Electric Vehicles: Efforts to Complete Advanced Battery Development Will
Require More Time and Funding (Letter Report, 08/17/95, GAO/RCED-95-234).
Pursuant to a congressional request, GAO reviewed the development of
advanced batteries for electric vehicles, focusing on the: (1) progress
that the United States Advanced Battery Consortium (USABC) has made in
reaching its long-term and mid-term research goals; (2) funding that has
been spent as of fiscal year 1995 and the additional amounts, if any,
that will be needed; and (3) Department of Energy's (DOE) role in
managing the consortium.
GAO found that: (1) the consortium's long-term goal is to develop a
battery that allows electric vehicles to compete fully with
gasoline-powered vehicles in terms of performance and cost, but the
feasibility of such a battery has not been demonstrated; (2) USABC is
developing a mid-term battery that allows an electric vehicle to travel
at least 100 miles under real world conditions; (3) electric vehicles
using the mid-term battery would not likely achieve much commercial
success, due to the battery's high costs and low driving range; (4) the
consortium's budget for 1991 through 1995 was $262 million, but USABC
spent only $123 million through March 1995, because of technical
problems and delays in negotiating agreements; (5) the original USABC
budget should sustain USABC initial research efforts through 1997, after
which USABC will seek $38 million from DOE to complete the development
of batteries meeting its long-term goals; (6) DOE reviews and approves
USABC contracts and agreements with battery developers and national
laboratories and participates in USABC management and technical
committees; and (7) DOE plans an audit of USABC and will require USABC
to conduct close-out audits of the individual battery developers.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-95-234
TITLE: Electric Vehicles: Efforts to Complete Advanced Battery
Development Will Require More Time and Funding
DATE: 08/17/95
SUBJECT: Motor vehicles
Automobile industry
Motor vehicle pollution control
Cost analysis
Alternative energy sources
Transportation research
Electric energy
Technology transfer
Research and development costs
Energy conservation
IDENTIFIER: California
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Cover
================================================================ COVER
Report to the Ranking Minority Member, Committee on Governmental
Affairs, United States Senate
August 1995
ELECTRIC VEHICLES - EFFORTS TO
COMPLETE ADVANCED BATTERY
DEVELOPMENT WILL REQUIRE MORE TIME
AND FUNDING
GAO/RCED-95-234
Electric Vehicles
(308881)
Abbreviations
=============================================================== ABBREV
CRADA - cooperative research and development agreement
DOE - Department of Energy
EPRI - Electric Power Research Institute
EV - electric vehicle
USABC - U.S. Advanced Battery Consortium
Letter
=============================================================== LETTER
B-260961
August 17, 1995
The Honorable John Glenn
Ranking Minority Member
Committee on Governmental Affairs
United States Senate
Dear Senator Glenn:
Electric vehicles could significantly improve air quality and save
oil resources if they replace large numbers of gasoline-powered
vehicles. However, electric vehicles will not be widely used unless
advanced batteries are successfully developed or some other
technological breakthrough occurs to extend their range and lower
their cost. In early 1991, after California had mandated electric
vehicle sales beginning in 1998, the three domestic automobile
companies formed a partnership known as the United States Advanced
Battery Consortium to jointly sponsor advanced battery research.
Later that year, the Department of Energy (DOE) and representatives
of the electric utility industry agreed to work together with the
consortium.
The consortium began with a 4-year budget of $262 million to fund
research and testing by battery companies and DOE's national
laboratories. DOE was to provide 50 percent of the funding. The
other 50 percent was to be provided by the industry--the automobile
companies, the utilities, and the battery developers each expected to
contribute varying amounts.
This report responds to your request that we determine (1) the
progress that the United States Advanced Battery Consortium has made
toward reaching its long-term and mid-term goals; (2) the funding
that has been spent as of fiscal year 1995 and the additional
amounts, if any, that will be needed; and (3) the role of DOE in
managing the consortium.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The United States Advanced Battery Consortium's long-term goal is to
develop a battery that will permit electric vehicles to compete fully
with gasoline-powered vehicles in terms of performance and cost. To
date, the feasibility of such a battery has not been demonstrated.
In the interim, the consortium is attempting to develop a mid-term
battery that would allow an electric vehicle to travel at least 100
miles under real-world conditions. However, a driving range of 100
miles would not be competitive with the driving range of
gasoline-powered vehicles. Moreover, the cost projections for a
battery that meets the consortium's mid-term technical goals
substantially exceed the consortium's cost goal. Therefore, it is
uncertain whether electric vehicles using such a battery could
achieve widespread commercial success, and without such success,
environmental benefits and energy savings would be limited.
The consortium's original budget for the period from 1991 through
1995 was $262 million. However, because of technical problems and
delays in negotiating agreements and contracts, only about $123
million had actually been spent through March 1995. Consortium
officials believe that the original budget could sustain the first
phase of the research--directed at both long-term and mid-term
goals--through 1997. During the first phase, work on the technology
to meet mid-term goals is expected to be largely completed. After
that, the consortium plans to seek approximately $38 million more
from DOE for a second phase that would run through 1999 and would
focus on completing the development of batteries meeting the
consortium's long-term goals.
DOE has an active and extensive role in managing the consortium. For
example, DOE reviews and approves the consortium's contracts and
agreements with battery developers and DOE's national laboratories
and participates in the consortium's management and technical
committees. In addition, DOE experts provided assistance in choosing
advanced battery technologies and selecting qualified contractors.
Also, to ensure the allowability of claimed costs, DOE plans a
close-out audit of the consortium and will require it to conduct
close-out audits of the individual battery developers. On the other
hand, DOE has not adequately responded to "lessons learned" during
this program that could improve the efficiency of the consortium and
other similar cooperative efforts in the future.
BACKGROUND
------------------------------------------------------------ Letter :2
In 1990, as part of its effort to meet federal clean air standards,
California adopted a requirement that effectively requires automobile
companies to offer electric vehicles (EV) for sale there beginning in
1998.\1
Subsequently, similar legislation was passed in several northeastern
states. However, the automobile companies believed that without
suitable advanced batteries, EVs would be expensive and limited in
performance and therefore difficult to sell in the quantities
mandated by the states.
To address this need for advanced batteries by jointly sponsoring
research, Chrysler, Ford, and General Motors established the United
States Advanced Battery Consortium (USABC) in early 1991. Because
EVs could help reduce mobile-source air pollution while allowing
electric utilities to utilize excess capacity during off-peak hours,
the Electric Power Research Institute (EPRI), along with several
individual utility companies, agreed to participate in the consortium
in mid-1991. Then, responding to a legislative mandate to pursue the
benefits of EVs,\2 DOE agreed to cooperate with the consortium's
research effort in late 1991.
The relationship between DOE and the three automotive partners in the
USABC is governed by a cooperative agreement. This agreement
requires DOE to be substantially involved in managing the program and
explains how it should be involved. (App. I provides information on
DOE's role in managing the consortium.) In addition, the cooperative
agreement spells out the details of other important issues, such as
the ownership of new technology developed under the program and the
potential recoupment, or repayment, of DOE's investment in the
program.\3 (App. II provides information on repayment provisions
applicable to both DOE and the three USABC partners.)
The consortium carries out its work through contracts with seven
battery firms and through cooperative research and development
agreements (CRADA) with five of DOE's national laboratories. In some
instances, the consortium has selected two battery developers to work
on the same technology to encourage competition, enhance the chances
for success, and potentially provide the automobile companies with
multiple battery suppliers.\4 The five DOE national laboratories were
generally selected on the basis of past experience with promising
technologies and/or their ability to objectively test battery
hardware. (App. IV provides details on the consortium's contracts
and CRADAs.)
According to USABC's original budget proposal, the consortium hoped
to obtain about 28 percent of the total program budget, or about $74
million, from the battery developers through cost-sharing provisions
in their contracts. However, the cost-sharing percentages vary for
each developer, and some developers may eventually join or leave the
program. Therefore, the exact cost-sharing percentages for the
industry participants will not be known until the end of the program.
DOE's national laboratories did not provide any more funding beyond
the 50-percent share committed by DOE.
--------------------
\1 Technically, the California mandate requires the automobile
companies to offer zero-emissions vehicles for sale beginning in
1998. However, EVs appear to be the only vehicles that can achieve
zero emissions and that may be reasonably available by 1998.
\2 This legislative mandate is contained in the Electric and Hybrid
Vehicle Research, Development, and Demonstration Act of 1976. The
Energy Policy Act of 1992 reaffirmed this mandate and authorized the
Secretary of Energy to enter into cooperative agreements with
industry to develop advanced batteries for EV applications.
\3 Hereinafter, the term "repayment" is used to refer to funds
provided to battery companies that are to be paid back to either DOE
or USABC.
\4 There is a possibility of a legal dispute between two such
developers over the interpretation of patents for a promising
mid-term technology. The details of this situation are discussed in
app. III.
THE FEASIBILITY OF LONG-TERM
GOALS FOR ADVANCED BATTERIES IS
UNCERTAIN, WHILE MORE
ACHIEVABLE MID-TERM GOALS OFFER
LIMITED BENEFITS
------------------------------------------------------------ Letter :3
On the one hand, advanced batteries meeting USABC's long-term goals
have not yet been proven technically feasible. On the other hand,
batteries meeting the consortium's mid-term goals, while potentially
achievable, will not enable EVs to offer performance or costs
comparable to those of gasoline-powered vehicles and therefore offer
limited market potential. (Information on the consortium's long-term
and mid-term goals can be found in app. V.)
USABC'S LONG-TERM AND
MID-TERM GOALS REPRESENT THE
COMBINED THINKING OF THE
AUTOMOBILE COMPANIES AND DOE
---------------------------------------------------------- Letter :3.1
The automobile companies established USABC because they believed that
existing battery technologies would result in EVs with limited
driving range--generally well under 100 miles and sometimes as short
as 30 miles, depending upon the terrain and weather conditions.
Moreover, existing batteries would have to be replaced frequently,
greatly increasing the operating cost of EVs. According to DOE and
consortium officials, the automakers did not believe such vehicles
would be acceptable to consumers and therefore originally proposed
that the consortium set its sights strictly on long-term goals.
Batteries meeting these goals would store enough energy and power to
give EVs the driving range and acceleration of gasoline-powered
vehicles at approximately the same lifetime costs. Such EVs would be
fully competitive with conventional vehicles.
However, during early discussions with DOE officials in charge of
this program, it became clear to the automobile companies that
long-term batteries were unlikely to become practical in time to help
address the states' EV mandates. In fact, DOE officials who had
considerable experience with advanced battery research convinced the
automobile companies that considerable uncertainty existed as to
whether long-term batteries could be successfully developed. DOE
suggested that it would be prudent to also pursue a second set of
more readily achievable mid-term goals. DOE stated that (1) mid-term
batteries were worth pursuing in their own right because they are
significantly better than current technology; (2) developing a
successful mid-term battery could help reestablish a strong domestic
battery industry; and (3) mid-term batteries could enable the
automakers to gather data on the performance of EVs that would apply
to long-term batteries if and when they are developed.
As a consequence, the consortium adopted both the long-term goals
originally championed by the automobile companies and a more readily
achievable set of mid-term goals recommended by DOE. At that time,
consortium officials believed that the mid-term goals could be
reached within the 1990s, making mid-term batteries available within
the approximate time frame when the states' EV mandates would take
effect.
THE BENEFITS OF LONG-TERM
BATTERIES ARE CLEAR, BUT
THEIR FEASIBILITY IS
UNCERTAIN
---------------------------------------------------------- Letter :3.2
EVs with long-term batteries are expected to be competitive with
gasoline-powered vehicles in terms of performance and cost. If that
goal is achieved, such EVs could significantly penetrate the consumer
vehicle market. Significant EV sales could reduce petroleum use and
increase energy security by replacing imported and domestic petroleum
fuels used by conventional vehicles with electricity, which is
generated mostly with domestically produced fuels. In addition, the
air quality benefits that could follow from replacing petroleum would
support important national environmental objectives. The emissions
from a relatively small number of stationary electricity generating
plants can be more easily controlled than the emissions from a large
number of conventional vehicles.
However, it remains unclear whether the feasibility of a long-term
battery will be demonstrated. The consortium's original goal was to
demonstrate the design feasibility of a long-term battery pack by
1994. Had this goal been achieved, pilot-plant production could
potentially have begun several years later, leading to full-scale
production early in the next decade. As of mid-1995, long-term
battery research still involved small cells with about 1,000 times
less energy than a vehicle-size battery pack. However, under the
best-case scenario, if breakthroughs are achieved, a battery pack for
one type of long-term battery could be proven feasible by 1998. This
scenario could lead to pilot-plant production by 2000 and to full
production by the middle of the next decade.
THE BENEFITS OF MID-TERM
BATTERIES ARE UNCLEAR, BUT
FEASIBILITY HAS LARGELY BEEN
DEMONSTRATED
---------------------------------------------------------- Letter :3.3
According to USABC officials, batteries that achieve the mid-term
goals are likely to be feasible but vehicles with them will have a
much shorter driving range than gasoline-powered vehicles and are
likely to cost more. The officials added that while such performance
may help in meeting the states' mandates, they do not believe these
vehicles will perform well enough to have wide appeal to large
numbers of consumers. Consequently, they do not believe that sales
in excess of the state-mandated quantities are likely.
The driving range of EVs with mid-term batteries is expected to be
about 100 miles under realistic conditions that require extra power
for such things as heating, cooling, and climbing hills. According
to officials of the consortium's Management Committee, this range
will be acceptable only to a limited number of consumers.
Also, automobile companies' market research indicates that consumers
will be unwilling to pay a high premium for EVs with limited range.
According to the consortium's cost estimates, during the early years
of commercialization, before full-scale production is achieved, a
mid-term battery pack alone would cost from $9,000 to $15,000. Even
after full-scale production is achieved, the consortium's latest
estimate is that such batteries would cost about $7,000. This figure
exceeds the mid-term cost goal by about $2,500.\5
Therefore, particularly during these early years, the automobile
companies believe that large subsidies will be needed to sell even
the mandated quantities of EVs. Furthermore, according to consortium
officials, government and industry have so far been unable or
unwilling to offer adequate subsidies. The only currently available
federal subsidy, provided under the Energy Policy Act of 1992, is
limited to a $4,000 tax credit per vehicle and may be reduced below
that amount for several reasons. Consortium officials also contend
that state and local governments have not stepped forward to offer
significant subsidies for EVs.
DOE officials in charge of the program are more optimistic than
consortium officials about the prospects for EVs with mid-term
batteries. In commenting on our draft report, DOE stated that
light-duty vans and passenger cars with mid-term batteries can
achieve a reliable range from 70 to over 100 miles, respectively, on
a single charge. They believe these vehicles will satisfy the needs
of many fleet operators as well as private consumers whose daily
driving distances are relatively short. For example, DOE officials
believe that electric vehicles with mid-term batteries might be
successful in niche markets, such as electric utility fleets. They
also believe that full-scale production and lower cost can be
achieved relatively quickly through such strategies as developing
other customers for mid-term batteries in the recreational vehicle
and foreign EV markets. Using this approach, DOE officials have
estimated that with the federal incentive, an EV with a mid-term
battery will exceed the cost of a gasoline-powered vehicle by only
about $2,500. They believe sales incentives from the automobile
companies themselves would be sufficient to address this remaining
cost increment.
Despite DOE's estimates, consortium officials doubt that EVs with
mid-term batteries can achieve any significant market penetration.
While mid-term batteries would extend the range of EVs beyond that
provided by using existing batteries, the consortium and DOE both
agree that these EVs would not be comparable in performance to
gasoline-powered vehicles and would cost more. Both the consortium
and DOE also believe that significant market penetration would be
required to achieve any widespread benefits in terms of energy
security or environmental improvement.
Despite their concerns about the market's acceptance of mid-term
batteries, USABC officials concluded that they are a necessary step
toward the ultimate goal of commercializing long-term batteries.
Therefore, the consortium has continued to pursue the mid-term goals
and has made progress toward developing a workable mid-term battery.
The consortium originally planned to demonstrate the feasibility and
begin the pilot-plant production of mid-term batteries by 1994; full
commercial production (over 10,000 battery packs a year) could then
have begun by approximately 1998. As of mid-1995, most aspects of
technical feasibility had been demonstrated for one mid-term battery
technology. However, the developers needed more time to demonstrate
that the battery could meet the goal of lasting 5 years. The
consortium now expects that the pilot-plant production of this
battery will begin in 1996 and that full production will begin in
2000 or 2001. Hence, existing lead-acid batteries are likely to be
used during the first few years of the states' EV mandates that will
begin in 1998.
DOE and USABC officials attributed their inability to meet the
original target dates for both mid-term and long-term batteries to
two factors. First, lengthy contract and CRADA negotiations delayed
the start of some work for as much as a year. For example,
negotiations with battery companies were delayed because of their
reluctance to agree to consortium-required cost-sharing provisions
and DOE-required patent provisions that threatened companies'
ownership of previously developed background technology. Second,
technical challenges proved to be more difficult than anticipated,
causing delays of a year or more. Each of the technologies under
development has presented significant technical barriers, including
the high cost of certain materials, the difficulty of fabricating
battery components to meet demanding specifications, and a shortened
battery life caused by corrosive materials.
--------------------
\5 The consortium's cost goal for mid-term batteries is less than
$150 per kilowatt hour. This equates to $4,500 or less for a battery
pack of 30 kilowatt hours, which the consortium views as sufficient
for a typical EV.
USABC BELIEVES IT CAN STRETCH
CURRENT 1995 BUDGET THROUGH
1997, THEN SEEK $38 MILLION
MORE
------------------------------------------------------------ Letter :4
Phase I of the USABC program began in 1991 and has included research
on both mid-term and long-term batteries. Consortium officials
believe that the budget originally planned for Phase I can carry the
program through 1997, during which time most of the work on mid-term
batteries would be completed. The consortium has also formulated a
Phase II plan that would focus primarily on continuing research on
long-term batteries through 1999.
The consortium's original budget was $262 million for 1991 through
1995. However, as explained above, progress has been delayed because
of difficulties in negotiating agreements and contracts and
greater-than-expected technical barriers. Consequently, spending has
been slower than anticipated. As of March 1995, about $123 million,
or less than half the total budget, had been paid out by the
consortium for all expenses.
Meanwhile, through June 1995, planned expenditures included a total
of about $181 million of Phase I funds that have been obligated
through contracts and CRADAS, of which about 45 percent was allocated
to mid-term projects and 55 percent to long-term projects.
Additionally, in-kind contributions and general and administrative
expenses in connection with these obligations were expected to total
about $11 million by the end of Phase I. (App. VI contains
information on appropriations received by DOE to cover its 50-percent
share of these expenditures.)
USABC officials hope to extend the cooperative agreement beyond 1995
to complete the development effort. The consortium believes the
original $262 million will be sufficient to continue the work through
1997. During this period, Phase I, including most of the work on
mid-term battery development, would be completed, and Phase II would
begin, focusing primarily on the continued development of long-term
batteries. During 1998 and 1999, the consortium hopes to continue
Phase II to complete the work on long-term batteries. Phase II would
require a total of about $81 million in additional funds for those 2
years. The consortium plans to ask DOE to provide almost half of
that amount--about $38 million--or about $19 million a year. DOE is
aware of this plan but has not yet endorsed it, pending a more
detailed explanation from consortium officials of how these funds
would be used by the battery developers.
According to USABC officials, Phase II of the program depends upon
fully funding Phase I, which is now somewhat in jeopardy. The
consortium's original budget called for the battery development
companies to share a portion of the program's total costs. However,
early in the program, the consortium decided to significantly
increase the amount of testing and battery development work to be
performed by DOE's national laboratories, thereby reducing the amount
of work to be done by the battery companies. Since the laboratories
do not contribute any share of the costs beyond DOE's 50-percent
share, this change has resulted in a shortfall of about $19.6 million
that would have been provided by battery companies, had they done the
work now being performed by the laboratories. When combined with
lost matching funds that would have come from DOE, the $19.6 million
shortfall becomes about $39 million, dropping the program's total
funding from the planned $262 million to only $223 million.
Consortium officials stated that the automobile companies are willing
to increase their contribution enough to restore full funding for
Phase I if the government makes a commitment to Phase II. However,
they indicated that the automobile companies may be unwilling to
commit these extra funds if Phase II is not approved. Consortium
officials also stated that they will need a clear signal by
approximately October 1995 as to whether the Congress intends to
provide funding for Phase II, or they will have to begin cutting back
on existing contracts to avoid jeopardizing their ability to complete
any of them. However, they believe that cutting back on work by
specific battery developers this year would require decisions based
on expert opinion rather than on actual test results, which are not
yet available. As a result, companies that might develop a viable
advanced battery, given more time, might be prematurely eliminated
from the program. Without funding for Phase II, consortium officials
expect that, at best, just one of the three current long-term
contracts could be continued. They believe such a cutback would
seriously diminish the chances for success in the long-term program.
DOE HAS ACTIVE ROLE IN USABC
MANAGEMENT, BUT GREATER
ATTENTION TO LESSONS LEARNED
COULD IMPROVE THE PROGRAM
------------------------------------------------------------ Letter :5
According to DOE and industry officials, DOE program officials have
made valuable contributions to the management of the consortium. In
addition, DOE contracting officials plan audits to ensure that the
program's costs are adequately accounted for. Nonetheless, greater
attention by DOE to lessons learned during the program could improve
the efficiency of both USABC and similar cooperative efforts in the
future.
DOE MAINTAINS AN ACTIVE ROLE
IN OVERSEEING USABC'S
PROGRESS
---------------------------------------------------------- Letter :5.1
Both the members of the USABC Management Committee and the DOE
officials in charge of the program stated that DOE has been actively
involved in managing and overseeing the consortium. DOE helps manage
the consortium through participation in the Management Committee,
which is responsible for key decisions such as selecting the
technology to be developed and contractors. This committee includes
executives from each of the three automobile companies and
representatives of DOE and EPRI. Technically, DOE does not have
voting authority on the committee. However, an automobile industry
committee member stated that no important decisions are made without
the concurrence of DOE's representative. Moreover, DOE officials
said that their control of half the program's funding gives them de
facto veto power over key management decisions.
On a more technical level, DOE personnel provide oversight and
guidance to the consortium through representation on the Technical
Advisory Committee, which supports the Management Committee. Besides
actively participating in meetings of the Technical Advisory
Committee, DOE experts also serve as members of individual working
groups that oversee the work of each battery developer and national
laboratory involved in the program.
DOE PLANS TO AUDIT
COST-SHARING CLAIMS
---------------------------------------------------------- Letter :5.2
Ensuring the allowability of costs is a concern because the costs
submitted by the consortium and the developers are used as the basis
to compute DOE's 50-percent share of the program's costs. The
consortium partners and developers are required to make significant
cost-sharing contributions to the program.\6 Ensuring that only
allowable costs are submitted is important in order to avoid
reimbursing the USABC partners or the developers for costs that
should be covered by their own contributions.
During the course of our review, we raised a potential concern about
the adequacy of the audit coverage of the costs claimed by the
consortium and the battery developers. DOE contracting officials
told us that an audit to determine the allowability of costs claimed
by the consortium is not required but that one might be done at the
conclusion of the program. The DOE officials also said that USABC is
responsible for determining the allowability of costs claimed by the
battery developers, with technical input from DOE's program manager.
USABC Management Committee officials said that the primary
responsibility for ensuring the allowability of the developers' costs
lies with the individual USABC program managers, who are primarily
automobile company employees. They also said they were not certain
whether the consortium would conduct formal close-out audits of the
battery developers.
At the conclusion of our review, the DOE contracting officer
responsible for the USABC program told us that there would definitely
be a close-out audit of the consortium and that this audit would
include a review of the costs claimed by the battery developers and
reported to the consortium. The contracting officer also said that
DOE would initiate individual audits of the developers' books, if
necessary. In addition, the contracting officer said that the
consortium is required by the regulations governing the cooperative
agreement to conduct close-out audits of battery developers' costs
and, if necessary, to request DOE's assistance in conducting such
audits.
--------------------
\6 Under USABC's original budget proposal, the battery developers
were expected to contribute about 28 percent--or about $74
million--to the total cost of the program. The automobile companies
were expected to contribute about 17 percent.
LESSONS LEARNED HAVE NOT
RECEIVED ADEQUATE
CONSIDERATION
---------------------------------------------------------- Letter :5.3
Greater attention to lessons learned during the USABC program could
improve cooperative efforts between DOE and the industry. After a
meeting of industry and government officials initiated by DOE in July
1993, the problems encountered and recommended actions to address
them were compiled by a consultant in a "lessons learned" document.\7
Most of the problems identified involved industry's perceptions of
barriers created by DOE or overall government policies and
procedures.
Many of the 17 items discussed in the document concerned delays. For
example, the document pointed out that the program was delayed by the
lengthy negotiation of contracts. Contributing to these delays was
the reluctance on the part of battery developers to agree to certain
DOE-required provisions, such as "march-in" rights that enable DOE to
take ownership of technology if it is not commercialized by the
developer within a suitable time period. In addition, industry
officials attributed delays to DOE's policy of avoiding direct
involvement in contract negotiations but subsequently insisting on
reviewing and approving each contract provision and modification. In
the case of CRADAs, industry officials contended that multiple levels
of review and approval by several DOE field offices and by DOE
headquarters resulted in additional delays in the program.
The lessons learned document included several industry-recommended
actions to be taken by DOE to eliminate or minimize these causes of
delays, including (1) developing a new approach to issues involving
the ownership and use of technology that would be specifically
applicable to cooperative agreements; (2) allowing DOE contracting
officers to actively participate in negotiations with contractors;
and (3) streamlining the process of reviewing and approving contracts
and agreements.
DOE officials who participated in a meeting devoted to the lessons
learned agreed with some of the recommendations, such as one that
called for DOE to develop a model CRADA to standardize the process of
negotiating CRADAs with the various DOE national laboratories.
Subsequently, a model CRADA was developed. However, these DOE
officials also argued that some of the recommended actions were
unnecessary or inappropriate. For example, they did not agree that
provisions about the government's ownership and use of technology
were the main reason for delays in negotiating contracts, nor did
they believe that a new approach to these provisions was imperative.
Also, the DOE officials argued that it would be a conflict of
interest for contracting officers, who are responsible for approving
contracts, to also take part in negotiating those contracts.
In subsequent discussions with us, however, several DOE officials
endorsed certain of the recommendations in the lessons learned
document. For example, the patent attorney overseeing USABC's
affairs in DOE's Chicago Operations Office agreed with the assertion
that there is a need for new rules governing the government's
ownership and use of technology for programs like the USABC program.
Also, the director of DOE's Office of Procurement, Assistance, and
Property stated that industry's call for greater involvement in
negotiations by DOE contracting officers contained some logic and was
worth considering. In addition, the director of DOE's Electric and
Hybrid Propulsion Division told us that new procurement rules, such
as those recommended in the lessons learned document, are needed to
provide greater flexibility for cooperative agreements.
According to DOE program officials, implementing many of the
recommendations would require action by other DOE offices, such as
those responsible for procurement and patent rights. They said they
had sent copies of the lessons learned document to these offices and
encouraged them to implement changes where feasible. However, when
we contacted officials of these other offices, they indicated that
the document's recommendations had not received serious
consideration. The procurement official cited above told us that
program officials had not built a convincing enough case for the
changes they sought by merely distributing copies of the lessons
learned document.
Thus, it appears that uncertainties and/or disagreements within DOE
about the utility or appropriateness of some recommendations in the
lessons learned document were not addressed, and others were not
carefully evaluated by DOE officials in a position to effect changes.
Consequently, it is uncertain which, if any, of the recommendations
would have been practical to implement or what improvements to the
USABC program might have resulted from their implementation.
Moreover, by not following through on the lessons learned in this
program, DOE may have missed an opportunity to improve the efficiency
of future cooperative efforts with industry.
--------------------
\7 Lessons Learned Under the United States Advanced Battery
Consortium (USABC), DOE (Washington, D.C.: 1993).
CONCLUSIONS
------------------------------------------------------------ Letter :6
Advanced batteries that would make electric vehicles fully
competitive with gasoline-powered vehicles have not yet been proven
to be feasible, although DOE and United States Advanced Battery
Consortium officials believe that continued research on these
batteries is justified. Progress has been made toward developing
mid-term battery technologies, but these batteries will probably not
be available until several years after the states' mandates for the
sale of electric vehicles begin in 1998. Because the batteries will
not make electric vehicles fully competitive with gasoline-powered
vehicles, the energy security and environmental benefits of mid-term
batteries appear limited.
To reach the goal of developing a long-term advanced battery,
consortium officials believe that approximately $38 million in
additional federal appropriations will be needed. If these funds are
received, the consortium hopes that pilot-plant production can begin
by 2000. But if there is no indication that the extra funds will be
available, consortium officials believe that some contracts may have
to be terminated before sufficient data are available to aid in
decision-making. They believe that such action would significantly
reduce the chances for the successful development of a long-term
battery.
DOE did not follow up on several lessons learned during this program
that could benefit future efforts based on similar cooperative
agreements. Industry officials believe that certain actions, such as
streamlining DOE's contract review procedures, could help prevent
programs like the United States Advanced Battery Consortium program
from falling behind schedule.
RECOMMENDATION
------------------------------------------------------------ Letter :7
GAO recommends that the Secretary of Energy give more careful
consideration to the document entitled Lessons Learned Under the
United States Advanced Battery Consortium to determine whether any of
its recommendations should be implemented and develop an action plan
for implementing those that are warranted.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :8
We provided a draft of this report to DOE for written comments.
(These comments are contained in app. VII.) While agreeing with our
characterization of the feasibility of long-term batteries, DOE said
that our draft report underestimated the potential prospects for the
technology used for mid-term batteries. We had stated in the draft
report that DOE officials are more optimistic about mid-term
batteries than consortium officials and had summarized their reasons
for being optimistic. DOE's written comments provide more detailed
information on this point, some of which we have added to our final
report. With respect to information in the draft report summarizing
the consortium's plan to seek additional funds for the program, DOE
stated that it views the plan as prudent and well considered. DOE
accepted our recommendation that it give more careful consideration
to implementing changes called for in the document identifying
lessons learned under the program. DOE also provided suggested
editorial changes, which we have made where appropriate.
---------------------------------------------------------- Letter :8.1
To respond to your request, we met with officials of DOE, USABC, the
electric utility industry, battery development contractors, and
national laboratories. We also had discussions with representatives
of an independent EV manufacturer and a producer of currently
available EV batteries. We also obtained and reviewed pertinent
documentation from these sources. We conducted our review between
September 1994 and June 1995 in accordance with generally accepted
government auditing standards. (App. VIII provides a more detailed
discussion of our objectives, scope, and methodology, including a
complete listing of the persons contacted during our review.)
Unless you publicly announce its content earlier, we plan no further
distribution of this report until 30 days from the date of this
letter. At that time, we will send copies of this report to
interested congressional committees, the Secretary of Energy, and the
USABC Management Committee. We will make copies available to others
upon request.
Please call me at (202) 512-3841 if you have any questions. Major
contributors to this report are listed in appendix IX. A list of GAO
products related to this issue appears on the last page of this
report.
Sincerely yours,
Victor S. Rezendes
Director, Energy and
Science Issues
DOE'S ROLE IN USABC'S MANAGEMENT
=========================================================== Appendix I
The U.S. Advanced Battery Consortium (USABC) established a framework
for cooperation among various organizations seeking to develop
advanced batteries for electric vehicles (EV) in the United States.
This framework was established by a series of agreements among the
stakeholders--automobile companies, the Department of Energy (DOE),
electric utilities, battery developers, and DOE's national
laboratories. This appendix summarizes these agreements, the
management structure resulting from them, and DOE's role in that
structure.
USABC'S AGREEMENTS
The relationships between the parties in USABC are governed by a
partnership agreement, a participation agreement, and a cooperative
agreement, all signed during 1991. Subsequently, USABC signed
development contracts with battery companies and cooperative research
and development agreements (CRADA) with DOE's national laboratories.
Figure I.1 illustrates the relationships established by these
agreements.
Figure I.1: USABC's Agreements
(See figure in printed
edition.)
USABC'S STRUCTURE
USABC's organizational structure includes four committees--the
Partner's Committee, the Management Committee, the Project Committee,
and the Technical Advisory Committee, each responsible for different
aspects of USABC's decision-making process. In addition, each
battery development contract and laboratory CRADA is assigned a
battery technology work group, headed by a program manager. Figure
I.2 illustrates how these structures contribute to accomplishing
USABC's work.
Figure I.2: How USABC Does Its
Work
(See figure in printed
edition.)
DOE'S ROLE IN USABC'S MANAGEMENT
DOE's cooperative agreement with USABC requires DOE to be actively
involved in the management of the consortium. To fulfill this
requirement, DOE headquarters staff provide management and technical
input into USABC's battery development efforts. Other DOE
headquarters staff deal with legal and contracting issues pertaining
to the consortium. DOE's Chicago Operations Office and various area
offices are also involved in supporting DOE activities with USABC.
Figure I.3 illustrates the various roles played by DOE staff in the
management and oversight of USABC.
Figure I.3: DOE's Role in
USABC's Management
(See figure in printed
edition.)
PROVISIONS FOR REPAYING DOE AND
USABC
========================================================== Appendix II
Both DOE and the USABC partners are, under certain conditions,
allowed repayment of their financial contributions to the consortium.
Repayment is to be made by battery producers after batteries
developed by USABC are commercialized. Provisions for repayment were
negotiated between DOE and USABC in the cooperative agreement and
subsequently between USABC and the battery development contractors.
As required by the agreement, USABC included a provision for repaying
DOE in all the battery development contracts.
PROVISIONS FOR REPAYING DOE
------------------------------------------------------ Appendix II:0.1
Repayment provisions outlined in the USABC cooperative agreement and
in the battery development contracts stipulate that DOE's repayment
is based upon (1) revenue received by USABC or its battery developers
from the licensing of patents to third-party battery manufacturers
and (2) any payments to USABC or its contractors upon the liquidation
or winding up of USABC's business. Exempt from the repayment
provisions are USABC, the USABC partners, certain companies
associated with the partners, EPRI, and EPRI participants, who all
can acquire a license to use the patents without paying licensing
fees to DOE. In addition, a subsequent amendment to the cooperative
agreement allows repayment to DOE on the basis of revenues from
battery sales in addition to licensing fees. However, such a
provision has been included in only one battery development contract.
DOE is to be repaid an amount no greater than the total amount of
funding it provides to the program. The repayment obligation ends
either after 20 years or when the entire DOE contribution has been
repaid, whichever occurs first. The repayment obligation can be
waived, in whole or in part, if DOE determines that repayment places
USABC or its battery developers at a competitive disadvantage.
Three of the battery development contracts place an additional
stipulation on DOE's ability to obtain repayment on the basis of
licensing fees. That is, repayment does not begin until battery
sales by the developer and/or licensee reach a specified level. As
noted earlier, one contract does contain a provision granting DOE an
opportunity to obtain repayment on the basis of revenues from the
sale of batteries by the developer.
PROVISIONS FOR REPAYING THE
USABC PARTNERS
------------------------------------------------------ Appendix II:0.2
The USABC partners are also entitled to obtain repayment of their
financial contributions to the consortium. In most instances, the
partners' ability to receive repayment depends upon two
sources--battery sales revenues and license fees. In addition, most
contract repayment provisions allow the USABC partners to receive up
to 20 percent more than they contributed to the battery developer.
According to consortium officials, this extra repayment will
compensate the USABC partners for the financial risks of supporting
the battery developers. At the same time, it will enable them to
compete favorably in the EV market with other automobile companies
that did not support the research effort but may be able to purchase
advanced batteries developed under the program at the same price as
the USABC partners.
COMPARISON OF PROVISIONS FOR
REPAYING DOE AND THE USABC
PARTNERS
------------------------------------------------------ Appendix II:0.3
Figure II.1 shows some of the types of repayment provisions for DOE
and the USABC partners and the number of battery development
contracts containing each provision. In addition to repayment
provisions based on revenues from EV battery sales and license fees,
some contracts contain provisions that allow repayment on the basis
of revenues from the sale of batteries for non-EV automobile
applications and for use by electric utilities.
Figure II.1: Provisions for
Repaying DOE and USABC
(See figure in printed
edition.)
As shown in the figure, five of the eight battery development
contracts allow the USABC partners to receive repayment from revenues
generated by battery sales.\8 In addition, the repayment provisions
allow the USABC partners to be repaid more than they contributed.
Therefore, if the batteries developed by the USABC are commercially
produced for sale, the USABC partners are likely to be repaid for
their financial investment in the consortium.
The provisions for repaying DOE that are based upon licensing fees
are contained in all eight battery development contracts, but only
one contract contains an additional repayment provision that is based
upon the sale of batteries. The extent to which the USABC or its
battery development contractors will choose to grant licenses to
third-party manufacturers is uncertain. Consequently, any potential
revenue from license fees and the corresponding amount of repayment
DOE would receive could be fairly limited.
A DOE official explained that DOE's repayment terms were negotiated
with USABC early in the program as part of the cooperative agreement.
At that time, there were no formal requirements in place concerning
what type of repayment DOE was expected to obtain. In lieu of formal
guidance, the repayment provisions in the cooperative agreement were
modeled upon similar provisions developed by DOE's Clean Coal
program, an earlier cooperative effort between DOE and industry. The
program official also explained that the USABC partners' repayment
terms were negotiated later by the consortium during contract
negotiations with battery developers. USABC negotiators were free to
negotiate different terms from those that applied to DOE if they
could convince the battery developers to agree.
--------------------
\8 There are no provisions for USABC repayment in two of the eight
battery development contracts.
POTENTIAL PATENT LITIGATION
========================================================= Appendix III
During our discussions with USABC's management and contractors, we
became aware of a potential for future litigation over patent rights
between two USABC contractors. At issue is the interpretation of
patents for a promising mid-term technology. The two contractors,
Ovonic Battery Company and Saft America, Inc., are both working on
nickel metal hydride batteries.
Ovonic Battery Company, a small U.S.-based firm, holds a number of
background patents for this technology that are based on work
conducted before it contracted with USABC. Ovonic has sold licenses
to other companies to use its technology in small consumer batteries.
Earlier, Ovonic had charged that several Japanese electronics firms
had violated its patents, and Ovonic filed patent infringement claims
with the International Trade Commission. However, in December 1994,
the dispute was amicably resolved, and Ovonic signed licensing
agreements with these firms. In the case of the USABC program,
Ovonic's officials are concerned that if Saft America eventually
produces a commercial nickel metal hydride battery, some of Ovonic's
patented technology may be used in this battery. They have stated
that they might file suit against Saft America if this occurs and a
satisfactory licensing agreement cannot be worked out.
Saft America, Inc., is a U.S.-based subsidiary of a large French
battery manufacturer and the largest manufacturer of nickel cadmium
batteries in the United States. Saft officials maintain that the
approach they are taking to nickel metal hydride technology is
significantly different from that taken by Ovonic. Therefore, they
believe it is possible that any battery they ultimately produce may
not use technology patented by Ovonic. However, they also stated
that if it does turn out that they use Ovonic's technology, they are
willing to pay Ovonic a reasonable licensing fee for such use. They
believe that Ovonic's existing licensing agreements will provide
precedents for determining appropriate licensing fees. Thus they
believe litigation will not be necessary. In the meantime, they
point out that before commercial production begins, there are no
restrictions on conducting research on already patented technologies.
Therefore, they are free to use Ovonic's technology in their
experiments if they wish to do so.
DOE and USABC officials are aware of this potential problem, but they
do not expect a real problem to develop because of the differences in
the technological approaches being taken by the two firms. Moreover,
they believe that any dispute that may occur down the road can be
resolved by negotiating a licensing agreement, thereby avoiding
litigation. However, if litigation does occur, they believe the
terms of the cooperative agreement and USABC's contracts protect DOE
and the consortium from any liability. Overall, they believe that
this situation is unlikely to cause a delay in the availability of
nickel metal hydride batteries in the United States. Both DOE and
USABC believe that any risk involved in sponsoring both of these
battery developers is outweighed by the increased chance of achieving
a technological breakthrough.
USABC'S CONTRACTS AND CRADAS
========================================================== Appendix IV
OVERVIEW
USABC has entered into eight contracts for the development of
advanced battery technologies. Five of those involve mid-term
technologies, and three involve long-term technologies. In addition
to basic agreements on the dollar amount of the contract, the scope
of work, schedules, and deliverables, the contracts generally include
provisions on cost-sharing, ownership of intellectual property, the
repayment of DOE and USABC funds, and domestic production.
The contractors generally agreed to share a portion of the costs of
conducting the research and development work. While the exact
percentage was determined during negotiations and varies from one
company to another, the average share was expected to be about 28
percent. Repayment provisions, under which developers are required
to repay some or all of the money invested by USABC and DOE, are
discussed in appendix II.
MID-TERM CONTRACTORS
------------------------------------------------------ Appendix IV:0.1
Table IV.1 summarizes USABC's mid-term contracts.
Table IV.1
USABC's Mid-Term Battery Development
Contracts
(Dollars in millions)
Contract
Contractor Technology amount
---------------------------------- ------------------ --------------
Duracell/Varta joint venture Lithium ion $17.95
Ovonic Battery Company Nickel metal $25.40
hydride
Saft America Nickel metal $20.70
hydride
Silent Power Sodium sulfur $4.30
Yardney Nickel metal $3.45
hydride
======================================================================
Total $71.80
----------------------------------------------------------------------
Of the five mid-term contractors, Ovonic Battery Company and Saft
America, Inc., were among the earliest to sign contracts and continue
to develop nickel metal hydride batteries. These contracts were
signed during 1992. USABC believes both the competition and the
varying approaches that result from having two contractors work on
the same technology will increase the chances of success. In support
of those two programs, Yardney is working on ways to develop a
low-cost nickel electrode.
In 1993, Silent Power received a contract to work on sodium sulfur
batteries. In 1994, USABC announced that it had awarded a contract
to partners Duracell, Inc., and Varta Batterie AG to develop lithium
ion technology. This battery has the potential to eventually exceed
the mid-term goals by a substantial margin, but because it does not
have the potential to reach the long-term criteria, it is classified
as a mid-term battery.
LONG-TERM CONTRACTORS
------------------------------------------------------ Appendix IV:0.2
Table IV.2 summarizes USABC's long-term contracts.
Table IV.2 USABC's Long-Term Battery
Development Contracts
(Dollars in millions)
Contract
Contractor Technology amount
---------------------------------- -------------------- ------------
Saft America Lithium iron $17.3
disulfide
W.R. Grace Lithium polymer $27.4
3M Lithium polymer $32.9
======================================================================
Total $77.6
----------------------------------------------------------------------
Of USABC's three long-term contracts, the two with W.R. Grace and 3M
involve lithium polymer technology. The two firms are taking
somewhat different approaches to the same technology, and USABC hopes
the competition between them will bring about rapid results. Both
companies are working with partners. Grace heads a team that also
includes Johnson Controls and a number of smaller participants. 3M
is teamed with Hydro-Quebec, a Canadian utility that has worked
extensively on lithium polymer technology.
Meanwhile, Saft America, the only company with both a mid-term and
long-term contract, is working on lithium iron disulfide (or, more
specifically, lithium-aluminum iron disulfide) batteries. These
batteries have very high energy potential but also present serious
corrosion and life expectancy challenges because they operate at
extremely high temperatures.
COOPERATIVE RESEARCH AND
DEVELOPMENT AGREEMENTS WITH
NATIONAL LABORATORIES
------------------------------------------------------ Appendix IV:0.3
USABC has entered into a series of cooperative research and
development agreements with five of DOE's national laboratories. In
some cases, because the laboratories had experience in research and
development of some of the technologies of interest to the
consortium, it made sense to take advantage of their experience. In
other cases, the laboratories had the equipment and expertise needed
to conduct independent testing of battery hardware and give USABC
consistent and objective test results on deliverables provided by a
variety of battery developers. This testing capability has been
useful in screening and selecting contractors for the program. It
has also been valuable in assessing progress by the developers once
they have been awarded contracts and have begun producing prototype
hardware. Table IV.3 summarizes USABC's CRADAs with the national
laboratories. As the table shows, some laboratories do only testing
or development work, but two (Argonne and Sandia) are involved in
both types of activity.
Table IV.3
USABC's CRADAs with DOE's National
Laboratories
(Dollars in millions)
CRAD
A
amou
National laboratory Tasks nt
---------------------------------- ---------------------------- ----
Argonne National Laboratory Test mid-term nickel metal $5.9
hydride and sodium sulfur
batteries
Develop supporting $7.2
technologies for long-term
lithium iron disulfide
battery
Idaho National Engineering Test mid-term sodium sulfur $0.9
Laboratory batteries
Test long-term lithium $0.1
polymer batteries
Lawrence Berkeley National Develop supporting $4.3
Laboratory technologies for long-term
lithium polymer battery
National Renewable Energy Develop thermal enclosure $3.9
Laboratory for high temperature sodium
sulfur and lithium iron
disulfide batteries
Sandia National Laboratory Test mid-term sodium sulfur $9.4
batteries and develop
supporting technologies for
long-term lithium polymer
batteries
======================================================================
Total $31.
7
----------------------------------------------------------------------
USABC'S LONG-TERM AND MID-TERM
GOALS
=========================================================== Appendix V
USABC established separate long-term and mid-term goals for advanced
batteries, measured according to a variety of criteria that measure
critical battery characteristics such as power, durability, and cost.
While all of the criteria are important to achieve viable advanced
batteries, this appendix discusses five key criteria that the
automobile companies believe are essential to offering EVs that will
meet consumers' needs. Table V.1 identifies the mid-term and
long-term goals for each criterion. An explanation of the five
criteria follows the table.
Table V.1
Key USABC Advanced Battery Technology
Goals
Criteria Mid-term goals Long-term goals
------------------------------ ------------------ ------------------
Specific power 150-200 watts per 400 watts per
kilogram kilogram
Specific energy 80 to 100 watt- 200 watt-hours per
hours per kilogram kilogram
Calendar life 5 years 10 years
Cycle life 600 cycles 1,000 cycles
Ultimate price Less than $150 per Less than $100 per
kilowatt-hour kilowatt-hour
----------------------------------------------------------------------
Specific power is a measure of the amount of power provided by a
given battery mass. This goal is related to EV performance
characteristics such as acceleration and hill-climbing ability.
Specific energy is a measure of the amount of total energy contained
in a given battery mass. This goal is related to the crucial EV
characteristic of driving range. Generally, the higher the specific
energy of the battery, the more miles the vehicle will be able to
travel between recharges.
Calendar life refers to the number of years a battery will last,
irrespective of the number of times it is charged and recharged.
This measure is important because a battery's performance can
deteriorate over time because of factors other than use. For
example, the performance of batteries that operate at very high
temperatures can be reduced by the corrosion that takes place as time
passes.
Cycle life is a measure of the number of times a battery can be
discharged and recharged before its performance deteriorates to
unacceptable levels. This characteristic will determine how much an
EV can be used before its battery pack needs replacement, and its
impact on a battery's life expectancy depends upon daily usage
patterns. For example, in a heavily used EV, a battery just meeting
the mid-term goal of 600 cycles would last fewer than 2 years if it
were discharged and recharged each day. On the other hand, DOE
officials believe that actual EV usage patterns will require
recharging only every 2 to 4 days, so that mid-term batteries would
last much longer than 2 years.
Ultimate price is a measure of the cost EV manufacturers would pay
per unit of energy once vehicle-sized battery packs are in
large-scale production--at least 10,000 units annually. This
criterion is critical to the automakers' ability to offer EVs at
prices that will make them competitive with conventional vehicles.
DOE'S APPROPRIATIONS FOR USABC
========================================================== Appendix VI
Table VI.1 shows the amounts of actual or anticipated appropriations
since 1991 for DOE's battery development programs. The portions of
the total appropriations not allocated to USABC are used for several
other purposes, including overhead expenses, preparation of reports,
and research on critical battery technologies and other high-power
storage devices in support of USABC contracts and/or the Partnership
for a New Generation of Vehicles.\9 The amounts in the table are
based on information provided by DOE's manager of the Electric and
Hybrid Propulsion Division.
Table VI.1
DOE's Appropriations Allocated to USABC
(Dollars in millions)
Total battery Cumulative
development Net amount to amount to
Fiscal year appropriation USABC USABC
---------------------- -------------- -------------- --------------
1991 $15.9 $6.30 $6.30
1992 $27.0 $20.87 $27.17
1993 $31.5 $21.87 $49.04
1994 $36.2 $26.00 $75.04
1995 $28.3 $20.50\a $95.54
1996 $31.6\a $19.80\a $115.34
1997 \b $15.66\c $131.00
----------------------------------------------------------------------
\a Amounts planned by DOE. For 1996, in addition to the $19.8
million to continue the ongoing USABC program, DOE also expects to
receive an additional $10 million to develop advanced high-power
energy storage devices for the Partnership for a New Generation of
Vehicles. Vehicles developed by that program may need a different
type of energy storage device than that needed by pure EVs. This new
effort is expected to be managed by USABC but will be separate from
its EV battery development program.
\b The total amount that DOE plans to request for battery development
in 1997 is unknown at this time.
\c The amount that would be needed in DOE's 1997 budget to carry out
USABC's plan of spending the entire $262 million program budget
through 1997.
As table VI.1 shows, as of fiscal year 1995, DOE had received
appropriations of nearly $96 million for USABC. Meanwhile, DOE's
share of the funds expended through March 1995 was approximately $61
million. Spending was heavier on mid-term contracts early in the
program. However, the portion spent on long-term work has gradually
increased as the long-term contracts get up to speed while the
mid-term contracts near completion. Overall, USABC expects the pace
of spending to accelerate this year, and therefore most of DOE's
accumulated appropriations will be paid out under the existing
contracts and CRADAs during 1995.
(See figure in printed edition.)Appendix VII
--------------------
\9 The Partnership for a New Generation of Vehicles is a joint
government/industry effort aimed at developing vehicles with greatly
improved energy efficiency and lower emissions.
COMMENTS FROM THE DEPARTMENT OF
ENERGY
========================================================== Appendix VI
(See figure in printed edition.)
(See figure in printed edition.)
OBJECTIVES, SCOPE, AND METHODOLOGY
======================================================== Appendix VIII
The objectives of the review were to determine (1) the progress that
the United States Advanced Battery Consortium has made toward
reaching its long-term and mid-term goals; (2) the funding that has
been spent thus far and the additional amounts, if any, that will be
needed; and (3) DOE's role in managing the USABC.
To address these objectives, we conducted extensive interviews with
officials of DOE, USABC, the Electric Power Research Institute, USABC
contractors, national laboratories, and several other interested
parties outside of USABC. We also obtained and reviewed pertinent
documents from these sources, as discussed below. The following list
identifies the agencies and organizations contacted.
DEPARTMENT OF ENERGY
Program management officials in DOE's Electric and Hybrid
Propulsion Division.
Other DOE headquarters officials responsible for procurement and
patent issues.
Contracting officials and legal counsel in DOE's Chicago Operations
Office.
Representatives of DOE's Argonne Area Office, which oversees the
work of DOE's Argonne National Laboratory.
UNITED STATES ADVANCED BATTERY
CONSORTIUM
Officials of the USABC Management Committee, including the chairman
and treasurer.
Legal counsel for USABC.
Four USABC program managers who are responsible for managing
specific battery development contracts and/or CRADAs and are
also members of USABC's Technical Advisory Committee.
ELECTRIC POWER RESEARCH INSTITUTE
An official of the Electric Power Research Institute who represents
the electric utilities on the USABC Management Committee.
USABC CONTRACTORS
Officials of two battery firms--Ovonic Battery Company and Saft
America, Inc.--which are conducting research and development
under contracts with USABC.
DOE'S NATIONAL LABORATORIES
Officials of the Argonne National Laboratory and the National
Renewable Energy Laboratory, which are conducting battery
research and testing under CRADAs with USABC.
INTERESTED PARTIES OUTSIDE USABC
A representative of an independent producer of EVs, U.S.
Electricar, which converts several conventional vehicles,
including those of the big three automobile companies, to
electric drive.
A representative of the Advanced Lead-Acid Battery Consortium,
which sponsors research and development of advanced lead-acid
batteries.
An official of Electrosource, Inc., a major producer of advanced
lead-acid batteries for EVs.
DEPARTMENT OF DEFENSE
Officials of the Advanced Research Projects Agency, which sponsors
research on advanced lead-acid batteries for EVs and
demonstrations of EVs using those batteries.
An official of the Office of Naval Research, which sponsors
research on battery technologies for military applications.
To determine the progress that USABC had made toward reaching its
long-term and mid-term goals, we interviewed DOE, USABC, and national
laboratory officials to discuss the status of work in developing the
battery technologies and their expected completion dates and reviewed
applicable progress reports. We also met with two battery
development firms--Ovonic Battery Company and Saft America, Inc.--to
discuss their progress to date. These two firms were selected
because they were the first to sign contracts with USABC and appeared
to have made the greatest progress in developing a mid-term battery.
In addition, Saft is developing a long-term battery.
To address the objective on funding issues, we interviewed DOE and
USABC officials to discuss the funds appropriated and allocated to
the development of advanced batteries, the expenditures to date, and
the need for additional funds to complete the work. We reviewed
pertinent program budgets, appropriation documents, and expenditure
reports.
To address the objective on management issues, we interviewed many of
the previously listed officials to discuss DOE's roles and
responsibilities in relation to the other consortium members and
DOE's procedures, processes, and actions taken to oversee the
management of federal funds and the scope of the work being carried
out to develop advanced batteries. We reviewed the cooperative
agreement--which specifies the roles and responsibilities,
organizational structure, funding and cost-sharing, and rights to
technology when developed, of DOE and the participating industry
groups, and we reviewed the provisions of battery development
contracts dealing with the repayment of federal funds. We also
reviewed the management issues identified in the document entitled
Lessons Learned Under the USABC. In addition, we reviewed an
independent public accounting report that looked into the cost
controls of one of the battery developers.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IX
Bernice Steinhardt, Associate Director
Gregg A. Fisher, Assistant Director
Francis J. Kovalak, Assignment Manager
Anthony A. Krukowski, Energy Core Group Manager
Michael R. Martin, Evaluator-in-Charge
Rick J. Belanger, Evaluator
Jackie A. Goff, Senior Attorney
RELATED GAO PRODUCTS
Electric Vehicles: Likely Consequences of U.S, and Other Nations'
Programs and Policies (GAO/PEMD-95-7, Dec. 30, 1994).
Alternative-Fueled Vehicles: Progress Made in Accelerating Federal
Purchases, but Benefits and Costs Remain Uncertain (GAO/RCED-94- 161,
July 15, 1994).
Energy and Science Reports and Testimony: 1993 (GAO/RCED-94-176W,
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