MAKING THE LITHIUM-ION BATTERY A NATIONAL PRIORITY

Charles Gassenheimer – Chairman/CEO

It is apparent that within any visible time horizon the lithium-ion battery will be an integral part of every alternative energy vehicle. Widespread understanding of the risks of foreign oil dependency and of the threat of carbon emissions is finally spurring a global effort to produce cars and trucks that run on alternative sources of clean energy.

This trend is evidenced by the accelerated race to create new energy solutions for the automotive industry, including more efficient gasoline engines, advanced clean diesel and biofuels, hybrid and electric cars, and hydrogen-powered fuel cell vehicles. Regardless of whether all or just some of these technologies emerge as dominant new energy solutions, lithium-ion battery storage will undoubtedly play a pivotal role.

Creating advanced battery manufacturing capability in the United States should be a national priority and is necessary to strengthen the competitiveness of the American automobile industry. Other than Ener1’s facility in Indianapolis, Indiana, virtually no advanced car battery production capacity exists in the United States. The evidence so far suggests that Japan, which already has a 90% market share in the nickel-metal-hydride technology used in today’s hybrid vehicles, is in a position to corner the lithium-ion battery market as well. Ultimately, this would cause the United States automobile industry and its suppliers to lose further ground to foreign competition.

With the recent adoption of a higher Corporate Average Fuel Economy (CAFE) standard, the time has come to create a national plan bringing together public and private initiatives aimed at increasing advanced battery production in the U.S. The United States Advanced Battery Consortium, which is effectively spearheading a public/private consortium, has identified lithium-ion as the most promising battery technology available. Moreover, in the 2008 Presidential campaign, both the Democratic and Republican contenders affirmed their dedication to focusing on the development of alternative energy technologies. In a speech on March 26, 2008, President elect Barack Obama (D-IL) pledged his commitment to the advancement of hybrid and electric vehicles and stated that developing the electric car industry is "a very high priority for our national security, as well as for our economy." Mr. Obama pledged that he would invest billions of dollars of federal government research funds for developing new technological alternatives to America's foreign oil dependence. Other government support for alternative energy comes from Vice President elect Joe Biden (D-DE), who supports increased research funds for lithium-ion batteries, and Senator Dick Lugar (R-IN), who is from the home state of Ener1’s domestic manufacturing facility, and is an active proponent of building American battery production capacity. Add to this the proposed higher levels of federal support funding, tax breaks, and interest-free federal loans, and the development of domestic manufacturing capacity is looking extremely promising.

The "Big Three" automakers continue to pursue relationships with battery companies in an effort to establish production capability. Detroit's green transformation, as indicated by its support of the new CAFE standard, will continue to focus on creating industry standards for integrating lithium-ion battery technology into hybrid electric vehicles, plug-in hybrid electric vehicles, and electric vehicles, inevitably spurring additional investments and collaboration.

Ener1's goal is to power cars that need no gasoline, have greater range than the fuel capacity of an internal combustion engine, and can be charged in fewer than 10 minutes per day. As consumer and political awareness of the issues driving the quest for affordable clean energy increases, we are confident that the momentum necessary to overcome the obstacles to full attainment of this goal has arrived.