In the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), Congress authorized support for lithium-ion battery manufacturing, with $2.4 billion in grants. Promotion of electric vehicles and the batteries to power them is part of a long-standing federal effort to reduce oil consumption and air pollution. As manufacturers have brought hybrid, plug-in hybrid, and fully electric vehicles to market, U.S. policymakers have become concerned about the development of an electric vehicle supply chain in the United States. Because lithium is lightweight, it can be fabricated into large battery packs for use in hybrid and electric vehicles. The automakers' role is quite different from that with traditional lead-acid batteries, which are simply dropped into a vehicle's engine compartment and connected to the electrical system. Automakers are integrally involved in the design and production of Li-ion batteries for their vehicles. This is a highly automated process requiring great precision. It has been estimated that 70% of the value added in making Li-ion batteries is in the development and manufacture of the cell itself (compared with, for example, only 15% in the assembly of the battery and 10% in electrical and mechanical components). ARRA and the Battery Supply Chain

In 2009, ARRA provided $2.4 billion in stimulus funding to support the establishment of Li-ion battery manufacturing facilities in the United States. The remaining ARRA funding for new electric battery development was allocated for two related goals: (1) $500 million was provided for U.S. production of electric drive components for vehicles, including electric motors, power electronics, and other drive train components; and (2) $400 million for purchase of several thousand PHEVs for demonstration purposes, installation of a charging station network, and workforce training related to transportation electrification. Moving beyond ARRA, President Obama has outlined several initiatives that could make electric vehicles more affordable, calling on Congress to
Raise the tax credit for electric vehicles to $10,000 and make it a rebate from the dealer available to a car buyer at the time of purchase. In his first term, President Obama set a goal of having 1 million fully electric vehicles on the road by 2015. There is a consensus that the current cost of electric batteries is too high. If production of batteries were to increase substantially, then economies of scale could drive these costs down, as could research breakthroughs. Range . Price of gasoline . Sustained high gasoline prices would be expected to spur stronger demand for fuel-efficient vehicles, including hybrid and electric vehicles. Improved IC engine technology. Subsidies by other governments. As shown in Appendix C , nearly all automakers are offering electric vehicles, and some of the federal and private investments made since the recession have increased capacity in the domestic battery supply chain. Electric vehicles are still in their infancy, and there is a gap between the Administration's goal of having 1 million electric vehicles on the road by 2015 and consumer demand for such vehicles. Advanced battery manufacturing is still an infant industry whose technology and potential market remain highly uncertain. Its development in the United States is likely to depend heavily on how the federal government further addresses the challenges of building a battery supply chain and promoting advances in battery technologies.
The United States is one of several countries encouraging production and sales of fully electric and plug-in hybrid electric vehicles to reduce oil consumption, air pollution, and greenhouse gas emissions. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) provided federal financial support to develop a domestic lithium-ion battery supply chain for electric vehicles. Some of these companies have brought on new production capacity, but others have gone bankrupt or idled their plants. While early in his Administration President Obama forecast that 1 million plug-in electric vehicles would be sold by 2015, motorists have been slow to embrace all-electric vehicles. At the beginning of 2013, about 80,000 plug-in electrics were on U.S. roads.
In making a national commitment to building electric vehicles and most of their components in the United States, the federal government has invested $2.4 billion in electric battery production facilities and nearly $80 million a year for electric battery research and development. To increase sales of such vehicles, the President has recommended that the current $7,500 tax credit for purchase of a plug-in hybrid be converted into a $10,000 rebate, available at point of sale to car buyers upon purchase of a vehicle.
Developing affordable batteries offering long driving range is the biggest challenge to increasing sales of plug-in electric vehicles. Batteries for these vehicles differ substantially from traditional lead-acid batteries used in internal combustion engine vehicles: they are larger, heavier, more expensive, and have safety considerations that mandate use of electronically controlled cooling systems. Various chemistries can be applied, with lithium-ion appearing the most feasible approach at the present time.
The lithium-ion battery supply chain, expanded by ARRA investments, includes companies that mine and refine lithium; produce components, chemicals, and electronics; and assemble these components into battery cells and then into battery packs. Auto manufacturers design their vehicles to work with specific batteries, and provide proprietary cooling and other technologies before placing batteries in vehicles. Most of these operations are highly automated and require great precision. It has been estimated that 70% of the value added in making lithium-ion batteries is in making the cells, compared with only 15% in battery assembly and 10% in electrical and mechanical components.
Despite these supply chain investments, it will be difficult to achieve the goal of 1 million plug-in electric vehicles on U.S. roads by 2015. Costs remain high; although data are confidential, batteries alone are estimated to cost $8,000 to $18,000 per vehicle. Vehicle range limitations and charging issues have so far slowed expected purchases. Lower gasoline prices and improvements in competing internal combustion engine technologies could slow acceptance of electric vehicles, whereas persistent high gasoline prices could favor it. Advanced battery manufacturing is still an infant industry whose technology and potential market remain highly uncertain. Its development in the United States is likely to depend heavily on foreign competition and how the federal government further addresses the challenges of building a battery supply chain and promoting advances in battery technologies.