Obama in Michigan: Big Money for Batteries

President Barack Obama, with Gov. Jennifer Granholm and Holland Mayor Kurt Dykstra

President Barack Obama, with Gov. Jennifer Granholm and Holland Mayor Kurt Dykstra

The President is on a roll these days: The oil spill is stopped, at least temporarily, and he may well get a big financial reform bill through Congress. But, as with most of his accomplishments, these things are not paying off politically.

So it is with his visit to Michigan. Mr. Obama yesterday visited the site of a new battery plant in Holland, which is getting $151 million, part of the $2.4 billion the government is investing in battery and electric-car technology. Together with a second plant nearby, about 1,000 jobs will be created within 18 months. Holland has a 15 percent unemployment rate.

But the deal isn’t selling well, even with Obama supporters. There seem to be two lines of argument against it. One, by 2014 we’ll have lots more batteries than we need for an industry that has yet to take off. Two, to compete globally, we will need to invest a lot more money in electro-tech.

What? The administration has already given nearly $2.6 billion in loans to Nissan, Tesla and Fisker, besides offering $7,500 tax breaks to buyers. But South Korea has just announced a $12.5 billion investment in its battery sector alone, so we may be getting into a game of very high-stakes poker.

Consider also that LG Chem, owner of the Holland facility and a South Korean company, may well end up benefitting from the largesse of both countries. Some have called that potential double-dipping.

Obama checks out a VoltAs far as the battery oversupply argument goes, conservative predictions are that by 2015 domestic production will be more than twice the demand. “Not everybody is going to survive,” said Mary Ann Wright, a vice president of Johnson Controls, largest single recipient ($299 million) of federal battery money.

During his Holland visit, the President got inside a new Volt. That car (along with the forthcoming Focus EV) will use battery cells made in the new plant. And GM, not just coincidentally, on Wednesday announced an 8-year, 100,000-mile guarantee on the Volt battery.

Unlike President Kennedy’s moon shot, Mr. Obama is trying to prime the pump for an entire new industry. It seems to me he’s focusing too much on one element, though it is a crucial one. One approach that Republicans might like would be tax incentives to fund serious research and development of major pilot projects.

Politically, he is again behind the eight ball. The pump will require a lot more priming, and the country doesn’t have much sentiment for that these days.

Is the administration investing too much to start up the electric car industry? Or not enough?


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