[Senate Hearing 111-808]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-808
 
  OPPORTUNITIES AND CHALLENGES PRESENTED IN INCREASING THE NUMBER OF 
         ELECTRIC VEHICLES IN THE LIGHT DUTY AUTOMOTIVE SECTOR 

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

                                HEARING

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                            SPECIAL HEARING

                   FEBRUARY 23, 2010--WASHINGTON, DC

                               __________

         Printed for the use of the Committee on Appropriations


       Available via the World Wide Web: http://www.gpo.gov/fdsys

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                      COMMITTEE ON APPROPRIATIONS

                   DANIEL K. INOUYE, Hawaii, Chairman
ROBERT C. BYRD, West Virginia        THAD COCHRAN, Mississippi
PATRICK J. LEAHY, Vermont            CHRISTOPHER S. BOND, Missouri
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
HERB KOHL, Wisconsin                 JUDD GREGG, New Hampshire
PATTY MURRAY, Washington             ROBERT F. BENNETT, Utah
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
DIANNE FEINSTEIN, California         SAM BROWNBACK, Kansas
RICHARD J. DURBIN, Illinois          LAMAR ALEXANDER, Tennessee
TIM JOHNSON, South Dakota            SUSAN COLLINS, Maine
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
FRANK R. LAUTENBERG, New Jersey
BEN NELSON, Nebraska
MARK PRYOR, Arkansas
JON TESTER, Montana
ARLEN SPECTER, Pennsylvania

                    Charles J. Houy, Staff Director
                  Bruce Evans, Minority Staff Director
                                 ------                                

              Subcommittee on Energy and Water Development

                BYRON L. DORGAN, North Dakota, Chairman
ROBERT C. BYRD, West Virginia        ROBERT F. BENNETT, Utah
PATTY MURRAY, Washington             THAD COCHRAN, Mississippi
DIANNE FEINSTEIN, California         MITCH McCONNELL, Kentucky
TIM JOHNSON, South Dakota            CHRISTOPHER S. BOND, Missouri
MARY L. LANDRIEU, Louisiana          KAY BAILEY HUTCHISON, Texas
JACK REED, Rhode Island              RICHARD C. SHELBY, Alabama
FRANK R. LAUTENBERG, New Jersey      LAMAR ALEXANDER, Tennessee
TOM HARKIN, Iowa                     GEORGE V. VOINOVICH, Ohio
JON TESTER, Montana
DANIEL K. INOUYE, Hawaii (ex 
    officio)

                           Professional Staff

                               Doug Clapp
                             Roger Cockrell
                         Franz Wuerfmannsdobler
                    Carolyn E. Apostolou (Minority)
                         Tyler Owens (Minority)
                       LaShawnda Smith (Minority)

                         Administrative Support

                          Molly Barackman-Eder























                            C O N T E N T S

                              ----------                              
                                                                   Page

Opening Statement of Senator Byron L. Dorgan.....................     1
Opening Statement of Senator Robert F. Bennett...................     7
Statement of Senator Lamar Alexander.............................     8
Statement of Dr. Henry Kelly, Principal Assistant Secretary for 
  Energy Efficiency and Renewable Energy, Department of Energy...     9
    Prepared Statement...........................................    11
Electric Drive Vehicle Capabilities..............................    12
EV Battery Technology and Ongoing Research.......................    12
Recovery Act Impact..............................................    14
Advanced Technology Vehicle Manufacturing Loan Program...........    14
EVs and the Electric Grid........................................    15
Statement of Frederick W. Smith, Member, Electrification 
  Coalition; Chairman, President, and CEO, FedEx.................    15
    Prepared Statement...........................................    16
Statement of Richard Lowenthal, Founder and CEO, Coulomb 
  Technologies...................................................    31
    Prepared Statement...........................................    34
Some Definitions.................................................    35
Policy Recommendations...........................................    36
Statement of Alan I. Taub, Ph.D., Vice President, Global Research 
  and Development, General Motors................................    38
    Prepared Statement...........................................    40
Statement of Kraig T. Higginson, Executive Chairman of the Board, 
  Raser Technologies.............................................    42
    Prepared Statement...........................................    50
American Automotive Renaissance..................................    52
High Volume & High Margin........................................    52
Why Trucks? The Greatest Good....................................    52
Why Fleets? Fleets Will Lead the Way.............................    53
Green Fleet Program..............................................    54
Minimal Changes..................................................    54
Offsetting Battery Costs With Mobile Exportable Power and 
  Additional 
  Value..........................................................    54
Key to OEM Profitability.........................................    54
Bridge to High Volume............................................    54
Market Drivers...................................................    55
Good for the Grid................................................    55
Mass Market Penetration Range & Infrastructure...................    55
Flexibility......................................................    55
Fuel Cell Ready..................................................    55
Well to Wheel Emissions, Improving...............................    55
Current Status of Electric Vehicle Development...................    56
How Much Will it Cost?...........................................    57
Economies of Scale--Sharing Common Components....................    57
What is Needed...................................................    57
Manufacturing Incentives.........................................    58
Early Adopting Fleet Incentives..................................    58
Consumer Incentives..............................................    58
Electric Fuel Charging Incentives................................    58
Low Carbon Fuel Incentives.......................................    58
Sales Tax the Highest Polluters..................................    58
Discounts in State Registration Fees for Electric Vehicles.......    58
Statement of Mary Ann Wright, Vice President and Managing 
  Director, Power Solutions Division, Johnson Controls...........    59
    Prepared Statement...........................................    61
Our New Li-ion Battery Production Facility.......................    61
The Challenge--Demand for Electric Vehicles......................    63
Leveraging the ARRA Manufacturing Investment.....................    64
Electrification Coalition Ecosystem Cities.......................    64
Research and Development--The Future.............................    64
Additional Consideration--Tax Treatment of ARRA Grants...........    65
Additional Committee Questions...................................    73
Questions Submitted to Dr. Henry Kelly...........................    73
Questions Submitted by Senator Robert F. Bennett.................    73
Questions Submitted to Richard Lowenthal.........................    76
Questions Submitted by Senator Robert F. Bennett.................    76
Integration Into the Electric Grid...............................    76
Questions Submitted to Alan Taub.................................    78
Questions Submitted by Senator Robert F. Bennett.................    78
Questions Submitted to Mary Ann Wright...........................    79
Questions Submitted by Senator Robert F. Bennett.................    79
Meeting DOE Goals for Cost and Performance of Batteries..........    79
Warranting Batteries.............................................    79
Uncertainties and Trade-Offs With Durability, Safety, and Cost...    79
Standardization of Technology....................................    81
Prepared Statement of PG&E Corporation...........................    83
Prepared Statement of Lindsay Leveen, Tiburon, CA................    84


  OPPORTUNITIES AND CHALLENGES PRESENTED IN INCREASING THE NUMBER OF 
         ELECTRIC VEHICLES IN THE LIGHT DUTY AUTOMOTIVE SECTOR

                              ----------                              


                       TUESDAY, FEBRUARY 23, 2010

                               U.S. Senate,
      Subcommittee on Energy and Water Development,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:17 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Byron L. Dorgan (chairman) 
presiding.
    Present: Senators Dorgan, Cochran, Bennett, and Alexander.


              opening statement of senator byron l. dorgan


    Senator Dorgan. I'm going to call the subcommittee hearing 
to order.
    This is the Energy and Water Subcommittee on 
Appropriations, and we're holding a hearing today on the 
subject of electric vehicles and an electric drive future for 
America.
    Let me talk first, in an opening statement, about some of 
the reasons that bring us to this judgment and to have this 
hearing.
    I think that moving toward an electric drive future makes a 
great deal of sense for our country, for a number of reasons. 
The most compelling reason to me is national energy security. 
Each day, we consume about 20 million barrels of oil a day in 
our country. Seventy percent goes into the transportation 
sector. I want to go through some charts, just very briefly, 
that describe, graphically, the case for this.
    As I indicated, the first chart shows that the oil demand, 
by sector--72 percent of oil demand is for transportation. By 
far, it exceeds everything else.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The second chart shows that, in transportation itself, 
petroleum accounts for 94 percent of the energy used, only 6 
percent comes from other sources.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The next chart shows the top oil producers in 2008. You 
can't see the top line very well, unfortunately, but Saudi 
Arabia is at the top, and it exceeds all the other countries. 
And this shows where the United States is versus the Saudis, 
the Russians, and others. Those are the top oil producers in 
2008. We are the top consumer, obviously, but not the top 
producer.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The next chart shows the top oil consumers. You see it's 
quite clear that the United States has a prodigious appetite 
for oil.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Finally, the fuel mix for electricity, which, in my 
judgment, is where we're headed, in terms of an electric drive 
future, is much different. The fuel mix for electricity is 
coal, natural gas, nuclear, hydro. And again, compared to the 
previous chart, where you have substantial oil intensity for 
our transportation system, this makes us much, much less 
dependent on foreign oil.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    In terms of considering electric drive vehicles, the final 
chart I have is the average miles driven per trip, which I 
think is very interesting. Nearly 60 percent of the travel in 
this country, the trips in this country, travel less than 6 
miles. Those are all the things that we need to understand as 
we talk about the need to move toward a different kind of 
future to power our transportation fleet. We use 24 percent, 22 
percent, somewhere in that range, of the world's oil 
production. We produce only 10 percent, and we have less than 3 
percent of the world's reserves. Well, that just doesn't add 
up, in terms of the use of oil and the intensity of that oil 
use in transportation.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    So, the transportation sector, in my judgment, can be 
powered by electricity. It would rely much, much more, as you 
saw from the chart, on domestic fuels, and that would make us 
less dependent on foreign oil.
    We can cut our dependence on foreign sources of oil, cut 
our smog and greenhouse gas emissions. There are a good number 
of things that, in my judgment, would suggest that we move 
toward an electric drive future.
    I've worked with my colleagues on increasing funding for 
vehicle technologies, which include electric vehicles. Last 
year, the Vehicle Technologies Program was funded at about $300 
million. President Obama has set a goal of getting 1 million 
electric vehicles on the road by 2015. The Department of 
Energy's budget request for 2011 includes a 14-percent increase 
in electric-drive-specific programs, most of which will fund 
research and advanced battery technology which is one of the 
keys to this issue of conversion to an electric drive future.
    Now, like most things, this is not a new idea. One hundred 
years ago, 25 percent of the cars made in America were electric 
vehicles. The year 1900 was the heyday of electric cars. At 
that time, they all sold all other types of cars, and it wasn't 
until the Model T that electric cars began to decline. I 
happened to have owned a 1924 Model T that I bought as a young 
kid for $25 and restored lovingly. So, I understand that 
genesis of the internal combustion engine in the Model T.
    In 1909, President Taft made an official decision to change 
from horses to cars. He ordered four cars, one of which was the 
Baker electric car. So, you know, we sit here, 101 years later, 
and the more things change, the more they remain the same. We 
are now talking about electric cars.
    I understand that there are issues here that we need to 
resolve and think about. A 40-mile range will be possible with 
the Volt, they say. That covers 90 percent of consumers' 
driving habits. But, they're also talking about how to extend 
that with the Volt. We need to be able to deploy a recharging 
infrastructure so that the American public is confident they 
can get to point A from point B without running out of power.
    The cost of the battery is one of the main reasons why 
electric vehicles are much more expensive than their internal 
combustion engine counterparts at this point. But we have sunk 
a massive amount of money into new battery technology. We now 
have new companies that are opening plants in this country to 
produce batteries. We're making significant strides in new 
battery technology. And we want to lead the world in battery 
technology.
    We see the Chevy Volt, and the Nissan Leaf, which I saw 
advertised on the Olympics last evening. The technology needed 
to produce commercial electric cars is well within our grasp. 
The electricity to power those cars in this country can come 
from many different sources, which makes us, as I said, much 
less dependent on foreign oil.
    So, there are so many things that are moving toward an 
electric drive vehicle system that are advantageous for our 
country.
    I'm a great believer in not letting things happen, but, 
instead, making things happen. I mean, so much of what we do in 
this country is, we sit around, we let things happen to us, and 
then we respond to it. It is much more preferable to me that we 
would decide, here's the kind of future we want, and here are 
the things that we need to do to achieve that future. That's 
the purpose of holding this hearing, to talk about where we are 
with the funding that we have committed and where we need to go 
if our country, indeed, wants to have a different kind of 
future and be less dependent on foreign oil.
    I'm going to make one final point. It is not lost, it seems 
to me, on people who think for a living that we could wake up 
one morning and discover that our unbelievable dependence on 
oil that comes from outside of our country is interrupted. And 
if that is the case, our economy will be flat on its back. I 
mean flat on its back. We are so unbelievably dependent. That 
is not healthy for our country, for our future. And so, because 
an overwhelming amount of oil is used in our transportation 
sector, and because, at the same time, we are trying to see how 
do we reduce emissions and do all the things that will help 
protect our planet, it seems to me this discussion of moving 
toward an electric drive vehicle future is timely and 
critically important for our country.
    Let me call on Senator Bennett for any comments you might 
have, Senator.


             opening statement of senator robert f. bennett


    Senator Bennett. Thank you very much, Mr. Chairman. I 
appreciate your holding the hearing, and apologize for being a 
bit tardy.
    I've been driving a hybrid car for about 9 years now and 
have seen some all-electric vehicles with a booster kind of 
activity from a gasoline thing that has come from a car 
developed in the State of Utah. And I think the direction away 
from a pure fossil-fuel-driven car is one that we're moving 
very strongly. So, I thank you for calling the hearing, and I 
look forward to hearing what our witnesses have to say.
    Senator Dorgan. Senator Bennett, thank you very much.
    Senator Alexander.


                  statement of senator lamar alexander


    Senator Alexander. Thanks, Mr. Chairman. I'm--I thank you 
for this hearing and for your approach.
    You know the buzz word this week in Washington seems to be 
that Washington doesn't work, that's not necessarily true on 
electric cars or even clean energy. I mean, we have--I mean, 
all Republican Senators and many Democrats, you know, want to 
greatly increase nuclear power production. And the President, 
over the last month, has taken a number of significant steps in 
that direction. So, we agree on that. The President's been a 
leader on electric cars, and all 40 Republicans have endorsed 
the idea of doubling--of making electric cars and trucks our--
you know, half of our vehicles. And if you add to that offshore 
exploration for natural gas and the fact that we also agree on 
the importance of energy research and development for the 500-
mile battery and the 50-percent-efficient voltaic cell for 
rooftops, we have a lot of agreement. We can get into a 
disagreement over economy wide cap-and-trade, but there's 
plenty to agree about on clean energy. And this is certainly 
one of those subjects.
    Eighteen months ago, I bought a Toyota Prius, and--that was 
converted with an A123 battery, so I plug it in every night, 
and I've driven it to work every day for the last 18 months, 
and I've had no problems with it, and I think I get extra 
mileage from it, and my electric bill hasn't gone up much. So, 
it seems to be working, except that the battery costs too much. 
But, it works fine.
    And, of course, we're very excited, in Tennessee, that 
Nissan's going to be building not only the Leaf there, it's 
going to be building the batteries there for the Leaf, at the 
plant there. And we're very proud of Federal Express. Fred 
Smith stuck his neck out several years ago, and Federal Express 
has gone ahead with electric and plug-in vehicles, including 
trucks, and then his leadership nationally on helping remind us 
of this.
    I've been fascinated, Mr. Chairman, by this from the first 
time I heard about it, because I simply had not realized how 
much unused electricity we have in the country, until a few 
years ago. I mean, that should be perfectly obvious to all of 
us, but it reminds me of Ross Perot's story, you know, in the 
1960s of--in Texas, he noticed all the banks were locking up at 
5 o'clock and not using their computers, so he went around and 
bought their unused computer time, and came around and sold it 
to governors at cheap rates to manage their Medicaid data, and 
made a billion dollars.
    And I know that in the TVA region, Tennessee Valley 
Authority region, we have the equivalent of six or seven 
nuclear power plants' worth of unused electricity every night. 
So, if we could figure out how to take all these cars and plug 
them in at night, according to many estimates, we might 
double--we might electrify half our cars and trucks without any 
new power plants.
    I talked to the Austin, Texas, utility head. They've been 
very progressive on this subject. And he thought it was 
realistic that, under some circumstances, they could electrify 
half their cars and trucks in the Austin, Texas, area without 
building any new plants.
    So, I'll be very interested to hear from our witnesses 
exactly, you know, What are the steps we ought to take? We're 
at a time when we don't have a lot of extra money. You know, 
our deficits are high, so we have to be careful with that, and 
here on the Appropriations Committee. And we don't want to put 
into the law subsidies that just go on forever and distort the 
marketplace's ability to make its own decisions about what 
works. But, it seems to me that this is a no-brainer, that 
probably the best way to reduce our dependence on foreign oil, 
to clean the air, to deal with climate change, et cetera, et 
cetera--
    And I'm delighted the chairman has called the hearing, and 
I'm--I welcome it as an opportunity for us to work together to 
help our country move ahead.
    Thank you.
    Senator Dorgan. Senator Alexander, thank you very much. 
You're right that there is more agreement than is apparent 
sometimes. But, agreement is good news, and that never leads 
the news. There's an old saying, ``Bad news travels half way 
around the world before good news gets its shoes on.'' And that 
certainly is the case here in Washington, DC.
    We are pleased to introduce the first panel: Dr. Henry 
Kelly, the Principal Deputy Assistant Secretary for Energy 
Efficiency and Renewable Energy at the Department of Energy. 
Throughout his career, Dr. Kelly has been a leader in the 
development of new energy technology. And during the Clinton 
administration, he served as the Assistant Director for 
Technology for the Office of Science and Technology Policy, in 
which he helped negotiate and implement administration research 
partnerships in energy technology, including new automobile and 
truck technology.
    He'll be followed by Fred Smith, president and CEO of the 
FedEx Corporation, if there's anybody in America who knows how 
to make things happen, it certainly must be Fred Smith. He is a 
chairman of the Energy Security Leadership Council and a member 
of the Electrification Coalition. Now, that Energy Security 
Leadership Council brings together America's most prominent 
business and military leaders for a major effort to support a 
comprehensive, long-term policy to reduce U.S. oil dependence 
and to improve our energy security.
    Dr. Kelly, you may proceed, and then we'll call on Mr. 
Smith.
STATEMENT OF DR. HENRY KELLY, PRINCIPAL ASSISTANT 
            SECRETARY FOR ENERGY EFFICIENCY AND 
            RENEWABLE ENERGY, DEPARTMENT OF ENERGY
    Dr. Kelly. Chairman Dorgan, Ranking Member Bennett, Senator 
Alexander, thank you for the opportunity to talk about the 
Department of Energy's programs in building safe, affordable 
transportation systems that also reduce our dependence on 
foreign oil and reduce greenhouse gas emissions.
    Now, Senator Dorgan's introductory remarks eloquently 
showed how important this issue is. And we, in DOE, have 
designed a portfolio of research designed to try to attack this 
problem. We've, of course, invested in renewable fuels and 
advanced engines for using them. We've invested in fuel cells. 
But, importantly, we've also invested in electric and hybrid 
vehicles of various kinds.
    Now, this is an interesting moment in the history of these 
technologies--these technologies are going to compete. It's 
very difficult, at this point, to find out what the market is 
going to be. But, consumers are likely to choose a number of 
these options, perhaps choosing different vehicles for 
different specialized purposes.
    I'm going to focus, today, of course, primarily on 
electrics and hybrids. To begin with, the environmental 
benefits of these technologies depend heavily on the source of 
electricity. And, of course, the Department has major programs 
to try to invest in low carbon-emitting electricity 
generation--renewables, nuclear, and coal with capture and 
sequestration.
    Now, as Senator Dorgan pointed out, electric cars have been 
around for a long time. They lost out to the Model T and other 
internal combustion engines because of cost, convenience; and 
that's the way the situation has really been until very 
recently. But, the introduction of the potential for extremely 
low cost and reliable safe batteries has really changed the 
rules of that competition. And we're certainly seeing that 
reflected in the market.
    Hybrid electrics are now 3 percent of the market. This 
year, we're likely to see three or four major manufacturers 
have a plug-in hybrids and electric vehicles on the market. 
This has been driven, in no small part, by the public 
investment we've had through the Recovery Act and through the 
Department of Energy's continuing investment in research and 
advanced batteries, including the lithium-ion battery.
    Now, there's a lot of work ahead of us. We have asked for 
$120 million in the fiscal year 2011 budget, plus additional 
money for transportation systems, to work on further battery 
research and the motors and controls and other devices are 
needed to put us on a continuous improvement path.
    In the Recovery Act, we invested $2.4 billion in advanced 
battery and electric transportation. A lot of these battery 
plants are being built now. We supported the installation of 
over 10,000 charging sites, provided $2 billion in tax credits 
for manufacturing and for the purchase of electric vehicles and 
plug-in hybrids. We've had a $25 billion auto loan, Advanced 
Technology Vehicles Manufacturing Loan Program which has also 
covered a number of firms that are investing in advanced 
electric vehicles. And the 48C tax credit supported a number of 
firms that are investing in battery manufacturing and other 
technologies.
    So, collectively, this work is helping put us in a position 
where U.S. firms will be able to produce batteries for half a 
million plug-in hybrids by the year 2015 and is leading rapidly 
to a point where the technology of electrics and hybrids of all 
kinds can be fully competitive with standard automobile prices 
and expected prices for future gasoline.
    Now, clearly if electrics and hybrids become a big part of 
the Nation's transportation system, it's going to have an 
impact on utilities. Hopefully, a large fraction of the 
resource can be met with existing generating plants, but, of 
course, it doesn't mean that you'll have the transmission 
facilities in place to move the power where you need it. It's 
one of the reasons for the Smart Grid. You need to have 
charging stations in residences, in parking spaces, and we're 
working very closely with electric utilities to make sure that 
we can do this expeditiously.
    Now, the businesses that will manufacture electric 
vehicles, batteries, motors, controls, and the maintenance can 
create a lot of new business opportunities throughout America, 
including manufacturing. And the research that we've done over 
the years has put us in a position where we can, I think 
rightly, claim leadership in this area. But, there's absolutely 
no cause for complacency. A number of well-managed, well-funded 
projects in advanced batteries and vehicle technologies are 
underway around the world. Markets will move quickly. 
Competition will be ruthless. And new technologies will require 
continuous improvement.


                           prepared statement


    Well-managed Federal research programs in the 20th century 
spurred the kind of innovation in the U.S. leadership in areas 
ranging from commercial aircraft to the Internet. And I'm 
absolutely convinced that wise management of public investment 
in electric vehicles can do the same thing and put us in a 
position where we can, in fact, lead world markets.
    Thank you for the opportunity of talking here, and I'd be 
happy to answer questions.
    [The statement follows:]
                 Prepared Statement of Dr. Henry Kelly
                              introduction
    Chairman Dorgan, Ranking Member Bennett, and members of the 
subcommittee, thank you for the opportunity to appear before you today 
to discuss the Department of Energy's (DOE) efforts to help provide 
Americans with attractive, safe, affordable transportation options that 
sharply reduce imported fuel use and greenhouse gas (GHG) emissions. A 
number of new technologies--particularly rapid advances in batteries, 
motors, and other essential components of electric and hybrid electric 
vehicles--open exciting new possibilities to achieve these goals while 
generating many new opportunities for business growth and job creation.
    Transportation is a central part of the Nation's energy and 
environmental challenges. It is responsible for about 30 percent of all 
U.S. energy use and two-thirds of total U.S. petroleum consumption.\1\ 
The work required to build, fuel, and maintain transportation systems 
makes the transportation sector one of the Nation's largest employers 
as well.
---------------------------------------------------------------------------
    \1\ Transportation Energy Data Book: Edition 28, Table 2.1 and 
Table 1.16.
---------------------------------------------------------------------------
    Within that transportation system, driving, in particular, consumes 
a significant amount of energy while emitting GHGs; and Americans drive 
a lot. The vehicle miles Americans travel in just over 8 years is 
roughly equal to the distance to the star nearest to the sun, Proxima 
Centauri.\2\ Automobiles and light trucks alone are responsible for 
nearly one-half of U.S. petroleum consumption.\3\ In 2007, gasoline use 
in transportation contributed to 16.4 percent of total U.S. carbon 
dioxide emissions.\4\
---------------------------------------------------------------------------
    \2\ Assumes an average of approximately three trillion miles driven 
annually (http://www.fhwa.dot.gov/policyinformation/travel/tvt/history/
) and a distance from the sun to Proxima Centauri of about 24.7 
trillion miles (http://heasarc.gsfc.nasa.gov/docs/cosmic/
nearest_star_info.html).
    \3\ Transportation Energy Data Book: Edition 28, calculated from 
data in Table 1.13 and Table 1.16.
    \4\ Transportation Energy Data Book: Edition 28, calculated from 
data in Table 11.4 and Table 11.6.
---------------------------------------------------------------------------
    DOE designed a portfolio of research projects that can help meet 
the challenge of producing safe, affordable, energy-efficient, and 
environmentally-friendly highway transportation. This portfolio 
includes balancing investments in basic science, highly innovative but 
high-risk research, and applied research focused on areas where risks 
and other factors have led to underinvestment by private firms. 
Investing the public's research money in several promising research 
pathways, the portfolio includes advanced engines for using new fuels 
from renewable resources, fuel cell vehicles, hybrid electric vehicles 
(including plug-in hybrid electric vehicles, or PHEVs), and all-
electric vehicles, or EVs. Each of these technologies can contribute to 
the solution. However, it is impossible to determine which technologies 
will be ``winners'' in the future since customers will choose different 
cars for different missions, making vehicle markets complex and 
sufficiently difficult to predict in the coming decades.
    The environmental benefits of PHEVs and EVs depend heavily on the 
fuels they use. EVs and hydrogen-powered vehicles can achieve very low 
net emissions if electricity and hydrogen are produced largely from 
low-carbon resources--renewable energy, fossil-powered generation with 
carbon capture and sequestration, and nuclear power. DOE is making 
major investments in the research needed to ensure that these energy 
resources are available as quickly as possible. If the Department's 
2050 goals are met, the GHG emissions of PHEVs and EVs would be five 
times lower than those produced by today's internal combustion engine 
cars.\5\
---------------------------------------------------------------------------
    \5\ J. Ward, internal DOE analysis, January, 27, 2010 based on A. 
Elgowainy, ANL GREET analysis, January 27, 2010.
---------------------------------------------------------------------------
    My remarks today focus on the recent progress being made in hybrid 
electric vehicles and all-electric vehicles. DOE's Vehicle Technologies 
Program (VTP) manages research on improving the cost and performance of 
advanced batteries, efforts supported by funding from the Recovery Act, 
and efforts of the Advanced Technology Vehicle Manufacturing Loan 
Program (ATVM). Collectively, this work is helping develop the advanced 
battery manufacturing capacity needed to produce half a million PHEVs 
per year by 2015.\6\
---------------------------------------------------------------------------
    \6\ Memorandum for the President from the Vice President, December 
15, 2009: http://www.whitehouse.gov/sites/default/files/administration 
official/vice_president_memo_on_clean_energy_economy.pdf.
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                  electric drive vehicle capabilities
    Hybrid electric vehicles, which are now familiar to most Americans, 
operate from fuel-powered internal combustion engines and from electric 
motors provided by batteries charged by the engine. Energy wasted by 
conventional vehicles during braking can be captured by hybrid cars to 
recharge batteries, and the fuel-powered engines can simply turn off 
when not needed--including during periods of idling. Virtually all 
hybrids on the road today can only operate for short distances without 
needing the engine to recharge the battery. Plug-in hybrids have 
batteries large enough to enable operation over significant distances 
using batteries alone. Many of the plug-in hybrids DOE supports can 
travel up to 40 miles on battery power alone. This means that most of 
the daily trips taken by Americans could avoid using any gasoline.\7\ 
The fuel-powered engine would be available to support longer trips.
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    \7\ Transportation Energy Data Book: Edition 27 (2008), p. 8-19, 
citing work done by Danilo Santini at Argonne National Laboratory.
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    EVs eliminate the engine entirely and operate only in all-electric 
mode. The EVs being tested on American roads today are designed to 
travel 100 to 200 miles or more on a single charge.
               ev battery technology and ongoing research
    Approaching 3 percent of new car sales, hybrid electric vehicles 
are now common on American highways \8\ and electric drive vehicles are 
beginning to enter the market. In 2008, an American manufacturer 
launched a highway-capable production electric car for sale in the 
United States; another American manufacturer expects to release a PHEV 
in 2010; a Japanese company's new EV will soon be available in several 
West Coast cities; and a major American company will launch sales of an 
all-electric delivery van by the end of 2010.
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    \8\ Green Car Congress reporting Autodata 2009 sales figures, 
January 7, 2010: http://www.greencarcongress.com/2010/01/hybsales-
20100107.html.
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    Electric cars are nothing new. Henry Ford's wife, Clara, loved her 
EV in 1916.\9\ Still, electric vehicles lost to internal combustion 
engines in the marketplace because of the convenience and low cost of 
internal combustion engines and gasoline. Storing energy in a gas tank 
was easier than storing it in a battery; and a gas tank could be filled 
in minutes while batteries took hours to charge. However, significant 
improvements in the performance of batteries, controls, and electric 
motors have changed the scope of the market.
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    \9\ http://www.henryfordestate.org/claracar.htm.
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    The promise of advanced lithium-ion batteries has had the most 
dramatic impact. These batteries have the potential to be much lighter, 
smaller, safer, and less expensive than their predecessors. Working 
with industry partners over the past decade, DOE research has helped 
make steady gains in all of these characteristics. The most important 
remaining challenge is to cut costs. One lithium-ion battery produced 
today is projected to use 8 kilowatt-hours (kWh) of energy (of a total 
capacity of 16 kWh) and costs roughly $6,500-$8,000 ($800-$1,000/kWh of 
useable energy) when produced in high volume.\10\ DOE and its research 
partners believe that the cost could likely be reduced to $2,400 ($300/
kWh of useable energy) by 2014 with a combination of better materials, 
optimized battery designs, and improved manufacturing. At this price, 
the cost of driving a mile in an electric or plug-in hybrid electric 
vehicle would be roughly comparable to that of today's conventional 
cars.\11\ The initial price of new vehicles would be higher, but the 
energy costs for driving would be much lower. Additionally, it can be 
expected that the battery prices will continue to fall while gasoline 
prices increase in the coming decades.\12\
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    \10\ TIAX, PHEV Battery Cost Assessment, page 32, LiMn2O4 high 
case, with 50 percent useable energy.
    \11\ A. Brooker, M. Thornton, and J. Rugh, Technology Improvement 
Pathways to Cost-Effective Vehicle Electrification (preprint of a 
conference paper--NREL/CP-540-47454), February 2010.
    \12\ From the VTP's published program goals in Department of Energy 
fiscal year 2011 Congressional Budget Request, http://www.mbe.doe.gov/
budget/11budget/Content/Volume%203.pdf, and from the Early Release 
Annual Energy Outlook 2010, U.S. Energy Information Administration 
(EIA).
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    Cost-reducing battery advances require a close partnership between 
government and industry. These partnerships are clearly visible in the 
way industry converted publicly-funded basic and applied research into 
commercial products and jobs. For example, DOE supported the 
development of the first lithium-ion battery for a production vehicle, 
which started manufacture in the summer of 2009. At the recent 
Washington Auto Show, two major American manufacturers showcased cars 
that utilize lithium-ion batteries. DOE supported the research and 
development (R&D) that provided the basis for both of these batteries.
    These commercial successes do not mean that the role DOE's R&D role 
in battery technologies is complete, but rather that the Department 
will need to address additional challenges in the sector. DOE's fiscal 
year 2011 budget request includes $120 million to continue work 
focusing on a wide range of research barriers facing developers of 
hybrid and electric vehicles, including specific materials problems 
that limit battery lifetimes, safety, charging rates, and production 
costs.\13\
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    \13\ U.S. Department of Energy fiscal year 2011 Congressional 
Budget Request, http://www.mbe.doe.gov/budget/11budget/Content/
Volume%203.pdf.
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    DOE has already begun to address these barriers through investments 
in the next generation of battery technologies. Lithium-ion batteries 
include a family of chemistries, each of which has advantages and 
disadvantages based on the cost of materials and safety. Other chemical 
systems, such as lithium metal polymer batteries and lithium-sulfur 
batteries, remain in the research stage and have shown promise in the 
laboratory. However, these will require significant additional work 
before they can become viable products.
    The Department's Vehicle Technologies Program currently funds 17 
industrial lithium-ion battery and materials development contracts. VTP 
also sponsors two major coordinated efforts spanning 10 National 
Laboratories and 12 universities. These efforts include those at the 
Lawrence Berkeley National Laboratory (LBNL) and Argonne National 
Laboratory. LBNL leads the Batteries for Advanced Transportation 
Technologies effort which focuses on relatively long-term R&D 
associated with advanced materials, modeling, and diagnostics. Argonne 
National Laboratory leads the Advanced Battery Research initiative 
which focuses on more immediate, or short-term evaluation and 
demonstration of new materials and technologies in advanced batteries. 
The 57 projects in these 2 efforts received approximately $30 million 
in fiscal year 2010.
                          recovery act impact
    In addition to the ongoing R&D concentrated on overcoming technical 
barriers to widespread adoption, the Department is supporting the 
development of advanced battery technology for EVs and PHEVs. In August 
2009, President Obama announced award selections for up to $2.4 billion 
in Recovery Act funds to accelerate the manufacturing and deployment of 
the next generation of U.S. batteries and EVs. Vice President Biden, 
Secretary Chu and three other Cabinet members participated in events 
across the country to mark this historic announcement--the single 
largest investment in advanced battery technology ever made.
    The Recovery Act supports 48 new projects for advanced battery and 
electric drive components manufacturing and electric drive vehicle 
deployment in more than 20 States. Funding for those projects includes 
up to $1.5 billion dedicated to building battery manufacturing 
facilities that provide an opportunity for the United States to lead 
the world in lithium-ion battery technology. Today, most lithium-ion 
batteries are made for consumer electronics applications such as mobile 
phones and notebook computers. More than 95 percent of these batteries 
are made in Japan, China, and South Korea, as East Asia is the 
epicenter of consumer electronics manufacturing. However, when the 
Recovery Act funded manufacturing plants are completed, the United 
States will have the capacity to make batteries for half a million 
PHEVs per year.
    The revenue generated by the lithium-ion battery market for 
vehicles could be as much as 10 times larger than that for consumer 
electronics batteries since the size and energy storage capacity for a 
PHEV or EV battery pack is several thousand times that of a mobile 
phone battery.\14\ Battery manufacturing is also a highly automated 
system. With low production costs that do not depend on low-wage labor, 
U.S. battery manufacturing can compete with producers anywhere in the 
world. Furthermore, the jobs that are created by domestic manufacturing 
will be well-paid. New domestic battery facilities will be able to 
supply advanced batteries for defense applications, consumer 
electronics, power tools, utility voltage regulation, and truck idling 
mitigation.
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    \14\ Ralph Broddarp, Broddarp of Nevada, Inc., speaking at the 2nd 
International Conference on Advanced Lithium Batteries for Automobile 
Applications, Tokyo, Japan, November 26, 2009.
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    In addition to building U.S. manufacturing capacity, Recovery Act 
funds support the installation of over 10,000 charging sites for PHEVs 
and EVs that will serve more than 5,000 PHEVs being tested in on-road 
use. This is the largest number of PHEVs ever on U.S. roads, and the 
in-use, operational, and charging data gathered in this effort will 
help inform how additional PHEVs and EVs can be introduced in the 
future. The Recovery Act is also funding the first programs to educate 
first responders and emergency personnel in how to deal with accidents 
involving EVs and PHEVs.
    Moreover, the Recovery Act includes $2 billion in tax credits 
ranging between $2,500 and $7,500 for the purchase of PHEVs and EVs. 
Credits also cover 10 percent of the cost of converting hybrids or 
internal combustion engine vehicles to PHEVs and EVs.
         advanced technology vehicle manufacturing loan program
    Separate from the Recovery Act programs above, the Department's 
ATVM Program strives to support the growth of domestic advanced vehicle 
technology manufacturing. The ATVM Program is authorized to make up to 
$25 billion in loans available to auto manufacturers and their 
suppliers for the cost of re-equipping, expanding, or establishing U.S. 
manufacturing facilities to produce qualified advanced technology 
vehicles or components. To be eligible to receive these loans, 
companies must be engaged in manufacturing ``advanced technology 
vehicles'' (ATVs) or components for these vehicles. ATVs must be light-
duty, meet 125 percent of the miles per gallon achieved by 
``substantially similar vehicles'' in 2005, and they must meet existing 
and any new emissions standards for fine particulates. Qualifying 
components must be specifically designed for installation in qualifying 
ATVs and must contribute to the qualifying ATV's performance 
requirements.
    So far, the program has awarded loans to five companies, amounting 
to almost $9 billion. Four auto manufacturers--Ford Motor, Nissan 
Motor, Tesla Motors, and Fisker Automotive--received loans to produce 
more fuel-efficient vehicles, including EVs and PHEVs. A fifth company, 
Tenneco Inc., will design, engineer, and produce emission control 
components for gas, hybrid, and diesel-powered vehicle engines.
                       evs and the electric grid
    If PHEVs and EVs become a major part of the Nation's transportation 
system, investments in the Nation's electrical grid need to be made to 
support the new demand for electricity. Charging facilities will need 
to be installed in residences, parking facilities, and other sites. DOE 
is working with utilities and other partners to explore how this can 
best be accomplished. It is expected that PHEV owners will typically 
charge their vehicles at night, which will limit the impact on the 
electric grid and allow consumers to take advantage of off-peak 
electricity rates. A study by the Pacific Northwest National Laboratory 
shows that up to 70 percent of the U.S. vehicle fleet could be 
comprised of PHEVs without a significant impact on the electric power 
grid.\15\
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    \15\ Kintner-Meyer M, Schneider K and Pratt R (2007) Impact 
Assessment of Plug-in Hybrid Vehicles on Electric Utilities and 
Regional U.S. Power Grids, Online Journal of EUEC 1:Papers #4 and #5.
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    Given the sophisticated controls possible with electric meters and 
other smart grid technologies, the electricity storage capacity of EVs 
and PHEVs could be a valuable asset to utility grids by helping 
utilities manage loads more efficiently without compromising service 
quality or reliability. These controls could ensure that vehicles are 
charged at times when generation costs are low (in many cases this may 
be when most of the electricity comes from more efficient, 
environmentally attractive plants), and thus, could lead to lower 
utility costs for all customers. It could also be possible to design 
systems that provide homes connected to electric vehicles with backup 
electric power during power outages. All of these functions have been 
demonstrated in limited experiments, such as in A123Systems' two 
megawatt grid stabilization batteries for AES Energy.\16\
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    \16\ A123Systems press release, 2008: http://ir.a123systems.com/
releasedetail.cfm?ReleaseID=403097.
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                               conclusion
    PHEVs and EVs show enormous promise to help the United States cut 
dependence on imported petroleum and meet national environmental goals 
with cars that are safe, reliable, and fun to drive. The businesses 
that will manufacture these vehicles--and the batteries, motors, 
controls, and other components they contain--can create new business 
opportunities and many new manufacturing jobs in America. The research 
DOE has funded over the years has put the United States in a position 
to lead in many key areas of battery, EV and PHEV development. Recovery 
Act investments provide America with the opportunity to lead the world 
in this critical new technology. However, there is no room for 
complacency. A number of well-managed, well-funded projects in advanced 
battery and vehicle technologies are underway around the world. Markets 
will move quickly, competition will be ruthless, and new technologies 
will require continuous improvement.
    Well-managed Federal research programs in the 20th century spurred 
tremendous innovation and U.S. economic leadership in areas ranging 
from commercial aircraft to the Internet. I am optimistic that similar 
sustained U.S. research investment in 21st century technologies like 
electric vehicles will provide renewed U.S. scientific leadership, 
economic growth, and job creation. It will enable the United States to 
meet its national energy and environmental goals while providing export 
opportunities that support global sustainability efforts.
    I would be pleased to answer your questions.

    Senator Dorgan. Dr. Kelly, thank you very much.
    And, Mr. Smith, I've already properly introduced you, I 
think, and we're really pleased that you're here. You may 
proceed.
STATEMENT OF FREDERICK W. SMITH, MEMBER, 
            ELECTRIFICATION COALITION; CHAIRMAN, 
            PRESIDENT, AND CEO, FEDEX
    Mr. Smith. Thank you very much, Senator Dorgan, Senator 
Bennett, Senator Alexander, always good to be with you, in 
Washington or Tennessee. We appreciate the opportunity to put 
the views of the Energy Security Leadership Council and the 
Electrification Coalition present.
    Mr. Chairman, I think you set the issue up very clearly. 
After nuclear proliferation and weapons of mass destruction, 
this is the Nation's biggest economic and national security 
issue. In 2008, we had a very visible example of the effects of 
precipitous run-ups in fuel prices. There's just no question 
that the $147-a-barrel oil prices that we saw in July 2008 were 
the match that lit off the financial crisis. People literally 
had to choose between making their mortgage payments or driving 
to and from work. And as we've looked at this problem over the 
last several years, with the reports that the Energy Security 
Leadership Council put out and the Electrification Coalition 
report that was released in 2009, this really is the only 
solution to significantly reducing our dependence on petroleum, 
and particularly on petroleum imported from places around the 
world which are hostile to the interests of the American 
people.
    As was pointed out, the infrastructure already exists. 
That's very different than any other potential solution. The 
sources of supply are highly diversified. The sources of 
supply, relative to the types of automotive and transportation 
power that we are currently consuming, are very clean. We have 
substantial spare capacity, as Senator Alexander pointed out.
    And, to me, probably the most important element here is 
that, after the transitional period, it's quite obvious that 
the electrification of a large segment of our short-haul 
transportation is highly cost efficient. Our estimate, in the 
report that we produced, is that an electric plug-in vehicle or 
a grid-enabled vehicle, with gasoline at about $3 a gallon, 
costs about 2.5 cents per mile to produce a mile of 
transportation in a personal vehicle. That contrasts to about 
10 cents a mile in a gasoline-powered vehicle. Now, the reason 
for that, quite simply, is that electricity has a higher 
efficiency of conversion into power than an internal combustion 
engine. The energy conversion ratio is about 90 percent for 
electrical power. It's about 25 to 27 percent for an internal 
combustion engine.
    So, the relative issues of converting to a modern grid, 
putting the recharging stations in place from a national 
productivity standpoint are highly effective. Our 
recommendations, in the electrification roadmap, are about $120 
billion, spread over 8 years, about $15 billion a year. But, 
contrast that into the U.S. Department of Energy estimate that 
U.S. oil dependence costs were $577 billion in 2008 alone. And, 
of course, we're spending enormous amounts of our national 
wealth protecting the oil trades, and are involved in two 
shooting wars, in large measure because of this issue.

                           PREPARED STATEMENT

    So, we think that the expenditure of $15 billion a year to 
make this transition in order to eventually end an addiction, 
that you laid out there that costs us upwards of $600 billion a 
year in perpetuity, is a very good expenditure, and we would 
recommend that the Nation move along this electrification path.
    Thank you.
    I have a complete statement I've submitted for the record.
    [The statement follows:]
                Prepared Statement of Frederick W. Smith
    Good morning, Chairman Dorgan, Senator Bennett, and members of the 
subcommittee. I would like to thank you for giving me this opportunity 
to speak to you regarding one of the great challenges facing our 
country today: ending the very real and pressing threats posed to our 
Nation by our dependence on petroleum.
    These are threats, Chairman Dorgan, that I know you are very 
familiar with. You have been one of the Senate's most stalwart 
champions in finding real solutions to our energy security challenges, 
and I thank you for your dedication and leadership.
    I am proud to serve both as co-chairman of the Energy Security 
Leadership Council and as a member of the Electrification Coalition, 
two organizations dedicated to facing these threats head on.
    The Energy Security Leadership Council, formed in 2006, is a 
coalition of business executives and retired national security leaders 
who believe that our dependence on oil, much of it imported from 
unstable and hostile regimes, poses an unacceptable economic and 
national security threat.
    The Electrification Coalition, formed in 2009, is a group of 
business leaders who represent the entire value chain of an electrified 
transportation sector and who are committed to promoting policies and 
actions that facilitate the deployment of electric vehicles on a mass 
scale.
    I became involved in these organizations for a single reason: it is 
my belief that after terrorism and the proliferation of weapons of mass 
destruction, our increased dependence on petroleum represents the 
biggest single threat to our Nation's economy and national security.
    I can speak to this issue personally. FedEx delivers more than 7 
million packages and shipments per day to more than 220 countries and 
territories. In a 24 hour period, our fleet of aircraft flies the 
equivalent of 500,000 miles, and our couriers travel 2.5 million miles. 
We accomplish this with more than 275,000 dedicated team members, 670 
aircraft, and some 70,000 motorized vehicles worldwide.
    FedEx's reliance on oil reflects the reliance of the wider 
transportation sector, and indeed the entire U.S. economy. Oil is the 
lifeblood of a mobile, global economy. We are all dependent upon it, 
and that dependence brings with it inherent and serious risks.
    In 2008, Americans consumed nearly 20 million barrels of oil a 
day--one-fourth of the world's total. We imported 58 percent of the oil 
we consumed, leading to a U.S. trade deficit in crude oil and petroleum 
products that reached $388 billion--56 percent of the total trade 
deficit.
    At the crux of America's oil dependence is the energy demand of the 
transportation sector. Transportation accounted for almost 70 percent 
of American oil consumption in 2008. Cars and trucks were 94 percent 
reliant on oil-based fuel for their energy, with no substitutes 
immediately available in anything approaching sufficient quantities.
    The volatility of oil prices affects every American. At the 
beginning of 2001, oil prices were steady at $30 per barrel. Over the 
subsequent 5 years, prices steadily rose, reaching $75 per barrel in 
June of 2006. After retreating slightly, benchmark crude prices jumped 
50 percent in 2007, from $60 per barrel in January to more than $90 in 
December. In 2008, oil prices soared rapidly, eventually reaching their 
all-time high of more than $147 per barrel on July 3.
    We are all aware of the sharp financial burden on U.S. households 
that faced--and still face--resets in their adjustable rate mortgages. 
But it is important to understand that increases in energy costs have 
been on the same, or even a greater, order of magnitude for the entire 
American economy. A typical subprime borrower with a poor credit 
history who bought a $200,000 house in 2006 with a 2 year/28 year ARM 
with a 4 percent teaser interest rate for the first 2 years would have 
seen monthly mortgage payments increase from about $950 a month before 
the reset to about $1,330 after the reset--an increase of about $4,500 
a year. In the meantime, between 2001 and 2008, the average retail 
price of gasoline increased from $1.46 to $3.27, costing typical 
households $1,990 a year in increased fuel expenses. And that increase 
in energy costs affected all U.S. households--not just the one 
household in 20 that held a subprime mortgage.
    This burden, multiplied across millions of households, was a major 
contributor to the ensuing economic slowdown. We saw an explosion in 
home ownership, with many purchases being made by people who had 
heretofore not qualified for mortgages. When the price of oil and the 
price of gasoline began to rise, and inflation on commodities began to 
take hold, and interest rates began to increase, you had a tremendous 
diminution in purchasing power and cash flow, which contributed to 
people having to walk away from their mortgages. The rise in oil prices 
was the match that lit the fuse of the mortgage mess and the subsequent 
recession.
    The U.S. economy lost more than 700,000 jobs between December 2007 
and the beginning of September 2008, and the unemployment rate 
increased from 4.5 percent to 6.1 percent--all before the financial 
crisis truly hit later in September. In fact, as early as August 2008, 
many economists believed the U.S. economy was already on the verge of 
recession, largely driven by sharply rising and volatile oil prices.
    And the steps we usually would take to help strengthen the economy 
and create jobs in times of weakness are just as easily overcome by oil 
price volatility. The total effect of changes to the Federal tax code 
from 2001 to 2008 code was a decrease in annual Federal income and 
estate taxes by about $1,900 for the median household. But a typical 
household's energy costs rose more than that. In other words, every 
penny that the most Americans saved due to Federal income and estate 
tax cuts over the past 8 years was spent on higher gasoline bills.
    All told, U.S. families and businesses spent more than $900 billion 
on refined oil products in 2008, representing 6.4 percent of GDP. 
Today, prices have receded. But for how long? Many of the underlying 
fundamentals that pushed oil prices up are still present today, and 
once demand--temporarily reduced due to the recession--begins to pick 
up again, prices are likely to follow. Our oil dependence could 
strangle an economic recovery just as it is beginning to take hold.
    The threat to American national security is equally as urgent. The 
vulnerability of global oil supply lines and infrastructure has driven 
the United States to accept the burden of securing the world's oil 
supply. Much of the infrastructure that delivers oil to the world 
market each day is exposed and vulnerable to attack in unstable regions 
of the world. According to the U.S. Department of Energy, each day more 
than 50 percent of the world's oil supplies must transit one of six 
maritime chokepoints, narrow shipping channels like the Strait of 
Hormuz between Iran and Qatar. Even a failed attempt to close one of 
these strategic passages could cause global oil prices to skyrocket. A 
successful closure of even one of these chokepoints could bring 
economic catastrophe.
    To mitigate this risk, U.S. armed forces expend enormous resources 
patrolling oil transit routes and protecting chronically vulnerable 
infrastructure in hostile corners of the globe. This engagement 
benefits all nations, but comes primarily at the expense of the 
American military and ultimately the American taxpayer. A 2009 study by 
the RAND Corporation placed the cost of this defense burden at between 
$67.5 billion and $83 billion annually.
    Oil dependence also constrains U.S. foreign policy. Whether dealing 
with uranium enrichment in Iran or a hostile regime in Venezuela, 
American diplomacy is distorted by the need to minimize disruptions to 
the flow of oil. Too often, oil dependence requires us to accommodate 
hostile governments that share neither our values nor our goals, 
putting both the United States and its allies at risk.
    Finally, petroleum consumption poses a long-term threat to global 
environmental sustainability. Curbing emissions is a global issue, and 
there is not yet an international consensus on a long-term 
stabilization objective or on the changes in emissions trajectory 
needed to meet such a goal. International discussions are increasingly 
centered on a stabilization level that ranges between 450 and 550 parts 
per million (ppm) CO2 equivalent (CO2-eq). 
Regardless of the exact nature of a final emissions stabilization 
target, what is clear is that the transportation sector is going to 
have to play a major role in virtually any carbon abatement scenario.
    We cannot continue down this path. We cannot continue to send 
untold billions of dollars and jobs overseas to pay for our addiction. 
We cannot continue to send men and women into harm's way to protect an 
increasingly vulnerable supply line. We cannot continue to put our 
future in the hands of hostile nations or fanatical terrorists who can 
turn off our crucial oil lifeline at the drop of a hat.
    There is a solution. The lynchpin of any plan that is serious about 
confronting oil dependence must be a transportation system that today 
is almost entirely dependent on petroleum. The solution can be found in 
something that nearly every single one of you has either on your belt 
or on the table in front of you. The lithium ion batteries that power 
our cell phones and laptop computers can one day form the nucleus of an 
electrified transportation sector that is powered by a wide variety of 
domestic sources: natural gas, nuclear, coal, hydroelectric, wind, 
solar, and geothermal. No one fuel source--or producer--would be able 
to hold our transportation system and our economy hostage the way a 
single nation can disrupt the flow of petroleum today.
    Electricity represents a diverse, domestic, stable, fundamentally 
scalable energy supply whose fuel inputs are almost completely free of 
oil. It would have clear and widespread advantages over the current 
petroleum-based system:
  --Electricity is Diverse and Domestic.--Electricity is generated from 
        a diverse set of largely domestic fuels. Among those fuels, the 
        role of petroleum is negligible. In fact, just 1 percent of 
        power generated in the United States in 2008 was derived from 
        petroleum. An electricity-powered transportation system, 
        therefore, is one in which an interruption of the supply of one 
        fuel can be made up for by others. This ability to use 
        different fuels as a source of power would increase the 
        flexibility of an electrified light-duty vehicle fleet. As our 
        national goals and resources change over time, we can shift 
        transportation fuels without having to overhaul our 
        transportation fleet again. In short, an electrified transport 
        system would give us back the reins, offering much greater 
        control over the fuels we use to support the transportation 
        sector of our economy. Moreover, while oil supplies are subject 
        to a wide range of geopolitical risks, the fuels that we use to 
        generate electricity are generally sourced domestically. All 
        renewable energy is generated using domestic resources. We are 
        a net exporter of coal, which fuels about one-half of our 
        electricity. Although we currently import approximately 16 
        percent of the natural gas we consume, more than 90 percent of 
        those imports were from North American sources (Canada and 
        Mexico) in 2008. And in fact, recent advancements in the 
        recovery of natural gas resources from unconventional 
        reservoirs like shale gas, coal bed methane, and tight gas 
        sands have led to wide consensus that our domestic undiscovered 
        technically recoverable reserves are well in excess of 1,000 
        trillion cubic feet. We do import a substantial portion of the 
        uranium we use for civilian nuclear power reactors. Forty-two 
        percent of those imports, however, are from Canada and 
        Australia.
  --Electricity Prices are Stable.--Electricity prices are 
        significantly less volatile than oil or gasoline prices. Over 
        the past 25 years, electricity prices have risen steadily but 
        slowly. Since 1983, the average retail price of electricity 
        delivered in the United States has risen by an average of less 
        than 2 percent per year in nominal terms, and has actually 
        fallen in real terms. Moreover, prices have risen by more than 
        5 percent per year only three times in that time period. This 
        price stability, which is in sharp contrast to the price 
        volatility of oil or gasoline, exists for at least two reasons. 
        First, the retail price of electricity reflects a wide range of 
        costs, only a small portion of which arise from the underlying 
        cost of the fuel. The remaining costs are largely fixed. In 
        most instances, the cost of fuel represents a smaller 
        percentage of the overall cost of delivered electricity than 
        the cost of crude oil represents as a percentage of the cost of 
        retail gasoline. Second, although real-time electricity prices 
        are volatile (sometimes highly volatile on an hour-to-hour or 
        day-to-day basis), they are nevertheless relatively stable over 
        the medium and long term. Therefore, in setting retail rates, 
        utilities or power marketers use formulas that will allow them 
        to recover their costs, including the occasionally high real-
        time prices for electricity, but which effectively isolate the 
        retail consumer from the hour-to-hour and day-to-day volatility 
        of the real-time power markets. By isolating the consumer from 
        the price volatility of the underlying fuel costs, electric 
        utilities would be providing to drivers of GEVs the very 
        stability that oil companies cannot provide to consumers of 
        gasoline.
  --The Power Sector has Substantial Spare Capacity.--Because large-
        scale storage of electricity has historically been impractical, 
        the U.S. electric power sector is effectively designed as an 
        ``on-demand system.'' In practical terms, this has meant that 
        the system is constructed to be able to meet peak demand from 
        existing generation sources at any time. However, throughout 
        most of a 24-hour day--particularly at night--consumers require 
        significantly less electricity than the system is capable of 
        delivering. Therefore, the U.S. electric power sector has 
        substantial spare capacity that could be used to power electric 
        vehicles without constructing additional power generation 
        facilities, assuming charging patterns were appropriately 
        managed.
  --The Network of Infrastructure Already Exists.--Unlike many proposed 
        alternatives to petroleum-based fuels, the Nation already has a 
        ubiquitous network of electricity infrastructure. No doubt, 
        electrification will require the deployment of charging 
        infrastructure, additional functionality, and increased 
        investment in grid reliability, but the power sector's 
        infrastructural backbone--generation, transmission, and 
        distribution--is already in place.
  --Electric Miles are Cheaper Than Gasoline Miles.--Operating a 
        vehicle on electricity in the United States is considerably 
        less expensive than operating a vehicle on gasoline. In large 
        part, this is due to the high efficiency of electric motors, 
        which can turn more than 90 percent of the energy content of 
        electricity into mechanical energy. In contrast, today's best 
        internal combustion engines have efficiency ratings of just 25 
        to 27 percent. With gasoline at $3.00 per gallon, the operating 
        cost of a highly-efficient internal combustion engine vehicle 
        (30 miles per gallon) is 10 cents per mile. For current pure 
        electric vehicles, assuming an average electricity price of 10 
        cents per kilowatt hour, operating costs are only 2.5 cents per 
        mile. Recent research confirms the potential savings of 
        electric propulsion. The Electric Power Research Institute 
        (EPRI) has determined that a compact size plug-in electric 
        hybrid vehicle will use only 160 gallons of gasoline a year, 
        compared to 300 in a gasoline electric hybrid and 400 in a 
        conventional internal combustion engine compact car. With 
        gasoline at $3 a gallon, a plug-in hybrid would save its owner 
        $10,000 over the course of the vehicle's lifetime compared to a 
        conventional vehicle.
  --Electric Miles are Cleaner Than Gasoline Miles.--Vehicle miles 
        fueled by electricity emit less CO2 than those 
        fueled by gasoline. Several well-to-wheels analyses conclude 
        that vehicles powered by the full and proportionate mix of fuel 
        sources in the United States today would result in reduced 
        carbon emissions. As renewable power increases its share of the 
        electricity portfolio, and to the extent that new nuclear power 
        comes on line, which I believe is important, the emissions 
        profile of the U.S. power sector and the GEVs powered by it 
        will continue to improve over time. Moreover, to the extent 
        that GEVs are charged overnight using power from baseload 
        nuclear or off-peak renewable power, their emissions footprint 
        can be nearly eliminated. In 2007, the Natural Resources 
        Defense Council and the Electric Power Research Institute 
        published a well-to-wheels analysis of several different 
        automotive technologies fueled by a range of sources commonly 
        used to generate power. Their analysis concluded that using a 
        PHEV would reduce carbon emissions as compared to a petroleum-
        fueled vehicle even if all of the exogenous electricity used to 
        charge the PHEV was generated at an old (relatively dirty) coal 
        power plant. Whereas a conventional gasoline vehicle would be 
        responsible for emissions, on average, of 450 grams of 
        CO2 per mile, a PHEV that was charged with power 
        generated at an old coal plant would be responsible for 
        emissions of about 325 grams of CO2 per mile, a 
        reduction of about 25 percent. Emissions attributable to the 
        vehicle could be reduced to as low as 150 grams of 
        CO2 per mile if the exogenous power was generated at 
        a plant without carbon emissions and ranged between 200 and 300 
        grams of CO2 per mile if the power used was 
        generated using other fossil fuel generation technologies. In 
        other words, no matter where the power consumed by a PHEV is 
        generated, the overall level of emissions attributable to its 
        operation are lower than those of a conventional gasoline 
        vehicle.
    In short, high penetration rates of grid-enabled vehicles--vehicles 
propelled in whole or in part by electricity drawn from the grid and 
stored onboard in a battery--could radically minimize the importance of 
oil to the United States, strengthening our economy, improving national 
security, and providing much-needed flexibility to our foreign policy 
while clearing a path toward dramatically reduced economy-wide 
emissions of greenhouse gases.
    No other alternative to petroleum can claim these widespread 
advantages. This is not to say that other alternatives have no role to 
play in a post-petroleum transportation sector. On the contrary. 
Natural gas, for example, may be used successfully in fleet vehicles, 
particularly those that can be centrally refueled, such as taxis, 
buses, specialized harbor and airport vehicles, and refuse-collection 
trucks. Even more importantly, natural gas will play a crucial role in 
providing electricity, a role in which it can be far more efficiently 
deployed than in actual vehicles. Other alternatives may also offer 
advantages in niche uses. But none offers the array of advantages that 
electricity does.
    We also recognize that there may be unforeseen challenges to an 
entirely new transportation system. For example, some have raised 
concerns about the supply of lithium, which is crucial for the 
batteries that will drive the cars and trucks of the future. We have 
examined this issue and found that, because the vast majority of 
material in lithium ion batteries is recyclable, the increased use of 
grid-enabled vehicles does not present the United States with 
additional resource dependency. Particularly when recycling is assumed, 
global lithium reserves are adequate to support even the most bullish 
GEV deployment scenarios. Moreover, at a structural level, dependence 
on lithium is unlike dependence on oil. Vehicles do not deplete 
batteries as we drive; they deplete the energy stored within them. In 
other words, batteries are like the engines in conventional vehicles of 
today; though their life span is finite, they last for many years. 
Coupled with the fuel diversity of the electric power sector, grid-
enabled vehicles generally insulate consumers from volatile commodity 
markets.
    The logical next question is how we can successfully devise and 
deploy an electrified transportation system.
    Make No Mistake.--Electrification at a mass scale is a complex 
undertaking. We are not only talking about cars here. We are talking a 
highly-integrated system of batteries, vehicles, generation, 
transmission and charging, in which every part depends on the other. We 
would see few results if we improved transmission in the northeast, 
created a smart grid in the northwest, and introduced more electric 
cars in the deep south.
    In November 2009, the Electrification Coalition released its 
Electrification Roadmap, a sweeping report outlining a vision for the 
deployment of a fully integrated electric drive network. The report 
details the dangers of oil dependence, explains the benefits of 
electrification, describes the challenges facing electric cars--
including battery technology and cost, infrastructure financing, 
regulatory requirements, electric power sector interface, and consumer 
acceptance issues--and provides specific and detailed policy proposals 
to overcome those challenges.
    Perhaps most importantly, the Roadmap proposes the selection and 
creation of specific geographic areas in which all of the elements of 
an electrified transportation system are deployed simultaneously and 
beyond early adopters, thus providing a crucial first step toward 
moving electrification beyond a niche product into a dominant, 
compelling, and ubiquitous concept. These geographic concentrations of 
electrification would:
  --Drive Economies of Scale.--Concentrating resources in a limited 
        number of geographic areas will allow participants in the GEV 
        value chain to take advantage of economies of scale, 
        particularly with respect to the deployment of charging 
        infrastructure. Utilities will incur fixed costs to support the 
        operation of GEVs; those costs will be more affordable if 
        spread over a greater number of vehicles. Power providers also 
        can reduce the cost of charging infrastructure through 
        economies of scale. While it is unclear how many public vehicle 
        chargers will be necessary for a GEV transportation system to 
        operate smoothly in a given community, it is clear that some 
        public charging facilities will be needed. Previous pilot 
        studies demonstrate that the cost of installing charging 
        facilities can be reduced significantly when groups of 
        facilities are installed at once. Furthermore, these geographic 
        concentrations will stimulate demand for grid-enabled vehicles 
        at a rate that is likely to be far greater than if the vehicles 
        are simply purchased by early adopters scattered around the 
        United States. Early on in the process, this higher level of 
        demand will simply be the result of magnified consumer 
        incentives. Subsequently, as individual metropolitan areas gain 
        exposure to GEVs and confidence increases, adoption rates 
        should be measurably expedited.
  --Demonstrate Proof of Concept Beyond Early Adopters.--By 
        demonstrating the benefits of grid-enabled vehicles in a real 
        world environment, this deployment plan will make consumers, 
        policymakers and industry aware of the tremendous potential of 
        electrification of transportation. Most Americans are familiar 
        with traditional hybrids, having seen them on the road for most 
        of the past decade; far fewer drivers are familiar with 
        electric vehicles. In general, consumers are probably unaware 
        that GEVs have evolved to the point where they can meet most 
        individuals' daily driving needs. In addition, electric drive 
        vehicles generally have faster acceleration and operate more 
        quietly than internal combustion engine vehicles. They hold out 
        the promise of offering drivers a wide range of features, based 
        on the electronic package in the vehicle, that are beyond our 
        imagination today in the same way that iPhone applications 
        would have been beyond our imagination a decade ago. The 
        problem is that consumers are not aware of the opportunities 
        presented by GEVs and are not yet convinced that they can 
        operate reliably and affordably at scale. Concentrating 
        investments and other efforts in a limited number of 
        communities will accelerate the opportunity to demonstrate that 
        grid-enabled vehicles can meet drivers' needs. In addition, 
        these projects will demonstrate that a community is capable of 
        putting the infrastructure in place, operating the vehicles 
        over their lifetimes, and disposing of them after their useful 
        life has ended, all in a manner that profits the participants 
        in the value chain.
  --Facilitate Learning by Doing.--While GEVs present a great 
        opportunity, their deployment also raises a number of 
        questions. Deploying large numbers of GEVs in concentrated 
        areas will allow for the collection of information and 
        experience that is needed to successfully deploy GEVs 
        nationwide. It will help automakers learn how much consumers 
        are willing to pay up front for a car that costs less to 
        operate and has a lower total cost of ownership over its 
        lifetime. It will allow utilities and charging station 
        providers to learn when and where drivers want to charge their 
        vehicles. It will allow utilities and other aggregators to 
        learn who can best sell power to drivers and what types of rate 
        structures meet both drivers' and utilities and aggregators' 
        needs. It will help determine whether there is a viable 
        business model for public charging infrastructure. It is clear 
        that for GEVs to succeed there must be a model in which each 
        party in the value chain is able to operate profitably, or in 
        which the Government determines that, as a matter of public 
        policy, certain aspects of the system should be publicly 
        supported in a manner that facilitates further competition. 
        Deploying GEVs in a series of geographic regions around the 
        country where resources can be concentrated and data can be 
        collected and studied will ultimately accelerate wide-scale GEV 
        deployment. Therefore, rather than allowing the market to 
        develop scattershot across the country, it is critical that the 
        market be encouraged to develop at a deliberate pace in clearly 
        identified geographic regions in which a large number of 
        vehicles can be deployed in a relatively short period of time.
    The success of this path will require focused and sustained public 
support. Ideally, the technology and deployment of electric vehicles 
would emerge through regular market mechanisms. Unfortunately, events 
conclusively demonstrate that this path to wide-spread electrification 
is unlikely.
    We understand that this is a challenging time for suggesting 
increased Government expenditures for any project, no matter how 
worthwhile. We also, however, believe that certain aspects of the 
threat of oil dependence and the solutions we recommend make this a 
unique issue.
    First is the urgent national security threat posed by our 
dependence on oil. While we cannot and should not ignore costs, threats 
to national security have always occupied a unique place of priority in 
our budget considerations. And make no mistake: the dangers posed by 
our oil dependence are not theoretical. Our safety and security are 
threatened by oil dependence, and every single day that we do not act 
is another day that we remain vulnerable.
    Second is the economic cost of inaction. The total cost of 
provisions that we recommend in the Electrification Roadmap is 
approximately $120 billion spread over 8 years. But Department of 
Energy researchers have estimated that U.S. oil dependence costs were 
$577 billion in 2008 alone, including $333 billion from transfer of 
wealth, $168 billion from economic dislocation, and $76 billion in 
foregone GDP.
    Shortly after completing the Electrification Roadmap, the 
Electrification Coalition commissioned the Interindustry Forecasting 
Project at the University of Maryland and Keybridge Research to study 
the long-term economic effects of our policy proposals. This expert 
modeling team collectively has decades of experience building and 
performing simulation studies with large-scale econometric models and 
conducting public policy research on energy and macroeconomic issues. 
Our goal was to produce a detailed, sober analysis based on 
conservative, realistic assumptions stretching out over the next 20 
years.
    We have not yet released the resulting report, but I wanted to 
share with the subcommittee some of the key findings in advance.
    If the policies we recommend were passed today, the resulting 
effect on the annual Federal deficit would turn positive by 2020. Even 
more importantly, on a cumulative basis, the budget effect would turn 
positive by 2025. By 2030, the total positive impact on the Federal 
budget would be $336 billion (in between $135 and $156 billion in 
current dollars).
    It is important to remember that one of the results of our oil 
dependence is the direct transfer of enormous amounts of wealth and 
capital overseas. Our economy benefits when we reduce oil dependence 
because we are using more of our own wealth productively here at home 
instead of sending it to others.
    Job creation would also benefit. Enacting these proposals would 
result in a total of 1.9 million new jobs by 2030, mostly in the 
manufacturing sector and in direct or indirect support of the motor 
vehicle industry. Job creation would start immediately with 227,000 in 
2010 alone, growing to 700,000 in 2015 and almost 900,000 in 2020. Most 
importantly, these would not be jobs that we stimulate once and go away 
once the stimulus is gone. These are jobs that would be a permanent 
part of a new, ongoing industry.
    The U.S. trade balance, which remains one of our Nation's greatest 
fiscal challenges, would improve by $127 billion--0.35 percent of GDP--
by 2030 under the policies we recommend.
    The final report, when we release it shortly, will detail 
additional economic and fiscal benefits, including to household income 
and GDP.
    In short, this economic modeling makes explicit what common sense 
perhaps already should make clear: if we can spend approximately $15 
billion a year for 8 years in order to eventually end an addiction that 
would otherwise cost us upwards of $600 billion a year in perpetuity, 
does it not make wise budgetary sense to do so?
    The dangers we face are not going to go away on their own. We have 
before us a responsibility, a necessity to act to put our Nation on a 
pathway toward once and for all ending our dangerous dependence on 
petroleum and leaving a stronger, safer America in its place.
    It is also an opportunity to strengthen our economy, create jobs, 
reduce our carbon footprint, and help to balance our budget in the long 
term.
    This is not a question of technology. The technology is there. If 
anyone on this subcommittee has been watching the Olympics, you've seen 
the commercials for the Nissan Leaf. You know the Chevy Volt is just 
around the corner. You're about to hear from business leaders what they 
can already produce. But the technology is not enough without the 
support needed to build infrastructure, encourage manufacturing and 
consumer acceptance--in short, to create in a few short years an 
entirely new transportation system. This is not pie-in-the-sky. It's 
simply a matter of organization, and--more importantly--a matter of 
will and a matter of execution.
    Here is what I know, as the leader of a company that both depends 
on and helps to strengthen the mobility upon which our global economy 
is built: If the Government supports this new path, if it helps to 
build these concentrations of electrification that are so crucial to 
jumpstarting a new, national transportation system, then that is a game 
changer. It is a game changer for businesses like mine, for employees, 
for consumers, for the economy, and for the country. A new future is 
ours for the taking, but only if we choose it and support it.
    Thank you for your attention.

    Senator Dorgan. Without objection, we'll include the 
complete statement of all the witnesses today in the record.
    Let me begin. Dr. Kelly, fast-forward 5, 7, or 10 years. 
You know the amount of money that we have put into battery 
technology. We are seeing new plants being built in the United 
States. We're pumping a massive amount of money into new 
battery technology. Is it your assessment that, in 5, 7, or 10 
years, that we are going to make substantial strides in the new 
batteries that will make the electric cars much, much more 
attractive to consumers?
    The reason I ask the question is there are some consumers 
that are just very worried about getting in an electric car and 
running out of power and not having a gas station to pull into. 
So, give me your assessment, going forward, on battery 
technology.
    Dr. Kelly. Well, of course, for one thing the hybrids run 
the gamut from the Prius, which, of course, is largely electric 
with a comparatively small battery, and go all the way up to 
all-electric batteries. So, if you're concerned about running 
out on a long trip, you can always get a vehicle that has an 
onboard engine. And the plug-ins are categorized by how many 
miles they'll operate without any backup of fuel power. And 40 
miles seems to be one of the sweet spots, and that's been where 
a number of the major companies are going.
    In terms of the batteries themselves, we're very 
optimistic. We've been, of course, in very close conversations 
with battery producers, in the process of reviewing bids for 
the Recovery Act, and right now the goal we've set is reducing 
the price of the lithium-ion battery from what we think is now 
around $800 a kilowatt hour down to about $300 a kilowatt hour. 
That seems very feasible in the fairly near term, 2014 or 
something like that.
    In the future, we have our bets on a number of even more 
advanced technologies that may drive the price down even 
further. So, I think that the consumers should be optimistic 
that this problem of battery costs, performance, safety, and 
lifetime is under control.
    Senator Dorgan. Mr. Smith, while there may be a national 
urge to reduce dependence on foreign oil, and a lot of reasons 
to move toward a different type of vehicle--electric drive 
vehicle, in this case--the fact is, if you build a product and 
consumers don't buy it, you know, it's not going to succeed. 
We've seen that. A great example is the Edsel car, which a 
number of us in this room remember. You're a consumer. You, at 
FedEx, run a lot of vehicles. I don't know how many. But, 
you're a consumer. Evaluate this from the perspective of a 
consumer.
    Mr. Smith. Well, Senator, we operate over 70,000 vehicles, 
so we have a keen appreciation for the exact point that you're 
making. That's why, in my summary of my testimony, I tried to 
focus on the productivity improvements inherent in 
electrification. Your chart, that showed the significant 
percentage of U.S. automotive trips being less than 40 miles, 
mean that this concern about running out of electrical power 
should not be the case for the vast majority of people in the 
vast majority of instances.
    And I don't think that you'll see the country convert 
completely to electric vehicles, any more than aviation has 
done away with turbo props in the era of the Jet Age. But, when 
you start talking about productivity numbers of per-mile cost 
with a grid-enabled vehicles of 2\1/2\ cents a mile versus 10 
cents a mile for an internal combustion powerplant over the 
course of the lifetime of that vehicle, that's about a $10,000 
savings.
    So, really the issue, I think, is getting the charging 
stations out. And people, I don't think, should be intimidated 
by that. Fifteen years ago, I don't think many of us were 
equipped with one of these devices, which has, obviously, 
electrical power. We monitor it with a little gauge up here. We 
clearly know when we have to plug it in to stay in 
communication, and so forth. And I think this whole psychology 
of electrical power has been not only held by the lithium-ion 
battery development because of telecommunications and 
information technology, it's also been a psychological thing 
where people feel pretty comfortable with electrical power 
because it powers so much of our life.
    So, I think if you can get these things into scale 
production where the costs come down, I believe consumers will 
adopt them, you know, for a lot of their utilization, contrary 
to a lot of the naysayers. I don't think that today that's a 
problem.
    I'd also point out that one of the things that the 
Electrification Coalition looked at was whether we would go 
from a dependence on imported petroleum from hostile regimes to 
being held hostage to the importation of lithium from hostile 
areas of the world. And our research indicates, for many 
reasons, not the least of which that lithium is recyclable, 
that there is plenty of lithium available from a diverse number 
of suppliers to allow the electrification of an enormous part 
of our transportation system and a significant reduction in our 
dependence on petroleum.
    Senator Dorgan. Well, a couple of things. No. 1, I think 
consumers will beat a path to the door behind which they 
believe are advantages. So, the cell phone you held up, you 
know, 15 years ago I think there were some cell phones, but 
they were the size of a small shoe box, and heavier. And I 
think the point you made earlier about ramping up from $38 to 
$147 in day trading, with the price of oil run by speculators 
who have made money on the way up and money on the way down, 
leaves consumers very uneasy. I think once we have a 
circumstance with the product, the infrastructure, and 
understanding that there's an inherent advantage for consumers 
and for the country, my guess is that this country is going to 
move very quickly to it.
    The new technologies have persuaded consumers to move very 
quickly when they think it's in their advantage or when they 
think it offers something to them that is new and better.
    Senator Bennett.
    Senator Bennett. Thank you, Mr. Chairman.
    Ms. Smith, I think you hit on a very important point when 
you were talking about the existing infrastructure. And I'm a 
little concerned about having charging stations. Let me again 
use my own example, which I don't think is that atypical. I've 
been driving a hybrid car, as I say, for about 8, 9 years now. 
I started out with the Honda Insight. Senator McConnell called 
it the car you put on like a pair of pants and everybody was 
wondering how I was able to get in and out of one.
    But, I was, and, after a while, decided I wanted a little 
more car around me for safety purposes, and so, I am now 
driving a Ford Escape.
    And clearly the vast majority of my trips are under 40 
miles a day. I commute back and forth. It's about 4\1/2\ miles 
from my house in Arlington to the Capitol. And there's plenty 
of room to do that and take a few trips downtown and so on. And 
then the end of the week comes and I have to go to Dulles 
Airport. And there's no way I can drive that car to Dulles 
Airport and back with a 40-mile range limit. And may--there's 
probably, if I've been using it for the running around town, 
the time I have to go to Dulles Airport, I can't even get 
there, let alone get back, with the 40-mile circumstance. So, 
it becomes very limiting, and the cost of building a charging 
station at the kind of convenience that we have for gasoline 
stations becomes an infrastructure expense.
    So, let me take you to the car that we have going in Utah 
that I have seen. And this is not a commercial for the company, 
but the simplicity of the idea struck me as being so obvious, I 
wondered why the company in Utah was the only one that had come 
up with it.
    They put me in a Hummer. Now, I don't much like a Hummer, 
but they put me in a Hummer because it's the symbol of the 
American consumption of gasoline. And the Hummer runs 100 
percent on electric power. But, they do have a small gasoline 
engine on the back of the Hummer. It has nothing to do with 
driving the Hummer. It is tuned to its most efficient capacity 
to get the highest quality--or, pardon me, the highest 
productivity out of the gasoline. It doesn't start up and have 
all of the inefficiencies connected with a gasoline engine that 
has to power your jackrabbit start when the gas--when the light 
changes or any of the rest of it. It only operates at one very 
narrow band, the most efficient, to run a charger. So, this 
very small gasoline engine is running a charger on the back of 
the Hummer so that there's enough range that I could drive 400 
miles in that Hummer without ever having to stop to a charging 
station, therefore duplicate the kind of range that I have in a 
regular car. And the efficiency of the gasoline motor is 
substantially better than the efficiency of a gasoline motor 
tied to a truck or a--take a FedEx truck going around 
neighborhoods, going to deliveries--relatively short number of 
miles traveled, but you fill the gasoline tank and the entire 
power comes from electricity.
    It seems to me it would be easier for us to build those 
kinds of vehicles, and concentrate on that as our first goal, 
than to say let's make the national investment of trying to 
have a charging station everyplace where you have a gasoline 
station, and then people have to wait while it's charging, and 
so on and so forth. I'd like your reaction to that technology 
and that thought.
    Mr. Smith. Well, Senator, I completely agree with you. I 
mean, if you think about the evolution of a lot of technology, 
its turning things on its head. In aviation, of course, 
propellers were the first power plant.
    Senator Bennett. Right.
    Mr. Smith. And then, Sir Frank Whittle and Ohain, in 
Germany, figured out how to take a propeller, put a shroud on 
it, and a compressor, where you then vastly increase the 
efficiency and the power that you could produce. But, the 
concept was essentially the same. So, today every one of our 
automobiles has a big internal combustion engine and a very 
small battery. The battery starts the car and does this and 
that, and then it is just regenerated.
    Well, what you just described is just turning everything on 
its head, where the powerplant that does the work with the 
efficiency that I mentioned, of 90 percent, where the 
electrical power is, you know, turning the wheels at a much, 
much higher efficiency of the internal combustion engine, and a 
small internal combustion engine that serves as a generator 
that keeps the vehicle charged. And I believe that will be the 
way this technology goes out, rather than pure electrics, for 
the reasons that you just say. That way, you have the ability 
to operate all electric on the majority of your short-haul 
trips. But, when you go to Dulles or wherever you might be 
driving this, several hundred miles, you've got the capability 
to do that.
    I--just as there are turbo props left in aviation, I don't 
think that the technology you described will preclude all-
electrics. But, I certainly think that a mix will be the same. 
And when you do have that kind of technology that you just 
mentioned, you can put your charger at your home garage.
    Senator Bennett. Right.
    Mr. Smith. And, in fact, putting 220-volt capabilities in 
most homes and apartment buildings is not that big a deal. And, 
in fact, many of the more modern apartment buildings and 
electrical installations have 220-volt things. So, your 
charging stations will become much less of an issue.
    But, I agree with you, that technology makes a lot more 
sense to me.
    Senator Bennett. Dr. Kelly, have you ever heard of anything 
of that kind or had done any research in that area?
    Dr. Kelly. Well, agreeing with Mr. Smith, that technology 
probably will be the dominant technology for most vehicles. 
When you say ``hybrid vehicle,'' what you mean is a device that 
is both powered by electricity and by some kind----
    Senator Bennett. That's correct.
    Dr. Kelly [continuing]. Of engine.
    Senator Bennett. The ones I drive now, you're driving 
sometimes with the gas, you're driving sometimes strictly with 
the electric motor, and sometimes with both.
    Dr. Kelly. Right. The virtue of the plug-in is that when 
you have utility power available, it's probably cheaper and 
more efficient to buy it from a utility----
    Senator Bennett. Yes----
    Dr. Kelly [continuing]. Than to generate the electricity on 
board. But, plainly, if you've got the engine on board, then 
you have unlimited range. You can drive across Utah with it 
with no problem. It's actually one of the dilemmas of trying to 
figure out how to calculate miles per gallon for----
    Senator Bennett. Yes.
    Dr. Kelly [continuing]. These hybrids, because the ratio of 
charging to gasoline consumption is going to vary.
    Senator Bennett. Well, they--this company said if you're 
just making the short trips and you never have the gasoline 
engine go on, because you can charge it at home, you--it's the 
equivalent of 800 miles to the gallon, or something like that. 
And then, they said, if you drove across the country and never 
charged it, so that it was entirely charged by the little 
gasoline engine, its 60 miles to the gallon. So, in any event, 
it's substantially better than anything we're getting now. Yes.
    Thank you, Mr. Chairman.
    Senator Dorgan. Right.
    Senator Alexander.
    Senator Alexander. I think we will find--it's always 
interesting to watch how this technology develops--I think 
we'll find, if you drove across the country, that might be true 
if you drove at 35 miles an hour and never accelerated very 
rapidly and never turned on the air conditioner, because soon 
as you do, the gasoline engine goes on and----
    But, the plug-in--I mean, as I mentioned--we're all talking 
about our own experiences--every night--I just have a regular 
plug outside my house. I just plug it in every night. And 
that's the way the one I have works.
    Mr. Smith, the--there've been some widely varying estimates 
of how rapidly we might be able to make our cars and trucks 
electric. The National Research Council had a very limited view 
of what might happen, recently. What's your view? I mean, is it 
unrealistic to think that, in 20 or 30 years, we might 
electrify half our cars and trucks? Is that just way out of the 
ball park? Or is the National Research Council too conservative 
in its estimates?
    Mr. Smith. We think that they're far too conservative in 
their estimates. The electrification roadmap would indicate 
that a much higher percentage of the U.S. automotive fleet can 
be converted to grid-enabled vehicles, either pure electrics or 
electric hybrids, by 2025, 2030. And the reduction--I don't 
recall them right off the top of my head that are in the 
report--but, the reduction in U.S. oil consumption as a result 
of this is--it's really dramatic. As I recall, it's something 
like 5 or 6 million gallons of--is that right--a day?
    Senator Alexander. By 2030, it will be 3.2 million barrels 
a day.
    Mr. Smith. Yes, 3.2-million-barrels-a-day reduction by 
2030, with the electrification laid out in that road.
    Senator Alexander. Government subsidies are a problem, in 
the sense that, once they get started, they're hard to stop. 
You know, we--I've been a critic of the subsidy for wind, 
because it may have been fine in 1992, but suddenly wind gets 
subsidized, per megawatt-hour, 25 times all of the forms of 
producing electricity, which was not what was originally 
intended. My question is, about research and development--Dr. 
Chu, I believe, has talked about a 500-mile battery as a grand 
goal someday. And I have thought, and proposed actually, that 
we have a mini Manhattan Project on advanced batteries, and 
just do whatever it took to try to get the battery up to 300, 
400, 500 miles per hour. What's the likelihood of that? And why 
would that not be where we ought to put our greatest effort? 
Because if we were to get the battery cost down from $7,000, 
$8,000, $10,000 to a lot less, wouldn't that just create all 
the other consequences that make electric vehicles marketable?
    Dr. Kelly. Well, I think that if you're going to make a 
short list of grand challenges in all energy that would be one 
of them. And we are, in fact, trying to put together a very 
aggressive program in this area. You may know that we have a 
proposal in our budget for a hub built specifically around 
advanced battery technology. The Office of Science has been 
aggressively looking at new materials. And we, of course, are 
continuing to work with our industrial partners to try to look, 
not just at the current generation of lithium-ion batteries, 
but look at lithium-air batteries and a whole range of really 
interesting, more advanced concepts. So, it's a project 
certainly worth investment. We think we've got an aggressive 
program in the works and we'd be anxious to talk to the 
subcommittee about any other ideas.
    One of the dilemmas we have with the National Academy study 
was I think that they were very pessimistic about driving down 
the cost of batteries. And I think that their estimates are 
going to be proven untrue by what's going to actually be in the 
market in the next few years. So, we're looking forward to 
sitting down with them and finding out whether we can work 
through the differences, because I think that we have a very 
compelling case that dramatic reductions in battery prices and 
increases in performance are very plausible.
    Senator Alexander. Dr. Kelly, I--just as one Senator, but I 
think there are a lot of Senators on the Republican side, as 
well as the Democrat, who would say the same thing--I strongly 
endorse the ideas that Dr. Chu has talked about, about these 
innovation hubs or mini Manhattan Projects, in a limited number 
of areas. I mean, you know, the highly efficient photovoltaic 
cell, whatever else we could figure out about recapturing 
carbon, that's sort of a--in a way, that's the next Nobel 
Prize, if you figure that out of--coming out of coal plants. 
Advanced biofuels would be another. But, the advanced battery 
would be one. And though--that also seems to me to be a more--
the most appropriate use of Federal dollars. I mean, Federal 
R&D is something we're comfortable with, and is easy to 
justify. It doesn't interfere with the market too much. It 
doesn't duplicate as much what is naturally done in the private 
sector. So, I want to congratulate you for those objectives and 
encourage you, especially, just to--if you're doing three acts, 
to try to do four acts or five acts or six acts, in terms of 
advanced batteries.
    Thank you.
    Senator Dorgan. Senator Alexander, thank you.
    I just would observe, if you take a look at previous 
supplementals, the omnibus and the Economic Recovery Act, we 
almost have--both in terms of grants, direct appropriations, 
and loan guarantees, a kind of a mini Manhattan Project on 
batteries. There is a massive amount of money moving in that 
direction from several different sources. So, I certainly 
support the thought of the Senator from Tennessee. I think this 
investment can yield very significant results.
    Senator Cochran.
    Senator Cochran. Mr. Chairman, first, let me thank you for 
calling the witnesses to this subcommittee to discuss these 
interesting issues.
    I'm particularly glad to be here and welcome my friend Fred 
Smith. We appreciate Dr. Kelly's participation, as well.
    I was looking through the electrification roadmap 
recommendation that has been developed--I guess, by the 
Coalition, which you're chairing--and I wonder, specifically 
what can Congress do now that will help encourage or give 
direction to those who will be involved in moving us into this 
new era of electrification of our transportation system? Is 
there a roadmap for us in Congress, as well as a road map for 
policymakers and business and industry that you are 
recommending that we consider?
    Mr. Smith. Okay. Well, Senator, yes, sir. In that roadmap, 
there were several recommendations for the Government.
    Before I get into that, let me just mention a couple of 
numbers, because they'll relate to the recommendation. The 
Electric Power Research Institute estimated that a plug-in 
hybrid vehicle, like Senator Bennett mentioned, will consume 
about 160 gallons of gasoline a year. That compares with a--the 
current gasoline electric hybrid, which has, essentially, two 
power systems in there, one electric and one gasoline, of about 
300 gallons per year, and a conventional internal combustion 
engine, of about 400. So, I mean, it is order-of-magnitude 
savings. And over the lifetime of that car, that's about 
$10,000 less expense to the driver, based on electrical power 
at today's grid rate.
    So, the issue is not that these vehicles can't be cost 
effective; it's not like wind power, where we just don't know 
how to make wind power that is competitive with coal power, 
nuclear power, natural gas power, hydroelectric power. This 
technology is cheaper than the technology it replaces on an 
operating basis. So, it's the upfront capital costs.
    And so, the number-one thing is to drive the economies of 
scale. And our recommendations in that report is to concentrate 
the efforts in a few areas so that you have the vehicle 
technology and the grid technology coming to fruition at the 
same time--that's one thing--and to continue to demonstrate the 
benefits of the technology by deploying a lot of these vehicles 
in a few locations, where it becomes obvious to people that 
these economics are correct.
    And I believe, based on my experience in--and again--I hate 
to keep going back to aviation, because--but it's very similar, 
in many ways. There were so many things that, when they first 
came out, the production cost of them, relative to the 
technology that they replaced, was very, very high. But, after 
they began to be adopted, they became quite cheap. And in 
aviation, as you know, the Government subsidized aviation for 
many years through airmail contracts, because there simply was 
no airplane that could earn its own way. And then Donald 
Douglas built the DC-3, and the DC-3 was the first airplane 
that could make money carrying passengers and a little bit of 
air express. And World War II came along, and they produced 
thousands of them, and we were literally off to the races, in 
terms of modern aviation standing on its own.
    So, this technology has a return on investment right now. 
It's simply that people--unlike a business, if the car costs 
more to buy, they don't look at the net present value of that 
$10,000 of savings. So, you've got to drive the production 
costs down so they can have their cake and eat it, too. They 
can have comparable acquisition costs and less operating costs, 
both.
    Senator Cochran. Well, thank you very much.
    And thank you both for the contributions you're making to 
this national debate--improving our information base, leading 
us in the direction of better decisions.
    Thank you.
    Senator Dorgan. Senator Cochran, thank you very much.
    Let me thank both Dr. Kelly and Frederick Smith. Thank you 
for being here today, and thank you for your testimony. And 
we'd like to have you available to respond to written questions 
if we submit written questions to you.
    The second panel today will be Richard Lowenthal, founder 
and CEO of Coulomb Technologies. They've been a leader in the 
development of technology for electric vehicles. They currently 
offer a wide range of products and services that provide 
charging infrastructure for plug-in vehicles.
    Mr. Alan Taub, who is the vice president for research and 
development at General Motors, he's responsible for GM's 
advanced technical work activity which manages major innovation 
programs within the company. He has also worked at Ford Motor 
Company for 8 years, where he was manager of the material 
science department and manager of vehicle engineering for the 
Lincoln brand.
    Mr. Kraig Higginson, chairman and founder of Raser 
Technologies, is chairman and founder of a clean energy company 
focused on comprehensive low carbon strategies through the 
development of new geothermal and electric vehicle 
technologies, and Mary Ann Wright, vice president and managing 
director of Johnson Controls. Ms. Wright is leading a dedicated 
global project team to oversee the Department of Energy ARRA 
Grant Program for advanced energy storage, including the launch 
of Johnson Control's first U.S. manufacturing facility in 
Holland, Michigan. She also previously worked at Ford Motor as 
a director of sustainable mobile technologies and the hybrid 
vehicle programs. And while at Ford, she served as the chief 
engineer of the 2005 Ford Escape Hybrid, the industry's first 
full-hybrid SUV.
    Senator Bennett. Mr. Chairman, if I may, Mr. Higginson is 
the CEO of the company that put me in the hybrid, and the--put 
me in the Hummer, rather--and the technology that I described 
is his company's technology. I wanted, while the experts were 
here, to keep it plain vanilla, but now that the constituent is 
here I want to say, very directly, that Raser is--Raser 
Technologies is the company that has developed that. They 
actually have a car, it does work. And they did not charge it 
off the grid. They do geothermal, and they charged the Hummer 
that I drove entirely out of heat coming out of the ground. So, 
I'm happy to acknowledge you're the constituent here, and do a 
little bit of hometown home cooking now that he's here at the 
table.
    Senator Dorgan. Well, thank you, Senator Bennett. By the 
way, how heavy is that Hummer?
    Senator Bennett. It's as heavy as any other.
    Well, ask Mr. Higginson, he can tell you that.
    Senator Dorgan. One other question. I got a call from the 
Governor of California, Governor Schwarzenegger, one day, 
thanking me for my work on hydrogen and so on, and he talked 
about his Hummer. Were you involved with his Hummer?
    Mr. Higginson. We actually took the Governor to lunch in 
the Hummer, so he's driven it.
    Senator Dorgan. Aha, okay.
    Well, thank you, Senator Bennett, for the additional 
information and the hometown commercial.
    Let me thank all of you for being here. Your entire 
statements will be part of the permanent record. You may 
proceed.
    Mr. Lowenthal, you first.
STATEMENT OF RICHARD LOWENTHAL, FOUNDER AND CEO, 
            COULOMB TECHNOLOGIES
    Mr. Lowenthal. Thank you very much, Chairman Dorgan and the 
members of the subcommittee. We appreciate the opportunity to 
be here today to talk about this tremendous opportunity for our 
country.
    I'm the founder and CEO of Coulomb Technologies, a company 
that is deploying charging stations and business software 
systems for electric vehicle charging, a necessary ingredient 
for the successful adoption of electric vehicles.
    Recently, Coulomb Technologies was selected by the 
Department of Energy to participate in an Electrification of 
Transportation Program that was recommended for funding by this 
subcommittee. Thank you very much. This public/private 
partnership, entitled ``Charge America,'' will deploy a 
charging infrastructure in 12 American cities. We'll begin to 
deploy technology almost immediately, creating American jobs in 
engineering, manufacturing, and installation.
    Electric vehicles will begin to appear on American roads 
and highways this year. But, for electric drive technology to 
be truly transformative, the market will need assistance in 
overcoming a number of challenges. Beyond financial issues, 
there are a set of regulatory issues that will need to be 
addressed at the Federal level.
    Electric vehicle charging stations, known formally as 
Electric Vehicle Supply Equipment or EVSE, are available in 
three levels. Level I EVSEs are based on 110-volt household 
electricity. Level I charging is slow. A 30 kilowatt-hour 
battery, like the one in my BMW MINI-E, takes 23 hours to 
charge on Level I. Smaller PHEV batteries, like the plug-in 
Prius, will take less time. And the Chevrolet Volt, which 
you'll hear more about, I'm sure, is specified to take 
approximately 10 hours to charge completely at Level I.
    The Level I charger times will likely convince most EV 
owners to opt for higher voltages and faster Level II charging.
    Level II charging is specified at 220 volts, similar to an 
electric clothes dryer. With a Level II charger, vehicles will 
take about 4 hours to charge.
    Level III, or DC chargers, can charge vehicles in under an 
hour. DC fast-charging equipment will be significantly more 
expensive than Level I and Level II chargers, and it's expected 
to be available only at commercial charging establishments.
    Setting aside technical specifications, charging 
infrastructure can generally be divided into two categories: 
private charging infrastructure, for in the home, and shared 
charging infrastructure, for places like condominiums, 
apartments, retail centers, public parking facilities in the 
workplace, and along transportation arteries.
    As important as access to home charging will be for 
achieving high rates of electric vehicle deployment, shared 
charging is arguably even more important during the early 
stages of EV adoption. Drivers are accustomed to being able to 
fill up using the ubiquitous gasoline infrastructure developed 
over the last 100 years. Insufficient public charging 
opportunities will generate hesitancy and could hinder the 
adoption of electric vehicles. Studies show that 80 percent of 
EV owners will want to charge the cars more than once a day.
    Range anxiety on the part of consumers remains a 
substantial challenge for EV adoption. People are afraid that 
their vehicle will be incapable of traveling the long distances 
required or that they will be unable to get the necessary 
recharge along the way. Despite the fact that data on consumer 
habits shows that drivers rarely travel long distances, when 
asked their opinions, they express unease over range. Early 
research supports the conclusion that reliable access to public 
charging infrastructure diminishes this anxiety.
    The first mass-produced, fully-electric vehicles in the 
U.S. markets will have an all-electric range of approximately 
100 miles. With these vehicles, when the battery is depleted, 
it must be recharged before the vehicle can be driven again. 
Consumers are unlikely to purchase a vehicle unless they have 
confidence that it can be conveniently refueled.
    So, I have some policy recommendations. Permitting 
electrical work is a local issue, typically the responsibility 
of a city or a county government, and rules vary widely between 
jurisdictions. The process of requiring an electrician to 
obtain a permit and schedule an inspection can stretch an 
otherwise short and simple electrical upgrade into a 
burdensome, several-weeklong process, a concern that was 
confirmed by several participants in the recent project 
conducted by BMW in Los Angeles, New York, and New Jersey.
    So, first, policy, we need streamlined permitting processes 
nationwide for the installation of EVSE in order to get those 
times to reasonable levels.
    Second, today there are roughly 54 million private garages 
for the 247 million light-duty vehicles that we have in the 
United States. For consumers who park in parking lots or 
curbside at night, overnight charging requires shared stations. 
By treating electricity as a transportation fuel, regulators 
can foster competition in the nascent EV infrastructure 
marketplace and help to facilitate a rapid deployment of public 
charging infrastructure.
    The California Public Utilities Commission recently 
indicated that it is not inclined to regulate electricity for 
sale for EVs. Nonetheless, the decision is not yet finalized 
and represents the opinion of only a single PUC.
    In many cases, current regulations require a seller of 
electricity to be treated as a regulated utility. In other 
words, if an apartment building, shopping center, or fast food 
restaurant has been--has charging stations, it could be subject 
to the full range of regulatory compliance mechanisms that 
affect utilities. This level of regulation would likely 
present--prevent even minimal deployment of charging 
infrastructure in the public, in private garages, in 
condominiums, apartments, and the workplace.
    Rather than depending on the Nation's public utilities 
commissions to rule on this, we would ask that the Federal 
Energy Regulatory Commission ensure that electric vehicle 
charging is a competitive marketplace with market-based 
pricing.
    I'll leave some of these issues, because I'm running out of 
time, for you to read it at your leisure. Let me skip a couple, 
hit on one that was mentioned earlier.
    The electric power sector has substantial untapped 
generating capacity offpeak, which can already allow millions 
of EV batteries to be charged without adding power generation 
or transmission. However, consumers will likely require 
incentives to charge offpeak, and disincentives to charge 
during peak demand, high-cost hours. Utilities and equipment 
providers should provide Smart Grid integration technology for 
demand response and time-of-use charging.
    Let's see, I'm going to skip the next one.
    EV charging stations are designed and manufactured in the 
United States, and distribution is available nationwide. Our 
products are ``shovel-ready'' and require the skills of local 
electricians and contractors to install, providing jobs 
nationwide. Each station we install employs three people for a 
day.
    Our company has faced the classic chicken-and-egg problem. 
Consumers will not adopt electric drive technology if they're 
not confident in their ability to refuel. At the same time, 
there is little incentive for companies to install charging 
infrastructure before cars arrive.
    The Federal Government can, and is, playing an important 
role as it considers stimulus spending and other financial 
incentives to assist this nascent market for electric vehicle 
charging infrastructure. And so, I recommend that--public 
investment in EV infrastructure that creates jobs and addresses 
this chicken-and-egg problem.
    Next, currently there's a 50-percent tax credit available 
for charging-infrastructure installations, which expires at the 
end of this year. We would like to see that extended. The 
time--the vehicles have not rolled out yet, and it would be 
very helpful for that to be extended, and, in addition, for it 
to be improved.

                           PREPARED STATEMENT

    Finally, let me add one other comment in support of the 
Electrification Coalition. We would like to see targeted 
spending, as the DOE has recommended and deployed in other 
cases, where particular areas of the country are focused on for 
deployment of electric vehicles in order--and infrastructure--
in order to ensure these programs have the scale necessary for 
success.
    Thank you very much.
    [The statement follows:]
                Prepared Statement of Richard Lowenthal
    Good morning Chairman Dorgan, Senator Bennett, and members of the 
subcommittee. Thank you for the opportunity to speak with you regarding 
a tremendous opportunity for our country--the transition to electric-
drive transportation. I'm the founder and CEO of Coulomb Technologies, 
a company that is deploying charging stations and business software 
systems for electric vehicle charging, a necessary ingredient for the 
successful adoption of electric vehicles.
    Recently, Coulomb Technologies was selected by the Department of 
Energy to participate in the Electrification of Transportation program 
that was recommended for funding by this subcommittee. This public/
private partnership entitled ``Charge America'' will deploy charging 
infrastructure in up to 12 American cities. We will begin to deploy 
technology almost immediately, creating American jobs in engineering, 
manufacturing, and installation.
    An electric drive future is one that leverages the diversity, 
flexibility, and stability of the electric power sector to sustainably 
power our transportation sector. Today, our cars and trucks rely on a 
single energy source--petroleum--for more than 95 percent of their 
delivered energy. This heavy reliance has generated profound economic, 
national security, and environmental risks for the United States. In 
contrast, vehicles that draw power from the grid--grid-enabled vehicles 
(GEVs)--derive their energy from the full range of fuel sources that 
produce electricity in the United States today. These fuel sources are 
stable, domestic, and diverse.
    Grid-enabled electric drive systems can be either pure electric 
vehicles (EVs) or plug-in hybrid electric vehicles (PHEVs). Both EVs 
and PHEVs store energy from the grid in on-board batteries. Energy from 
the battery powers a highly efficient electric motor that propels the 
vehicle. EVs substitute an electric drivetrain for all conventional 
drivetrain components. PHEVs retain the use of a down-sized internal 
combustion engine that supplements a smaller battery.
    Both EVs and PHEVs provide consumers and the broader economy with 
two distinct advantages compared to conventional vehicles. First, 
electric miles are cheaper than gasoline miles. Operating a vehicle on 
electricity in the United States is considerably less expensive than 
operating a vehicle on gasoline. In large part, this is due to the high 
efficiency of electric motors, which can turn 90 percent of the energy 
content of electricity into mechanical energy. In contrast, today's 
best internal combustion (IC) engines have efficiency ratings of just 
25 to 27 percent. With gasoline at $3.00 per gallon, the operating cost 
of a highly efficient IC engine vehicle (30 miles per gallon) is 10 
cents per mile. For current pure electric vehicles, assuming an average 
electricity price of 10 cents per kilowatt hour, operating costs are 
only 2.5 cents per mile.
    Second, electric miles are cleaner than gasoline miles. Vehicle 
miles fueled by electricity emit less CO2 than those fueled 
by gasoline--even with today's mix of generating resources. As 
renewable power increases its share of the electricity portfolio, and 
to the extent that new nuclear power comes on line, the emissions 
profile of the U.S. power sector will continue to improve over time; 
this improvement will directly enhance the emissions benefits of grid-
enabled vehicles.
    By adopting these technologies at scale, the United States would 
dramatically reduce its dependence on petroleum, achieve significant 
reductions in energy-related greenhouse gas emissions, and catalyze the 
next generation of industry and manufacturing jobs that could be the 
backbone of our country's economic competitiveness in the decades to 
come. Ultimately, moving to an electric-drive transportation sector 
would also substantially increase disposable income for American 
households, because overall spending on energy would decrease.
    This transition is not only technologically possible, it is 
fundamentally necessary if we are to improve our economic and national 
security while preserving our natural environment. However, the wide-
scale transformation of our petroleum-based transport system to one 
powered by electricity is far from certain today. There are a number of 
challenges facing electrification that, if not addressed in the near-
term, could postpone or prevent progress toward a more secure, 
efficient transportation sector.
    I want to be clear in stressing that these challenges are not 
technological problems with batteries, vehicles, or chagrining 
infrastructure. While ongoing research and development will be 
critical, battery technology has advanced to the point at which grid-
enabled vehicles will provide consumers with the performance, safety, 
and durability that they require. To be sure, cost continues to be a 
factor. However, it is important to note that based on existing Federal 
tax credits, and at today's gasoline prices, a plug-in hybrid electric 
vehicle will already provide consumers with a net economic benefit over 
the life of the vehicle.
    Electric vehicles will begin to appear on American roads and 
highways within a year. But for electric drive technology to be truly 
transformative, the market will need assistance in overcoming a number 
of challenges. Beyond financial issues, there is a set of regulatory 
issues that will need to be addressed at the Federal level.
                            some definitions
    Electric Vehicle charging stations, known formally as electric 
vehicle supply equipment (EVSE), are available in three ``Levels''. 
Level I EVSEs are based on 110-volt household electricity. Level I 
charging is slow. A 30 kWh battery in a pure EV could take as long as 
23 hours to fully charge. Smaller PHEV batteries will take less time, 
with the Chevrolet Volt specified to take approximately 10 hours to 
completely charge at Level I.
    These Level I charge times will likely convince most EV owners to 
opt for higher voltage and faster Level II charging. Level II charging 
is specified at 220 volts, similar to an electric clothes dryer. With a 
Level II charger, vehicles will take about 4 hours to charge.
    Level III, or DC chargers, can charge vehicles in under an hour. DC 
fast-charge equipment will be significantly more expensive than Level I 
or II chargers and is expected to be available only at commercial 
charging establishments.
    Setting aside technical specifications, charging infrastructure can 
generally be divided into two categories: shared and private. Private 
charging infrastructure would include a charging station installed in a 
private home for dedicated use by a single customer. Shared charging 
infrastructure would include units installed in condominiums, 
apartments, retail centers, public parking facilities, the workplace, 
or along major transportation arteries.
    For drivers with access to a dedicated outlet, the most convenient 
time to charge their GEV will be overnight at home. Most passenger 
vehicles sit parked during the hours between roughly 8 p.m. and 6 a.m., 
which could provide ample opportunity to supply consumers with the 
charge levels required for typical daily usage of GEVs. Moreover, by 
concentrating charging during off-peak hours, the electric power sector 
could today charge more than 100 million GEVs (if the vehicles were 
entirely PHEVs, the number could be as high as 160 million) without the 
need to install significant additional generating capacity. While Level 
I charging will be an option for some PHEV owners, most consumers will 
prefer Level II charging in their homes.
    As important as access to home charging will be for achieving high 
rates of electric vehicle deployment, shared charging is arguably even 
more important during the early stages of EV adoption. Drivers are 
accustomed to being able to fill up using the ubiquitous gasoline 
infrastructure developed over the last 100 years. Insufficient public 
charging opportunities will generate hesitancy and could hinder the 
adoption of electric vehicles. Studies show that 80 percent of EV 
owners will want to charge more than once a day.
    Range anxiety on the part of consumers remains a substantial 
challenge for EV adoption. People are afraid that their vehicle will be 
incapable of travelling the long distances required, or that they will 
be unable to get the necessary recharge along the way. Despite the fact 
that data on consumer habits shows that drivers rarely travel long 
distances, when asked their opinions, they express unease over range. 
Early research supports the conclusion that reliable access to public 
charging infrastructure diminishes this anxiety.
    The first mass-produced fully-electric vehicles (BEVs) to reach 
U.S. markets will have an all-electric driving range of approximately 
100 miles. With these vehicles, when the battery is depleted, it must 
be recharged before the vehicle can be driven again. Consumers are 
unlikely to purchase a vehicle unless they have confidence that it can 
be conveniently refueled.
    Regardless of which technology--PHEV or EV--captures the dominant 
share of the market at any time, consumers will demand access to public 
charging infrastructure. Whether one is concerned about operating 
efficiency or basic necessity, grid-enabled vehicles will need to 
charge their batteries conveniently. If the market fails to meet this 
standard upfront, high operating costs and consumer anxiety about range 
will simply prevent grid-enabled vehicles from reaching mass market 
penetration. In this sense, we are faced with a classic problem of 
coordination. Consumers will not adopt electric drive technology at 
scale if they are not confident in their ability to refuel. At the same 
time, there is little incentive for the private sector to install 
public charging infrastructure if that equipment is expected to sit 
idle.
                         policy recommendations
    Permitting electrical work is a local issue--typically the 
responsibility of city or county governments--and rules vary widely 
between jurisdictions. The process of requiring an electrician to 
obtain a permit and schedule an inspection can stretch an otherwise 
short and simple electrical upgrade into a burdensome, several week-
long process, a concern that was confirmed by several participants in a 
recent pilot project conducted by BMW in Los Angeles, New York, and New 
Jersey. Market participants have suggested allowing third parties to 
inspect newly installed equipment and even to allow installers to self-
certify the installation.
Policy 1.--We Need Streamlined Permitting Processes Nationwide for 
        Installation of EVSE
    Today, there are roughly 54 million private garages for 247 million 
light-duty vehicles (cars and SUVs). For consumers who park in parking 
lots or curbside at night, overnight charging requires shared stations.
    By treating electricity as a transportation fuel, regulators can 
foster competition in the nascent EV infrastructure marketplace and 
help to facilitate rapid deployment of public charging infrastructure. 
The California Public Utilities Commission recently indicated that it 
is not inclined to regulate electricity sales for EVs. Nonetheless, the 
decision is not yet finalized and represents the opinion of only a 
single PUC.
    One critical issue is that electricity for GEVs is not yet viewed 
as a transportation fuel. For public charging infrastructure, this 
precedent could present particularly burdensome regulatory issues. In 
many cases, current regulations require a seller of electricity to be 
treated as a regulated utility. In other words, if an apartment 
building, shopping center, or fast food restaurant has charging 
stations, it could be subject to the full range of regulatory 
compliance mechanisms that affect utilities. This level of regulation 
would likely prevent even minimal deployment of shared charging 
infrastructure in the public, in private garages, in condominiums, 
apartments, and the workplace.
    Rather than depending on all of the Nation's public utility 
commissions to come to the conclusion that we need a competitive 
commercial market for vehicle charging, we need a national policy of 
allowing free-market vehicle charging, potentially through Federal 
Energy Regulatory Commission policy and authority.
Policy 2.--FERC Should Ensure That Electric Vehicle Charging is a 
        Competitive Market With Market-Based Pricing for Charging 
        Vehicles
    The United States has over 3,000 electric utilities. Drivers will 
charge in several different utilities' service areas. Because no third-
party provider is likely to be ubiquitous, some type of ``roaming'' 
capability will likely be necessary. On longer trips, this is sure to 
be the case.
    It is important that the responsibility not be placed on drivers to 
establish billing relationships with all utilities within whose service 
area they may charge.
Policy 3.--Payment Systems That Allow for Consumer Roaming Should Be 
        Encouraged
    Today, the electric power sector has substantial untapped 
generating capacity off peak, which can already allow millions of EV 
batteries to charge without adding power generation or transmission 
capacity. However, consumers will likely require incentives to charge 
off-peak and disincentives to charge during peak demand, high-cost 
hours. Utilities and equipment providers should include smart-grid 
integration technology for demand response and time-of-use charging 
plans.
Policy 4.--Smart Grid Integration, Demand Response, and Time of Use 
        Pricing Should Be Required
    Coulomb has developed electric vehicle charging stations and 
business software systems that ensure EV charging is a sustainable, 
scalable business. Our stations include a business software suite that 
includes a billing system that provides money to pay for all recurring 
costs, and asset management tools to allow infrastructure to be well-
managed. We have the capability to build charging infrastructure that 
will enable rapid growth of the electric vehicle market, and we have 
been shipping these products since 2008.
Policy 5.--Charging Infrastructure Selection Must Consider Life Cycle 
        Costs
    EV charging stations are designed and manufactured in the United 
States and distribution is available nationwide. Our products are 
``shovel-ready'' and require the skills of local electricians and 
contractors to install, providing jobs nationwide. Each station we 
install employs three people for a day.
    Our company has faced a classic chicken and egg problem. Consumers 
will not adopt electric drive technology if they are not confident in 
their ability to refuel. At the same time, there is little incentive 
for companies to install charging infrastructure before the cars 
arrive.
    The Federal Government can play an important role as it considers 
stimulus spending and other financial incentives to assist the nascent 
market for electric vehicle charging infrastructure. Public sector 
investment in shared charging infrastructure during the early phases of 
EV deployment can help overcome consumer range anxiety and enable those 
who don't have home charging stations to buy these cars.
Policy 6.--Public Investment in EV Infrastructure Creates Jobs and 
        Addresses the Chicken and Egg Problem
    Currently, there is a 50 percent tax credit available for 
infrastructure installations, which expires at the end of this year.
    Congress should extend the tax credit for alternative fueling 
facilities and make it useful by making it convertible to a rebate or 
to a payroll tax credit.
    There are far too many restrictions in the current tax credit. For 
example, it cannot be used for station owners who pay the alternative 
minimum tax or for companies with tax loss carry forward.
Policy 7.--Extend and Improve the Infrastructure Tax Credit That is 
        About to Expire
    In order to benefit from Level II charging in their homes, a large 
percentage of EV consumers will require the installation of a dedicated 
220 volt circuit in their garages or car ports. These installation 
costs can be dramatically reduced if garages are pre-wired for electric 
vehicle charging.
    While building codes are generally a local/municipal issues, I 
cannot stress their importance enough. All new garages and parking lots 
should be required to include wiring for future electric vehicles. This 
will significantly lower the cost of adding EVSE later.
Policy 8.--The Federal Government Should Use its Clout To Ensure That 
        Building Codes Nationally Require all New Parking Places 
        Include Wiring for Future EVs
    Finally, like Mr. Smith, who spoke on your first panel, I am a 
member of the Electrification Coalition, a group of CEOs from companies 
that represent the entire value chain of electrification. The Coalition 
and its members are committed to promoting policies and actions that 
facilitate the deployment of electric vehicles on a mass scale in order 
to combat the economic, environmental, and national security dangers 
caused by our Nation's dependence on petroleum.
    As a final policy recommendation, I would like to stress the 
importance of the concept of targeted investment in a limited number of 
electrification ecosystems. Such a program will accomplish a number of 
important objectives: it will prove that electric vehicles work as a 
concept; it will help drive economies of scale for a number of 
businesses; and it will facilitate critical research on technology and 
driver behavior. Most critically, it will create the local networks in 
which electric vehicles can thrive.
    This technology is here today. We have the capability right now to 
deploy an electrified transportation sector that will dramatically 
improve our Nation's trade balance, national security, and environment, 
and reduce consumers cost of transportation. What is required is 
coordination and support to push past initial regulatory and financial 
hurdles. This is the right thing to do for our Nation, and I urge you 
to move forward.
    Thank you for your time and your attention.

    Senator Dorgan. Mr. Lowenthal, thank you very much, next, 
Alan Taub, vice president for research and development at 
General Motors.
    Mr. Taub, thank you for being here.
STATEMENT OF ALAN I. TAUB, Ph.D., VICE PRESIDENT, 
            GLOBAL RESEARCH AND DEVELOPMENT, GENERAL 
            MOTORS
    Mr. Taub. Pleasure to be here today and, in particular, to 
talk about General Motors plans for vehicle electrification, 
and specifically the Chevrolet Volt. I couldn't have done a 
better job than Mr. Bennett just did to describe the philosophy 
of the consumer that was behind the Chevy Volt theory.
    What we do on the Volt is have it plug into the grid; put 
the electricity into the battery, and that will enable 40 miles 
of driving range. When, in the course of the drive, that 
battery is depleted, we have a motor--an engine generator on 
board to allow the consumer to go the additional 300 miles 
they're used to today. It's the way to get the best of today's 
vehicle technology and introduce this breakthrough of electric 
drive systems. We're hoping that's actually the car you'll be 
choosing next.
    We're going to be launching the vehicle this----
    Senator Bennett. Can I ask you, does the gasoline engine 
drive the wheels or the----
    Mr. Taub. No. In our full hybrids, our two-mode hybrids, 
say, we have on the Escalade, that's what's called a parallel 
hybrid and goes----
    Senator Bennett. Right.
    Mr. Taub [continuing]. Straight to the wheels. This is 
called a series hybrid, which is what you're describing----
    Senator Bennett. It does the same thing that Mr. 
Higginson----
    Mr. Taub. It's the same concept, with different 
embodiments.
    Senator Bennett. Okay. Thank you.
    Mr. Taub. And so, ours will be launching, this November. In 
its first year, we'll be selling thousands of these, and, as we 
ramp up in subsequent years, tens of thousands a year is in our 
production plans.
    Clearly, the success of any vehicle electrification 
requires not just the vehicle solution, but the infrastructure. 
And it's important that we design that infrastructure to meet 
the consumer needs. So, we've been studying this problem with 
EPRI, with electric utilities, with other interested parties 
and battery makers.
    Our conclusion is that the research shows that consumers 
refuel close to home and close to work. And so, we believe the 
first priority for the infrastructure should make easy charging 
for the consumer at home. And Mr. Lowenthal spoke about some of 
those options. Then move the infrastructure to the workplace. 
And because our Volt technology eliminates the range anxiety, 
we really think the public charging infrastructure should 
happen, but later on in the development of the infrastructure.
    You asked us to talk about how we get this to high volume. 
Clearly, we need the refueling infrastructure to keep up with 
the vehicle, infrastructure in the vehicle production. But, I 
also want to emphasize, we need to get through making this 
technology affordable in the right value equation for the 
consumer. Traditionally in the automotive industry, that means 
three cycles of learning, three cycles of technology 
development, and three cycles of commercialization. It's in 
that third cycle, where the technology has become robust, cost 
effective, and is able to go into the tens of millions of 
units, that we feed into the car park.
    In order to get to the first generation of technology, the 
efforts of this subcommittee, the Department of Energy, and the 
other agencies, have really allowed us to accelerate up to that 
first cycle. So, whether it's the Freedom Car funding, the fuel 
partnership, or the stimulus funding, which allowed us to go 
forward for domestic production by GM of motors and battery 
packs, that's the first step.
    Our view is to keep up the momentum on this key technology. 
We need to find a way to take our private/public partnership 
through generation two. It's at generation three, we've met the 
consumer value equation and it's self-sustaining. It's the 
partnership through generation one and two, both technology 
development and commercialization, that's key.
    So, to summarize, in terms of the priorities as we see 
them, first, again, focus the initial infrastructure for 
charging on the home.
    Second and I want to remind the subcommittee that the 
batteries, right now, are the most expensive element of 
electric vehicles, but similar efforts are needed on electric 
motors and power electronics. The breakthroughs in technology 
are required on all three components, and we need to ensure 
that production of those three is also done domestically.
    Third key is, as we develop automotive batteries, at the 
end of vehicle life they are still good batteries for other 
applications. And as the Electric Coalition pointed out, there 
are ways we can put in place to incentivize the use of these 
batteries after vehicle use, such as putting a floor on the 
value of the automotive batteries if they make their way into 
the stationary grid.
    The last point I want to make is a reminder that--for 
General Motors and, I think, for the industry, electrification 
means the vehicle is powered by--moved by motors that are 
powered by electrons. There are two ways to do that on a 
vehicle. One is the battery electric vehicle we've been talking 
about. The other is a fuel cell vehicle, which still has the 
same motors, power electronics, and other drive elements. Fuel 
cells have the advantage of being applicable to larger vehicles 
and also having larger vehicle range. What that means is, as we 
see the future of vehicle electrification, it's not an either/
or, it's an ``and'' solution. A plug-in grid, battery vehicles, 
augmented by the auxiliary power units that we described, our 
Voltec technology, and for larger vehicles, the hydrogen fuel-
cell economy.

                           PREPARED STATEMENT

    And so, relative to that, in addition to continuing to 
support the battery work, we really would like to see the 
United States remain the leader in fuel cell technology, as 
well. And specifically, what we'd like to recommend is 
extending the present Fuel Cell Test and Validation Program 
into fiscal year 2011, and also to think about incentivizing 
the marketplace by a pre-commitment of Government fleets for 
fuel cell vehicles, in order to enable that technology to move. 
And just like you're having this hearing, the question is, how 
do we ensure the United States puts in the infrastructure for 
not just electrification, but for hydrogen, so we keep pace 
with Japan and Germany in that regard?
    I'll look forward to your questions. Thank you.
    [The statement follows:]
               Prepared Statement of Alan I. Taub, Ph.D.
    Mr. Chairman and subcommittee members, thank you for the 
opportunity to testify today on behalf of General Motors. I am Alan 
Taub, Vice President of Global Research and Development. I lead GM's 
worldwide R&D efforts on advanced technology.
    I am pleased to be able to speak to you today regarding our plans 
for the Chevrolet Volt and our other electrically driven vehicles. I 
also look forward to discussing the infrastructure that will be needed 
to ensure that recharging and refueling options are available to 
American consumers.
    This is an important time in the history of the automobile 
industry. The world we live and do business in is changing. Automotive 
technology is clearly changing and the challenges and opportunities 
faced by our industry continue to evolve.
    For these reasons, GM has placed very high priority on vehicle 
electrification. We believe electric vehicle technology is one of the 
best long-term solutions to simultaneously increase energy independence 
and security, remove the automobile as a source of emissions, and 
enable more sustainable energy pathways.
    The electrification of the vehicle will also allow automakers to 
create exciting new vehicles that customers will want to drive and own. 
This is critical. Achieving high-volume sales of advanced technology 
vehicles is the only way to realize the large-scale energy and 
environmental benefits we are seeking.
    To support our focus on bringing the right products to market, at 
the right time, for the right cost, GM has an advanced propulsion 
technology strategy that addresses both energy efficiency and energy 
diversity.
    As part of this strategy, we are working to dramatically improve 
the efficiency of our conventional engines and transmissions, as we've 
been doing for decades. We have also been working hard to improve 
overall vehicle efficiency by reducing vehicle weight and improving 
aerodynamics and rolling resistance.
    At the same time, we have intensified our efforts to displace 
petroleum-based fuels by building more vehicles that run on alternative 
fuels. This includes biofuels such as ethanol and biodiesel. In fact, 
of the 7.5 million E85 flex-fuel vehicles currently on U.S. roads, more 
than 4 million are GM cars and trucks. GM, along with Ford and 
Chrysler, has committed to make one-half of our vehicle production 
flex-fuel-capable by 2012, provided there is steady growth in the 
fueling station infrastructure.
    Our commitment to alternatives also includes expanding and 
accelerating our development of electrically driven vehicles.
    Today, I want to highlight our progress on GM's broad-based plans 
for vehicle electrification, which includes the Chevrolet Volt 
extended-range electric vehicle, plug-in hybrids, and fuel cell-
electric vehicles. GM is working on all of these vehicle solutions 
because they are all electrically driven, yet each offers unique 
attributes that align with different driving needs.
    Electrification simply means the vehicle is powered by electrons 
that energize the motor. There are two ways to accomplish this. One is 
to use a battery that draws electricity when it is plugged into the 
grid. The other way is to store electrical energy in the form of 
hydrogen on board the vehicle and convert it into electricity in real 
time.
    Developing a variety of electric vehicles is also the best way to 
meet the driving needs of our customers. Those needs can involve a 
short commute to work, longer-range driving, or the requirement to 
carry more passengers or haul cargo. In other words, we think consumers 
will love the compact Chevrolet Volt extended-range electric vehicle 
for city and suburban driving. Meanwhile, our Chevrolet Equinox fuel 
cell EV--which has logged more than 1.2 million miles of driving 
through our Project Driveway market test--would appeal to drivers who 
need a larger vehicle.
    Since electrically driven vehicles use many common components and 
subsystems, technology developments can be applied across the range of 
EV options.
    GM believes there are many benefits available with electrically 
driven vehicles. They have the potential to:
  --Reduce petroleum consumption.
  --Create the pathway to new energy sources.
  --Reduce CO2, especially as utilities add renewable energy 
        sources to their portfolio.
  --Create new technology jobs in areas such as cell chemistry, 
        batteries, motors, power electronics and controls, and vehicle 
        systems. Today, the Volt supply base already includes 196 
        suppliers in 24 States. And that's just beginning to scratch 
        the surface of the potential for advanced vehicles to be a real 
        driver for economic and jobs growth.
    Beyond these societal benefits, the electrification of the vehicle 
also enables auto manufacturers to design a better vehicle. The instant 
torque at the wheels available with electric drive makes the vehicle 
more fun to drive. Electrification frees vehicle designers and 
engineers to develop exciting new architectures. It also enables 
faster, more capable, more responsive vehicle subsystems, features, and 
accessories.
    The Volt combines the best aspects of battery electric propulsion 
with the technology on today's vehicles to deliver a superior consumer 
experience. It will deliver up to 40 miles of electric-only, gas-free, 
emissions-free driving. And when the battery is depleted, its extended-
range capability provides up to an additional 300 miles of range, 
supplying electricity to the drive unit while also sustaining the 
charge of the battery.
    GM is targeting the launch of the Volt in November. We have 
announced our initial markets, which include the greater Los Angeles 
area, Detroit, and Washington, DC and we will be expanding beyond these 
three markets. We are working on a managed start and we will build 
thousands the first year and tens of thousands after that.
    GM is working with the Electric Power Research Institute, electric 
utilities, and other interested parties on launch market plans that 
include home, work, and public charging. We are grateful to the 
Department of Energy for the grant provided under the American Recovery 
and Reinvestment Act (ARRA) that will allow us and our utility partners 
to demonstrate how the Volt interacts with the electric grid. Our 
research shows that consumers refuel close to home and work. For this 
reason, we believe efforts to support initial infrastructure investment 
should focus on home and work location opportunities, then public 
charging.
    You have asked us to address the issue of how to get electric 
vehicles to high volume. In addition to creating the refueling 
infrastructure for electric vehicles, this will require vehicle 
solutions that are robust and affordable for consumers. This is a 
question not only of technological maturity, but of getting through the 
2-3 cycles of learning needed to reach high-volume production.
    With respect to the technology, we still need to achieve cost 
breakthroughs, faster recharge, and good low-temperature performance 
with lithium-ion batteries. We also need to address technical 
challenges related to electric motors and power electronics. Along with 
batteries, these are the other key components of electric vehicle 
systems. In both these areas, we need to realize materials, cost, 
design, and efficiency breakthroughs.
    DOE has been supporting vital research on batteries, motors, and 
other electric vehicle technologies through the FreedomCAR and Fuel 
Partnership. The Department is also helping build U.S. manufacturing 
capability through ARRA funding. GM is grateful for the grants we 
received to help us open our new battery manufacturing plant in 
Brownstown Township, Michigan and our electric drive production center 
in White Marsh, Maryland. These two facilities are among the first 
advanced battery and electric motor manufacturing plants in the United 
States to be operated by a major auto company. They will enable us to 
gain valuable learning as we move down the cost curve on these 
technologies.
    Reducing cost is crucial because today's first-generation 
technology remains out of reach for many buyers. In our industry, 
driving to the right value equation for consumers generally takes three 
cycles of learning before a technology can become cost-competitive. For 
the automotive industry, this period from first commercialization to 
the third cycle of learning is a critical time when a new technology 
can either take off, become a niche play, or even fade away entirely. 
If we cannot get beyond this period, a new technology will never get to 
large volumes--and will not significantly impact our national petroleum 
consumption or greenhouse gas emissions.
    Transitioning to the point where the technology can be used in 
enough cars to achieve the necessary economies of scale to make it 
affordable is a large challenge. Historically, Government technology 
development programs have ended before this point. In many of these 
programs, the goal is to meet a series of technical milestones. These 
may get you to first-generation technology, but if our metric is how 
much a technology decreases petroleum consumption or greenhouse gases, 
we really need to move the focus to that third generation of the 
technology, when high-volume manufacture and sales are possible. This 
will require more than just consumer tax credits for new technologies. 
It really means deeper re-thinking of our efforts to accelerate the 
deployment of advanced automotive technologies.
    The challenge of getting through the first few cycles of learning 
is compounded by the need to create a new infrastructure. At GM, we are 
making a very large commitment in dollars and manpower to bring our 
extended-range electric vehicle technology to market this year. In 
order to reach our national goals, we need a similar commitment to 
infrastructure development.
    What does all this mean for the subcommittee? In preparing this 
year's Energy and Water Appropriations bill, we urge the subcommittee 
to consider the following:
  --First, focus any funding for EV infrastructure on making home 
        recharging easy for the consumer. This should be followed by 
        workplace charging. Public charging facilities will become more 
        important over time, but if we do not make home chargers work 
        for the consumer, we are not going to get EVs to a scale where 
        public charging makes sense.
  --Second, increase the level of DOE's efforts on reducing the cost of 
        electric motors and power electronics. To make EVs affordable, 
        we need to reduce these costs, not just the cost of the 
        batteries.
  --Third, there are a number of options for repurposing automotive 
        energy storage batteries after their initial use in electric 
        vehicles. Congress has a role in incentivizing the creation of 
        these options. It should consider adopting either the concept 
        of a battery warranty fund or the proposal of the 
        Electrification Coalition to establish a floor on the value of 
        advanced automotive batteries that are repurposed for use in 
        stationary energy storage.
  --Fourth, remember that electric vehicles powered by batteries are 
        not the only type of electric vehicles--and, in fact, are not 
        the best vehicle solution in some market segments. I urge the 
        subcommittee to extend the Fuel Cell Test and Validation 
        Program in fiscal year 2011 with technology insertion to ensure 
        that we have the latest in fuel cell technology on U.S. roads. 
        Congress should also begin to fund section 782 of the Energy 
        Policy Act of 2005, which will pay for the cost differential 
        for Federal and State fleet purchases of fuel cell vehicles. 
        This funding should also be available until expended, so that 
        auto companies can plan on early fuel cell purchases in the 
        2012-2015 timeframe, when early Federal purchase of even a few 
        thousand vehicles will have a huge impact on accelerating the 
        technology.
  --Fifth, ensure that the United States keeps pace with Germany and 
        Japan on hydrogen infrastructure, but focus these efforts in 2-
        3 regions of the country where commercialization can start. For 
        example, 40 hydrogen stations in the Los Angeles metro area 
        would be a game-changer.
  --Finally, reframe multi-agency goals and priorities for advanced 
        technology vehicles, from the point where technology metrics 
        are met to the point where high-volume production is possible--
        basically, at the third cycle of learning.
    GM needs support for all advanced technologies, including the Volt. 
We welcome Government and cross-industry partnerships to accelerate 
both technology development and early commercialization.
    Thank you for the opportunity to testify today. I look forward to 
your questions.

    Senator Dorgan. Mr. Taub, thank you very much.
    Next we'll hear from Kraig Higginson, the chairman and 
founder of Raser Technologies.
    Mr. Higginson.
STATEMENT OF KRAIG T. HIGGINSON, EXECUTIVE CHAIRMAN OF 
            THE BOARD, RASER TECHNOLOGIES
    Mr. Higginson. Thank you, Chairman Dorgan and Senator 
Bennett and Senator Cochran. It's my pleasure to be here today 
to testify.
    I'm the chairman of Raser Technologies. And 8 years ago, it 
was our mission to develop advanced geothermal power plants and 
electric power plant--powertrain technologies to build what we 
called a ``wells-to-wheels'' solution to the energy problem in 
this country. We did that on private financing, and got to a 
significant point in that development. In fact, our new 10 
megawatt geothermal power plant, that just came online this 
year in southern Utah, is now powering Anaheim, California, and 
our favorite, Disneyland. So, we've been successful on the 
geothermal power plant side, worked closely with United 
Technologies in developing a technology that's doing some 
things pretty incredible in that front.
    At the same time, we teamed with General Motors on a 
project to develop the vehicle that you see in that picture 
over there. It's an electric Hummer.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    We began our quest for this solution back in 2002. We were 
drawn to a chart--to this chart, if you'll look at the chart 
that identifies what Senator Dorgan had talked about earlier, 
and that was--there's an interesting dynamic--that most of the 
vehicles out there drive less than 25 miles a day. In fact, 
many of them drive far less than that. But, at that range, you 
can solve this problem. And this--we started looking at this 
back in 2001, 2002, probably one of the earlier people to look 
at this idea of saying, ``Okay, if we can solve the problem at 
the short range of these electric vehicles, we will have the 
solution.''

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    What we did was, we went on to deal with the average daily 
driving cycle, and then extend the range for the occasional 
longer trips by using a small onboard generator, as the good 
Senator described that for us.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    In 2004, we founded the Plug-in Hybrid Development 
Consortium with Pacific Gas and Electric, Southern California 
Edison, and other leading utilities, along with technology 
companies such as A123 Systems and other companies. Recently we 
completed a 2-year program with General Motors to develop an 
extended-range electric powertrain, similar to the Chevy Volt, 
but designed for larger vehicles, including trucks, SUVs. 
Working with GM, we introduced this technology at the SAE 
Conference in a midsized sport utility vehicle, that beautiful 
red Hummer that we see again.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Since most people drive less than 40 miles a day, on most 
days this vehicle will not burn a drop of gasoline. Applying 
this powertrain to light-duty trucks, gas consumption could 
reasonable be cut more than in half in America's top-selling 
vehicles.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The key to achieving the maximum benefits of 
electrification was designing an electric powertrain for 
heavier vehicles that optimized the vehicle battery for the 
average miles driven.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The fact is the United States has led the world in the 
development of electric motors, drives, and battery 
technologies needed for electrification of vehicles. Yet, today 
the U.S. is in a high-risk position of losing its leadership in 
both automotive manufacturing and electric vehicle technology 
to foreign competitors, who have significant government backing 
at this time. At one time, the United States had more than a 
10-year lead in the world on electric vehicle development. With 
GM's foresight in launching the EV1 program, we were the clear 
leaders.
    People ask me the question, and I've heard it asked here 
today, ``Why trucks, why SUVs?'' and even more specifically, 
``Why the Hummer?'' The Hummer is clearly the vehicle of choice 
when it comes to the car that everyone hates to love; it's the 
vehicle that's got the reputation of having the worst fuel 
economy on the planet. By the way I don't necessarily agree 
with that reputation, but that is its reputation. And that's 
exactly why, back 4 or 5 years ago, I said, ``Let's do it in 
the Hummer.'' Nothing could be more dramatic than demonstrating 
a vehicle as egregious as a Hummer getting more and better fuel 
economy than a Toyota Prius. And that's what we did.
    Working with the PHEV Consortium, Raser has initiated a 
Green Fleet Program to introduce extended-range fleet vehicles 
and fleet trucks, beginning with the Nation's largest utility, 
Pacific Gas and Electric.
    It is clear that electrification of transportation is the 
most practical and immediate way to reduce dependence on oil 
and dramatically reduce greenhouse gas emissions. In your 
efforts to encourage automakers to improve fuel economy, 
Federal fleets can provide tremendous support to the market by 
simply leading the way to purchase plug-in electric fleet 
vehicles. It's the smart thing, and it's the right thing to do. 
We can now build clean electric working trucks and SUVs, and in 
doing so, we can cut gas consumption in half in this country.
    If you look at this chart--our prior panelist, Fred Smith, 
referred to this earlier--and this is a chart that shows that--
if you look on the far right-hand side, this is identifying 
trucks and SUVs as the largest consumer. This is a--the purple 
is the current utilization of fuel in these vehicles. And if 
you go over to the right, to the orange column, which is about 
one-third of the consumption of fuel, that would be the Hummer 
that we've designed and built and are driving today. So, there 
is significant savings to come from using this in these larger 
vehicles.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    I want to just add one point, as I close, that it is the 
larger vehicles, the working vehicles in America, that do, in 
fact, create the biggest problem of pollution. It's not the 
Toyota Prius, or it's not even the Chevy Volt, that we're going 
to be worried about. It's the trucks. The working trucks of 
American working people. If we can solve the problem at that 
level, we solve the majority of the problem.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Senator Dorgan. Are you talking about fleet trucks, or are 
you talking about individually-owned trucks?
    Mr. Higginson. I'm talking about everything from light-duty 
pickup trucks to a Federal Express truck. Our system was 
designed for that market. So, we've designed, from the ground 
up, for the larger, heavier vehicle market for a plug-in series 
hybrid.

                           PREPARED STATEMENT

    I want to thank you for the opportunity to share, today, 
our vision of the electrification of the transportation 
industry. We, as a country, find ourselves in a position of 
tremendous opportunity. We can once again lead the world if 
industry and government join in this most important mission. 
That is our generation's mission. Our parents' and 
grandparents' mission was to put a man on the moon, and they 
did it. It's now our turn. We have the technology, we certainly 
have the need. Let us work together so that future generations 
will able look back at us with pride and say that, ``We did it. 
We led the world out of dependence on oil and air pollution.''
    Thank you.
    [The statement follows:]
                Prepared Statement of Kraig T. Higginson
    Thank you for the opportunity to participate in this hearing today. 
My name is Kraig Higginson. I am the chairman of Raser Technologies, a 
public company on the New York Stock exchange. We develop advance 
geothermal energy and electric powertrain technology, a ``Well-to-
Wheels'' approach to reducing our Nation's dependency on oil and green 
house gas emissions. In our automotive division, we work with Tier 1 
suppliers and OEMs. Alan Perriton, a former senior executive at GM is 
on our board.
    In 2004, we co-founded the Plug-in Hybrid Development Consortium 
with Pacific Gas & Electric, Southern California Edison and other 
leading utilities along with technology companies such as A123 Systems 
& others. Recently we completed a 2 year program with GM to develop an 
extended range electric powertrain, similar to the Chevy Volt, but for 
larger vehicles including trucks & SUVs. Working with GM, we introduced 
this technology in a GM mid-size SUV, demonstrating between 30 and 100 
mpg in gas fuel economy for the average driver using electricity as the 
primary fuel. Because most people drive less than 40 miles a day, on 
most days it won't burn a drop of gas, driving its first 40 miles on 
electricity using advanced lithium ion batteries. Applying this 
powertrain to the light duty truck, America's top selling vehicle, gas 
consumption could reasonably be cut in half or more. And we can begin 
doing this beginning today and begin commercialization with America's 
fleets.

                                 TABLE 8.12.--HOUSEHOLD VEHICLE TRIPS, 2001 NHTS
----------------------------------------------------------------------------------------------------------------
                                                                     Number of        Average      Daily vehicle
                                                                   daily vehicle   vehicle trip      miles of
                                                                       trips      length (miles)      travel
----------------------------------------------------------------------------------------------------------------
1990............................................................             3.3             8.9            28.5
1995............................................................             3.6             9.1            32.1
2001............................................................             3.4             9.9            32.7
----------------------------------------------------------------------------------------------------------------
Source.--U.S. Department of Transportation, Summary of Travel Trends, 2001 Household Travel Survey, December
  2004, p. 12.

    Trucks and SUVs account for about one-half of the vehicles sold in 
this country with light duty trucks constantly the No. 1 selling 
vehicle in America. We can improve their fuel economy through 
electrification by as much as 100 percent or more depending on the 
route. This significant reduction in petroleum consumption will lead 
directly to greater national energy security, economic growth and 
reduce our trade deficit resulting from exporting cash for oil , 
cleaner air and most importantly new American jobs with a sustainable 
future.
    The key to achieving the maximum benefits of electrification is 
designing an electric powertrain that optimizes the vehicle's battery 
range for the average miles driven. According to the Department of 
Transportation (figure 1) most Americans today drive less than 40 miles 
a day. An electric vehicle with 20 to 40 miles of battery electric 
range and a small gas/electric generator or range extender, could 
provide most of the benefits of an electric vehicle while removing 
critical barriers to mass market penetration such as range limitation 
and charging infrastructure.
    It is becoming clear that Electrification of Transportation is 
emerging as the most practical and immediate way to reduce dependency 
on oil and to reduce green house gas emissions.
    Why Extended Range Electric?--This is due to the many advantages of 
electric transportation. We have a well-established electric 
infrastructure in place, capable today of accommodating millions of 
additional electric vehicles. Electric motors are much more efficient, 
about 90 percent efficient compared to about 15 percent for gas 
engines. According to a study by the Electric Power Research Institute, 
charging electric vehicles from today's grid would cut GHG emissions in 
half, even with today's coal fired power plants. As States meet their 
renewable portfolio standards, the grid continues to become cleaner. 
The two key steps to meeting the Nation's energy goals are (1) plugging 
in electric vehicles to the grid, and then improving the grid with 
renewable energy. The United States has the advantage of massive 
reserves of alternative fuels and renewable energy including the 
world's largest reserves of geothermal energy.
    In fact, the United States has led the world in the development of 
electric motor drive and battery technologies needed for vehicle 
electrification including, the invention of the Nickel Metal Hydride 
and Lithium Ion batteries and advanced AC induction and hybrid motor 
designs.
    Yet at the same time, the United States is at high risk of losing 
its leaderships in both automotive manufacturing and electric vehicle 
technology to foreign competitors with government backing.
    At one time, the United States had a 10-20 year lead on electric 
vehicle development. But sadly we have a history of being excellent at 
innovation, but poor at commercialization, failing to capitalize on our 
own intellectual property in emerging new industries.
    As a case in point, although the LCD display technology was 
invented here in United States, foreign competitors now manufacture 
over 90 percent of world's LCD screens, which have nearly completely 
replaced traditional cathode ray tube or CRT displays. This was due to 
closer cooperation between private industries and government in 
countries like Korea.
                    american automotive renaissance
    My company has struggled with these very issues. Today we stand 
together at the crossroads. We can look back and remember the days when 
America led the global automotive industry, or look ahead to an 
American Automotive Renaissance inspired by clean electric vehicle 
technology: the RIGHT STUFF in the RIGHT PLACE at the RIGHT TIME. My 
message to you today is that we have the technology in hand to solve 
these very significant challenges. Of course we will grow through 
generations of improvements, just as we have in the computer and 
networking industries.
    Now, I'd like to share with you my thoughts on where we get the 
most ``bang-for-the-buck'' so to speak.
    I confess, that when I imagined the ``car to save the planet,'' I 
had something more like the sexy Tesla Roadster in mind, or the elegant 
Fisker ``Karma.'' (Don't tell my friends at GM but I have already 
placed an order for the Fisker Karma.) However there is another less 
flashy vehicle that I believe we will also need on the road to 
electrification. It is a vehicle very unique to America's working 
class. A vehicle that is so important to our economy that it has been 
the number one selling vehicle in this country for the past several 
decades. It is the humble but hard working pick up truck. This is an 
important vehicle both for the rebuilding of the economy and the 
automotive industry.
                       high volume & high margin
    For a significant reduction in nationwide gas consumption and green 
house gas emissions, high volume market penetration is imperative. 
Therefore, the ideal vehicle for early commercialization would have 
both high volume and high margin. It is very difficult for automakers 
to add $25,000 of advance technology and batteries to an economy car 
with very low margin and stay profitable. Light duty trucks have both 
high volume, and high profit margin and can better accommodate the 
additional cost of new technology.
                     why trucks? the greatest good
    Light duty trucks are the number one top selling vehicles in 
America (figure 2). When combined with SUVs and vans, they make up 
about one-half the vehicles sold. Trucks & SUVs are also responsible 
for a majority of vehicle emissions and fuel consumption. Trucks are 
the vehicle of choice of America's small businesses. Trucks are not 
driven on Wall Street, but they do drive hard working families in 
America's heartland back to work. I've heard it said that behind every 
Prius owner is a friend with a truck, to move-in, to build or repair 
their home or take their family camping. Trucks are also the number one 
vehicle in America's working fleets It will be hard to rebuild the 
housing industry without the trucks we use to build our houses. It's 
hard to put a 4 by 8 sheet of plywood in the back of a Prius. America's 
government and utility fleets are among the highest truck users. If 
we're going to clean up the air, we need to clean up our trucks.

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    On the other hand, the greatest reduction in GHG and fuel 
consumption can result through electrification of America's working 
trucks. But can it be done? Is it practical? Is it even possible?
    America leads the world in electric vehicle powertrain development 
for this class of vehicles. Another case in point: I refer again to 
Raser and GM the first to build and demonstrate a full performance four 
wheel drive extended range electric vehicle powertrain for SUVs and 
trucks.

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    Auto sales are nearly matched by the sale of light trucks, but 
suffer more as gas prices increase.
                  why fleets? fleets will lead the way
    Working with the PHEV Consortium, Raser has begun a ``Green Fleet 
Program,'' to introduce electric fleet trucks in the Nation's largest 
utility fleet, Pacific Gas & Electric. David Meisel, Director of Fleet 
Services for PG&E comments:

    ``In a continuing battle to reduce operating costs, fleets prefer 
the stable low cost alternative to gas. In most States as in 
California, utilities Fleets have strong inherent drivers for early 
adoption of plug-in electric vehicles led by concerns over rising gas 
prices and a desire to reduce emissions. Working fleet trucks typically 
need both fuel economy and occasional light payload. The ideal fleet 
vehicle has the gas fuel economy of a Prius, with the payload of a pick 
up. In the past, trucks have been largely excluded from significant 
increases in emissions standards. Utility fleets are strong supporters 
of plug-in electric vehicles. Additional funding and incentives to the 
Nation's public and private fleets who are willing early adopters of 
electric work vehicles majority of duty is `hauling people' with 
occasional moderate payloads.''
                          green fleet program
    Raser is leading a good example of the role that fleets can play. 
In addition to being one of the Nation's largest and cleanest 
utilities, PG&E is also a leader in the development, demonstration and 
deployment of clean alternative fuel fleet vehicles with over 1,500 
alternative fueled vehicles operating in its fleet today.
    PG&E is co-founder of the Plug-In Hybrid Development Consortium and 
has been working with Raser Technologies to demonstrate six new plug-in 
electric fleet pick-up trucks. PG&E operates more pick-up trucks than 
any other vehicle in their fleet, and with the extended range electric 
trucks developed by Raser, PG&E can confidently deploy these trucks 
throughout their service territory as a solution to many of their 
business goals, including reducing emissions while lowering fuel costs, 
and helping to address the Nation's dependence on imported oil.
                            minimal changes
    The pick up truck has a very high volume to weight ratio giving it 
the room and payload needed to accommodate the additional weight of a 
large lithium ion battery pack safely between the frame rails without 
reducing cargo or cabin area.
 offsetting battery costs with mobile exportable power and additional 
                                 value
    In addition, the incremental cost of batteries, particularly in 
early stages of low volume production, can be largely offset by the 
additional value of mobile exportable power in extended range electric 
trucks equipped with a 100 kW generator used to provide additional 
power to the motor and to recharge the vehicles batteries and when 
driving beyond battery range. That's enough to power construction tools 
or the entire construction site or enough to provide power to run your 
home and six of your neighbors in an emergency. Municipal and 
maintenance crews use Utility fleets and highly value the mobile 
emergency power built into the truck. Unlike consumer vehicles, working 
fleets find enough value in the mobile power generation to nearly 
offset the incremental cost of batteries.
                        key to oem profitability
    In a recent article, the Wall Street Journal sites trucks as key to 
GM's profitability due to higher margins and high volume. To offset 
reduces sales due to higher gas prices, GM plans to improve truck fuel 
economy to meet the 24.1 mpg CAFE standard set for 2011. High vehicle 
profit margins are needed to absorb additional cost of new technology. 
The Ford F-150 is the top selling vehicle model in America followed by 
the Chevy Silverado. However, if combining both the 
SilveradoTM and the GMC Sierra brand which is essentially 
the same truck, then GM would hold top honors.
    Trucks offer U.S. automakers a position of strength upon which to 
rebuild profitability if they can overcome sagging sales due to rising 
gas prices. Shifting from the more volatile gasoline to electricity 
will allow U.S. automakers to maintain truck sales volumes while 
dramatically improving CAFE fuel economy in trucks. This in turn puts 
Americans back to work building a clean truck with a sustainable future 
powered primarily by electricity.
    Fleets sales constitute a significant portion of truck sales 
volumes and are strategically important to GM and other OEMs. Utility 
Fleets seek lowest volume pricing for gas vehicles, while tolerating a 
higher price for very clean vehicles that meet their customers 
expectations for environmental responsibility. Pick up trucks are the 
most popular vehicle with both Fleets and with consumers. The vehicle 
of choice by America's Heartland and working families.
                         bridge to high volume
    Rapid acceleration to high volume is one of the best ways to 
amortize the tremendous costs of new technology. Fleets are key to 
early adoption, rapid market penetration and can provide a crucial 
bridge to volume. Pacific Gas & Electric's fleet alone contains over 
12,000 vehicles with over 8,000 trucks. Government fleets are required 
to meet EPAct with 75 percent of all new fleet purchases being 
alternative fueled vehicles. Government fleets including municipal, 
State and Federal, are some of the largest users of light trucks & 
SUVs. In their efforts to encourage automakers to improve fuel economy, 
Federal fleets can provide tremendous stimulus to the market by 
``walking-their-talk'' and purchasing plug-in electric fleet vehicles 
and trucks given the right incentives.
                             market drivers
    The most powerful market driver for electric vehicles is the 
comparatively low cost of grid electricity when charging at night 
during off peak hours. With a national average of about 6 cents per 
kilowatt hour, a fleet truck can drive on electricity for about 60 
cents per equivalent gallon. This could translate into a 75 percent 
reduction in fleet fuel costs. For large fleet operators, such as 
FedEx, UPS, Comcast, AT&T and others, the fuel savings can increase 
dramatically over a mild hybrid or even a plug-in HEV that remains gas-
engine dependent representing often a 75-100 percent improvement over 
mild hybrids. This savings is particularly augmented when vehicle route 
& duty cycle can be matched to the battery range.
    For most working fleets, fuel is the highest operational expense. 
On average, electricity costs about one-fourth as much as petroleum 
nationwide. Because of the benefits of ``load leveling'' by charging in 
``off peak'' hours, most utilities now offer or plan to offer a 
nighttime ``off peak'' electric vehicle charging program. Pacific Gas & 
Electric offers a night-time EV rate of just 6 cents per kWh. This 
translates into less than 60 cents per equivalent gallon. SMUD, the 
Sacramento Utility District offers a 50 percent discount for nighttime 
charging of electric vehicles. The Los Angeles Department of Water and 
Power (LADWP) offers a discounted rate of just 2.5 cents/kWh for 
electricity used to charge EVs during off-peak times. Southern 
California Edison offers a discount program of about 8 cents per kWh 
and San Diego Gas & Electric offers about 9 cents per kWh. This 
translates into about a 75 percent reduction in fuel costs, a powerful 
market driver. (source DOE Department of Energy Efficiency & Renewable 
Energy http://www.afdc.energy.gov/afdc/progs/view_ind_mtx.php/in/DICS/
CA/0)
                           good for the grid
    Plugging in at night is good for the consumer and good for the 
utility. Night time off peak vehicle charging offers load leveling 
benefits to the utility improving grid efficiency.
             mass market penetration range & infrastructure
    Two of the most significant barriers to high volume market 
penetration of electric vehicles has historically been (1) range 
limitations and (2) infrastructure. Extended range electric vehicles 
can bring benefits of immediate electrification without the requirement 
of huge investment in infrastructure. Mass penetration of alternative 
fueled vehicles has historically been limited by range and 
infrastructure issues.
    In addition to the benefits to the environment, a national fleet of 
thousands of extended range electric vehicles offers National security 
of mobile emergency power generation for municipal, military and other 
critical operations.
                              flexibility
    To adapt to best available alternative fuels, the extended range 
electric vehicle can accommodate a variety of fuels including diesel, 
bio diesel, CNG, and others providing a high degree of flexibility
                            fuel cell ready
    The United States has invested billions of dollars into hydrogen 
fuel cell research. The extended range electric powertrain is by nature 
``fuel cell'' ready. The combustion generator in an EREV can be 
replaced with a fuel cell generator for zero emission operation in the 
future. Hydrogenics, a leading fuel cell company sees this as a more 
practical pathway to commercialization for fuel cell technology, 
significantly reducing the size and cost of the fuel cell stack.
                   well to wheel emissions, improving
    Driving on grid electricity will provide over a 60 percent 
reduction in total well-to-wheels emissions in California according to 
an EPRI study. More importantly, as the State's grid improves to meet 
new RPS (renewable portfolio standard) in the next few years, the total 
well-to-wheels emissions will continue to decrease as the percentage of 
renewable energy increases. PG&E in California offers one of the 
greenest energy mixes in the country with over 50 percent of its power 
coming from low emission sources such as hydroelectric, nuclear, 
geothermal, wind and solar. As the United States moves to meet a 
national RPS, the well-to-wheels emissions will continue to go down. 
This is part of the long-term advantage of the plug-in electric vehicle 
that aligns well with the Nations overall energy plan.
             current status of electric vehicle development
    Raser Technologies recently completed a program with General Motors 
to develop an extended range electric demonstration vehicle. The 
Demonstration vehicle selected was a midsized SUV. The gas powertrain 
was replaced with an extended range electric powertrain designed for 
larger vehicles. In testing the 6,000 lb vehicle achieved over 40 miles 
in electric range on a mixed city/highway drive cycle using about 50 
percent of the available battery pack. We are now applying the 
powertrain to popular pick up trucks to demonstrate in the Nation's 
leading fleets beginning with the largest utility fleet, Pacific Gas & 
Electric.
    David Meisel, Director Fleet Services for PG&E comments:

    ``In addition to being one of the Nation's largest and cleanest 
utilities, PG&E is also a leader in the development, demonstration and 
deployment of clean alternative fuel fleet vehicles with over 1,500 
alternative fueled vehicles operating in its fleet today. PG&E is co-
founder of the Plug-In Hybrid Development Consortium and has been 
working with Raser Technologies to demonstrate six new plug-in electric 
fleet pick-up trucks. PG&E operates more pick-up trucks than any other 
vehicle in our fleet, and with the extended range electric trucks 
developed by Raser, PG&E can confidently deploy these trucks throughout 
our service territory as a solution to many of our business goals, 
including reducing emissions while lowering fuel costs, and helping to 
address the Nation's dependence on imported oil.''

    In southern California Raser is working with the city of Anaheim to 
begin implementation of ultra low emission extended range electric 
fleet trucks. Fleet Superintendant Karl Hopfer writes:

    ``Anaheim City is proud to offer its customers clean electric power 
from Raser's geothermal power plant. In addition, we have teamed with 
Raser to demonstrate how much cleaner plug-in electric fleet trucks can 
be, especially when charged with electricity from a zero emission 
geothermal power plant. Extended range electric trucks offer us the 
electric range we need for typical daily routes, with the flexibility 
for longer trips. For us the E-REV truck is like a pick up truck and is 
just what fleets like ours are looking for. Fleets can play a key role 
in bringing this new cleaner technology to the market. We are in favor 
of any additional incentives that may be available to help early 
adapting fleets.''
  --Karl Hopfer, Director Fleet Superintendent, Anaheim Public Utility.

    The city of Anaheim also provides power to help Mickey Mouse's home 
town ``go green as well''.
    Working with consortium partners, over 11,000 soft orders for plug-
in electric fleet vehicles have been acquired from over 76 cities, 166 
public utilities and 17 State and Federal agencies. The green fleet 
program could soon be ready to convert those soft orders to purchase 
orders as it completes its beta and field testing. For example, we were 
recently invited to meet with the city of Seattle who is scheduled to 
receive $20 million in stimulus funding in association with Clean 
Cities, to purchase clean fleet vehicles. Matching fleet demand with 
fleet incentives to can provide tremendous velocity to 
commercialization. There are hundreds of cities across the country like 
Seattle, Anaheim and others who are seeking to use stimulus funds to 
buy new clean vehicles.
    Due to current low volumes, battery pricing still remains high. 
However, we are now receiving bids from battery companies with high 
volume capacity that now approach $500 per kilowatt hour, with lower 
prices closer to the DOE targets on the horizon given adequate volumes. 
The key seems to be getting batteries to a high volume capacity. We 
believe that working with fleets will provide an essential bridge to 
volume early to accelerate commercialization.
    Many fleets are willing to pay more for clean vehicles if the value 
is there including a more significant improvement fuel economy over 
previous models. Our market research shows that an improvement of over 
50 percent in gas fuel economy can drive a higher vehicle price 
particularly as gas prices are predicted to continue rising as global 
demand outpaces supply due to emerging economies such as China and 
India with a large energy appetite. However additional value is needed 
to overcome the anticipated incremental vehicle costs during low 
volume. For working fleets, such as utilities, maintenance crews, 
contractors, farmers and others, the additional value of mobile power 
generation may offset a significant portion of battery costs.
                         how much will it cost?
    In volume we are targeting a 30 percent incremental cost for the 
Advanced Technology package for consumers. Statistics from the Commerce 
Department show that the average truck price is about $30,000, or 20 
percent over base vehicle. In addition, nearly 25 percent of all trucks 
are sold with options adding over 25 percent to vehicle price. We 
anticipate that an Advanced Technology Package, with Ultra High Fuel 
Economy of 50 mpg or higher in a truck, will capture significant market 
share from 15 mpg competitors and may command a 25 percent premium 
package option price. This price point has already been established by 
consumers who regularly spend 25 percent more for other high-end 
options such as a comfort package including leather, wheels, 
navigation, additional horse power and an entertainment system. Selling 
value for price is an appropriate strategy.
    Incentives such as the current $7,500 tax credit (applicable to 
EREV-40 trucks) and other incentives are key to bridging to high 
volume.
             economies of scale--sharing common components
    Greater economies of scale are needed to reduce rapidly the cost of 
new technology. Similar to the way we build on the economies of scale 
applying a number of different vehicles to a common chassis, we need to 
find the same economies of scale by leveraging a common electric 
powertrain class that can be applied in tandem to a chassis class to 
power a broader number of vehicles. For example, the cost of a 
specialty delivery vehicle for FedEx, USPS or the military can be 
greatly reduced if it shares a common powertrain with light trucks 
already in high volume production. The computing industry has 
successfully leveraged this strategy in the popular ``WinTel'' model 
providing flexibility and economies of scale. For example, we have 
carefully selected the 2500 class chassis due to its high potential for 
commonality among a number of high value vehicle platforms shared in 
common with high volume light duty trucks.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    A 20 mile plug-in has the potential to cut gas consumption in half, 
and a 60 mile EV range vehicle can cut gas consumption by over four 
times according to this analysis by EPRI.
                             what is needed
    Four areas of policy support are needed to aid in the 
commercialization of vital advanced electric vehicle technologies, 
manufacturing and consumer incentives, and incentives for early 
adopting fleets and streamlining of emissions and vehicle 
certifications.
                        manufacturing incentives
    For smaller innovative technology companies, capital-intensive 
operations such extended R&D and new tooling for manufacturing of new 
technology can be prohibitive. Technology suppliers and tier one 
suppliers play an important role in supporting the Nation's larger 
automakers with the innovations needed to leap ahead. Loan guarantees 
for suppliers working with OEMs can be tremendously helpful. Once 
manufacturing can be achieved, then tax credits can take affect.
                    early adopting fleet incentives
    The most near-term and effective incentives that are needed should 
be provided to early adopting fleets who replace low fuel economy 
trucks & SUVs for electric trucks & SUVs. Many fleets especially 
government fleets are unable to take advantage of tax credits. Due to 
the key role that early adopting fleets play in the acceleration of 
commercialization of electric vehicles, additional incentives need to 
be offered to fleets to help bridge to volume and reduce the 
incremental cost of clean electric vehicles. This would allow 
government fleets to lead the way without exceeding current replace 
purchasing budgets for a limited time, say 3 years.
                          consumer incentives
    Several consumer incentives for electric vehicles can help 
accelerate commercialization and increase total volume. The vehicle's 
all electric range correlates directly with the amount of petroleum 
displaced. Therefore purchase incentives tied directly to the vehicles 
all electric range can be in the public's interest and justified to 
bridge to volume production. This can be called Petroleum displacement 
credits valued by the electric vehicles incremental improvement or 
reduction of emissions over the gas version. This would provide a one-
time incentive for owners of so-called ``gas guzzler'' vehicles to 
upgrade to an electric version which would provide a greater overall 
reduction in emissions and fuel consumption.
                   electric fuel charging incentives
    Incentives to charge vehicles at night would benefit the utility 
and the national grid. Incentives should increase for households who 
select night time and renewable energy charging options. Overall 
utility rates can also be discounted with temporary Federal and State 
subsidies.
                      low carbon fuel incentives.
    Provide additional incentives for clean fuel graduating by lowest 
carbon content.
                    sales tax the highest polluters
    An environmental recovery tax on vehicles that do not meet C.A.F.E 
would encourage automakers and consumers to reduce the number of high 
emissions vehicles and provide funding needed for electric vehicle 
incentive programs.
       discounts in state registration fees for electric vehicles
  --Streamline Safety & emissions testing for pre-certified vehicles 
        with new clean powertrains
  --Mandate Government Fleets to order first
  --Fund study quantifying TOTAL cost of ownership of cleaner vehicles 
        including total ownership costs including fuel, hidden costs to 
        government and society
    --Loss of life
    --Damage to environment from emissions
    --``cost of carbon''
                               conclusion
    I feel it a privilege to be alive today, to be apart of this great 
change for the better. It has been my passion and my pleasure to be a 
small apart of what I consider to be the greatest challenge of our 
time. I believe that our success in going to the moon four decades ago, 
served to teach us that we can meet any challenge if we work together 
and set a clear objective. How much more important is our challenge 
today . . . to make a giant leap for mankind. Until now, we have lacked 
only the will to do it. We have built this vehicle. It's not perfect, 
but its more than good enough to begin the journey. In Neal Armstrong's 
words, ``It's time to take the first small step!''
                          additional resources
    Extended Range Electric Fleet Trucks http://www.rasertech.com/
media/videos/rasers-extended-range-electric-fleet-truck.
    Forty mile range test of Extended Range Electric SUV--100 mpg 
http://www.rasertech.com/media/videos/test-drive.
    EREV Powertrain 3D Animation http://www.rasertech.com/media/videos/
series-phev-drive-system-video.
    Governor Schwarzenegger Introduces EREV Hummer http://
www.rasertech.com/category/media/videos.

    Senator Dorgan. Mr. Higginson, thank you very much for 
being here and for your testimony.
    Next, we'll hear from Mary Ann Wright, vice president and 
managing director of Johnson Controls.
    You may proceed.
STATEMENT OF MARY ANN WRIGHT, VICE PRESIDENT AND 
            MANAGING DIRECTOR, POWER SOLUTIONS 
            DIVISION, JOHNSON CONTROLS
    Ms. Wright. Thank you, Chairman Dorgan and Senator Bennett 
and Senator Cochran. And I'm glad to see you like your Escape 
hybrid, because that was probably the best project I ever 
worked on at Ford Motor Company. I'm very proud of it.
    Well, we left the batteries for last, so let's talk about 
the state of play of what's going on in the batteries, and the 
challenges and the opportunities that are facing us so that we 
can drive to mass commercialization.
    As a way of background, Johnson Controls and our partner, 
Saft, opened our first mass production facility in France in 
2008, where we support Daimler and BMW for their first 
generation of lithium-ion batteries. We also are supporting, on 
a preproduction basis, Ford Motor Company/Azure Dynamics for 
commercial applications, VW, and other global OEMs. So, we're 
already in production. And, thanks to the vision and the 
foresight of the legislators, we also were recipient of an ARRA 
grant. And the importance of that grant is that it allowed us 
to make our next investment--our expansion of our capacity--in 
the United States versus and going and expanding in Europe or 
Asia. And that's really important, because that wasn't in our 
plan originally. So, we were very appreciative of that.
    Now, our grant was based on our commitment that we wouldn't 
just build a manufacturing facility, but that we would lead in 
standing up an industry all the way from the raw material 
suppliers to the end-of-life recycling infrastructure. I'm very 
proud to say that, as of today, we've already recruited two 
Asian raw-material suppliers to the State of Michigan and--who 
will be supporting, not only Johnson Controls and Johnson 
Controls staff, but other manufacturers in the United States. 
We've developed strategic relationships with battery recycling 
partners so that we can drive for the end-of-life and the 
responsible disposition of these batteries.
    I certainly want to tell you that the plant that we're 
putting up in the United States is going to be located in 
Holland, Michigan, which is--if you're not from Michigan--is 
over here. And we're on track to launch it in September of this 
year, where we'll be supporting our first U.S. customer, Azure 
Dynamics, and then, next year we go into production with Ford 
Motor Company for their first plug-in hybrid mass production. 
And we are their exclusive supplier.
    What's also really important is, by 2012 we will move all 
of our production, that's currently in Europe, to the United 
States, to this Holland facility. And you probably don't hear 
that very often, where U.S. guys are bringing stuff back and 
we'll be exporting it again. So, we're very proud of that.
    So, lots of good news. We have good customers. We're very 
fortunate to have our feet underneath us. But, here's the 
challenge: We simply do not have enough demand to efficiently 
and economically operate our facilities. The capacity that's 
being installed is on a mass scale, and this industry requires 
scale to drive down the cost. And the biggest factor for our 
cost is, really, volume--about driving our raw material prices 
down, our processing costs, our manufacturing technology.
    And so, what we--what we're going to talk about today, and 
where we're going to need help, is in demand creation. Just a 
couple of facts that will--should be rather startling to you, 
if you think about between now and 2015, there is estimated 2-
million-vehicle demand globally for any level of hybridization, 
from hybrids all the way to electric vehicles. There will be 4 
million units of installed capacity for batteries. Two million 
of that capacity will be here in the United States. So, we have 
a very significant gap in our demand.
    But, we have some solutions. And, Craig, you talked about 
them. And that is, we have a great opportunity in the 
transition of our government fleets. Starting with the Federal 
fleets, if you look at the GSA, the Postal Service, the DOD, 
they operate over a million vehicles. All of them are ideally 
suited for some level of electrification, whether they are mild 
hybrids all the way to full EVs. And if you look at a 
particular fleet, the Postal fleet that is an ideal--when you 
look at--most of the miles driven are only less than 18 miles 
per day.
    Given that we're running a bit short on time, I think the 
key point that I would leave with you is that these fleet 
programs are a great way to stimulate demand. We really need to 
leverage the ARRA investments that the U.S. taxpayers have 
made, to put these assets on the ground and to help us 
establish a domestic battery industry.
    You know, I'd have to ask the question; shouldn't we give 
preference to vehicles with batteries made by companies which 
receive taxpayer stimulus dollars? The risk is--if we don't 
utilize these investments, is that our tax could go to purchase 
vehicles with components made in foreign countries, and strand 
these assets that we put in place.

                           PREPARED STATEMENT

    Finally, as we look to the future--and Dr. Kelly talked 
about it, and so did you, as well--the need for ongoing 
research and development. The technology is very complex. And 
if we want this 500-mile battery, we're going to have to 
collaborate very closely, as a private sector and the national 
labs, so that we can take these great technology ideas and get 
them out on the street for commercial success. And so, we're 
going to look for continued support from the government, in 
terms of funding, as well as, enabling us to collaborate on a 
closer basis.
    So, I thank you very much for the opportunity to testify. 
We look forward to answering questions.
    And thank you.
    [The statement follows:]
                 Prepared Statement of Mary Ann Wright
    Mr. Chairman and members of the subcommittee, my name is Mary Ann 
Wright. I am the Vice President and Managing Director, Business 
Accelerator Project, Power Solutions Division of Johnson Controls, Inc. 
We are the leading independent supplier of battery systems for hybrid 
vehicles, plug-in hybrid vehicles, and electric vehicles. Johnson 
Controls is a founding member of the Electrification Coalition. In 
addition, I serve on the Board of Directors of the Electric Drive 
Transportation Association (EDTA).
    I greatly appreciate the opportunity to discuss with you today the 
current status of batteries for electric vehicles and the opportunities 
and challenges we face. I am honored that you have asked me to speak 
before you today on a topic so critical to the security, economic 
vitality, and environmental stability of our country and planet.
               our new li-ion battery production facility
    Let me start with an important status update on our first lithium-
ion automotive battery manufacturing plant in the United States. As 
background, Johnson Controls, in a joint venture with Saft America, 
named Johnson Controls--Saft Advanced Power Solutions, launched the 
world's first automotive lithium-ion cell manufacturing and battery 
assembly facility in Nersac, France in 2008. That facility is currently 
mass producing lithium-ion cells and packs for Mercedes and BMW hybrid 
vehicles.
    In August 2009 we were awarded an ARRA matching grant to create an 
advanced battery manufacturing industry in the United States. This 
grant, along with significant incentives from the State of Michigan, 
played a key role in our decision to build a manufacturing plant for 
advanced batteries in this country. Without this support from the DOE, 
we would have likely built our second lithium-ion battery plant in 
Europe or Asia.
    We are not just building a domestic advanced battery manufacturing 
plant. We are also building a domestic supply chain and recycling 
infrastructure for the manufacture of lithium-ion batteries for 
electric drive vehicles. This initiative includes suppliers of critical 
materials and components in addition to U.S. equipment suppliers for 
the specialized machinery the industry will need. To date, we have 
helped recruit two Asian materials suppliers to the U.S. (Michigan). We 
have formed strategic partnerships with global battery recyclers to 
implement battery collection, transportation, recycling and material 
recovery and reuse processes. The Recovery Act funding for advanced 
battery manufacturing is stimulating economic activity in many industry 
sectors including one of critical strategic importance--the development 
of a lithium mine in northern Nevada. Our technology partners include 
the Department of Energy's Argonne National Laboratory, who will help 
us accelerate commercialization and validation of cell materials. We 
also have partnered with the DOE's Oak Ridge National Laboratory under 
a separate contract to validate and implement manufacturing process 
enhancements for lithium-ion cells. We have established commercial 
viability through customers who have awarded us long-term production 
contracts. We have production contracts with Ford, Daimler, BMW and 
Azure Dynamics. Notably, we have pre-production development contracts 
with several global customers, including Jaguar Land Rover and 
Volkswagen, in support of their production program plans. Below is a 
diagram of our advanced battery initiative funded in part by the ARRA 
grant.

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    We have chosen an existing manufacturing location on our technical 
campus in Holland, Michigan to site the plant. We are drawing on a 
workforce from an area rich with skilled automotive workers. Through 
the reemployment of local talent, we will help reverse the recent trend 
of job loss in the automotive industry generally and the Midwest 
specifically.

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    This investment is an important step toward creating and building 
an industry in the United States that addresses market requirements and 
long-term opportunities for growth and new jobs in this country. 
Construction of our plant in Holland, Michigan is progressing as 
planned with battery pack assembly set to begin in August of this year 
and cell production starting in 2011.
    We will support several important customers from this facility. 
Johnson Controls is the exclusive supplier for the complete battery 
system for Ford Motor Company's first series production plug-in hybrid 
electric vehicle (PHEV), which will be introduced in 2012. In October 
it was announced that we will supply batteries for the Ford Transit 
Connect commercial van in 2010 in collaboration with Azure Dynamics. We 
are working with Azure to supply batteries for other commercial 
delivery trucks that will start in production in 2010. In addition, we 
will supply batteries for the Mercedes S-Class and BMW 7-Series mild 
hybrids, presently produced in France.

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              the challenge--demand for electric vehicles
    Congress has shown vision and determination in appropriating $2 
billion in ARRA funding to support the development of a U.S. 
manufacturing industry for advanced batteries and for electric drive 
components. However, the sustained success of this investment will 
depend ultimately upon creating demand for electric drive vehicles. We 
run the risk of creating more capacity to build batteries and critical 
components for new electric drive vehicles than what the market will 
demand, particularly during the early stage of commercialization. Of 
concern is the near-term, i.e., 2010 through 2015 when market demand, 
if left uncatalyzed will lag manufacturing capacity. The bar chart 
shown below underscores the challenge--we estimate that by 2015 
domestic capacity in vehicle units will exceed demand by approximately 
1.35 million units, a gap of 62 percent.

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    Early in the life cycle of any new product or technology, scale is 
one of the critical factors enabling manufacturing success, as well as 
cost reductions. Electrification of vehicle fleets, including 
government fleets, can be a major contributor toward rapidly achieving 
scale.
    Combined, the U.S. General Services Administration, Postal Service, 
and Department of Defense operate approximately 1 million non-tactical 
vehicles. Many of these vehicles, particularly Postal Delivery LLV 
vans, are excellent candidates from an economic standpoint for some 
level of power train electrification. The average Postal Delivery 
vehicle travels 18 miles a day at very low speeds in stop-start mode 
and averages only 10 mpg. The Postal Service's Inspector General Office 
estimates that a full electric version of a delivery vehicle will save 
$1,500 per year in fuel cost if gasoline is priced between $3-$4 per 
gallon. Many other Federal fleet vehicles are also good candidates for 
electrification and would help create demand.
    Beyond the Federal Government, the 50 states collectively operate 
another 1 million vehicles. Electrification of State and local 
government fleets would have a significant impact on creating demand. 
Johnson Controls Building Efficiency business operates a service 
vehicle fleet of 5,548 vehicles. Seventy-seven percent of these 
vehicles travel less than 60 miles daily and 25 percent travel less 
than 40 miles per day. This represents a tremendous opportunity for us 
to electrify our own vehicles and gain invaluable field experience and 
help to build demand. We have implemented a pilot program in Milwaukee 
and will be taking delivery of our first fully electric service van 
within the next month.
              leveraging the arra manufacturing investment
    In order to stimulate demand through government agency purchases of 
electrified vehicles for their fleets, we will need to leverage our 
existing ARRA investments. This could be done by establishing a 
preference to purchase electric drive vehicles for government fleets 
that contain batteries and components manufactured in facilities 
supported by ARRA grants. The risk if we do not leverage our investment 
is that our tax dollars could go to purchase electrified vehicles 
assembled in the United States but with batteries and components made 
in foreign countries. This could have the unintended consequence of 
stunting the utilization of domestic capacity, ultimately resulting in 
shuttered facilities and lost jobs.
               electrification coalition ecosystem cities
    Another approach to stimulating market demand is advocated in the 
Electrification Coalition's Roadmap--the creation of Electrification 
Ecosystems. Investing in a series of large-scale demonstration projects 
will encourage the adoption of electric vehicles and prove their market 
readiness. The establishment of Electrification Ecosystems has three 
important goals:
  --Prove that wide scale deployment of grid-enabled vehicles is not 
        only possible, but desirable;
  --Take advantage of economies of scale; and
  --Support research to answer critical questions about usage and 
        recycling patterns.
    By concentrating investments in a limited number of communities, we 
can maximize leverage from the opportunity to demonstrate that grid-
enabled vehicles can meet drivers' needs. As the Roadmap stated:

    ``Electrification ecosystems will demonstrate that a community is 
capable of putting the infrastructure in place, operating the vehicles 
over their lifetimes, and disposing of them after their useful life has 
ended, all in a manner that profits the participants in the value 
chain. In short, electrification ecosystems provide the best 
opportunity to give consumers confidence in the safety, performance, 
and benefits of the vehicles themselves and the reliability of the 
surrounding infrastructure.'' (Electrification Roadmap, November 2009, 
Electrification Coalition, page 141.)

    A third and critical element to help spur demand is the 
continuation of tax incentives for the purchase of electrified 
vehicles. These incentives are proven demand boosters that must be 
maintained. Failure to continue these important tax policies at this 
time would send exactly the wrong signal to the marketplace and 
individual customers.
                  research and development--the future
    As we execute our plan to create an advanced battery manufacturing 
industry we cannot ignore the future. The nature of technology is that 
there is always something better on the horizon. For the United States 
to achieve global product and manufacturing leadership in this 
technology is just the first step; we must sustain it with continuing 
and robust Federal R&D funding. In the same manner that lithium-ion is 
now supplanting nickel metal-hydride as the technology of choice for 
electric drive vehicles, the next game-changing chemistry is already 
being pursued by our global competitors in partnership with their 
governments. Japan has set a national technology goal for a seven times 
improvement in specific energy coupled with a 94 percent cost reduction 
for electric drive vehicle batteries by 2030. Commercialization of 
these technologies will depend on not only fundamental chemistry and 
materials breakthroughs, but also substantial innovations in 
manufacturing processes and equipment.
    Technology R&D on this scale is risky and costly, requiring more 
resources, both capital and intellectual, than what is available in the 
private sector alone. Continuing Federal support through the DOE and 
its national laboratory network is critical to ensuring that the 
technology of the future is made here at home. The near collapse of 
U.S. financial markets over the last 2 years has made it painfully 
clear that our eroded manufacturing base must be rebuilt and returned 
to its time-tested position as the cornerstone of a healthy economy.
    We need to develop next generation lithium-ion batteries by 
improving electro-chemistries, as well as the battery systems which 
support and extend cell life. We must discover and develop the 
successor electrochemistry to lithium-ion. There are several 
technologies under consideration as the next transformation in battery 
technology. Equally important is the rest of the battery system, which 
includes sensors and thermal management components. Federal R&D support 
must be maintained in these areas in order for our domestic industry to 
remain competitive. We need to foster a collaborative relationship with 
the national labs and private industry to enable technology ideas to go 
from the labs to commercial success in the market place.
         additional consideration--tax treatment of arra grants
    Currently, recipients of ARRA grants for advanced battery and 
critical components manufacturing, as well as the recipients of Smart 
Grid technology grants, need clarification on the tax treatment of 
these funds. Nothing in ARRA indicates that these grants are taxable. 
Legislation gave a clear intent of a 50:50 cost-share grant structure. 
Should the IRS interpret these grants as being taxable income, we may 
find that at a 30 percent taxation rate, many millions of dollars from 
the grants merely will go back to the Government and not be spent on 
actual manufacturing and jobs. We understand that the IRS may be able 
to interpret their current authority and the intent of the legislation 
to not tax the ARRA grants. If not, the IRS may need a statutory 
ability to grant an exclusion and not consider these ARRA grants as 
taxable income.
    ARRA was designed to help create jobs and innovation in the United 
States in a tough economy and a hard competitive environment. Every 
dollar of the grant should be spent on hiring workers and developing 
new technologies that will propel American companies forward and enable 
them to compete with foreign manufacturers. Facilities such as ours can 
be great successes for the ARRA. We hope that the intent of the 
legislation will be clarified and the entire sum of the grant will go 
toward our facilities.
    In conclusion, let me thank the subcommittee for this opportunity 
to testify. We are making important investments needed to develop a 
domestic and sustainable manufacturing base for the commercialization 
of electric drive vehicles. However, our progress must be maintained by 
creating demand for these vehicles by electrifying our fleets, 
establishing valuable demonstration projects, maintaining tax 
incentives, and investing in research and development. The success of 
these initiatives is critical to the security, economic vitality, and 
environmental stability of our country and planet.

    Senator Dorgan. Ms. Wright, thank you very much. I don't 
think you used the term ``Buy American'' but your final 
comments will raise the hackles of some in Congress, though it 
sounds like the right kind of music to me. I offered the Buy 
American provisions in the Economic Recovery Act, and, you 
know, some of my colleagues had an apoplectic seizure about it. 
But, I noticed, yesterday, that Mr. Pascal, in Europe, 
indicated that there was nothing violative of our WTO 
obligations with respect to the Buy America provisions in the 
Economic Recovery Act. I also happen to share your view, that, 
If we're trying to promote economic recovery here, why would we 
not make the investment here?
    You're on the way to opening a plant in Michigan. We hear a 
chorus of music these days that the Economic Recovery Act was a 
complete, total failure, creates no jobs, and so on. I fully 
disagree with that. But, I assume you're opening a plant here, 
in part, because you've gotten some funding from the Economic 
Recovery Act. Is that correct?
    Ms. Wright. That's absolutely correct. After we opened our 
facility in France and started looking at our global footprint 
strategy--I will be perfectly honest with you, coming to the 
United States wasn't on the list. We were looking at expansion 
in Eastern Europe and in Asia. And we are in the United States, 
and we are building our entire business model in the United 
States, as a result of the ARRA matching grant. So, yes, that's 
correct.
    Senator Dorgan. Nobody knows what ARRA is, in terms of the 
acronym, but it's the stimulus funds or the economic stimulus 
funds.
    Ms. Wright. Yes.
    Senator Dorgan. How many employees will you have at the 
plant in Michigan?
    Ms. Wright. That's a great question. And I'll give you a 
number, but first let me--the number of employees is going to 
depend upon the demand that we can create, because we have to--
we'll have employees that will support the production. At full 
capacity, each one of our plants will employ, directly, 550 
people.
    Senator Dorgan. Now, let me ask about international issues. 
What's happening in China, what's happening in France, and 
Japan, and so on with respect to converting to electric drive? 
Who has some information about that, anybody?
    Mr. Lowenthal. I can speak up, because half of our business 
is in Europe now. And it's just a bit ahead of the United 
States, I'd say, in demand for electric vehicle 
infrastructure--in part, I have to say, driven by the Kyoto 
Protocol adoption, of some countries. Our biggest single 
customer is the city of Amsterdam, who has already deployed 100 
stations and wants 2,500 more, and the city of London, who's 
talking about ordering 25,000 charging stations. So, Europe is 
moving pretty well.
    I'm proud to say that all of our products are manufactured 
in the United States, so it's a good balance-of-trade issue for 
us. We're happy to sell in the international realm.
    We are also anxious about exporting our products to Asia. 
Asia has moved ahead pretty quickly, in part, because they have 
low regulatory standards.
    So, the international field is moving well. I think it can 
be to the benefit of us.
    Senator Dorgan. I thought your anxiety was, because if you 
send it to China, they'll reengineer it and you'll lose your 
intellectual property.
    Mr. Lowenthal. We have to manage that anxiety.
    Senator Dorgan. Mr. Higginson?
    Mr. Higginson. Yes, just to add a little bit to that. One 
of the few known secrets of the world might have been that, 
back when General Motors made the decision to sell the Hummer 
brand to a Chinese firm, a lot of technology was going to China 
with that. It's no mystery that we were contacted fairly 
immediately by the Chinese, who had great interest in our 
technology. They flew to Utah and spent a fair amount of time 
talking with us and talking about that technology that we had 
built for the Hummer going with it to China. And the jury's out 
on that, at this point. We're hopeful that the technology, 
including Hummer, will stay in the United States, and we'll see 
what happens over the coming weeks.
    But, that is one of the things that we witnessed happen. We 
were not only involved, but anxious to be a bidder in that 
process, and we came up short, due to the tremendous strength 
of the Chinese Government supporting their buyers over there. 
So, there is some pressure on the technologies right now.
    Senator Dorgan. Now, we're talking about automobiles, 
electric drive vehicles and trucks. I've been reading now, for 
1\1/2\, 2 years, that the Chinese are gearing up a very 
significant automobile export effort, and we expect low-cost 
Chinese automobiles to be sold in our market, at some point, 
soon. Does General Motors understand that that is going to 
happen, from all that we know and read?
    Mr. Taub. Well, first recognize that the automotive 
industry is becoming consolidated among multinational players. 
In fact, China has recently set a policy in place recognizing 
that their domestic companies need to get economy of scale 
through consolidation. General Motors has been No. 1 in sales 
in China, with our JVs there. To date, the Chinese market is 
expanding so quickly, the domestic production is ramping up to 
meet their consumption there.
    At the same time, there's no question that the Chinese 
Government has set automobile industry as a priority. Their 
university infrastructures, their national lab 
infrastructures--remember their domestic companies are state-
owned. We've been in a joint venture that's been very 
successful for over 10 years as part of that.
    Senator Dorgan. What percent of the joint venture do you 
own?
    Mr. Taub. Up until very recently, it's been a 50-50 joint 
venture. And, by the way, there are Chinese regulations 
requiring that level of ownership, maximum. We just did a 
renegotiation, because we're working with our partner to enter 
India, so it's now 51 percent SAIC, a very successful 
partnership. We're both doing technology advance, we're both 
making money in the fastest-growing market in the world right 
now.
    Senator Dorgan. Let me just ask--and I'm taking more time 
than I should--what is SAIC?
    Mr. Taub. SAIC is the name of our joint-venture partner in 
China, Shanghai Automotive.
    Senator Dorgan. So, General Motors is 49 percent now.
    Mr. Taub. We just changed to a 51-49; it was part of our 
financing to expand the operation into other parts of Asia.
    Senator Dorgan. What part of that is General Motors, 49 or 
51?
    Mr. Taub. Forty-nine. By regulation, these joint ventures 
had to be no more than 50 percent U.S.-owned.
    Senator Dorgan. My understanding is, the Chinese would 
prohibit majority ownership by an American company building 
cars in China.
    Mr. Taub. Correct.
    Senator Dorgan. But, let me ask you the more important 
question. Are you aware that, in the Bilateral Trade Agreement 
that we did with China, with whom we have a $260 billion 
merchandise trade deficit, after a phase-in, the Chinese 
automobiles, when exported to the United States--and they are 
coming--will have a 2\1/2\ percent tariff attached to them, and 
any U.S. automobiles that would be sold in China, would have a 
25-percent tariff attached to them? So, our own negotiation 
with China, in a bilateral agreement, gave the Chinese a 10-to-
1 advantage, even if the Chinese would allow our cars in. They 
don't want our cars; they want you to manufacture cars in 
China, with minority ownership. That's what China wants. But, 
my point is, as we gear up in this country to think through: 
how do we have a vibrant automotive sector? How do we build new 
cars? How do we move toward electric drive? We are confronting 
very serious trade problems that suggest you, in General 
Motors, may not be able to compete, on American streets, with 
the Chinese automobile that comes in here with a 2\1/2\ percent 
tariff--I'm just telling you.
    Mr. Taub. Well, you know, clearly, we're subject to those 
regulations. We try to influence how they go. And I think we 
could go offline on policy discussions around that. I think the 
real focus of this hearing, and the way I've approached putting 
our testimony in is this breakthrough technology. We are 
reinventing the automobile, as we've known it for the second 
century.
    Take batteries, in the 1990s, the United States, which, 
prior to that, had led in battery technology, basically 
abandoned that charter. It was maintained by Meady in Japan, 
and the breakthroughs came there. I think it's time for a 
public/private partnership so that the United States will be 
not only the place to develop the technology, but the place to 
implement it and commercialize it. We have the will, I think we 
have the team, and it's going to take a partnership to get 
there, coupled with the right trade policies, so we make sure 
we're not taken advantage of.
    Mr. Lowenthal. If I may, Senator, chime in----
    Senator Dorgan. My time has long since expired.
    Mr. Lowenthal. Oh, sorry.
    Senator Dorgan. That's all right. Yes, sir, go ahead, Mr. 
Lowenthal.
    Mr. Lowenthal. Oh, thank you. Well, I just want to say, 
we're not intimidated by foreign competition. We need a level 
playing field, but then we can win. And in Europe now, we get a 
70-percent market share. Seventy-percent market share. So, we 
can build great products.
    Senator Dorgan. Yes. Mr. Taub, I understand, you can't come 
to Congress--in fact, you can't say anywhere publicly, ``We're 
really concerned about this imbalance with the Chinese. Fix it, 
Congress. You owe it to us, as an automobile manufacturer, to 
fix it.'' Because if you did that, the Chinese would say to 
you, ``You know what? We don't really want you in joint 
ventures over here.'' So, that's why we never hear a word from 
the major automobile manufacturers in our country about this 
unbelievable imbalance and the avalanche that is coming, that 
is, in my judgment, going to be very hard to compete with, 
because we don't have fair trade rules. You're not in a 
situation to be able to be a chorus of noise here on it. But, 
somebody needs to be, because otherwise we can do all these 
things, and we can have all the innovations, and we can 
electrify our fleet, and ultimately, the fleet is going to be 
made elsewhere.
    Mr. Taub. That's not our objective.
    Senator Dorgan. I understand that, and I appreciate your 
being here to talk about what you did talk about. Senator 
Bennett, thanks for indulging me, and the same to you, Senator 
Cochran.
    Senator Bennett. Thank you, Mr. Chairman. I enjoyed the 
exchange and enjoyed the information that you got.
    Looking at the chart you have there, U.S. auto sales, you 
have cars and you have light trucks. And the sales--sometimes 
light trucks are higher than cars, and sometimes the cars are 
higher than light trucks. I don't know, but my impression is 
that that's not true in other countries, that the sales in 
other countries are more cars than they are light trucks. Is 
that true?
    Mr. Taub. Yes.
    Senator Bennett. Okay.
    Mr. Taub. But, also, if you look around the world, you'll 
find the personal use of what would be defined as a car and a 
truck, versus the work use, tends to scale with how fuel is 
priced.
    Senator Bennett. Yes.
    Mr. Taub. And what we saw in the United States was that 
markets shifted from 60-40, truck to car, to 40-60, truck to 
car, when gasoline crossed $3.75. So----
    Senator Bennett. Shifted the other way.
    Mr. Taub. It shift--it was 60-percent truck----
    Senator Bennett. Right.
    Mr. Taub [continuing]. And it went to 40-percent truck. So, 
clearly the consumers look at the price of energy, the price to 
fuel the----
    Senator Bennett. Sure.
    Mr. Taub [continuing]. Vehicle, in making that decision.
    Senator Bennett. Well, since the truck seems to be more of 
an American love affair than it is European, and certainly, 
from my experience, not Japanese, because the roads in Japan--
of course, maybe since the Lost Decade, when they keep repaving 
the roads in an attempt to get their economy kick-started, 
they're wider and so on, but--I've driven the roads in Japan. I 
used to own a business in Japan, and go there fairly regularly. 
They can't accommodate the American car, let alone the American 
truck. You see an American car on the streets in Tokyo, and it 
looks huge compared to the other vehicles that are running 
around.
    So, talking the strategy here, it would seem to me that 
focusing on getting this technology into trucks as fast as 
possible--that being an American vehicle of choice--when fuel 
is a problem, is a way to kick-start this whole circumstance.
    Mr. Taub. And, just so you know, when we introduced our 
two-mode technology, which is not our plug-in, but our base-
strong hybrid, we concentrated it on our SUVs and large 
vehicles, for exactly that problem, that the--that's the 
largest source of fuel consumption, and where we could make the 
biggest impact. So, your conclusion is correct for 
hybridization.
    Senator Bennett. Yes.
    Ms. Wright. So, as you look at the markets and how we're 
trying to create demand, there is this natural sweet spot in 
our Federal fleets, State and local fleets. The commercial 
market is, for sure, a very good candidate, given short-haul 
stop-starts. And I used the Postal Service as an example. We're 
so--we believe that so profoundly that Johnson Controls, which 
operates about 6,000 vehicles internally, we're going to have 
to walk the talk and we're going to transition our own fleet, 
as well. And--but, we're going to do it because, not only do we 
have the technology and we know it's the right thing to do, 
but, when you look at the operating costs, the greenhouse gas 
emission reduction, it's the right thing to do for us, as a 
business, as well.
    Senator Bennett. Mr. Higginson, you----
    Mr. Higginson. Yes, I think, just to put an emphasis on 
what both Alan and Mary Ann have said, that the driver of 
getting these vehicles to the marketplace right now is clearly 
going to be getting quantities up, and the best place to do 
that is going to be through fleet operations. We have 
approximately 11,000 soft orders that we're looking at right 
now, from fleets that come from municipalities, county 
governments, utility fleets, et cetera, who are ready, willing, 
anxious to participate in this process.
    So, I think we're going to see it happen, and that's where 
it will happen. We think the Federal Government really should 
lead the way. It should be--Federal fleets should be moving 
that way faster than anyone.
    And just to draw a little bit of a distinction, I think it 
was Chairman Dorgan who had the chart up earlier that talked 
about the difference between what a plug-in hybrid--a series 
hybrid does versus what a dual-mode hybrid does, for example, 
and literally more than doubled the fuel economy out of a plug-
in series----
    Senator Bennett. Right.
    Mr. Higginson [continuing]. Versus a dual-mode hybrid. And 
I think--not--that's not to criticize General Motors' product, 
because I think it's a great one. In fact, one of the top 
engineers that designed the dual-mode worked, works for me now 
at Raser. So, we're proponents and fans of that technology.
    But, I think that the key right now is, if we can get the 
critical mass that Mary Ann talked about, relative to the 
battery manufacturing, fill the facilities up that we have now 
invested in here in the United States, doing that through fleet 
purchases is going to be a real kick-start. Then we're going to 
see happen what happened in the LCD world and, hopefully, 
without the end result of that world. That technology was 
developed here in the United States. Great technology displaced 
the picture tube itself. And, in fact, that technology 
developed here is now, 90 percent of it, being manufactured in 
Korea.
    And I think, in the world of the vehicle and plug-in series 
hybrid vehicles and the electrification of transportation, our 
country sits in the leadership position today, and it really is 
ours to lose. It's not something we've got to chase; it's in 
our hands, and it's ours to lose.
    Senator Bennett. Well, it occurs to me that, if we go in 
the direction you're talking about, one of the advantages of 
putting the Federal fleet into this technology, or large 
corporate fleets, they all overnight at a corporate 
headquarters. They don't drive them home. And consequently, the 
whole charging question becomes very easy to deal with, because 
you simply--you're now dealing with a scale that can give you 
the kind of circumstance that you wanted. So that you put in a 
charging system at the local Post Office, and all those trucks 
get charged overnight, just--that's the way it's done, and 
there's no big hassle.
    Whereas, if you're going to the individual market, homes 
maybe have to be retrofitted, you've got to get the 240 in some 
places where they don't have it, so somebody will avoid it for 
this, that, and the other.
    But, moving in the fleet direction strikes me as making a 
whole lot of sense, and it's a product that the rest of the 
world doesn't necessarily want.
    Mr. Higginson. And, Senator, it's----
    Senator Bennett. So, there--you're not going to get 
competition from the Chinese building those kinds of trucks.
    Mr. Higginson. And it's precisely that scale that you talk 
about that allows the cost to come down on the battery systems 
quickly. We heard, from Fred Smith earlier, that the real 
challenge, one of the real hurdles here, is the cost of the 
battery system in these vehicles right now. It's strictly a 
scale question. To the extent we can utilize fleets to launch 
this project and get the battery plants operating at or near 
capacity, and growing from capacity, we'll see the price of 
this stuff tumble quickly. It's just a--it's a pure fact of 
economic life. And----
    Senator Bennett. Yes.
    Mr. Higginson [continuing]. That's what we need to do. To 
the extent we don't do that, someone else out there will be 
doing it.
    Senator Bennett. Okay.
    Thank you, Mr. Chairman.
    Senator Dorgan. Thank you.
    Senator Cochran.
    Senator Cochran. I couldn't help but think about the fact 
that if you use the tax code as an incentive, you're bound to 
make progress, if it's targeted in the right way and priced so 
that the public will accept it, as a political matter. But, 
that's outside the jurisdiction of this subcommittee, so you 
hadn't had a lot of questions about the investment tax credit 
or other benefits that might flow through the utilization of 
our tax code as an incentive.
    Are there tax provisions in place now that encourage 
investment or reward the investments that you're making in 
bringing this to reality?
    Mr. Higginson. Senator, we do have one piece of legislation 
that we were involved in fairly heavily early on with a--it's 
called the Clear Act, and we've heard mention of that here 
today. It allows for up-to-$7,500 tax credit for battery 
systems that go into hybrid electric vehicles. Interestingly, 
that was sponsored by a couple of people that were well known 
is--one, Senator Orrin Hatch from Utah; and secondly, a junior 
Senator at the time, Barack Obama.
    And so, I think you see something happening, as we heard 
talked about here earlier today. This isn't an issue of one 
side or the other of the aisle. This is an American issue that 
I believe we see good consensus on both sides to solve these 
problems. It is the problem of the day, and I think we're 
seeing good consensus, and we'll, hopefully, stand by for some 
more things that can come in the tax code that will help 
support this effort.
    Mr. Taub. And the--that present offset of a tax credit for 
individuals that will be buying the Volt is the right example 
of incentivizing the Gen1 commercialization that I talked 
about.
    I think the key element, as you think through this, is we 
do need incentives to get through the first two learning 
curves. We should only do that on technologies and solutions 
that are then sustainable, where we have the confidence we can 
do the cost walk, we have the confidence we can do robust, 
durable products, and the confidence that the consumer is going 
to value it. And I think this technology falls in that realm.
    Mr. Lowenthal. I wanted to weigh in a bit on tax credits. 
There is a tax credit on infrastructure, as well. There's a 50-
percent tax credit. It's part of the energy bill. It expires at 
the end of this year, which is not great timing, given that the 
vehicles just start coming out then. So, we would like to see 
that extended.
    It has a flaw in it, in that it's an income tax credit, and 
many of the fleets now are county fleets and city fleets, none 
of whom pay any taxes. So, it actually isn't working very well. 
Most cases where we try to use that income tax credit, it isn't 
working. It's a wonderful idea, and so there's the idea. In 
fact, Senator Hatch has an idea of converting that to a payroll 
tax, which will work a lot better, as opposed to an income tax 
credit.
    We do see, for example, sort of a mixture of these ideas. 
The county of Sonoma, in California, wants to create one of 
these ecosystems, where the county of Sonoma's known for EVs 
and attract EV players; they've attracted Nissan, they're 
attracting others to the county, as an EV Center of Excellence. 
In their case, they have an innovative idea, which is that the 
city and county fleets have charging stations and are being 
electrified, and then the--and they use those at night; in the 
daytime, they open them up to the public. So, they've--this is 
a way of getting two-for-one on this investment. But, still, 
the tax credit doesn't work, because it's the county of Sonoma.
    Senator Cochran. Thank you very much. I think your 
presentations have added to our understanding of the challenges 
we face and the direction that we ought to consider, in terms 
of legislation from the Congress and the use of the tax code as 
incentives.
    Thank you very much for being here today.
    Senator Dorgan. Senator Cochran, thank you very much.
    I think it's clear from this discussion, that we all know 
we are unbelievably dependent on foreign sources of oil, and 
that we have challenges with respect to the planet and wanting 
to have a lower-carbon future. We understand that there are 
ways to begin to light a fuse and start a change. With respect 
to the automobile, I think, from the early 1900s, when it was 
decided that we wouldn't use alcohol and we really would 
discard electricity, we'd just do an internal combustion engine 
and use gasoline, from that moment on, we have just been 
unbelievably addicted to that source of energy.
    So, 70 percent of that which we need to run our economy is 
used in the vehicle fleet, and much of it comes from outside of 
our country. The question is whether we let things happen and 
perhaps do nothing to address these questions, or whether we 
decide, as a matter of public policy, to make things happen. 
The one thing that's important to understand, is that we can't 
make consumers buy something. Consumers are an unbelievable 
source of power here. But, as Senator Bennett just mentioned to 
me, if you can get 60-cent-a-gallon fuel for a Hummer, the 
consumers will very quickly beat a path to that source of 
energy for their vehicle.
    I think that based on the discussion we've had today, if 
the Federal Government could decide it is going to move toward 
an electric drive fleet it would have a profound impact.
    If we can find a way to use tax credits that bring the cost 
down for conversion, we will incentivize those that are hauling 
our garbage, FedEx, and all of those kinds of trucks running 
around this country, to convert very quickly. That mass moving, 
from the Federal Government to its fleet to the other truck 
fleets and so on, would have a profound impact on moving this 
country in a completely different direction, toward an electric 
drive future.
    I also think the consumers would very, very quickly follow, 
because all of the advances that will come from that--and 
there'll be a lot of advances in technology and capability--
will, I think, show up in the marketplace very quickly for the 
kinds of vehicles that consumers want to drive.

                     ADDITIONAL COMMITTEE QUESTIONS

    So, I really appreciate your willingness to come and talk 
about this. At this time I would ask that the subcommittee 
members submit any questions they have for the record.
    [The following questions were not asked at the hearing, but 
were submitted to the witnesses for response subsequent to the 
hearing:]
                 Questions Submitted to Dr. Henry Kelly
            Questions Submitted by Senator Robert F. Bennett
    Question. How do you rate the potential for a ``true 
breakthrough(s)'' in battery technology and any thoughts on when and 
where that might occur?
    Answer. The Department of Energy (DOE) views the potential for a 
breakthrough in battery technology for advanced electric drive vehicles 
as being high. Multiple universities, national laboratories, and 
commercial companies are investigating and developing breakthrough 
technologies. A small sample include advanced anodes (Silicon and other 
alloys), cathodes (high voltage, high capacity cathodes a), and 
electrolytes (such as composite electrolytes for use with lithium metal 
anodes). It is believed timescale for some of these technologies is 3-5 
years in PHEVs, and perhaps 10 years before commercial application in 
BEVs. In addition, the Advanced Research Projects Agency--Energy's 
(ARPA-E) work on transformational energy storage concepts is 
accelerating the development of these and other technologies such as 
lithium/sulfur and lithium/air which promise to triple or quadruple the 
energy density of today's lithium ion batteries. The timescale for 
these technologies is highly speculative, although some have estimated 
an additional 15-20 years of development will be needed.
    Question. Where should DOE and industry focus their efforts in R&D 
to get the biggest return on their investments?
    Answer. The Department of Energy (DOE) works closely with industry, 
academic leaders, and our national laboratories to design a research 
portfolio that balances long-term investments in basic science and 
engineering, investments in using this science to develop 
transformational energy storage concepts, and work to help industry 
convert breakthrough ideas into practical products. EERE battery 
programs work closely with the Office of Science and their Energy 
Frontier Research Centers, and worked with ARPA-E to help craft their 
recent solicitation for new energy storage concepts. Together we are 
exploring the widest possible landscape looking for promising new ideas 
as we move the current generation of concepts into the market. For 
example, early DOE support led directly to a generation of new lithium 
ion batters that is now entering the marketplace with high-leveraged 
DOE support--with considerable new funding from the American Recovery 
and Reinvestment Act of 2009. At the same time, we're supporting higher 
risk research on lithium/air and lithium/sulfur batteries. And we 
worked with ARPA-E to help craft their new call for breakthrough energy 
storage technologies and hope this will attract some spectacular new 
concepts. R&D is a top priority for the Department, and we will 
continue to work closely with our partners to harness science and ideas 
to address energy challenges.
    Question. Do you expect to meet the DOE goals for battery cost and 
performance? If not by DOE's dates, when would you expect to?
    Answer. With sustained future R&D investment, there is a very high 
likelihood of meeting the Department of Energy (DOE) performance goals. 
The battery life goals, both the 15-year calendar life and the charge/
discharge cycle life, are also likely to be met. The cost goals may be 
the most challenging, but battery development efforts are on track to 
meet the 2015 cost targets. The path to achieving the necessary cost 
reduction is through a combination of technology advancements, 
learning-curve improvements, and manufacturing economies-of-scale. The 
path to achieving the necessary cost reduction is through a combination 
of technology advancements, learning-curve improvements, and 
manufacturing economies-of-scale.
    Question. How do you see the applicability of electric vehicles to 
different geographic regions (different climatic conditions) of the 
country, such as Minnesota vs. California?
    Answer. The initial introduction of electric-drive vehicles to 
different geographic regions of the country will be driven by the 
manufacturers producing the vehicles. Work at the Department of Energy 
and elsewhere indicates that electric drive vehicles face performance 
problems in extreme climates. Extreme climates also add to the heating 
or air conditioning loads that can limit the range that can be provided 
by the batteries. The Department is working with industry and academic 
experts to further quantify these problems and address them. We expect 
that manufacturers are likely to introduce electric-drive vehicles 
first in locations which do not have extreme hot or cold temperatures. 
We are confident that improved designs will encourage manufacturers to 
offer these vehicles in all geographic regions. Over the long term, we 
believe that electric vehicles will be deployed across the country.
    Question. How important is it that PHEVs are charged at night?
    Answer. Charging at night enables greater cost savings and system 
benefits of grid-connected vehicles to be realized. Vehicle charging 
during off-peak night-time hours will allow electric utilities to plan 
for more stable load profiles, while enabling intermittent generation 
resources such as wind--which is typically most prevalent at night--to 
be more fully utilized. Consumers will realize economic benefits from 
lower electricity rates during off-peak hours. We anticipate the 
majority of electric-drive vehicles will be charged during off-peak, 
overnight hours.
    Initially, there will be few PHEV vehicles in use, minimizing the 
importance of when they are charged. However, the importance of night-
time, off-peak charging will rise with increased market penetration of 
grid-connected vehicles. Through the Transportation Electrification 
projects awarded under the American Recovery and Reinvestment Act, the 
Department of Energy is working with electric utilities and vehicle 
charging infrastructure providers to prepare for properly managed 
smart-charging systems so off-peak electricity capacity is utilized, 
maximizing the benefits of widespread utilization of electric-drive 
vehicles while minimizing their impacts on the U.S. electric grid.
    Question. Will public or other charging stations that are used 
during peak hours be a problem?
    Answer. Unmanaged charging of large numbers of electric-drive 
vehicles during peak grid operation, especially charging at higher 
rates such as those utilized in faster charging Level II and Level III 
public stations could result in load management problems for electric 
utilities. The Department of Energy is working with utility and 
industry partners to ensure Level II and Level III chargers will be 
equipped with communications and control capabilities that will allow 
utilities to track utilization of each charger and be able to 
coordinate charging as needed to reduce load during peak demand 
conditions, while still meeting customer needs.
    It is anticipated the vast majority of electric-drive vehicles will 
likely be charged at home during off-peak hours. Publicly available 
charging sites will predominantly be utilized for opportunity charging 
(partially charging a battery whenever power is available instead of 
when battery is completely discharged) to provide incremental increases 
in range of electric-drive vehicles. These public stations will help 
overcome consumers' range anxiety with electric vehicles. The 
Department will study various use scenarios as part of eight American 
Recovery and Reinvestment Act Transportation Electrification Electric-
Drive Vehicle Demonstrations, including how best to encourage off-peak 
charging. These scenarios, which will include the use of several 
different time-of-use utility rates, will be evaluated to determine how 
best to minimize the impact of electric-drive vehicles on the electric 
grid.
    Question. At what point will additional capacity (generation, 
transmission, or distribution) be required because of the extra demand 
from PHEVs?
    Answer. Based on the results of a Pacific Northwest National 
Laboratory study conducted for the Department of Energy, we estimate 
currently available off-peak electric generation and transmission 
capacity is sufficient to support the conversion of over 70 percent of 
the existing U.S. light-duty vehicle fleet to PHEVs. Additionally, a 
2007 joint-study by the Electric Power Research Institute (EPRI) and 
the Natural Resources Defense Council (NRDC) concluded there is an 
abundant supply of electricity for transportation--a 60 percent U.S. 
market share for PHEVs would use 7 percent to 8 percent of grid-
supplied electricity in 2050. This study can be found at http://
energytech.pnl.gov/publications/pdf/
PHEV_Economic_Analysis_Part2_Final.pdf.
    It is possible local distribution networks may experience some 
adverse effects in a scenario involving a sudden increase in unmanaged 
vehicle charging. However, we anticipate these effects will be minor 
due to the gradual adoption of electric-drive vehicles by consumers, 
and they will be mitigated by planned infrastructure upgrades by local 
utilities.
    To evaluate and anticipate the potential impacts of electric-drive 
vehicles on the U.S. electric grid, DOE is partnering with electric 
utilities through demonstration projects as part of the Transportation 
Electrification projects awarded as part of the American Recovery and 
Reinvestment Act. These demonstration activities will allow the 
Department and the utility industry to assess the true impact on the 
electric grid of large numbers of electric-drive vehicles in 
concentrated locations. This will in turn facilitate the development of 
plans to incorporate intelligently managed vehicle charging systems 
into the U.S. electric grid with minimal impact.
    Question. How will the proposed Batteries and Energy Storage hub 
contribute to advancing electric vehicles? Are we just continually 
throwing money at this problem?
    Answer. Today's electrical energy storage technologies suffer from 
limited energy and power capacities, lower-than-desired rates of charge 
and discharge, calendar and cycle life limitations, low abuse 
tolerance, high cost, and poor performance at high or low temperatures. 
The current state of technology for electric energy storage has 
significant limitations not only for electric vehicles, but also for 
storing electricity from broad classes of power generation technologies 
ranging from nuclear power to intermittent sources like solar and wind.
    Many of the fundamental performance limitations for energy storage 
are rooted in the constituent materials making up the storage system 
and in the fundamental physics and chemistry that govern the transport 
and storage of energy in the material. The potential for scientific 
advances are great and the needs for technology applications are many. 
The Department of Energy believes that establishing a focused energy 
storage research and development effort the size, scope, and duration 
of an Energy Innovation Hub will garner long-term commitment from many 
of our most innovative researchers, and the Hub will act as a beacon 
for attracting our Nation's most enthusiastic science and engineering 
students.
    The Batteries and Energy Storage Hub will target science knowledge 
gaps that are preventing breakthroughs for both mobile and grid 
applications. Specifically, the Hub will address key research areas 
identified in the Basic Energy Sciences workshop report Basic Research 
Needs for Electrical Energy Storage: expanding our scientific base for 
synthesis of novel nanoscale materials with architectures tailored for 
specific electrochemical performance, developing new methodologies to 
characterize materials and dynamic chemical processes at the atomic and 
molecular level, and expanding our competencies in simulation and 
prediction of structural and functional relationships using leading 
computational tools. These research challenges are inherently multi-
disciplinary. The Hub would bring together multi-disciplinary, 
collaborative teams of scientists and engineers, in a way that hasn't 
been done before, to focus on specific milestones or research 
opportunities for energy storage where highly integrated basic and 
applied research can accelerate the innovation process.
    The Hub's ultimate technological goals include the development of 
radically new concepts for producing storage devices from materials 
that are abundant and have low manufacturing cost, high energy 
densities, long cycle lifetimes, and high safety and abuse tolerance 
for a broad range of energy storage applications. Each of these issues 
is important to further the commercialization of all electric or plug-
in hybrid vehicles.
    Question. Could you detail some of the specific milestones or 
research that the Hub could accomplish that were not possible through 
the significant amounts of Federal investment in prior year 
appropriations or the stimulus package?
    Answer. The Batteries and Energy Storage Hub's purpose is to 
accelerate the feedback loop between fundamental science and 
engineering to scalable, cost-effective energy storage solutions. The 
Hub would draw upon the scientific and technical knowledge being 
generated across the Department's existing energy storage research 
efforts, which span fundamental research, development of specific 
technologies, and demonstration projects. The investments made in prior 
years have been especially critical to targeting specific areas of 
fundamental research, as well as to incremental improvements to 
existing technologies, including funding for battery and component 
manufacturing supported via the American Recovery and Reinvestment Act 
of 2009, which feed directly into the marketplace. The Hub is different 
than prior technology development activities in that the selection of 
the specific milestones for applied research and development 
opportunities in energy storage will be based on down selecting the 
most promising scientific discoveries, which will be done within the 
Hub's highly integrated basic and applied research teams; accelerating 
the innovation process.
    By addressing both the scientific and engineering challenges to 
cost-effective manufacturing and deployment, the Hub would go beyond 
existing technologies to develop radically different energy storage 
designs, concepts, and architecture. The scale of the Hub effort is 
important to ensure that the technology and manufacturing/production 
needs will be linked to the fundamental science. The longer-term Hub 
investment provides motivation to top scientists and engineers to 
redirect their careers toward the sole focus of the Hub mission. 
Collectively, these aspects define the Hub and delineate it from other 
funding models in the Department.
    Key scientific questions that could be addressed by the Hub 
include:
    How Can We Approach Theoretical Energy Densities?--To answer this 
question the Hub could explore the efficacy of structure in energy 
storage by pursuing new approaches combining theory and synthesis for 
the design and optimization of materials architectures including self-
healing, self-regulation, failure-tolerance, and impurity-
sequestration; seek a molecular-level understanding of the full range 
of interfaces in order to design tailored interfaces/interphases; and 
extensively study the chemistry occurring at solid/electrolyte 
interfaces and within the cathode, anode, and electrolyte.
    How Do We Increase Safe Storage Capacity, Power Density and 
Optimize the Charge and Discharge Rate?--To answer this question the 
Hub could investigate the science of charge transfer and transport, 
seeking a molecular scale understanding of interfacial electron 
transfer, and electrolyte-electrolyte interfaces with strong ionic 
solvation, weak ion-ion interactions, high fluidity, and controlled 
reactivity; which could increase rates of energy utilization. The Hub 
could pursue materials discovery focused on systems with more than two 
electrons per redox center, such as bimetallic, amorphous nanoporous or 
porous nanostructures.
    Can We Approach Full Reversibility to Achieve Maximum Cycle Life?--
To achieve this goal, the Hub could develop new probes and of energy 
storage chemistry and physics at all time and length scales, including 
analytical tools capable of monitoring changes in structure and 
composition at interfaces and in bulk phases with spatial resolution 
from atomic to mesoscopic levels and temporal resolution down to 
femtoseconds. The Hub could pursue advances in multi-scale modeling; 
developing computational tools with improved integration of length and 
time scales to understand the complex physical and chemical processes 
that occur in electrical energy storage from the molecular to system 
scales.
    Examples of potential outcomes include the discovery of novel 
nanoscale materials that offer possibilities for the development of 
revolutionary three-dimensional architectures that simultaneously 
optimize ion and electron transport and capacity; new in situ photon- 
and particle-based microscopic, spectroscopic, and scattering 
capabilities and techniques that allow observation of the dynamic 
composition and structure at an electrode surface in real time during 
charge transport and transfer processes; and new integration of 
experiments with novel multi-scale theory with different time and 
length scales appropriate to energy storage to enable the 
identification of new mechanisms and predictive trends, as well as the 
discovery of new materials for advanced energy storage solutions. Once 
awarded, the Hub will be assessed against the goals and benchmarks 
outlined in the approved research and management plan.
                                 ______
                                 
                Questions Submitted to Richard Lowenthal
            Questions Submitted by Senator Robert F. Bennett
                   integration into the electric grid
    Question. There is general agreement that the existing power grid 
could accommodate a large number of electric vehicles. Utilities would 
only need to proceed with planned updates to the grid, which are not 
specific to the vehicles. Additional demand by electric vehicles could 
help to stabilize the peak-and-valley cycles that utilities face. This 
assumes, however, that electric vehicles are charged at night and not 
when demand for electricity peaks.
    How important is it that PHEVs are charged at night?
    Answer. First, I want to stress the general importance of plugging 
in grid-enabled vehicles, both EVs and PHEVs. The first plug-in hybrid 
electric vehicles to reach U.S. markets will have an all-electric 
driving range of approximately 40 miles. When the battery's energy is 
depleted, these vehicles will essentially function as traditional 
hybrid vehicles, relying on an internal combustion engine to charge the 
battery. The first mass-produced fully-electric vehicles (EVs) to reach 
U.S. markets will have an all-electric driving range of approximately 
100 miles. When the battery is depleted, it must be recharged before 
the vehicle can be operated.
    In the case of the fully electric vehicle, the need for reliable 
access to both public and private charging equipment should be obvious. 
The vast majority of consumers simply will not purchase a vehicle 
unless they have complete confidence that it can be conveniently 
refueled, day or night. For PHEVs, the equation is somewhat different, 
because the vehicle can continue to operate even after the battery has 
reached its minimum state of charge. There are, however, two important 
caveats to this. First, the operating costs for PHEVs are significantly 
higher when they are relying on gasoline as opposed to electricity. 
(The same is true for the emissions profile.) To the extent that a PHEV 
driver charges the battery infrequently, the fuel savings--and thus the 
cost savings--of owning a PHEV are significantly diminished.
    In any area where the grid is limited by generation or 
distribution, it is important that grid-enabled vehicles be charged 
off-peak. (Roughly speaking, peak load is from noon until 7:00 p.m.) In 
California, where we do approach the capacity of the grid in summer 
afternoons, it is more than desirable to charge off peak--in fact, it 
is an issue of reliability for the grid. The good news is that the 
average American drives less than 30 miles a day. In that context, it 
will take about 7 kWh of electricity to recharge the average drivers' 
vehicle battery. At 110 Volts, such a charge would take about 7 hours. 
At 220 Volts, 16 Amps, it would take about 3.5 hours. Either way, with 
17 off-peak hours each day, grid-enabled vehicles can be charged at 
night or in the morning. Typically, then, the average Chevy Volt driver 
will charge their vehicle at home for 3.5 hours after peak times, and 
then at work in the morning before noon.
    Question. Will public or other charging stations that are used 
during peak hours be a problem?
    Answer. The answer is no, and the reason is simply that it won't 
happen enough to matter. First, the vast majority of shared and other 
charging stations will be Level II (charging at 220 Volts). The power 
draw from these stations will be manageable for the generation and 
distribution assets in most of the Nation. More importantly, however, 
most people will charge their vehicles at night and when they first get 
to work.
    From a systems standpoint, it is also important to note that smart 
charging stations will have mechanisms that limit charging to off-peak 
hours. If utilities are able to offer pricing incentives to charge off-
peak, very little charging will take place on-peak form shared or 
private Level II chargers.
    DC Charging (formerly called Level III charging) is another matter. 
DC charging will be used to refuel electric vehicles during longer 
trips when vehicle batteries are fully discharged. DC charging will 
allow a driver to fully charge the battery in a Nissan Leaf in 30 
minutes. With DC charging, there are three issues. One is that the 
power rates are high, up to 50 kW. To put that in perspective, homes 
use an average of 1.2 kW. So DC charging is like providing power for 40 
homes. The second issue is that typical drivers will only use DC 
charging when they have a fully discharged battery, so they need a lot 
of energy. Finally, and somewhat related, is the fact that DC charging 
will typically take place when drivers are in a hurry, so they will not 
wait for off-peak times.
    It's my view that to compensate for these challenges, DC chargers 
should come with storage batteries that can be charged off-peak at 
modest rates. The batteries could then assist in charging vehicles 
during peak hours to minimize the grid impact.
    Question. At what point will additional capacity (generation, 
transmission, or distribution) be required because of the extra demand 
from PHEVs?
    Answer. The only problem in the short term will be localized loads. 
The power available to the average home is about 30 kW. A Tesla 
roadster can charge at up to 15 kW. So adding a Tesla Roadster to a 
home will frequently require additional distribution to the home. 
Adding a few of these vehicles on a block can require more transformers 
and more local distribution lines.
    From a broader perspective, the need to add generation and 
transmission will be so slow that we will never notice. Automotive 
technology adoption is very slow. After having hybrid technology for 
about 10 years, it still amounts to less than 4 percent of the 
automotive inventory of the United States. People keep their cars for 
about 7 years and even then most don't pick new technology vehicles. In 
general, the utility industry will have adequate time to plan to stay 
ahead of the demand for electricity from grid-enabled vehicles.
    Another way of looking at this is that the average home uses about 
1 MWh of energy a month. A vehicle will use about 250 kWh of energy a 
month. So when every home in America has an electric vehicle, home 
energy use will go up by 25 percent--a manageable increase at an 
aggregate level. This transition will take decades.
                                 ______
                                 
                    Questions Submitted to Alan Taub
            Questions Submitted by Senator Robert F. Bennett
    Question. How much investment have you committed to producing 
electric vehicles?
    Answer. To date, we have invested more than $1 billion on electric 
vehicle development, including $700 million to develop and manufacture 
the Chevrolet Volt extended-range EV.
    Question. What will be the resulting rate of production?
    Answer. The start of production for the Volt is scheduled for late 
2010. Production rates will be managed to ensure a quality launch 
experience. We expect to be able to produce tens of thousands of 
vehicles as we ramp up production. These products will be produced at 
our Detroit-Hamtramck, MI high-volume production facility, with battery 
packs being manufactured in Brownstown Township, MI. In addition, our 
Volt supply base includes 196 suppliers in 24 States.
    Question. How fast do you expect the costs of the battery cells and 
packs to drop?
    Answer. It normally takes three generations of development to 
meaningfully reduce the cost of a new technology. The speed with which 
we transition from one generation to the next is largely dependent on 
parallel advances in R&D and engineering development, associated 
advances in manufacturing processes, and, finally, the commercial 
incentives that are in place to accelerate these efforts. GM has 
analyzed the potential cost reductions through the three generations; 
these internal analyses show potential cost reductions at least as good 
as those set forth by the U.S. Advanced Battery Consortium (USABC). 
Policies and initiatives that support the production of cells, packs, 
and vehicles in the United States will facilitate further reductions.
    Question. How will your plans change if they don't drop that fast?
    Answer. The future of sustainable personal mobility involves many 
technology alternatives, including batteries, motors, power 
electronics, hydrogen fuel cells, ethanol, and other biofuels. GM is 
committed to accelerating all alternative technologies and we will work 
to ensure that durability, cost, and timing stays the course.
    Question. How do you expect to measure and guarantee battery 
performance, since battery capacity will deteriorate over time?
    Answer. Our long-term goal is to design the system to minimize 
battery life deterioration. It is important to note that, because of 
known battery usage and calendar life degration, GM designed the Volt 
to meet specifications based on projected battery performance of 10 
years/150,000 miles. We continue testing of batteries at our state-of-
the-art battery lab and on the road in support of our current highly 
competitive warranty program. We are also looking to secondary markets 
for battery re-use after initial vehicle life. Programs that support 
battery residual value and help mitigate the risk of aggressive 
development are important to the expansion of the vehicle 
electrification market.
    Question. Based on your understanding of customer preferences, how 
big is the market for electric vehicles given the higher cost and 
changes in driver behavior they will require?
    Answer. We believe the Volt, with its extended-range capability, 
provides the functionality needed to allow an electric vehicle to 
appeal to the broadest possible market. The size of this market will 
depend largely on vehicle cost and consumer preferences; therefore, 
incentives are important to attract consumers and accelerate the 
expansion of this new market.
                                 ______
                                 
                 Questions Submitted to Mary Ann Wright
            Questions Submitted by Senator Robert F. Bennett
        meeting doe goals for cost and performance of batteries
    Question. The Department of Energy (through the EERE office) has 
established cost and performance goals for both 10-mile and 40-mile 
batteries to be achieved in 2012 and 2014, respectively. The current 
technology is behind the curve in meeting these goals. The goals for 
the 10-mile battery are as follows:

------------------------------------------------------------------------
                                        2012 Goal        Current Status
------------------------------------------------------------------------
Cost.............................  $1,700............  $3,400
Cycle Life.......................  5,000.............  1,700-2,000
Life.............................  10+ years.........  3+ years
Weight...........................  60 kg.............  80-120 kg
------------------------------------------------------------------------

    Do you expect to meet the DOE goals for battery cost and 
performance? If not by DOE's dates, when would you expect to?
    Answer. By the year 2015 we expect the cost of our PHEV battery 
systems to be at $500/kWh. The EERE goal is based on a battery system 
with 3.4 kWh of available energy. Battery systems are designed with an 
energy content buffer to provide satisfactory vehicle performance and 
ensure reliability and warranted life. This means that a battery with 
3.4 kWh of useable energy will be designed to have a total energy 
content of 5.2 kWh. The corresponding battery system cost at $500/kWh 
is $2,600. By 2015 we expect to meet or exceed the following goals:
  --Calendar life of 10 years (our 8+ years of real-time testing 
        provides a high confidence factor).
  --Cycle life of 4,500 cycles.
  --Battery system mass of 60 kg.
    By the year 2020 we expect to be at a system cost level of $1,250 
or less, have a cycle life of 5,200 cycles and a battery system mass of 
less than 60 kg.
                          warranting batteries
    Question. According to the National Research Council's report on 
electric vehicles, replacing the battery pack when it is depleted could 
cost more than $3,300 for PHEV-10s and $14,000 for PHEV-40s. Although 
there is some uncertainty about the exact cost, without doubt it will 
be significant. Given this cost, the warranty that a company decides to 
offer on the battery will be a key factor in the marketability of these 
vehicles.
    Although DOE has set a goal of 10+ years for the calendar life of 
PHEV batteries, I understand that current technology is only capable of 
approximately 3-5 years.
    What warranty do you expect to provide on your batteries sold for 
2015 installation?
    Answer. Ten years for HEV batteries. The duty cycle for PHEV 
batteries places much greater stress on the battery than the HEV 
application. This combined with the emergent nature of PHEV battery 
technology will require us to offer a range of warranty terms based on 
the vehicle application requirements and specific battery chemistry. A 
full 5 year/50,000 mile with a 6-10 year pro-rata warranty is a 
possibility.
    Question. Are you confident that the great majority of these 
batteries will meet the warranty?
    Answer. This will be very much dependent on the manufacturer. We 
are confident that Johnson Controls battery products will satisfy our 
warranty specifications, but we cannot speak for our competitors. Also, 
the small start-up vehicle OEMs that will produce relatively small 
volumes annually may not feel compelled to offer the same vehicle 
system warranties as the larger established OEMs.
     uncertainties and trade-offs with durability, safety, and cost
    Question. The batteries envisioned for electric cars have not been 
deployed on this scale before, and are therefore untested in the 
commercial field. Accordingly, battery manufacturers will have to rely 
on assumptions and demonstration-scale information about the 
durability, safety, and cost of these batteries. Although most 
observers believe that the durability and safety questions can be 
resolved in the short-term (< 5 years), this is a big assumption that 
is often simply overlooked.
    To offset the significant cost of the battery, it may be tempting 
to provide less durability or safety. We saw a similar problem in 2008 
when certain lithium laptop batteries overheated (with some actually 
causing fires and property damage) because of the tradeoffs associated 
with reducing cost and size.
    How do you expect to handle issues of durability for the first few 
years before the manufacturers gain actual in-field commercial 
experience?
    Answer. First, lithium batteries for consumer electronic devices 
and lithium batteries for electric drive vehicles are two very 
different products and should not be compared on the basis of name 
similarity alone. Li-ion cells and batteries for vehicle motive power 
are designed to the exacting and rigorous standards of global 
automobile original equipment manufacturers which include very rigorous 
requirements for performance, cost, and safety.
    Durability, defined as long life without deterioration in 
performance, is a non-issue for batteries for electrified powertrain 
vehicles. Specifically, in the case of PHEV batteries, the key 
performance metric is electric equivalent range which corresponds to 
battery energy capacity. All electrochemical systems will demonstrate a 
predictable reduction in capacity and/or power as the battery 
accumulates cycles. The battery performance requirements formulated by 
the United States Advanced Battery Consortium (USABC) and/or other 
vehicle manufacturers are end-of-life requirements that allow for a 
performance buffer to be designed into the battery pack. The 
performance buffer is simply additional energy capacity that 
compensates for the energy gradually lost during the accumulation of 
driving cycles and calendar time. The other vehicle systems dependent 
upon battery energy, most notably the powertrain, are managed based on 
the battery end-of-life characteristics. This ensures that even as the 
battery ages, the vehicle owner/operator will experience no discernable 
changes in vehicle performance, fuel economy, or emissions.
    Reliability, or dependability, is related to manufacturing 
consistency of the raw materials as well as the finished cells and 
assembled battery systems. The reliability of new technologies can be 
ascertained in the laboratory with a high degree of confidence. Follow-
on field testing is performed to validate these findings. A common 
example is the use of internal combustion engine test stands by the 
automotive OEMs. Credible battery manufacturers routinely put cells and 
complete battery systems on accelerated testing not only to maximize 
the data available, but to accelerate the battery cycling process 
(discharging and charging) so that 10 year life capability can be 
established in a much shorter timeframe, e.g., 15 months.
    Product reliability is a function of the entire supply chain, 
materials and equipment included. The critical importance of a 
dependable supply chain is the reason why Johnson Controls successful 
proposal for Recovery Act funding emphasized not only building advanced 
battery manufacturing facilities, but standing up an advanced battery 
industry including the domestic supply chain for materials, equipment, 
and recycling.
    Ultimately, battery system ratings for life, cycle life, power, 
energy, and safety are data driven; nothing is assumed.
    Question. Batteries face issues related to durability, safety, and 
cost; how do you see the relation among these three and the trade-offs 
that exist? For example if you aggressively reduce cost, is it likely 
that you will give up durability or reduce safety?
    Answer. The safety of our products is non-negotiable. We will not 
introduce any product into the marketplace that does not satisfy our 
Johnson Controls internal criteria for safety as well as our customer's 
safety and abuse tolerance requirements. We will continue to 
aggressively reduce costs while ensuring compliance with all automotive 
standards.
    However, there are legitimate opportunities to optimize cost versus 
design life. From a design and manufacturing perspective we are 
pursuing dual paths to cost reduction:
  --Improved utilization of key materials; enhancing the energy and 
        power output of existing materials without adding mass or 
        volume. This will be accomplished via improved process 
        capability in both our manufacturing plant and our suppliers' 
        facilities. Domestic supply chain development and maturation is 
        a key facet of this approach.
  --Lowering the unit cost of key materials. This is a function of 
        scale, but also requires a mature and capable domestic supply 
        chain to ensure that we have access to materials and components 
        which represent the most current product and manufacturing 
        technologies.
    It would be possible to take cost out of a battery system if it did 
not have to be warranted for 10 years/150,000 miles as part of advanced 
technology vehicle warranties dictated by California laws for emissions 
control devices or for the 8 year/80,000 miles Federal standard. Having 
said that, it is important to emphasize that cost versus life 
optimization is not the same as cost versus reliability. Poor 
reliability means poor quality.
                     standardization of technology
    Question. To successfully integrate a significant number of 
electric vehicles into the fleet, there must be a certain amount of 
standardization of the technology. Standards in some of these areas are 
being developed, such as the type and size of the plug to charge the 
car.
    Which components of PHEVs and electric vehicles will need to be 
standardized, such as the type of plug needed to charge the car?
    Answer. For purposes of cost, reliability, serviceability, and 
safety, standards would be appropriately applied to the interfaces 
between the battery system and the vehicle and the operator and the 
vehicle. For example:
  --High power connector from the vehicle to the battery
  --Battery to powertrain controller communications bus
  --Charging plug from external alternating current power source to 
        vehicle
  --Terminology and nomenclature relating to vehicle owner/operator 
        understanding of battery state-of-charge and charging 
        procedure(s)
    An area equal to and perhaps more critical to the sustainability of 
our fledgling industry is transportation standards for domestic and 
international shipments of cells and batteries. We responded to the 
DOT's recent rulemaking proposal for shipments of lithium-ion cells and 
batteries. In summary, we felt that these proposed regulations, if 
approved, would place unnecessary burdens on battery companies doing 
business in the United States, thus thwarting the goal of both the 
Congress and the administration for America to become a leader in green 
transportation technologies. Although their rulemaking proposal 
contains numerous detailed discussion points, we identified two high 
level areas where the DOT language represents missed opportunities to 
help enable the development of a sustainable transportation industry in 
the United States:
  --In many instances the DOT proposed rules differ from those recently 
        promulgated by the U.N. concerning international shipping of 
        batteries. This lack of harmonization is frustrating from two 
        critical perspectives:
    --It runs contrary to DOT's stated position that harmonization of 
            international shipping regulations is a desired goal; and
    --It will impose cost penalties on commerce done in the United 
            States, thus putting American producers at a competitive 
            disadvantage.
  --The proposed regulations for air shipments are particularly onerous 
        and would result not only in increased costs, but the 
        likelihood of a shortage of qualified battery cargo space on 
        aircraft.
    Question. Who is involved in the standardization discussions? What 
is the status?
    Answer. From the product side, the key standards organizations are:
    ANSI: American National Standards Institute
    BCI: Battery Council International
    CENELEC: European Committee for Electrotechnical standards
    DOE: U.S. Department of Energy
    EN: European Norm
    IEEE: Institute of Electrical and Electronics Engineers
    JIS: Japanese Industrial Standards
    PRBA: Rechargeable Battery Association
    SAE: Society of Automotive Engineers
    UL: Underwriters Laboratories
    In the United States SAE, ANSI, UL, and IEEE are already engaged in 
the standards process and many SAE standards already exist or have been 
proposed. However, much work remains to be done, particularly in terms 
of international harmonization of standards.
    We appreciate the opportunity to discuss the broad issue of 
standards. In fact, there is specific language for Electric Drive 
Transportation standards in S. 1462--American Clean Energy leadership 
Act in section 153. The legislation states:

    ``In General.--Not later than 180 days after the date of enactment 
of this act, the Secretary, in consultation with the National Institute 
of Standards and Technology, the National Laboratories, utilities, 
vehicle manufacturers, battery manufacturers, industry trade 
associations, and such entities as the Secretary determines to be 
appropriate, shall submit to Congress a report containing 
recommendations for establishing and adopting consensus on industry 
standards for electric drive transportation.''

    We support the Senate directive that DOE assumes a strong role in 
this process, but we believe it is in the best interest of the vehicle 
manufacturers, battery manufacturers and consumers for the ultimate 
decisionmaking authority on final consensus standards language to be 
maintained by the traditional governing bodies, in particular SAE, 
IEEE, and the battery industry trade associations BCI, and PRBA.
    The legislation lists a number of areas in which standards should 
be developed. Specifically, we would recommend strengthening section 
9(a)(2)(vi) on battery safety, by changing the line to read:

    ``(vi) battery safety including test methods and metrics; and''

    In conclusion, the broader answer to your question of reliability 
and feasibility of this technology is that for the first time in the 
United States serious investment has been made by a great variety of 
companies including large manufacturers and suppliers. This is the 
moment to drive the industry forward. Warranty, cost and standards are 
key elements to be worked out. However, the issue of cost for warranty 
and batteries is primarily based on demand; thoughtful Government 
investment into spurring demand via fleet electrification, purchase 
incentives, and standardization policies will make a great difference 
in the future of this technology and our collective success.

    Senator Dorgan. Ms. Wright, you talked about building a 
plant and at this point, you only see the capacity for 50 
percent of your potential production. So, you're betting on a 
future. I guess all of you are betting on a future that many of 
us hope will exist, and it probably will only exist if we 
understand the need to change public policy to try to lead in 
that direction, as opposed to sitting around and waiting for 
something good to happen.

                         CONCLUSION OF HEARING

    So, let me thank all of you for your being here today and 
your testimony and your contribution to this hearing.
    This hearing's recessed.
    [Whereupon, at 12:10 p.m., Tuesday, February 23, the 
hearing was concluded, and the subcommittee was recessed, to 
reconvene subject to the call of the Chair.]



              MATERIAL SUBMITTED SUBSEQUENT TO THE HEARING

    [Clerk's Note.--The following testimonies were received by 
the Subcommittee on Energy and Water Development subsequent to 
the hearing for inclusion in the record.]
                 Prepared Statement of PG&E Corporation
    PG&E Corporation is an energy holding company headquartered in San 
Francisco, California and the parent company of Pacific Gas and 
Electric Company (PG&E). Pacific Gas and Electric Company is 
California's largest utility, providing electricity and natural gas to 
more than 15 million people throughout northern and central California. 
PG&E is a recognized leader in energy efficiency and has among the 
cleanest mixes of electric power of any utility in the country.
    PG&E is committed to improving California's air quality and 
addressing the challenges associated with climate change, and reducing 
greenhouse gas emissions from the transportation sector is a key step 
in meeting both of these objectives. For nearly two decades, PG&E has 
actively worked to advance cleaner, more efficient transportation 
technologies for our customers and our own operations. This is a key 
pillar of PG&E's overall emissions reduction and environmental 
stewardship strategy --no less important than procuring clean sources 
of energy or protecting wildlife habitats.
    No one fuel or technology is the answer to our fuel dependency and 
climate challenges, however, PG&E views electric vehicles (EV), 
including battery electric (BEV) and plug-in hybrid electric vehicles 
(PHEV) and trucks as practical and dynamic solutions. Parts of PG&E's 
territory are expected to be early adoption hubs for electric vehicles, 
therefore our readiness to safely and reliably integrate these vehicles 
into our electric grid will be a critical success factor in the 
California electric vehicle market.
    In addition to extensively modeling electric vehicle adoption 
scenarios and the potential impacts to the electric grid down to the 
local neighborhood level, PG&E is actively involved in real-world 
testing and research aimed at providing a clear roadmap for our 
electric transportation readiness.
    Currently, PG&E is using its fleet to test the usefulness, 
effectiveness, cost, durability, reliability, infrastructure support 
requirements, and safety of newly commercialized electric drive vehicle 
and truck technologies. For example, in 2008, we added four passenger 
electric drive vehicles to our fleet--a Ford Escape PHEV, Scion e-box 
BEV, Mitsubishi i-Miev BEV and our second Toyota Prius PHEV. PG&E has 
also partnered with General Motors and will take delivery of 10 Chevy 
Volts later this year.
    PG&E is one of 14 fleets in the Nation to assess a hybrid diesel-
electric bucket truck developed by International Truck and Eaton 
Companies, which eliminates the need to idle and burn diesel while 
operating the bucket used to hoist servicemen to perform repairs. Field 
test results show the hybrid diesel-electric bucket truck reduces fuel 
consumption between 30-60 percent, reduces emissions 50-90 percent, 
improves operational and scheduling flexibility, and reduces 
maintenance costs.
    PG&E has also partnered with Smith Electric Vehicles for 12 medium 
duty battery electric trucks in 3 configurations to support our field 
work, including boom, flat bed, and service trucks. In addition, with 
pick-up trucks being the most common vehicle in PG&E's fleet, PG&E has 
partnered with General Motors to take delivery of more than 100 of 
their hybrid units. PG&E has also partnered with Raser Technologies for 
six plug-in hybrid pick-up trucks.
    Through field tests of these vehicles, we are helping to 
demonstrate the increased efficiency of electric vehicles. We are also 
helping to understand the impact on the grid of charging electric 
vehicles--and the need for a robust ``smart charging'' infrastructure 
to enable vehicles to recharge batteries automatically when ample 
electric supply is available. PG&E's current deployment of nearly 10 
million smart meters, the largest roll-out in the country, provides a 
critical foundational technology that will help ensure as more electric 
vehicles are commercially introduced, PG&E can ensure they are safely 
and reliably integrated with the grid.
    To support the development of a smart charging infrastructure, PG&E 
is actively engaged with the Electric Power Research Institute (EPRI) 
and the Society of Automotive Engineers to develop and revise the 
important codes and standards related to charging of EVs and the 
protocols needed to allow EVs to communicate with the grid.
    Beginning in Q2 of 2010, PG&E will embark on a large pilot project 
with EPRI to test various electrical chargers and load management 
systems to minimize the effects of EVs on the electrical grid while 
maximizing customer convenience at various EV rates. This project will 
enable PG&E to develop critical knowledge and expertise to safely and 
reliably begin supporting electric vehicle customers as the broad 
rollout of EVs begins in late 2010.
    In addition to the important testing and deployment work that PG&E 
is conducting in CA, the company actively supports Federal policy aimed 
at expediting the successful market development of electric vehicles. 
PG&E has long been an active member with board representation at the 
Electric Drive Transportation Association.
    In 2009, PG&E joined the Electrification Coalition which is 
committed to promoting policies that expedite the deployment of grid-
enabled vehicles and infrastructure on a mass scale, moving 
electrification beyond a niche concept into a compelling and widely 
available alternative to the current transportation system. In November 
2009, the Electrification Coalition released its Electrification 
Roadmap, a sweeping report outlining a vision for the deployment of a 
fully integrated electric drive network. The Electrification Roadmap 
outlines critical policy recommendations, such as promoting the 
inclusion of electric vehicle related investments in utility rate base 
and adjusting utility rate structures to facilitate EV deployment, both 
necessary to successfully establish Electrification Ecosystems around 
the country and drive the economies of scale needed to sustain and grow 
the electric vehicle market.
    As global demand for oil increases from the emergence of economies 
such as China and India, along with our Nation's increased dependence 
on foreign supplies of oil, we face an uncertain energy future. The 
time is now to establish bold policy commitments that will chart a 
different future for our Nation's energy supply and transportation 
infrastructure. PG&E recognizes the strong commitment of the Congress 
to adopt Federal policies aimed at creating a market for electric 
transportation, such as those in the American Recovery and Reinvestment 
Act and the House passed Advanced Vehicle Technology Act of 2009. Our 
hope is that Congress will recognize and act to implement the bold and 
necessary policies outlined in the Electrification Roadmap.

                                 ______
                                 
           Prepared Statement of Lindsay Leveen, Tiburon, CA
   an essay on the thermodynamics and economics of lithium batteries
    My name is Lindsay Leveen. I am a chemical engineer and my interest 
is to apply my scientific knowledge to alternate energy sources. My 
graduate work involved the study of thermodynamics. Over the last 35 
years my work has been in cryogenics, microelectronic device 
fabrication, nanotechnology development, fuel cell fabrication, and 
most recently biotechnology.
    Purpose.--The purpose of this essay is to provide the subcommittee 
with reasoning based on thermodynamics why lithium batteries will 
likely not lower in cost and therefore why plug in passenger vehicles 
(cars and trucks) will probably not make any significant dent in the 
consumption of gasoline and diesel. I wish to prevent the waste of 
precious resources on a technology that I believe is headed toward a 
dead end.
    I have no commercial interest in any energy or battery technology 
and am writing this essay as a concerned citizen to inform the Senate 
Subcommittee on Energy and Water Development of the severe 
thermodynamic limitations of Lithium Secondary Batteries and of the 
probable long term unaffordable economics associated with plug-in 
passenger vehicles that will rely on them. Much of this report is taken 
from my presentations, reports, publications and blogs 
www.greenexplored.com I have produced in recent years.
    Thermodynamics--Definition.--The science concerned with the 
relations between heat and mechanical energy or work, and the 
conversion of one into the other: modern thermodynamics deals with the 
properties of systems for the description of which temperature is a 
necessary coordinate. (dictionary.com).
    Moore's Law and Learning Rates for Technologies.--Gordon Moore one 
of the founders of Intel Corporation, postulated that semiconductor 
integrated circuits would enjoy a doubling in performance in a period 
of every 18 months. This rate of learning allows performance to be 
improved exponentially with time for the same original cost.
    Many technologies that engineers and scientists develop need a 
``Moore's Law'' in order to improve their performance and 
correspondingly their economics to capture vast markets. Most efforts 
around the improvement of alternate energy technologies vis a vis 
competing with fossil fuels have not yielded these ``Moore's Law'' 
rates of learning. In particular for the past decade as much as $6 
billion has been spent without any real success toward the ``learning 
curve'' of PEM fuel cells. Much of these $6 billion was appropriated by 
the Federal Government. The learning curve for PEM fuel cells over the 
past decade yielded a yearly learning rate of less than 2 percent. By 
comparison the Moore's Law yearly learning rate for integrated circuits 
has averaged over 40 percent for more than three decades.
    My Experience With Moore's Law.--For almost 20 years I directed 
teams of engineers that designed state of the art Integrated Circuit 
(IC) fabrication facilities that helped drive this rapid rate of 
learning and therefore cost improvement in computers and other 
electronic devices. A simple explanation for the high learning rates in 
IC fabrication is that the technology was neither constrained by 
thermodynamics nor reaction kinetics but simply by the line width of 
the circuits within the ICs. To drive Moore's law in IC fabrication 
improvements in lithography, higher purity gases for deposition, 
implantation, and etch, as well as the occasional increase in the size 
of wafer being fabricated were needed.
    Moore's Law, Thermodynamics and Lithium Batteries.--To drive the 
learning rate in PEM fuel cells and similarly lithium secondary 
batteries both thermodynamic and reaction kinetic constraints have to 
be overcome. The reason why thermodynamics places such constraints is 
that the functioning of these systems depends on chemical reactions. 
Thermodynamics determines how much useful energy can be derived from a 
chemical reaction. But we know that the thermodynamic constraints 
cannot be overcome as the laws of thermodynamics are inviolable. ICs do 
not undergo chemical reactions to function, but all batteries and fuel 
cells do involve chemical reactions to deliver energy. It is these 
chemical reactions that are limiting the possible learning rate.
    The Resulting Economic Problem.--Significant effort and much money 
is now being spent on advanced batteries for plug-in full electric or 
plug-in hybrid vehicles. Such vehicles will require between 10 kilowatt 
hours and 50 kilowatt hours of stored electricity if the range of the 
vehicle purely propelled on stored electricity is to be between 40 and 
200 miles. Lithium chemistry based secondary (chargeable) batteries 
presently offer the best performance on a weight and volume basis and 
therefore represent the best ``hope'' for a ``Moore's law'' to solve 
the world's addiction to fossil oil. Sadly ``hope'' is not a winning 
strategy. Present costs of such battery packs at the retail level range 
from $800 per kilowatt hour of storage to over $2,000 per kilowatt hour 
of storage. One can purchase a 48 volt 20 amp hour Ping Battery for an 
electric bicycle directly from this Chinese ``manufacturer'' for less 
than $800 delivered by UPS to any address in the USA. A123 offers a 
battery system that will modify a standard Prius to a 5 kilowatt hour 
plug-in Prius for $11,000 or around $2,200 per kilowatt hour fully 
installed by a service station in San Francisco. The Ping battery 
delivers much less instantaneous power (watts) and that is the reason 
their batteries are less expensive on a stored energy basis (watt 
hours) than are the A123 batteries. Both the Ping and the A123 
batteries claim safety and claim to be manufactured with phosphate 
technology that will neither short circuit nor burn.
    Economic Case Study the Example the Standard Prius vs Plug-in 
Prius.--The following is an economic analysis of a standard Prius 
versus a plug-in Prius using A123's lithium battery pack: The standard 
Prius will get 50 MPG and let's assume that the driver drives 12,000 
miles a year. The standard Prius driver will need to purchase 240 
gallons a year of gasoline at an estimated cost of $720 per year with 
gasoline at selling for $3 per gallon. If the driver purchased the A123 
plug-in system and can recharge the system at home and at work such 
that half the mileage driven in a year is on batteries and half is on 
gasoline the driver will save $360 a year on gasoline. The driver will 
need to buy some 2,000 kilowatt hours a year of electricity from the 
grid in order to save this gasoline. At 10 cents per kilowatt hour the 
driver will spend $200 a year for electric power and will therefore 
only enjoy $160 a year in net operating savings. The $11,000 set of 
batteries have a maximum expected life of 8 years and the owner must 
set aside $1,375 a year for battery replacement without accounting for 
the time value of money. The battery replacement cost is simply too 
expensive to justify the savings in gasoline. How high do gasoline 
costs have to rise and how little do batteries have to cost to make the 
plug in viable? Let's assume gas prices reach $6 per gallon and 
electricity remains at 10 cents a kilowatt hours we have a yearly 
operating savings of $520. These savings will still be far short of the 
money needed for battery replacement.
    The A123 batteries will need to drop to 15 percent of their present 
cost to make the proposition of converting a Prius to a plug-n 
``worthwhile''. To reach this cost target in a decade one needs a 
yearly learning rate of approximately 26 percent. With 35 years of work 
experience, I have concluded that in the best case of battery costs (no 
inflation in raw materials) a 4 or 5 percent yearly learning rate could 
be achieved over the next decade. But if we believe that gasoline will 
double then we also have to assume that plastics, copper, cobalt, 
nickel, graphite, etc. will also double in unit cost. As raw materials 
account for three-quarters of the manufacturing cost of lithium 
batteries the inflation adjusted cost will increase at a higher yearly 
rate than the learning rate will lower costs. My prediction is 
therefore that lithium secondary batteries will likely cost more per 
unit of energy stored in 2020 than they do today.
    Toyota is a company well known for its cars with improved fuel 
economy and therefore is a master of thermodynamics and must have 
``optimized'' the cost and performance of its batteries in the standard 
Prius deploying a relatively small battery pack and with the choice of 
Nickel Metal Hydride chemistry rather than lithium chemistry. While 
Toyota may be experiencing safety problems no one can fault this 
company on fuel efficiency. Other car companies such as Ford have also 
chosen Nickel Metal Hydride as their hybrid car battery platform. 
Fisker and GM are touting plug in hybrids with lithium batteries and 
are much more aggressive in their claims of cost improvement and their 
ability to drive ``Moore's Law'' in their battery systems. My educated 
guess on all of this is that Toyota, Ford and the car manufacturers 
that stick with smaller nickel metal hydride battery systems and the 
traditional non plug-in hybrid will sell tens of millions of such 
vehicles over the next decade. Renault, GM, Fisker, Tesla, and others 
who go for plug-in hybrids or full electric vehicles will only sell a 
few tens of thousands of vehicles in the next decade. I simply believe 
we will not have ``Moore's Law'' at play here but have a very 
fractional Moore's Law that holds.
    Argonne National Labs published an exhaustive review of the 
materials and associated costs of lithium batteries back in May 2000, 
http://www.transportation.anl.gov/pdfs/TA/149.pdf. The total material 
cost for the cell was estimated at $1.28 and the total manufacturing 
cost of the cell including overhead and labor was estimated at $1.70. 
This Argonne report is perhaps the best report written on the economics 
associated with lithium battery fabrication. Actually had folks read 
this report back in 2000 they would have realized that the learning 
curve for lithium batteries would be painfully slow. Materials just 
make up far too much of the battery cost and the quantity of materials 
is fixed by the chemistry. Therefore economies of scale could not drive 
a Moore's Law type rate of learning and a very fractional Moore's Law 
resulted. In the early years of lithium cell development from 
approximately 1990 to 2000, the improvements in chemistry and in 
economies of scale did allow the technology to enjoy a Moore's Law type 
learning rate and it has been reported that costs of an 18650 cell 
reduced from $18 to $2 per cell in that decade. Unfortunately the 
technology has now hit an asymptote in their cost reduction curve.
    By doing a Google search on an 18650 lithium ion battery I came 
across this link http://www.batteryjunction.com/li18322mahre.html. This 
site lists a selling price of $5.29 each for 200 or more cells. The 
cells are 3.7 volts with 2.2 amp hours so they are capable of holding 
8.1 watt hours of energy from full charge to discharge. Expressed in 
cost per kilowatt hour of nominal capacity these loose cells cost 
around $650. My guess is that if you applied today's costs of cobalt, 
nickel, lithium, lithium salts, plastics, copper, graphite, and other 
constituent materials that make up a cell, the material cost in 
November 2009 compared with May 2000 have increased by more than 150 
percent and a current estimate of the materials used in the Argonne 
labs report will show cost of about $3 per cell versus $1.28 back in 
May 2000. Hence this company sells the cells for $5.29 each. From my 
previous analysis of the probable learning rate I would not be 
surprised if in 2020 the selling price per 18650 lithium cell is as 
high as $6 rather than as low as $3.
    Conclusion.--Lithium batteries are and will remain best suited for 
items as small as a cell phone and as large as a bicycle. The cost 
relative to performance or these batteries will likely not improve by 
much in the coming decade. Although some standard hybrid vehicles may 
use lithium batteries with low capacity, their cost will remain high. 
Also plug-in vehicles that have a range longer than 10 miles using 
battery power will likely not penetrate the market significantly. Given 
the likely scenario that plug-in passenger cars and trucks based on 
lithium battery technology will not reduce U.S. consumption of gasoline 
and diesel fuel in large measure, I am asking the subcommittee to limit 
the funds that the U.S. Government will appropriate for research and 
development of this technology.
    Thank you

                                   - 
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