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Reality Check: Cheaper Batteries are GOOD for America’s Electric Vehicle Manufacturers

September 16, 2011 - 11:05am

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Today’s New York Times includes a story about loans the Department of Energy has issued for electric vehicle manufacturing.

The story says that the price of advanced batteries for electric vehicles is rapidly declining. That’s true. And it’s also very good news, since it makes America more competitive.

The story goes on to say that this price decline could hurt the electric vehicle manufacturers that the Department has extended loans to. That is not true. In fact, it's just the opposite. Think about it - cheaper components will only make electric vehicles more attractive to consumers.

The three companies cited in the story are Nissan, Tesla, and Fisker.

Tesla and Fisker are two smaller manufacturers that are building innovative new electric vehicles. Fisker is actually doing this in an old GM plant in Delaware that had previously shut down and is now coming back to life. Since both Tesla and Fisker are buying their batteries from other manufacturers, the declining price of batteries will help them, not hurt them. It makes them less likely to default.

The other company the Times cited is Nissan North America. Nissan is hardly a risky start-up company. It is one of the largest auto companies in the world. And it doesn’t have to worry about finding a buyer for the batteries it produces in Smyrna, Tennessee. Those batteries will be used in the Nissan Leaf, also built in Smyrna, Tennessee. Demand for the Nissan Leaf is high. And in fact, the story does quote Nissan's spokesperson noting that "if we had more, we'd sell more."

These investments are on pace to employ thousands of Americans, but far more importantly, ensure that our country can lead in a growing global industry. If you’re not convinced about the potential of electric cars, consider this: if even just a small percentage of global auto sales are electric vehicles by the end of this decade, that’s a market worth billions of dollars.

Again, ultimately this is a question of whether America should be a leader or a follower – whether we are afraid to compete for the jobs of the future, or whether we’re going to play to win. 

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