But some experts, including people at companies supported by the grants, worry that the new manufacturing capacity will exceed the demand for electric vehicles and plug-in hybrids, which have larger batteries than conventional hybrids and can be recharged by plugging them in. Later this year, Chevrolet will start selling its plug-in hybrid, the Volt, and Nissan will offer the electric Leaf, to be followed by other automakers in the next two years.
Last year's stimulus package committed the government to spending billions for factories designed to produce advanced batteries for electric cars. One goal is to rejuvenate cities in Michigan that have been devastated by the collapse of the auto industry. Unfortunately, it's not yet clear if electric cars will sell fast enough to justify all this battery production. Generating the demand for these vehicles could be a long-term project-which could mean even more government investment over the next few years.
Construction began last week on the last of nine battery factories supported by grants under the Recovery Act, which was part of the stimulus package. The factories are part of a $2.4 billion program to help fund 30 factories for electric vehicles and their components in the United States. (The manufacturers must match these federal funds with other money, such as state incentives and private investment.) The U.S. Department of Energy released an analysis this week that claims this program, and others in the Recovery Act that support electric vehicles, will lower the cost of batteries by 70 percent, support the production of 500,000 electric vehicles a year, and create tens of thousands of jobs.