utilities. This is synergistic with providing vehicle owners with the 
lowest possible cost of electricity while maintaining convenience of 
charging. Other studies by the Department of Energy's Oak Ridge 
National Lab and Pacific Northwest National Lab found that the on-peak 
demand for new power plants could almost entirely be mitigated with 
utility involvement.
    Question 5. With regard to the efforts now underway to standardize 
technology needed for the vehicle to grid interface and for ``smart 
grid'' technologies, do you believe these efforts are sufficient to 
establish robust industry standards by the time we see significant 
market penetration by plug-in vehicles? In other words, what is the 
risk of consumers being stranded with obsolete technology like the 
Betamax tape systems of the late 1970s?
    Answer. Representatives of the electric utilities have been working 
closely with the automotive industry on creating the necessary 
``recommended practices'' that would guide all automakers in designing 
PHEVs and EVs that are compatible with smart charging infrastructure. 
There are two important recommended practices, one defining the 
physical connection between vehicles and the grid (SAE J1772) and one 
defining the way vehicles communicate with smart metering and other 
smart grid systems (SAE J2836). Both of these standards efforts are 
scheduled to be completed in over the next several years. Once 
completed and approved by standards committees representatives 
(comprised of automaker, supplier, utility, and government reps), 
automakers would follow these practices in the design of their 
production plug-in vehicles.
    Electric utilities and EPRI are also conducting intensive 
technology development efforts with automotive partners (Ford, GM, and 
others) to ensure a rapid maturation of the technology and verification 
of the sufficiency of these standards to ensure that the many different 
smart grid approaches are easily compatible with the single automotive 
standard for smart charging.
    From a policy perspective, we support open-source standards, and 
are concerned that a proprietary charging system may occur for 120 or 
240 V charging. We believe policy is needed to discourage development 
of proprietary charger connection or communication standards, or 
proprietary technology that limits free access.
    Question 6. Please describe your company's history of using 
electric drive vehicles.
    Answer. Southern California Edison (SCE) has a long history of 
using electric drive vehicles. Since the 1970s, SCE has actively 
researched and implemented electric vehicles in its operations. It 
began with early prototypes from auto manufacturers, to pre-production 
prototype evaluation in partnership with major OEMs, to refined fully-
functional electric vehicles in fleet revenue service. Since 1998, SCE 
has maintained a fleet of EVs of greater than 200 in number, which 
reached a peak of 320 in 1999, and currently numbers 293. Today, SCE 
operates the largest private fleet of EVs in the country that has 
traveled over 16.7 million EV miles in real world day-to-day fleet 
operations with company meter readers and field service personnel, and 
saved over 830,000 gallons of gasoline.
    Question 7. How many PHEVs do you currently have in your fleet?
    Answer. SCE currently has 4 PHEV prototypes in its evaluation and 
testing fleet. This includes: 2 Ford Escape PHEVs, 1 Sprinter PHEV van, 
and 1 International heavy-duty PHEV utility truck. Today there are no 
commercially available PHEV vehicles from Tier 1 manufacturers.
    Question 8. What has been the feedback from employees who are 
driving the vehicles?
    Answer. SCE's EVs in our meter reader services division perform 
flawlessly and are well liked by employees. Their feedback includes 
favorable reactions from customers and the general public; access to 
carpool lanes greatly reducing ``windshield time'' and quite, clean 
reliable operation without having to go to a gas station.
    The Ford PHEV prototypes have consistently returned favorable 
reviews. SCE staff report that the vehicles are just as comfortable and 
smooth riding as conventional versions, with the smooth power 
transitions between electric and hybrid drive. Charge time is easily 
accommodated overnight with 120 volt power.
    The Daimler Sprinter prototype van has been useful for fixed route 
delivery type applications, such as hauling medium loads in an 
efficient package. The electric drive function of the Sprinter PHEV has 
been reported to be very powerful and capable of full driving 
functionality in excess of 50 mph.
    The International PHEV truck prototype was the first of its kind, 
built by SCE in 2001, and demonstrated in the SCE fleet in 2004. It was 
able to do all the work of a ``troubleman'' truck with the added 
benefit of reduced exposure to harmful noise and emissions.
    Question 9. Are you tracking the PHEV miles per gallon? If so, what 
kind of values are you seeing?
    Answer. Several Ford PHEVs have been tested in multiple 
configurations at SCE's EV Technical Center located in Pomona, CA. They 
have also been baselined against the stock Ford Escape HEV version. 
Currently two PHEVs are in reliability test and mileage accumulation.
    With regard to fuel efficiency, we are evaluating the vehicles 
under accepted procedures based on industry and government developed 
standards. So we are indeed tracking miles per gallon, but it is 
probably more appropriate with this technology to use different terms 
to describe fuel economy. With the broadening of technology which we 
are currently experiencing in the transportation field, comes a need 
for new metrics to understand energy use. With these vehicles we are 
actually replacing one fuel for another--electrical energy in place of 
gasoline--and that can lead to confusion. PHEVs also do not have 
constant fuel economy; rather, the fuel economy is related to the 
distance driven. As the electrical energy is used first to maximize the 
benefit, the fuel economy is much higher for shorter drives than longer 
drives. Vehicle usage data for the U.S. showed that 68% of all 
residents drive 30 miles or less per day to go to work and back.
    If we were to use the traditional metric of miles per gallon for 
fuel efficiency with a PHEV like the Chevrolet Volt, and apply that to 
the 68% of commuters with a round-trip drive of 30 miles or less, the 
Volt, with a stated 40 mile range on its battery, would in fact have 
infinite ``mpg.'' Pure electric vehicles have previously been rated 
with window stickers showing miles per unit AC kWh. Groups like the 
Society of Automotive Engineers have required conversion of electrical 
energy to liquid fuel equivalence, which is then added to the volume of 
liquid fuel used.
    SCE's results for a 30-mile drive of the 1st Ford Escape prototype 
PHEV on the urban test course show a 57% reduction in gasoline used 
over a stock hybrid Escape without PHEV capability. The amount of 
gasoline used by the prototype PHEV Ford Escape for the 30-mile test 
loop was less than one-third of one gallon, with the balance of the 
drive energy coming in the form of electrical energy from the grid. The 
gasoline savings on a national basis if such vehicles were in use for 
those 68% of commuters can thus be easily estimated, given the total 
number of commuters.
    These are the actual results from both test vehicles for the 30-
mile urban test loop (30.6 miles actual distance):

          HEV: 0.68 gallons gasoline
          PHEV: 0.29 gallons gasoline and 6.0 AC kWh 10.

    Question 10. What kind of charging system are you using to recharge 
the PHEVs?
    Answer. Due to the size of their batteries, most PHEVs utilize an 
on-board charger. Using appropriate safety equipment (e.g. GFCI), the 
on-board charger is connected to the power grid. Depending on the 
vehicle requirements and design features, power is then transferred 
from the utility grid at either 120 volts or 240 volts.
    Question 11. What kinds of corporate applications are you using the 
PHEVs for? Meter reading? Distribution work? Company outreach efforts?
    Answer. SCE's PHEV prototypes are in vehicle testing applications 
only and are not integrated in to our working fleet. As PHEV products 
become commercially available SCE will integrate them in to our fleet 
operations where appropriate.
    Question 12. What is the current status of Lithium Ion batteries 
for hybrid electric vehicles (HEV), plug-in hybrid electric vehicles 
(PHEVs), and electric vehicles (EVs)?
    Answer. Lithium Ion batteries include more than a dozen different 
electro-chemistries. The performance, safety and cost vary widely. 
Small form factor (cylindrical cell vs prismatic cell) Lithium-Ion 
batteries are commonly used in consumer products. Large battery packs 
require massive paralleling of small form factor battery cells or the 
use of larger form factor batteries. Several battery manufacturers are 
currently producing large lithium cells suitable for automotive 
applications, and use various electrochemistries and form factors. 
Laboratory testing of those cells have shown encouraging results. In 
general, Lithium Ion ``power'' batteries (gasoline hybrids) are just 
coming to market now in limited volumes/applications. Next year we will 
start to see Lithium Ion ``energy'' batteries in low volume launches of 
BEVs and possibly PHEV demonstrations. In both cases however, the 
technology is still in very early stages of maturity.
    Question 13. What are the major technical/market barriers for 
commercialization of lithiumion batteries?
    Answer. Recently, lithium Ion batteries have made significant 
progress, although manufacturers are still working on improving overall 
battery safety, cycle life (the ability of the battery to maintain 
performance after multiple charge and discharge cycles) and calendar 
life (the ability of the battery to sustain performance over the life 
of the vehicle).
    One of the main barriers remaining is cost. At current low 
production volumes, the cost remains high. At higher production levels 
(several hundred-thousand battery packs a year), the cost is expected 
to drop significantly. From a policy perspective, establishing large-
scale volume to get to mass production (secure lower costs due to 
economies of scale) is the key issue for policymakers to help address. 
While the costs are higher today, the historical introduction of new 
technology into the auto industry (e.g. automatic transmissions) has 
been overcome as the value has been understood by the consumer.
    Question 14. Plug-in vehicles hold great promise in our ongoing 
efforts to lessen our dependence on foreign sources of oil. However, 
U.S. transmission infrastructure has increased by only 6.8% since 1996. 
In last year's energy bill, Congress encouraged the modernization of 
the electricity grid in ``Smart Grid'' provisions that include the 
deployment and integration of plug-in electric and hybrid electric 
vehicles. What kind of infrastructure improvements must we undertake to 
accommodate the eventual use of plug-in vehicles?
    Answer. SCE strongly believes that research is needed covering the 
intersections of vehicle connection and communication, load management 
and smart charging, bi-directional energy flow, smart meters and smart 
grid. A smart grid will greatly enhance the deployment of PEVs, but is 
not a prerequisite for the large-scale deployment of PEVs.
    Given the anticipated slow adoption rates, we do not anticipate any 
near term transmission system challenges meeting the load from 
transportation grid connecting. However we do anticipate some local 
distribution system challenges with early adopter concentrations of 
PEVs. These challenges will be addressed at the local utility level, 
and are similar to other challenges that utilities have been addressing 
for years. The impact of full function pure battery EVs on the 
distribution system is greater than the impact of PHEVs. This is 
because full size, full function battery EVs use 6.6 kW charging 
systems (or larger) which is much larger than the typical 1.4 kW 
charging system used by PHEVs.
    Also see answers to questions 4 and 5 for answers on the impact on 
utility generation systems and other infrastructure.
                                 ______
                                 
     Responses of Brian P. Wynne to Questions From Senator Bingaman
    Question 1. You mentioned that tax incentives should reward 
performance rather than picking winners and losers. Others might argue 
that basing the incentive on the size of the battery is biasing policy 
towards a particular technology. Is there a more neutral approach such 
as one linked to fuel consumption that would be equally effective for 
electric vehicles and competing technologies?
    Answer. If the goal is to reward only efficiency, than a completely 
neutral incentive with an efficiency-only metric could be developed. 
However, if a credit were to have multiple goals, such as rewarding 
efficiency and advancing technology development, or promoting fuel 
diversity, then additional metrics are useful.
    In the current tax code, consumer credits are available for 
alternative fuel vehicles, hybrids, advanced diesel and fuel cell 
vehicles. Each has specific metrics to ensure that diverse technologies 
meet emissions and efficiency goals of the credits.
    Based on the current tax policies for advanced vehicles, a battery 
metric measures emissions and oil displacement performance and targets 
the highest cost element in emerging plug-in vehicle technology.
    Question 2. It's notable that many of the nearer term entrants we 
are likely to see are ``city cars'' or other short range vehicles. One 
might imagine that cities where these would be the most useful would 
also be likely to be places where housing is dense [and] a 
substantially smaller part of the population have garages to plug in 
vehicles at night. Is this true and if so are there programs to address 
this?
    Answer. First to clarify, ``city car'' sometimes is used as a 
technical term for a mid-speed vehicle (as opposed to a low or full 
speed battery electric vehicle.) In this instance, assuming that the 
term is used here meaning ``for urban use,'' the answer is that a large 
segment of the early adopters of plug-in vehicle technology, be it 
battery electrics or plug-in hybrids is likely to be urban consumers 
using the vehicle for commuting and other shorter range travel.
    Plug-in hybrids and extended range battery electrics offer 
additional fuel, or recharging power, on board. Pure battery electrics 
do not. All will need their batteries recharged at some point. The 
difference is how often.
    Whether plug-in vehicles have a short or long range on a charge, 
new charging models need to be identified to serve consumers that do 
not have a private garage charging option.
    Options being privately demonstrated include daytime public 
recharging; with a fast charge option; multi-tenant garage recharging. 
Other models, such as the Better Place demonstrations are promoting a 
recharging model that would allow customers to swap out batteries at 
ubiquitous stations rather than recharging them.
    Different users, such consumers and commercial fleets, are likely 
to require different recharging approaches. Efforts to promote non-
private charging should allow for this diversity while moving toward 
equipment and recharging standards to maximize interoperability and 
safety.
    The Department of Energy, through programs like the Clean Cities 
program, can help to fund cooperative vehicle and fueling 
demonstrations, but is constrained by limited funding. Additional 
demonstrations authorized in Section 131 of the Energy Independence and 
Security Act (EISA) of 2007 offer validation paths for recharging 
models as well, but they have not yet been funded.
     Responses of Brian P. Wynne to Questions From Senator Domenici
    Question 3. In your written testimony, you note that there some tax 
provision being offered that would actually limit plug-in technology 
development and vehicle options. Please elaborate.
    Answer. During the extended debate on energy tax legislation, 
several versions of a tax credit for plug-in vehicles were at some 
point considered. There were several bills that would have established 
a credit only for ``plug-in hybrid vehicles,'' excluding battery 
electric vehicles that plug-in, but are not hybrids.
    Later in the debate, a proposal to lift the threshold eligibility 
requirement from a 4 kWh battery to 8kWh. The latter threshold would 
have excluded many of the smaller-battery plug-in hybrid models that 
have been proposed, such as the including the proposed Prius plug-in.
    In addition, the higher threshold would also have penalized plug-in 
vehicles vehicles that operate in a blended fashion, i.e., the battery 
and conventional engine can work simultaneously, rather than serially. 
These can be extremely efficient using a smaller battery.
    With this emerging technology, we support the inclusive incentive 
that was adopted, which allows the market to determine a preference in 
plug-in options, including blended operation plug-in hybrids, pure 
battery electric vehicles, extended range battery electrics like the 
Volt or plug-in hybrids that would operate serially, like the proposed 
Saturn Vue.
    Question 4. Please describe the differences between EVs, HEVs, and 
PHEVs. Which technology is most widely used in the U.S.?
    Answer. Each of these, as well as fuel cell electric vehicles 
(FCEVs) are electric drive vehicles, meaning electricity provides some, 
or all, of a vehicle's motive power--i.e., electricity moves the 
wheels.
    Battery Electric Vehicles (BEVs) are plug-in electric drive 
vehicles. (Not all plug-in's are hybrids.) They use batteries to power 
an electric motor to propel the vehicle. BEVs produce no tailpipe 
emissions. The batteries are recharged from the grid and from 
regenerative braking. Full function EVs are being produced by Tesla and 
are planned by other manufacturers, including Nissan, Mitsubishi, 
Chrysler and BMW. Battery electric vehicles in widespread use today 
include low-speed, neighborhood electric vehicles, airport ground 
support equipment, and off-road industrial equipment such as fork 
lifts.
    An extended-range battery electric vehicle (BEV-ER) is variation on 
the BEV configuration. It includes an internal combustion engine or 
fuel cell, but that power source is only used to recharge the battery; 
it does not move the wheels.
    Hybrid Electric Vehicles (HEVs) use both an electric motor and 
another energy source such as internal combustion engine (or 
compression--diesels can be hybridized as well) to propel the vehicle. 
A hybrid is designed to capture energy that is normally lost through 
braking and coasting to recharge the batteries (regenerative braking), 
which in turn powers the electric motor--without the need for plugging 
in.
    A `parallel' hybrid electric vehicle uses the electric motor or the 
internal combustion engine to propel the vehicle. A `series' hybrid 
electric vehicle uses the electric motor to provide added power to the 
internal combustion engine when it needs it most, for example, in stop-
and-go driving and acceleration. Hybrid electric vehicles have the 
potential to use electricity to power onboard accessories or to provide 
outlets to plug in appliances or tools. All have the potential to 
achieve greater fuel economy than conventional gasoline-engine 
vehicles.
    Plug-in Hybrid Electric Vehicles (PHEVs) are hybrid vehicles with 
plug-in capability. That is, they use a combination of grid 
electricity, regenerative energy from braking, and power from another 
onboard source, such as an internal combustion engine or fuel cell. The 
last of these is what distinguishes them from the other plug-in 
vehicle, the BEV.
    In addition, plug-in hybrids can be configured to operate serially, 
or in a blended fashion. In a serial configuration, the vehicle runs on 
electricity alone at some points, like starting, and uses its other 
power source alone at others, for example, when accelerating. 
Alternatively, a plug-in hybrid may be configured for blended 
operation, i.e., the battery and the conventional engine operate 
together.
    While forms of battery electric vehicles have been around the 
longest, HEV's have achieved the greatest commercial penetration in the 
10 years since their introduction. Since the introduction of the Honda 
Insight in late 2008, the number of hybrids offered for dale in the US 
has risen to 20 models. Toyota has sold over a million hybrids 
worldwide. In the U.S. this year, sales figures to date for hybrid 
vehicles are approximately 270,000 vehicles. Due to variations in sales 
reporting, the numbers are not exact. However, a breakdown of sales by 
manufacturer and vehicles by year is available at: http://
www.electricdrive.org/index.php?tg=articles&topics=7
    Question 5. How widespread is the use of electric drive in public 
transportation?
    Answer. Hybrid and fuel cell buses, school buses are being added 
into city and school transit in small numbers, but with significant 
benefits in fuel and operating cost as well as emissions. According to 
the American Public Transportation Association's (APTA) ``2008 Public 
Transportation Fact Book,'' electricity powered .1% of buses in 1996 to 
2.3% in 2007.
    The Park Service also uses electric drive for public 
transportation. For instance, in Alaska's Denali National Park, the 
Park Service is trying out a hybrid bus to reduce fuel costs and air 
pollution in this pristine area. The bus has a hybrid system developed 
by Enova Systems and will provide over 30% reductions in particulate 
matter, 20% reduction in NOX emissions, over 40 percent 
reduction in CO2 and in excess of 70% percent improvement in 
fuel economy.
    Question 6. What is the role of PHEV in fleet applications?
    Answer. PHEVs can potentially play a significant role in private 
and in regulated fleets, which have significant economic and regulatory 
requirements to reduce petroleum use. The managed travel and central 
recharging characteristic of fleets are optimizing features for plug-in 
vehicles.
    For fleets regulated under EPAct 92, the 2007 EISA explicitly 
recognized the use of plug-in hybrids (and, finally, hybrids) in 
meeting petroleum reduction requirements through alternative fuel 
vehicle acquisition. This recognition will substantially expand the 
acquisition of electric drive, specifically PHEVs, in covered fleets.
    In private and municipal fleets, economic concerns and 
environmental requirements have led to many fleets to incorporate HEVs 
and plan to incorporate PHEVs into their fleets as they become 
available.
    At the local government level, at least 10 U.S. cities have or are 
considering enacting requirements for taxicabs traversing their roads. 
Other cities are trying an incentive approach. For instance, after the 
New York City edict for hybridizing the cab fleet by 2012 was blocked 
in court, city officials recently announced new financial incentives 
for trading traditional taxis in for hybrids. The Medium and Heavy Duty 
HEVs are currently being used in fleets of major enterprises such Wal 
Mart, UPS, FedEx and others. Environmental Defense has a useful survey 
of available vehicles in this category: http://www.edf.org/
page.cfm?tagID=13394
    Question 7. You said that we could cut our fuel consumption by 83% 
by switching the light duty fleet to electric drive and hybrid 
technologies. Can you explain the assumptions you used to arrive at 
this number?
    Answer. We used an internal modeling exercise with aspirational 
timing benchmarks to highlight the oil-saving potential of electric 
drive. We posited a light duty fleet (cars & trucks) with a mixture of 
electric drive technologies, including hybrids, plug-in hybrids, fuel 
cells and battery electric vehicles.
    We used the 2006 EIA projections of light-duty vehicle stock and 
liquid fuel consumption. (The modeling was done last year.)We posited 
market entry in 2010 with 100% new car sales being electric drive by 
2020 (15 million per year) and 100% of the vehicles being electric 
drive with an average equivalent electric of 40 miles by 2030.
    The timeline we used is short, to highlight the oil savings 
potential of electric drive, rather than project real-word market 
penetration rates.
    Question 8. As you noted in your testimony, we import the majority 
of the oil we use for our transportation fleet. Not only does this put 
as at a strategic disadvantage, it also causes us to send a huge 
fraction of our nation's wealth overseas. Given the new technology and 
materials involved in electric and hybrid vehicles, are there crucial 
areas we should monitor to may give rise to strategic vulnerabilities 
for our country?
    Answer. In addition to the importance a domestic automobile 
manufacturing industry, domestic capacity for advanced battery 
manufacturing is a critical need for the emerging electric drive 
industry. Currently there is very little domestic manufacturing of 
lithium ion batteries and hurdles to commercial scale industry include 
not only the materials but the manufacturing processes and equipment 
for automotive scale battery manufacturing must be developed. Congress 
can play an important role in building a domestic industry by funding 
the battery and manufacturing programs authorized in EISA 2007.
    Questions have also been raised about the availability of lithium. 
It has been noted that lithium is currently known to be concentrated in 
geographically remote and geopolitically inhospitable areas of the 
world, including the Andes in South America.
    Answer. While Congress should be monitoring the availability of 
lithium, it is worth noting that reliance on lithium ion batteries for 
the global personal computing and cell phone applications has not been 
limiting to date. Nevertheless, the search for the next iteration of 
the lithium ion chemistry, and of advanced battery technology, is 
ongoing.
    Question 9. You noted the importance of developing and maintaining 
a domestic battery manufacturing capacity. Recently there have been 
advances in the performance of traditional lead acid batteries for 
which there is a mature manufacturing and recycling industry in this 
country. What do you think the prospects are for traditional lead acid 
batteries playing a role in the electrification of the transportation 
sector?
    Answer. Traditional lead acid batteries are already playing a role 
in the electrification of transportation, as they power low speed 
electric vehicles (or neighborhood electric vehicles). These vehicles 
provide battery electric options in communities, campuses and 
increasingly urban options. They are road legal in 40 states and help 
to build market, infrastructure and acceptance of electric 
transportation.
    Advanced lead acid options are also options for certain 
configurations of hybrid vehicles. For example, advanced lead-acid 
batteries of the Absorbant Glass Mat type, are an excellent technology 
for micro-hybrid vehicles, which operate with conventional powertrain 
and use battery power at idle and stop (and in some cases mild 
regenerative braking) to enhance fuel economy.
    Question 10. What is the current status of the lithium ion 
batteries for hybrid electric vehicles, plug-in hybrid electric 
vehicles and electric vehicles?
    Answer. First generation lithium ion batteries are market ready, 
for instance lithium ion batteries power the Tesla EV, A123 plug-in 
hybrid conversions and Johnson Controls' lithium ion battery will be in 
the 2009 Mercedes hybrid. However, continuing advances are needed for 
vehicle applications of this relatively young technology. Reductions in 
cost, advances in battery life, durability and abuse tolerance are 
needed to achieve the scale and performance certainty required for 
global commercial scale vehicle applications.
    Question 11. What are the major technical/market barriers for 
commercialization of lithium ion batteries?
    Answer. Technical barriers for widespread commercialization include 
durability, length of life and safety. Department of Energy research 
and development programs are a critical part of the industry effort to 
address the technical challenges. The Department Energy Storage program 
is working on some salient technical challenges, including performance 
over time; abuse tolerance (including overcharge and over-discharging, 
and high temperature environments); and life--the battery needs to last 
and perform for the 15-year life target of the vehicle.
    Cost is a technical and a market hurdle. The incremental cost of 
lithium ion batteries for plug-in vehicles is estimated at $500 to 
$1000 per kilowatt hour. To put this in perspective, the Chevy Volt is 
designed to operate on a 16 kWh battery. Even at the lowest end of the 
cost projections, the battery would add $8000 to the cost of the 
vehicle. Federal and private research and development partnerships can 
help to address the technical aspects of the cost. The market hurdle 
can be mitigated by consumer tax incentives that address the retail 
cost and manufacturing incentives that mitigate production costs.
    Section 641 of EISA, the Energy Storage Competitiveness provisions 
developed by the Senate Energy and Natural Resources Committee, provide 
a critical template for advancing battery technology; funding for these 
programs going forward can accelerate the development of energy storage 
technology and electric drive transportation overall.
    Question 12. Plug-in electric vehicles hold great promise in our 
ongoing efforts to lessen our dependence on foreign sources of oil. 
However, U.S. transmission infrastructure has increased by only 6.8% 
since 1996. In the last year's energy bill. Congress encouraged the 
modernization of the electricity grid in Smart Grid provisions that 
include the deployment and integration of plug-in electric and hybrid 
electric vehicles. What kind of infrastructure improvements must we 
undertake to accommodate the eventual use of plug-in vehicles?
    Answer. A 2007 study conducted by the Electric Power Research 
Institute and the National Resources Defense Council concluded that 84% 
of the energy needed for a plug-in light duty vehicle fleet could be 
met with existing electricity capacity. Grid connected transportation 
won't require more electricity generation for a very long time. It will 
require better management of existing electricity resources.
    The national scale adoption of grid-powered transportation requires 
updating the the ``hardware'' and the ``software'' of electricity 
infrastructure. Better technology and better communication will 
optimize the energy and environmental benefits of plug-in vehicles.
    Smart meters that allow two way communications between energy users 
and suppliers are needed so that consumers can maximize savings and 
benefit from price signals and electricity providers can manage load, 
maximize off-peak charging and ultimately use the energy stored in 
batteries to improve grid reliability.
    Public charging and fast--charge infrastructure will be needed to 
meet the needs of diverse drivers who want or need an alternative to 
home charging. This will also require new payment protocols that allow 
billing to be as mobile as the plug-in vehicle user.
    Grid-powered transportation will become more sustainable as the 
grid becomes greener. Transmission lines should be upgraded to increase 
the efficiency of the grid, minimize line loss and enable distributed, 
renewable generation to be used in the grid.
    In addition, interconnection standardization will be needed to 
enable the energy stored in batteries to be delivered to homes for 
backup power and one day to the grid.
    This committee identified key elements of the necessary 
modernization effort in Title XIII of EISA and provided key threshold 
incentives in the HR 1424 tax incentives for smart meters and 
alternative fuel vehicle recharging infrastructure. Funding for the 
former and expansion/extension of the latter can help to speed the 
changes needed for large scale integration of grid-powered vehicles.
                                 ______
                                 
                                            Toyota,
                                         Washington Office,
                                  Washington, DC, December 5, 2008.
Hon. Jeff Bingaman,
Unites States Senate, Committee on Energy and Natural Resources, 
        Washington, DC.
    Dear Chairman Bingaman: Thank you for your letter of November 20, 
2008 containing additional follow-up questions from your September 16 
hearing on the Electrification of the Automobile. I appreciate the 
opportunity to respond to these questions (attached).
    If you have any further questions or if I can be of further 
assistance as you move forward in consideration of legislation, please 
do not hesitate to contact me.
            Sincerely,
                                             Robert Wimmer.
              Responses to Questions From Senator Bingaman
    Question 1. As I understand your testimony, the main factor in 
determining the all-electric range of the next generation Prius is the 
cost of the batteries and your desire to make a mass-marketable price 
point. If the US market had incentives on the scale that Mr. Balkman 
advocates that would significantly reduce the cost to consumers of 
larger battery packs, would that alter the calculations for what is 
feasible for the market?
    Answer. Toyota supports broad-based consumer tax incentives to 
promote the purchase or lease of advanced technology vehicles, like 
those included in the Energy and Tax Extenders Act of 2008. Any 
incentives that support all manufacturers' PHV designs are beneficial 
to the industry and will speed deployment.
    It is often a decade or more between the start of vehicle design 
and the end of a model's production run. With such a long time frame, 
it is risky to develop global designs optimized for one market's 
incentives. Toyota designs our vehicles to provide attractive 
affordable transportation to greatest number of potential customers in 
multiple markets. Incentives in the early stages of marketing a new 
technology are certainly beneficial in lowering a vehicle's price point 
and making it more affordable to a greater number of possible 
customers. But ultimately, such incentives are temporary and 
technologies must compete on overall value to the consumer.
    Regarding all-electric range of a PHV, the larger the battery the 
more dead weight must be carried after the battery is discharged. This 
of course negatively affects overall vehicle mileage, especially on 
long trips. Also, the larger the battery the less room for passengers 
and cargo, negatively affecting functionality, a key selling point of 
the Prius (small battery) concept.
    Question 2. We've heard previous testimony that prices for lithium 
ion batteries are only likely to drop significantly when high 
production volume is achieved. Of course, this high volume will only 
follow from high sales volume of vehicles using lithium ion batteries. 
In your estimation, what kind of volume in battery production might 
represent a ``tipping point'' where the batteries would be inexpensive 
enough to be used in a substantial portion of vehicles?
    Answer. As Li-Ion battery production increases, manufacturers can 
apply lessons learned and develop advanced manufacturing technologies 
to,lower production costs. But even in high volumes, battery experts do 
not expect pack prices to drop below--$500/kW-hr.
    As Toyota designs new hybrid and PHV models we will evaluate all 
battery options and select the chemistry that best meets vehicle 
performance goals, customer expectations and price targets. Battery 
cost is a key factor, but only one of many that go into the vehicle 
design process.
    Another consideration must be the long-term commodity price of 
lithium metal. Current low-cost sources, like dry lakes in Latin 
America, cannot support massive increases in the global demand for 
lithium. New, more costly sources will need to be developed as demand 
increases. As a result, much of the cost savings from manufacturing 
improvements may be negated by higher material costs.
     Responses of Robert Wimmer to Questions From Senator Domenici
    Question 3. Are you performing any sort of vehicle-to-grid research 
with these vehicles?
    Answer. We have a joint research project with the French electric 
utility EDF (Electricitee France) to explore public 
recharging and some vehicle-to-grid communication issues. We also 
participate in a number of national and international standards 
organizations, Society of Automotive Engineers for example, that are 
developing codes and standards for plug-in vehicles.
    Question 4. How many miles will your vehicle or vehicles travel in 
its ``all electric'' mode?
    Answer. The current prototype travels about seven miles all-
electrically. Next year's PHV, to be leased to commercial fleet users, 
will have significantly greater range. Once EPA certification testing 
is completed and we near product launch, Toyota will announce the all-
electric range of the next-generation vehicle.
    It is important to note that battery cost is closely related all-
electric range. As mentioned in our testimony, Toyota is seeking to 
find the appropriate balance between electric range, vehicle cost, 
consumer desires and other factors when determining electric range.
    Question 5. What are the challenges presented to your vehicles by 
extreme environments? What will buyers in Arizona and Wisconsin have to 
face?
    Answer. Toyota designs vehicles to operate reliably and efficiently 
in all climatic conditions. The PHV will be no exception.
    As with conventional vehicles, cold weather operation will reduce a 
PHV's fuel efficiency. There should be no noticeable loss of 
performance, but all-electric range will be less.
    In extremely hot conditions, the vehicle's control system may limit 
battery charge and discharge rates to assure battery longevity. This 
will result in a slight increase in fuel consumption as the engine 
operates more frequently, but should not affect performance.
    Question 6. As sales of Toyota hybrid and electrical vehicles in 
the U.S. increase what investments are Toyota prepared to make in 
manufacturing infrastructure development in the U.S.? For example, will 
a domestic lithium ion manufacturing capability be important to 
Toyota's business model.
    Answer. Toyota is a global company that strives to manufacture 
where we sell. Since initial PHV volumes are expected to be modest, 
production will likely take place at a single manufacturing facility to 
minimize cost. As we near start of production, Toyota will announce 
which facility is slated to produce PHVs.
    Question 7. What is the current status of Lithium Ion batteries for 
hybrid electric vehicles (HEV), plug-in hybrid electric vehicles 
(PHEVs), and electric vehicles (EVs)?
    Answer. We have announced we will be using Li-Ion batteries in our 
next-generation PHY that begins production next year. This battery will 
be built on a new, dedicated assembly line by Panasonic EV, a joint 
venture between Panasonic and Toyota.
    As Toyota develops new hybrid systems, we evaluate all battery 
options and select the chemistry with the best cost/performance 
tradeoff that meets our customers' expectations and provides required 
battery durability and life.
    Though Toyota is committed to mass production of Li-Ion batteries, 
challenges of the chemistry have us looking ``beyond lithium. To this 
end, we established a separate advanced battery group with facilities 
in both Japan and the US (Ann Arbor) to examine innovative battery 
chemistries that may lead to a breakthrough in energy storage.
    Question 8. What the major technical/market barriers for 
commercialization of lithium-ion batteries?
    Answer. Key issues we see with Li-Ion batteries are cost, life-of-
the-vehicle durability and cold weather performance. Another issue is 
sustainability of the lithium metal supply as demand grows for 
automotive batteries. Lithium commodity prices are expected to increase 
as demand grows and traditional lower-cost sources of lithium are 
exhausted.
    Question 9. Plug-in vehicles hold great promise in our ongoing 
efforts to lessen our dependence on foreign sources of oil. However, 
U.S. transmission infrastructure has increased by only 6.8% since 1996. 
In last year's energy bill, Congress encouraged the modernization of 
the electricity grid in ``Smart Grid'' provisions that include the 
deployment and integration of plug-in electric and hybrid electric 
vehicles. What kind of infrastructure improvements must we undertake to 
accommodate the eventual use of plug-in vehicles?
    Answer. Studies show that the US electrical grid has the nighttime 
capacity to support tens of millions of PHVs. However, experience from 
our electric vehicle program in California has shown that consumers are 
``opportunity chargers'' and will charge whenever convenient.
    We expect similar behavior from PHV owners as they will want to 
maximize fuel and cost savings by ``plugging-in'' as often as possible. 
Remote, public recharging stations will be needed to accommodate this 
cell-phone mentality. Charging during lower-cost off-peak-hours will 
initially dominate vehicle recharging, but significant growth in 
daytime charging could ultimately stress the electric grid.
    Notwithstanding the issue of daytime versus nighttime charging, the 
greater near-term infrastructure need is at the residential level.
    Currently, less than half of US households have the ability to 
charge a PHV. Those that can not, include multi-unit residences with 
parking lots and homes that have no off-street parking. Charging 
infrastructure must be built for these residences before their 
occupants can benefit from PHV ownership.
    Another issue is the electrical capacity of sub-divisions. As more 
and more households begin recharging their vehicles at night, the 
electrical capacity of entire subdivisions could be exceeded. Smart 
meters may reduce this possibility, but ultimately upgrading many 
subdivisions' electrical systems could be required.
                                 ______
                                 
      Responses of Thad Balkman to Questions From Senator Bingaman
    Question 1. As you know, the automotive industry is both highly 
competitive and capital intensive. Has something changed that has made 
it more likely that a company such as yours, or Tesla is likely to 
succeed in breaking in where other efforts have failed in the past?
    Answer. The established model of vertically integrated automobile 
manufacturing is giving way to a systems integration manufacturing 
model much as occurred in the computer industry. This has profoundly 
reduced barriers-to-entry for manufacturers of battery electric 
vehicles (BEVs). Under the systems integration manufacturing model 
employed by Phoenix, Tesla, and others, the manufacturer undertakes the 
R&D and integrates the vehicle elements while suppliers contribute 
virtually all components and materials and much of the innovation at 
the sub-system level. See Nutek (Swedish Agency for Economic and 
Regional Growth), Globalization and Regional Economies, Case Studies in 
the Automotive Sector (2007) at http://fm.nutek.se/forlaget/pdf/
r_2007_11.pdf. The greater efficiency and cost reduction opportunity 
presented by the systems integration model has enabled the emergence of 
an entirely new collection of American automobile manufacturers within 
the past five years, the first new entrants in the automotive sector in 
decades. Nearly all of these new manufacturers are relying on electric 
propulsion systems consisting of electric motors and advanced lithium 
batteries designed and supplied by third parties. In contrast, 
traditional automobile manufacturers depend on their own vertically 
integrated manufacturing plants dedicated to the production of IC 
engines and transmissions, which require the engineering, design and 
manufacture of thousands of moving parts. Thus, the low-cost design and 
manufacture of combustion technology and transmissions are the primary 
``value added'' by traditional automobile manufacturers which have 
accumulated substantial expertise over the past 100 years. The sheer 
complexity of vertically integrated manufacturing for decades has 
effectively barred the entry of new actors. See Green Mountain Chrysler 
v. Crombie, No. 2:05-CV302 (D. Vt. Sept. 12, 2007), available at http:/
/www.vtd.uscourts.gov/Supporting%20Files/Cases/05cv302.pdf. The major 
OEM's have become so large and complex that each new vehicle launched 
costs hundreds of millions of dollars and requires hundreds of 
thousands of unit production to break even. In contrast, BEVs replace 
IC engines and transmissions, two of the primary business units of the 
automobile industry. See U.S. EPA, Staff Technical Report: Cost and 
Effectiveness Estimates of Technologies Used to Reduce Light-duty 
Vehicle Carbon Dioxide Emissions , available at http://epa.gov/otaq/
climate/420r08008.pdf ; EVWorld.com, Inc., Interview with General 
Motor's Vice President of Research and Development, Dr Larry Burns 
(March 12, 2007), available at http://www.evworld.com/
article.cfm?archive=1&storyid=1208&first=3630&end=3629.
    Question 2. Assuming we were to put in place some of the incentives 
you advocated in your testimony to bring down the initial costs of 
battery electric vehicles, how long would you anticipate such 
incentives would be needed? In other words, at what point do you 
anticipate that enough scale is achieved in battery manufacturing to 
bring costs in line with standard vehicles available today?
    Answer. Clearly investments in bringing down the initial costs of 
battery electric vehicles must be a sustained multi-year effort to be 
successful. Generally speaking, economics of scale in manufacturing are 
not fully achieved until hundreds of thousand units are produced. See 
Bandivadekar, Evaluating the Impact of Advanced Vehicle and Fuel 
Technologies in Light Duty U.S. Vehicle Fleet (2008) http://
esd.mit.edu/people/dissertations/anup_bandivadekar.pdf. Internal 
combustion technology has dominated for 100 years and benefits from 
several billion units of production. New technology comes with a price 
of development. If advanced electric vehicles are to be successful 
market incentives are critical for a sustained period of time to help 
early adopters offset the initial investment. As volume from Phoenix 
Motorcars and others increase, component prices will come down and 
allow for future cost reduction in our existing and future models.
      Responses of Thad Balkman to Questions From Senator Domenici
    Question 3. You testified that consumers will not pay extra for 
more fuel efficient vehicles unless the pay-back is 2.5 years or less. 
What is the pay-back period for the two electric vehicle models Phoenix 
Motorcars will introduce next year?
    Answer. Without incentives our vehicle shows a payback period of 
3.5 years at a gasoline price of $4.00 per gallon. The higher the gas 
prices the shorter the payback period and the lower the gas price the 
higher the payback period. With the incentives available to today in 
California and thru the Federal Government the payback period can be 
met in the first year of operation making Electric Vehicles truly a 
zero compromise alternative to the fleet or consumer in these economic 
times.
    Question 4. How do you arrive at the payback period for your 
vehicles?
    Answer. Payback period is determined by the annual cost of 
ownership for an internal combustion vehicle (ICE) compared with the 
annual cost of ownership of a Phoenix EV. While the initial cost of a 
Phoenix SUT is higher ($47,500) than the initial cost of a comparable 
ICE ($28,000) the operational costs is substantially lower with 
electric vehicles.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      
    Question 5. You note that there are a number of advantages that 
electric vehicles have over traditional gasoline powered vehicles 
including simpler mechanics and environmental emissions as well as 
lower infrastructure emissions. Are there potential disadvantages that 
are unique to electric vehicles, for example battery chemistry and 
manufacturing infrastructure, that we must also consider?
    Answer. There are three concerns that early adopters will have to 
face. First--charging infrastructure will take time to build out to 
provide the opportunity to quickly recharge your vehicle and continue 
driving. Second--users will need to become familiar with the idea of 
plugging in their vehicles at home leaving each morning with a full 
charge. Statistics show that most Americans do not drive more than 40 
miles per day. Third--battery technology production is just coming on 
line in many instances and will take some time to allow large 
production of hundreds of thousands of units. In most cases these large 
format batteries will require cold and hot weather validation for use 
in different climates within the US.
    All of these challenges can and are being addressed and will be 
proven out with time and marketing. The market is pulling for these 
alternatives which greater assists in the reformation of the idea of 
transportation in the US. Investments into furthering technologies for 
alternative fueled vehicles will assist in closing the hundred year 
head start that the internal combustion engine has had.
    Question 6. What is the current status of Lithium Ion batteries for 
hybrid electric vehicles (HEV) plut-in hybrid electric vehicles 
(PHEVs), and electric vehicles (EVs)?
    Answer. The market as a whole now views lithium ion based batteries 
as the best alternative for transportation. With any transportation 
application size, weight, safety and durability are all important 
considerations. Lithium ion batteries allow for the highest energy 
density batteries providing a smaller less weight solution. With 
advancement in Lithium Titanate and Lithium Polymer batteries you now 
have a durable safe chemistry. Phoenix Motorcars view that large 
prismatic lithium cells are best suited for electric transportation.
    Question 7. What the major technical/market barriers for 
commercialization of lithium-ion batteries?
    Answer. The largest barrier is the domestic manufacturing capacity 
of large format lithium-ion based batteries.
    Question 8. Plug-in vehicles hold great promise in our ongoing 
efforts to lessen our dependence on foreign sources of oil. However, 
U.S. transmission infrastructure has increased by only 6.8% since 1996. 
In last year's energy bill, Congress encouraged the modernization of 
the electricity grid in ``Smart Grid'' provisions that include the 
deployment and integration of plug-in electric any hybrid electric 
vehicles. What kind of infrastructure improvements must be undertake to 
accommodate the eventual use of plug-in vehicles?
    Answer. One advantage of electric transportation is the ability to 
use the existing electricity grid infrastructure to refuel your 
vehicle. Unlike our vehicles at present time that refuel most often 
during the daytime hours, electric vehicles can recharge at night when 
the existing utility grid capabilities are ``idling'' burning 
electricity off the grid until the need arises the following day as we 
wake up. In addressing the rapid recharge station we promote the model 
that gas stations use today. Instead of large tanks that hold gasoline, 
we envision using a large battery that recharges off the grid at night 
or thru renewable sources. As a vehicle pulls ind uring the day it 
transfers the required energy from this large battery instead of from 
the grid. Not only would this proposed model assist the utilities thru 
use of this elecgtricity during the day, but national security would be 
greater assisted by having power distributed throughout the grid.
                                 ______
                                 
    Responses of Joseph T. Dalum to Questions From Senator Bingaman
    Question 1. Your technology seems to be an exceptionally good fit 
for several heavy duty applications where idling is a significant part 
of the fuel consumption. With fuel prices where they are, why isn't 
this sector, which is historically so sensitive to fuel prices, 
adopting this technology quicker? It would seem it would pay for itself 
fairly quickly.
    Answer. In my opinion there are several reasons that explain why 
the heavy duty truck segment has not adopted plug-in hybrid technology 
more quickly:

          1) High acquisition price

                  Low initial production volume, combined with high 
                start-up costs contribute to a relatively high 
                acquisition price for current plug-in hybrid systems. 
                The high price deters wide-scale adoption of this 
                technology by commercial customers.
                  The start-up costs include costs for research and 
                development, testing and validation, production floor-
                space and tooling, low volume manufacturing activities, 
                service and operator training, marketing and other 
                costs associated with launching a new product. Those 
                costs are spread over an initially low production 
                volume, resulting in higher per unit sell prices. 
                Critical components that are used in the system are 
                also not typically available in high volume, resulting 
                in higher material cost. Although per vehicle fuel 
                consumption is high, making the heavy truck segment a 
                good target for plug-in hybrid technology, heavy duty 
                commercial truck unit volume is low in comparison to 
                light duty car and truck volume. The relative low 
                volume for this sector makes it less attractive to some 
                automotive component suppliers to develop products for 
                this market.
                  DUECO strongly recommends that the Federal government 
                pass and fund legislation similar to H.R. 6323 Heavy 
                Duty Hybrid Vehicle Research, Development, and 
                Demonstration Act of 2008. The legislation would 
                provide for competitively awarded grants to accelerate 
                development of hybrid and plug-in hybrid technology. In 
                my opinion, additional research and development is 
                likely to result in plug-in hybrid systems for heavy 
                duty trucks with lower costs and better performance.

          2) Weak economy and low fuel prices

                  Commercial truck customers are currently reducing 
                purchases and may have difficulty accessing credit. 
                When purchasing trucks with a limited budget, customers 
                tend to favor low priced products that provide the best 
                short-term return. Low fuel prices and a difficult 
                economy tend to make it more difficult to sell a higher 
                priced product, even if it has substantial benefits 
                over existing products.
                  The expected return on investment of current plug-in 
                hybrid systems for medium and heavy duty trucks may 
                extend beyond the period that some customers use to 
                determine whether they will pay more money up front for 
                a product with the expectation of lower operating costs 
                later. The recent collapse in fuel prices to less than 
                $2 per gallon essentially doubles the time before fuel 
                savings alone will offset the higher initial cost of 
                the system, compared to when the cost was $4 per 
                gallon.
                  DUECO strongly encourages the Federal government to 
                enhance the plug-in hybrid tax credits by doubling the 
                credit through 2011 for vehicles that weigh 14,001 
                pounds or more. The initial tax credit was developed 
                during a period of high fuel costs, but fuel prices are 
                now less than half of the peak price. The increase in 
                the tax credit would help to stimulate demand for this 
                green technology, create jobs and the increased 
                production volume would ultimately result in lower 
                costs.
                  In addition, DUECO recommends that a credit be 
                developed for plug-in hybrid trucks that weigh more 
                than 33,000 pounds, by modifying the Tax Extenders Bill 
                (H.R. 1424) to create a tax credit of up to $40,000 for 
                a plug-in vehicle weighing more than 33,000 pounds.
                  The plug-in hybrid tax credit should also be made 
                available for the upgrade of existing heavy trucks that 
                are modified by adding a plug-in hybrid drive system. 
                Unlike light duty cars and trucks, heavy trucks are 
                typically built in multiple stages for custom 
                applications and are more easily modified. Due to the 
                large number of existing Class 4-8 trucks on the road 
                today (6.5M, excluding road tractors), addressing the 
                retrofit market can have an immediate and sizable 
                impact on job creation, improved emissions, and reduced 
                fuel consumption within the medium and heavy duty truck 
                market.
                  Many of the trucks in this fleet of millions of 
                trucks can be converted to plug-in hybrids, potentially 
                creating tens of thousands of jobs in the retrofit 
                sector.

          3) Hesitancy to adopt new technology

                  Commercial truck buyers are typically quite 
                conservative, and are currently more likely to buy 
                trucks that are very similar to others in their fleet. 
                Trucks that are purchased may remain in the field for 
                20 years or more, so unless there are substantial 
                incentives, the transition to plug-in hybrid trucks 
                will likely occur incrementally. Our experience has 
                been that some customers have adopted a wait and see 
                attitude.

          4) Weight

                  Plug-in hybrid systems typically require much larger 
                battery systems. The additional weight can create a 
                problem for certain applications.
                  DUECO strongly encourages the government to support 
                advanced battery programs to develop advanced batteries 
                for commercial truck applications that have high power 
                and high energy densities at low costs. The lower 
                weight of an affordable advanced battery system would 
                increase the number of applications in which plug-in 
                hybrid system technology could be used.

          5) Stability of supply chain

                  Current economic challenges and reduced access to 
                credit has negatively affected some suppliers of 
                critical hybrid components. The overall weakness of the 
                automotive supply chain could jeopardize the 
                availability of key components and cause consumers to 
                wait before purchasing new technology.
                  In order to reduce the cost of development and 
                improve access to capital, DUECO strongly encourages 
                the government to modify Section 136 of the Energy 
                Investment and Security Act (EISA--H.R. 6--P.L. 110-
                140) which established the Advanced Technology Vehicle 
                Manufacturing (ATVM) program. The current law does not 
                provide for any loans or grants to manufacturers of 
                heavy duty trucks for the development of advanced 
                technology vehicles. The law only assists light duty 
                vehicle manufactures. DUECO believes this law should be 
                expanded to include final stage manufacturers of trucks 
                that weigh 14,001 pounds or greater, and include other 
                entities involved in manufacturing or modifying heavy 
                trucks, such as chassis manufacturers, intermediate 
                manufacturers and alterers.

    Question 2. As I understand it, a big part of the fuel savings in 
your vehicles is realized through idling reduction rather than 
depleting the charge driving. The CAFE provisions in the energy bill we 
passed last year contemplate future regulation of the medium and heavy 
duty sectors. Do you know if the duty cycle fuel savings you achieve 
would be given credit under such a CAFE regime?
    Answer. DUECO does not know if the duty cycle fuel savings achieved 
would be given credit under a CAFE regime that would be developed for 
trucks that weigh 14,001 pounds or more. Our current experience in the 
evaluation of various existing truck duty cycles indicates that many of 
the duty cycles do not closely match the use of the vehicles we have 
observed in the field. Work truck duty cycles may have a significant 
component of stationary idle time in which the primary engine is used 
to power truck mounted equipment at a job site. Most existing truck 
duty cycles do not incorporate the same proportion of idle time and 
stationary engine loads.
    DUECO encourages the government, perhaps through the Department of 
Energy (DOE) Laboratories, to measure and study actual truck duty 
cycles and to assess other factors before determining if a standard 
should be adopted. Unlike higher volume light-duty cars and trucks, 
heavy trucks tend to be built in greater variation with different 
profiles, weight distributions and uses. Additional regulation could 
cause commercial truck prices to rise further if test costs and 
associated administrative costs are spread over low sales volume. If 
standards were adopted, DUECO recommends that test duty cycles closely 
match actual use, be made optional, and that tax credits or other 
incentives be used to encourage consumers to purchase higher efficiency 
vehicles.
    DUECO believes that the best performance standard for plug-in 
hybrid heavy duty trucks is to measure the reduction in fossil fuel 
consumption from diesel heavy duty trucks, provided that the heavy duty 
hybrid truck utilizes a certified engine without modification. The DOE 
is already using this standard through its Clean Cities program. DUECO 
is confident that this metric will demonstrate substantial reductions 
in fossil fuel consumption between comparable vehicles performing 
comparable tasks over a period of time, whether this is one day, one 
month or one year. Our initial testing indicates that fuel consumption 
may be reduced by as much as 50 percent over the course of a day, 
depending upon the duty cycle. We believe these savings will be even 
higher once battery weight and costs are reduced.
    DUECO initially recommends a performance metric that demonstrates a 
reduction of 10 percent in fossil fuel use for the purposes of 
developing various incentives, such as the use of an expanded Advanced 
Technology Vehicle Manufacturing Program for plug-in hybrid heavy duty 
trucks. This metric will allow oversight over the expansion of the 
plug-in heavy duty truck sector, without harming efforts to expand this 
sector. We recommend 10 percent initially because we are concerned that 
fleet managers will not measure comparable vehicles, or that they won't 
properly maintain the plug-in vehicles by failing to charge them 
through an external grid, making them less efficient during the period 
when they are learning to use these trucks.
    DUECO recommends increased government funding for the DOE's Clean 
Cities Program.
    Responses of Joseph T. Dalum to Questions From Senator Domenici
    Question 3. How many miles will your vehicle or vehicles travel in 
its ``all electric'' mode?
    Answer. Our vehicle has the capability to provide ``All Electric 
Operation at a job-site for a typical day,'' as stated in my written 
testimony. The all electric mode is used while the vehicle is 
stationary to provide power for truck mounted equipment, lights, air 
conditioning and exportable power (e.g. power for tools). Those loads 
are normally powered by an idling engine in a traditional truck. Our 
plug-in hybrid heavy duty vehicle utilizes a parallel hybrid power 
train configuration in which the engine operates, along with the 
electric motor. The electric motor is used to provide ``launch assist'' 
when the vehicle accelerates, and regenerative braking when the vehicle 
decelerates which also recharges the batteries. Since the engine 
operates along with the electric motor, there is no all electric range 
using this configuration. Like conventional hybrid trucks of similar 
size, the internal combustion engine must remain on when the vehicle 
travels in order to power vehicle sub-systems such as brake systems, 
steering and HVAC. Further changes to those sub-systems, such as the 
possible electrification of associated components, and modifications to 
the drive train could make it possible to create a truck with all 
electric range. A series/parallel design could allow a truck to have a 
limited all electric range as described in the System architecture 
section of my written testimony shown below:

          System architecture:

          Existing hybrid systems for trucks tend to utilize system 
        architectures that are similar in many ways to that of existing 
        truck power trains. The internal combustion engine typically 
        remains operating while the vehicle is driven to power 
        auxiliary loads such as power steering systems, brake systems 
        and HVAC systems. Keeping the engine running while stationary 
        or in low speed stop and go traffic increases fuel consumption. 
        Some vehicles also do not have a clutch in between the internal 
        combustion engine and the transmission. While such systems 
        utilize an automatic transmission, it may be desirable to 
        create a method to uncouple from the transmission from the 
        engine for improved regenerative braking or an all-electric 
        drive mode.
          In order to improve fuel economy further, different system 
        architectures that are designed for high volume production in 
        which the internal combustion engine can remain off during 
        driving need to be developed. The development of electrically 
        driven sub-systems such as braking, power steering, HVAC and 
        others need to be brought to high volume production for medium 
        and heavy duty trucks.
          Existing parallel hybrid electric vehicle systems for trucks 
        also tend to use relatively small electric drive components 
        with relatively low power output, compared to the power 
        provided by the internal combustions engine. Larger electric 
        motors and higher capacity battery systems may allow smaller 
        engines to be used that operate at higher efficiency without a 
        reduction in vehicle performance, or allow the vehicle to be 
        driven entirely by electric propulsion. Future system 
        architectures could also combine the benefits of plug-in hybrid 
        technology, which requires battery systems with high energy 
        densities, with that of hydraulic hybrids that have high power 
        densities. The combined plug-in electric hybrid system with 
        hydraulic hybrid components could offer high horsepower during 
        acceleration and recapture more energy during braking while 
        providing enough energy for sustained operation with the engine 
        off.
          Alternative power train architectures, such as a combined 
        series/parallel hybrid system with a plug-in battery system are 
        also recommended for consideration. A combined series/parallel 
        system would allow the vehicle to operate in an all electric 
        mode, a series hybrid configuration or a parallel hybrid 
        configuration, depending upon which is most advantageous given 
        operating requirements.

    DUECO strongly recommends that the Federal government pass and fund 
legislation similar to H.R. 6323 Heavy Duty Hybrid Vehicle Research, 
Development, and Demonstration Act of 2008. The legislation would 
provide for competitively awarded grants to accelerate development of 
new power train designs.
    In addition, to reduce the cost of development and improve access 
to capital, DUECO strongly encourages the government to modify Section 
136 of the Energy Investment and Security Act (EISA--H.R. 6--P.L. 110-
140) which established the Advanced Technology Vehicle Manufacturing 
(ATVM) program. The current law does not provide for any loans or 
grants to manufacturers of heavy duty trucks for the development of 
advanced technology vehicles. The law only assists light duty vehicle 
manufactures.

    Question 4. Given the different duty cycles required for medium and 
heavy duty trucks and light-duty passenger cars and trucks, how well do 
you think technology development in either of these market segments 
will benefit the other?
    Answer. While medium and heavy duty truck cycles and power 
requirements differ significantly from those of light-duty passenger 
cars and trucks, there are some technologies that can be shared between 
each segment. Areas of technology development that could be shared are 
listed below:

   Advanced battery systems
   Charging technology (i.e. ``Smart Chargers'')
   Inverters and electric motors
   Control systems

    While individual components may be different due to the larger 
power and greater energy requirements of heavy duty trucks, the 
underlying technology is very similar and could be shared in these 
areas. In order to reduce the cost for heavy duty plug-in hybrids, it 
would be beneficial to utilize higher volume, lower cost light-duty 
vehicle technology wherever possible.
    Question 5. Do you think any fuel economy differences seen between 
parallel and series drive systems for medium and heavy duty trucks will 
also apply to light duty vehicles?
    Answer. In my opinion, the fuel economy differences seen between 
parallel and series drive systems for medium and heavy duty trucks will 
not be as readily apparent in light duty vehicles due to the fact that 
technology for light duty vehicles is more mature and fuel consumption 
per vehicle in the light duty segment is much less. Light duty power 
train systems have in many cases already become highly efficient. 
Light-duty hybrid power trains have been in production for years 
(although present in only approximately 2% of light-duty vehicles) and 
power trains that offer extended range or 100% electric operation are 
under development and are targeted for deployment in 2010 (such as the 
GM Chevy Volt). So, in other words, the relative difference as 
technology improves for light duty power trains will not be as great as 
that for heavy duty trucks.
    In the near term it will be difficult to achieve further 
improvements in advanced light-duty power trains while maintaining a 
competitive value proposition relative to lower cost conventional 
hybrids. As an example, a light duty vehicle that achieves 50 mpg using 
conventional hybrid technology and 100 mpg using plug-in hybrid 
technology saves approximately 100 gallons of fuel when driven 10,000 
miles per year using the more advanced plug-in power train. At $2 per 
gallon, a driver will only save $2000 over a ten year period (or less 
if the cost of charging the vehicle is included). $2000 does not 
currently cover the increased incremental cost required to obtain 100 
mpg.
    However, medium and heavy duty trucks, due to their lower overall 
current efficiency, offer a more compelling value proposition for the 
use of advanced power train technology. Overall, medium and heavy duty 
trucks consume a disproportionately large amount of fuel as compared to 
light duty vehicles. A large truck that can use advanced technology may 
save over 1000 gallons of fuel per year. At $2 per gallon, the operator 
can save $2000 per year in fuel costs, or $20,000 over a 10 year 
period. It is more likely in my opinion that the increased cost of 
power train advancements in heavy duty trucks can be offset by reduced 
fuel expenditures. Unfortunately, as discussed previously, the current 
cost of heavy duty plug-in hybrid technology is still relatively high, 
which causes demand to be relatively low.
    Question 6. What is the current status of Lithium Ion batteries for 
hybrid electric vehicles (HEV), plug-in hybrid electric vehicles 
(PHEVs), and electric vehicles (EVs)?
    Answer. I have deferred this question to two manufacturers of 
Lithium Ion battery systems: Valence Technology Inc. and Johnson 
Controls--Saft.
    Question 7. What the major technical/market barriers for 
commercialization of lithium-ion batteries?
    Answer. DUECO believes that the primary barrier for 
commercialization of lithium-ion batteries is high cost. The price per 
kWh of energy storage is prohibitively high for large plug-in advanced 
battery systems. Other concerns including safety, ease of recycling and 
limited performance history in the field can also deter wide-scale 
commercialization.
    DUECO recommends that a portion of government funding for advanced 
battery research, development and demonstration programs should be 
directed to heavy duty truck applications (trucks that weigh 14,001 
pounds or greater). Any federal funding for advanced battery 
manufacturing should also include funds for the manufacturing of 
battery systems for heavy duty truck applications.
    Question 8. Plug-in vehicles hold great promise in our ongoing 
efforts to lessen our dependence on foreign sources of oil. However, 
U.S. transmission infrastructure has increased by only 6.8% since 1996. 
In last year's energy bill, Congress encouraged the modernization of 
the electricity grid in ``Smart Grid'' provisions that include the 
deployment and integration of plug-in electric and hybrid electric 
vehicles. What kind of infrastructure improvements must we undertake to 
accommodate the eventual use of plug-in vehicles?
    Answer. There are two types of potential infrastructure 
improvements in my view that are needed in order to accommodate the 
eventual use of plug-in vehicles.

    One is the immediate interface between the vehicle and the 
surrounding infrastructure. A charge station is required to connect the 
battery system of a plug-in vehicle to an electrical power source. 
Charge stations must be installed near the parking places of plug-in 
hybrid vehicles, which in the case of a commercial vehicles, may be a 
garage or storage area (e.g. parking lot for commercial vehicles). It 
may be necessary to modify or add electrical connections between the 
charge station and the existing source of power for the location.
    DUECO recommends that assistance be provided to users of plug-in 
hybrid vehicles to help offset the cost of charge station 
installations.
    The second type of infrastructure improvement may be to the 
electrical distribution or transmission system, depending upon the 
number and type of vehicles connecting to the grid and the ability of 
the utility to control the size of the loads added to the grid and the 
timing of the addition of the loads to the grid. For further 
information, DUECO recommends that the Senator contact PG&E for further 
information. PG&E is one of the largest utilities in California.

                                    

      
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