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62 U.S. BATTERY INDUSTRY FOR ELECTRIC DRIVE VEHICLES Keynote Address INTRODUCTION John R. Chalifoux Original Equipment Suppliers Association U.S. Senator Debbie Stabenow (D-MI) "has been a true friend and fighter for Michigan's emerging clean-energy industry," said Mr. Chalifoux, the OESA's marketing and business development vice-president. She is a "nationally recognized leader" who has "the ability to organize coalitions to get things done for Michigan and for our nation." Senator Stabenow serves on the Senate Energy and Natural Resources, Finance, Agriculture, and Budget committees. This gives her "a unique role in shaping our nation's manufacturing, trade, and energy policies," Mr. Chalifoux said. "Senator Stabenow is bringing manufacturing issues to the forefront in Congress and is committed to making sure our nation has a 21st century manufacturing strategy to cultivate America's leadership in alternative energy." The senator is co-author of the Energy Manufacturing Tax Credit and of consumer tax credits for the purchase of electric and hybrid vehicles, Mr. Chalifoux noted. Senator Stabenow also championed passage of the advanced battery manufacturing grants and retooling loans for advanced vehicle production, he added. She authored the Senate version of the "cash for clunkers" program that gave U.S. car-owners financial incentives to replace old cars with more fuel-efficient ones. This program is credited with creating 60,000 jobs in 2009, he noted. Senator Stabenow's leadership led President Obama to appoint her to the President's Export Council, created to advise the President on export issues and boost exports by American companies, he said. Mr. Chalifoux said he "would be remiss as a member of a supplier's trade association" if he didn't add that Senator Stabenow has led the push for legislation to give R&D assistance to U.S. suppliers. The bill, S. 2843, the Advanced Vehicle Technology Act of 2010, "will help vehicle manufacturers and suppliers develop and implement technology for more fuel-efficient vehicles and components," he said. The legislation also will make significant changes to the Advanced Technology Vehicle Incentive program managed by the DoE, Mr. Chalifoux explained. Senator Stabenow and U.S. Sen. Ron Wyden (D-Ore.) introduced legislation to extend the existing program to medium- and heavy-duty vehicle manufacturers and suppliers and "improve the program to allow for greater supplier participation overall," he said. That provision passed the Senate Energy Committee in early July 2010.
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PROCEEDINGS 63 The OESA supports and "greatly appreciates the Senator's work on behalf of suppliers," Mr. Chalifoux said. Debbie Stabenow United States Senate Sen. Stabenow thanked the National Academies for "pulling this session together" and recognized Dr. Wessner for his leadership. She also acknowledged the efforts of TARDEC "and the important efforts of leaders around this room." Clean-energy policy in the U.S. is fundamentally about jobs, Sen. Stabenow said. "It is about other things. But when you come from Michigan, it is all about jobs," she said. As a member of the Senate Finance, Energy, and Agriculture committees, "I am laser-focused on all of the things you are talking about." With the leadership of the Michigan Economic Development Corporation and Governor Granholm, "we have very much been focused on clean energy," she said. Although she said she is not eager to go back to Washington's hot summer weather, Sen. Stabenow said she is returning "because we are going to continue to focus on jobs and an important small-business bill that will help suppliers and create capital for small businesses." The topic of this conference is "incredibly important," not only for Michigan but for the country, Sen. Stabenow said. She noted that a man named Steve Pernell, who had worked on the assembly building cars for GM, now is building test models for the Chevy Volt. Mr. Pernell told a Fox News reporter that he feels the pressure to build the car well because "the success of the Volt is a matter of do or die." Mr. Pernell is right, "and not just for GM," Sen. Stabenow said. "Building the next generation of energy-efficient vehicles is do-or-die for all of the automakers, for the state of Michigan, and for America." The success or failure of these vehicles will largely depend on the quality of the batteries that will power them, she said. "So this is a very, very important discussion and an important effort that we all need to be continually engaged in." There has been "incredible spending" by Asian nations on battery technology, Sen. Stabenow pointed out. "Japan, Korea, and others have taken the early lead," she said. "China has now gotten into the game big time. China is now spending about $288 million a day to beat us on clean energy. So this is a race." American companies have been competing against countries for years, Sen. Stabenow stressed. "Finally our country is beginning to get in the game in terms of partnership with our businesses," she said. "It is incredibly important that we ramp this us as fast as we can." The last thing the U.S. needs to do "is go from a dependence on foreign oil to a dependence on foreign technology," she said. "And if we don't continue to push, that is what is going to happen."
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64 U.S. BATTERY INDUSTRY FOR ELECTRIC DRIVE VEHICLES The U.S. is starting to turn the corner, Sen. Stabenow said. "There are many positive things happening," she said. "But we are starting from a position of being behind on this." The strategic focus by U.S. companies, the federal government, and states "will get us there," she said. "We are going to have to be serious and we are going to have to be focused." The U.S. now has an Administration "that understands the importance of making things in this country," Sen. Stabenow said. For more than a decade, the only thing that mattered was cheap prices. Americans did not care where products were made, she said. "We have been losing our middle class as a result of that," she said. "It matters where things are made. I happen to believe that we can only have a strong economy and middle class if we make things and grow things and add value." Government in the U.S. now is working on this, Sen. Stabenow said. We are seeing a different discussion now." As a member of the President's Export Council, Sen. Stabenow said she is "enthused" about the efforts to double U.S. exports in the next five years. "We want to export our products, not just our jobs," she said. "I think that is the focus for us--jobs and innovation here." The U.S. still should form global partnerships, Sen. Stabenow said. "We are in a global economy, so of course we partner," she said. "But we should not take our eye off the fact that we want our jobs here." The Recovery Act was really about starting to make the investments needed to bolster U.S. industry, Sen. Stabenow said. Michigan has been a beneficiary, perhaps more so than any other state. She noted that more than $12 billion was invested in advanced vehicle technology in the previous 18 months through the Recovery Act. About $2.3 billion of that went exclusively to batteries. "I am very proud of the fact that Michigan has received over 50 percent of that money," she said. "I told the President and Vice President directly that we like that ratio. We would like it with every program." The Administration has recognized Michigan as the center of advanced battery manufacturing, "and that is great for us in the long run," she said. Sen. Stabenow noted that President Obama was in Holland, Mich., recently to celebrate the opening of Compact Power's facility. Between the Advanced Manufacturing Tax Credit and the efforts around batteries, she noted, some 2,000 jobs are expected to be created in the Holland area over the next few years. The President also visited Chrysler and GM facilities in Wayne County to explain the importance of the U.S. auto industry and the impact of U.S. investments. The investments are important not only for OEMs, Sen. Stabenow said. They also are important for suppliers. "If we did not have an American automobile manufacturing industry, the ripple effect across all of our suppliers and all of our industries would be absolutely devastating." A123 is a "great story" about bringing business back from Asia, Sen. Stabenow said. The company is opening a new plant in Livonia, near the site of
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PROCEEDINGS 65 the symposium, she noted. "Creating that new technology and jobs is important for us," she said. There are nine new battery plants under construction or operating "from one end of the state to the other," she said. They include Johnson Controls in Holland, Dow Kokam in Midland, and facilities by Ford, GM, Magna, and Chrysler. It also is important that battery investments have been made with universities, Sen. Stabenow said. The University of Michigan, Michigan State, and Michigan Tech all received battery grant funding for R&D and partnerships with business, she explained. "Our great universities are such an important part of where we want to go," she said. "We have more engineers and high-quality workers than any other place in the country. When we talk about clean energy, manufacturing, and developing new technologies for our country, I know that means we are going to do well in Michigan because we have the talent here." One example of this talent is Ann Marie Sastry, she noted, who founded Sakti3 Inc. at the University of Michigan "to translate groundbreaking research to manufacturing advanced batteries and is putting that to work right here in Michigan." The Advanced Manufacturing Tax Credit program also has boosted manufacturing in Michigan. "For the first time, we have put into law that if you are buying equipment or investing in a plant for clean-energy manufacturing, there is a 30 percent tax credit," Sen. Stabenow explained. "That is important, and is part of what can make us competitive." Twelve Michigan companies have received the tax credits, which have gone to 46 states. There were three times as many qualified applicants for the tax credits than there was available funding, she said. As a result, President Obama and Vice President Biden asked Congress for another $5 billion. "I was able to put that into the budget resolution, and I hope we will get that done by the end of the year," she said. "A lot more businesses and manufacturers are waiting to receive help from this." The Senate Energy Committee also is doing important work on electric vehicles, Sen. Stabenow said. In July, she joined U.S. Rep. Gary Peters of Oakland County to include suppliers and medium- and heavy-duty vehicles to an advanced-vehicle technology program. A loan program for retooling also was expanded to include medium- and heavy-duty vehicle suppliers. Another piece of legislation coming out of the Energy Committee is the Promoting Electric Vehicles Act.9 Sponsored by Senators Byron Dorgan, Lamar Alexander, and Stabenow, the bipartisan bill calls for the DOE to make concerted efforts to help 15 communities develop infrastructure needed for electric vehicles. She said the program will help set up charging stations and address "whatever the process is" to have charging at home. "I'm starting to hear that it can take months to get a permit and that folks in local government 9 The Promoting Electric Vehicles Act of 2010 (S. 3495) sponsored by Sen. Byron Dorgan (D-ND), Sen. Debbie Stabenow (D-MI), and Sen. Lamar Alexander (R-TN) calls for providing incentive programs to create "deployment communities" across the U.S. stations for purchasing electric vehicles and set up charging facilities. The Senate Energy and Natural Resources Committee approved the bill on July 27, 2010.
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66 U.S. BATTERY INDUSTRY FOR ELECTRIC DRIVE VEHICLES are trying to figure out how to make this all work in terms of infrastructure for electric vehicles," Sen. Stabenow said. "We would like very much to pick a number of communities on a competitive basis and try to really jump-start start that. We want to create models of how to develop that infrastructure as quickly as possible." It will not be enough just to have electric vehicles on the road, Sen. Stabenow said. "They have to be consumer-friendly," she said. "And that is a real challenge for us." Reducing battery costs by 70 percent by 2015 is important, she said. "But again, we have to make sure that the infrastructure is there as well." Success in electric vehicles "depends on a whole range of things," Sen. Stabenow said, "from smart-grid technologies to the permitting process so that you can make sure you have what you need in your home." As with any new technology, the prices of electric cars will be high until production volumes increase, Sen. Stabenow pointed out. The federal government can help build the market as a buyer. The government will buy the first 100 Chevy Volts, for example. "I would like to add a few zeros to that," she quipped. "We need to be doing the same with Ford and Chrysler. The federal government can and should be a purchaser." She noted that the federal government has some 700,000 vehicles, including those operated by the U.S. Postal Service and the military. A new Senate bill encourages federal agencies to purchase electric vehicles. The government also has helped with consumer tax credits. Buyers of plug- in vehicles can get a $7,500 credit, Sen. Stabenow explained. Currently, these credits will go only to the first 2,500 purchasers of plug-ins until 2014. "I know if it works we will be expanding it," she said. Sen. Stabenow said she is working on legislation to allow those tax credits to be given at the time a car is purchased. The experience of the Cash for Clunkers program, which she said "was amazingly successful beyond my wildest dreams," showed that it helps to allow people deduct a tax credit immediately off the price of car. "That is more helpful than waiting until you fill out your taxes the next year," she said. "It will create a lot more opportunity for people to be able to use that tax credit." Sen. Stabenow said she is working on legislation to allow these credits to be applied at dealerships and to extend the credits to medium- and heavy-duty vehicles as well as for fleet purchases by businesses that buy 50 or more hybrids or electric vehicles. "There is a lot of interest right now," she said. "We have heard from a lot of fleet owners interested in buying electric vehicles." She added that she has seen the batteries being installed in trucks in Michigan. "There is no reason why we should be getting energy efficiency only from small vehicles," she said. Fair trade is another important issue, Sen. Stabenow said. China has policies not only to invest aggressively, "which they certainly have every right to do in their own technology," she said. But China also has "indigenous innovation" policies that "are blocking our companies from the ability to sell to their
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PROCEEDINGS 67 government," she said. There also are requirements on transferring technology, evidence of currency manipulation, and problems with intellectual property rights. "There are a whole range of issues that involve creating a level playing field that we in the federal government have got to pay attention to and do something about," Sen. Stabenow said. Senators Stabenow, Lindsay Graham, Jarrod Brown, and Russ Feingold have introduced the China Fair Trade Act of 201010 in response to Chinese policies directing the government to only do business with Chinese companies, she noted. "Basically what we are saying is that China, which has been part of the World Trade Organization 10 years now, agreed to abide by international law," she said. China has not signed the WTO's government-procurement agreement that allows companies from other nations to bid on public contracts, she pointed out. "Now they are moving much more aggressively," Sen. Stabenow said. No longer does the Chinese government just require foreign companies to form Chinese partnerships. She recalled visiting China in 1995, when General Motors launched its first joint-venture. "It's now beyond joint ventures," she said. "It has to be a Chinese patent and it has to be a Chinese company. It is going way beyond what has been viewed as a level playing field in the past." The new bill is aimed at simply saying, "If they are not going to let us sell to them, then we aren't going to let them sell to our government and use federal tax dollars to buy their goods until they open up their markets," Sen. Stabenow said. She said she disagrees with people who argue that fighting for fair trade in a global economy is about protectionism. "This is not about walls," she said. "It is about creating opportunities for our companies to be able to compete successfully and not have markets closed unfairly." It is great that the U.S. is partnering with other countries in industries like clean energy," she said. "But we have to have access to markets if we are going to meet our exporting goals." The U.S. also needs a comprehensive energy strategy, Sen. Stabenow said. "We have to fully decide that we are in it," she said. "I believe that this is a critical part of our next economic wave." The U.S. should raise the price on carbon pollution and plow the resources that are raised into technology. "We can do that in a way that is a winner for us," she said. "But we have to make sure that we have certainty in the marketplace for everybody who wants to come in and invest in batteries and clean energy." Investors need certainty on policies and tax laws, she said. The U.S. also has to make sure it creates capital for the front end. Sen. Stabenow noted that the Energy Bill now in Congress creates a mechanism to finance the first deployment of technology. "Everyone will invest in the third, 10 The China Fair Trade Act of 2010 (S. 3505) was introduced on June 17, 2010, by Sen. Lindsay Graham (R-S.C.), Sen. Debbie Stabenow (D-MI), Sen. Russ Feingold (D-MN), and Sen. Sherrod Brown (D-OH). It would bar the U.S. government from purchasing Chinese products until China agrees to the Agreement on Government Procurement of the World Trade Organization.
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68 U.S. BATTERY INDUSTRY FOR ELECTRIC DRIVE VEHICLES fourth, fifth or tenth" product, she said. "But who is going to commercialize the first one?" Other countries will make such investments, she said. "They will offer to build the plant and to give you the financing," Sen. Stabenow said. "We ought to have a way." She noted that bills in the House and Senate have proposed setting up a Clean Energy Development Administration that would help fund early- stage commercialization of new technologies. "We are very hopeful that we are going to be able to get this going," she said. Sen. Stabenow explained that she and Sen. Graham of South Carolina chair a bipartisan effort on U.S. manufacturing. "I do believe we are seeing a real change in terms of how we focus not only on clean energy and batteries and technology, but also on manufacturing," she said. "I don't want to see us going through with batteries and electrification of vehicles what we did with the technology that created the iPod, where we have the President going to England, visiting the Queen, and giving her a great product of American ingenuity--an iPod made in China. Shame on us if we let that happen in batteries, or wind, or solar, or anything else in clean energy. Shame on us." The U.S. still has a chance to succeed in the electric-vehicle and battery industries, Sen. Stabenow said. "They haven't left us yet. We are in a fierce race, but this is ours to capture," she said. "And my focus is to make sure that when those batteries and vehicles come off the line and the new technologies are being produced, they all say `Made in America' again. That's when we win." Sen. Stabenow asked those in the room to help generate "a sense of urgency about this." She said she has "talked to too many businesses who have a great idea, a great technology, or a great innovation who can't get the financing right now." Others are held back by factors such as certainty about tax policy. "I talk to venture capitalists all the time who are sitting on the sidelines saying they are waiting to see where energy strategy is going to be before they know where to invest," she said. Help from those attending the symposium is needed "to kick this into gear," Sen. Stabenow said. "You folks are on the front lines. You know the facts. You know the reality of what is happening." Every single member of Congress must be told to stop thinking in terms of who is a Republic and who is a Democrat. "We can't afford that," she said. Sen. Stabenow recalled that she was in a meeting with President Obama and backers of a bipartisan energy bill. "We were saying, `Well, we don't know if we can get enough Republican votes or if we can get over the filibuster,'" she said. "I said, `You know, while we are talking about this, China is cleaning our clock.'" "This should be about the United States versus China," Sen. Stabenow said. "Not whatever else is going on in Washington. We need the help of the Academies and from businesses. Let's talk about getting the policies right. We can have differences on policy, but we are all on the same side here in this country."
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PROCEEDINGS 69 Sen. Stabenow said the U.S. has "absolutely great opportunities" if it uses all of its intellectual capacity, talent, and resources. "There is no reason that we can't have the President give the Queen a wonderful new electric vehicle with all of the components, including the battery and cell, made in America." Sen. Stabenow noted that Henry Ford once said that "what is right about America is that, although we have a mess of problems, we have great capacity-- intellect and resources--to do something about them." That is where America is right now, she said. "We may have a lot of challenges," Sen. Stabenow said. "But we have great intellect and great resources. Now is the time to put it all to work."