Industry and government are on track to bring down the cost of lithium ion batteries to power hybrid and electric cars, which is crucial for improving commercial appeal of those electric vehicles, U.S. Energy Secretary Steven Chu said on Wednesday.
Chu said at the Detroit Economic Club the Obama administration is not deterred by soft sales of plug-ins in their first full year in showrooms, nor does it worry about the potential for overcapacity in battery production.
The administration is sticking to its goal of seeing up to 1 million electric and plug-in hybrids cars on U.S. roads by the middle of next decade — a goal industry insiders believe is over-optimistic.
"If you look at what they’ve done, they’ve done it wisely," Chu said of measured initial production of the mostly electric Volt by General Motors and the fully electric Leaf, made by Nissan .
The two sold fewer than 20,000 of those electric vehicles combined in 2011, fewer than expected.
The government has spent more than $2 billion under the Obama administration to underwrite domestic battery production, and billions more to finance electric car development to cut U.S. oil imports and reduce pollution.
Government and industry officials say bringing down battery costs is critical to meeting those goals, and Chu cited aggressive steps and measurable progress.
Chu said batteries suitable for plug-in hybrids four years ago cost about $12,000 to produce.
"That’s pretty expensive. We think we’re on target by 2015 so that the cost of that same capacity battery will be reduced to $3,600, a really aggressive step in the right direction," Chu said.
But last year electric cars sold under 18,000 units in the US – barely a 1% share of the world’s biggest car market. Despite this, the industry still believes electric car is the way forward, as the BBC’s Caroline Hepker reports from Detroit.