The US is building its own advanced battery industry and has recently awarded several grants to jumpstart its creation. This news was announced last August 5, and may seem outdated, but it is good to take a pause and review what it means to investors as this may give us a headstart into participating in some companies in this new industry.
The earmarked amount that will be awarded to several companies is worth $2.4 billion. Here is an excerpt from a report in Physics Today.
"These are incredibly effective investments that will come back to us many times over—by creating jobs, reducing our dependence on foreign oil, cleaning up the air we breathe, and combating climate change," said US Energy Secretary Steven Chu at an event in Charlotte, North Carolina. "They will help achieve the President's goal of putting one million plug-in hybrid vehicles on the road by 2015. And, most importantly, they will launch an advanced battery industry in America and make our auto industry cleaner and more competitive. "
"The new awards are split into three separate programs:
> $1.5 billion in grants to US-based manufacturers to produce batteries and their components and to expand battery recycling capacity;
> $500 million in grants to US-based manufacturers to produce other related components for electric vechicles; and
> $400 million in grants to purchase thousands of plug-in hybrid and all-electric vehicles for test demonstrations, to deploy them and evaluate their performance, to install electric charging infrastructure, and to provide education and workforce training to support the transition to advanced electric transportation systems."
For the complete details of the grants, here is a link to the pdf file from US Department of Energy. Some of the companies that were mentioned were Ener1(NASDAQ:HEV), Exide (XIDE), A123, johnson Controls (NYSE:JCI)General Motors and Ford.
Just like any industry when it is just starting, many companies big or small will try to mark its big footprint. But at the end of the day, size does not even determine its success in the long run. If you look at the solar industry when it was just beginning, many small companies sprouted and because of the uncertainty in the future success of this young industry, no big established company took time to take a look because the visibility of future earnings will just only be a very small addition to their current earnings. And also because young and new industries demand that high intensity entrepreneurial spirit, big companies are at a disadvantage against small companies that do not experience bureacratic roadblocks in every executive decision to be made.
Now, there are a lot of battery companies that the Department of Energy has chosen to take a look at and from my analysis, these are seeds that they are planting that will determine future winners of the industry. Right now, it is still too early to determine which company has the technology that will be the standard in the future. As investors, we can decide to just wait and see. But we can also start planting seeds of our own by looking deeply at the technologies of these small companies and invest in some, even just a little, in our portfolio.
The author is long HEV.