If you look at past USABC contracts, you’ll see similar targets that were not met at the end of the contract period. The targets for the USABC are just targets, it’s not like A123 doesn’t get the money if they don’t meet them, it means they get the money for trying to meet them.

Also since the presentation by CPI does not say what capacity the battery is for $500, it doesn’t really say too much about the costs/kWh.

Great Job in reading the tea leavesand practical intelligence gathering.

Most development contracts such as the US ABC one is wuith A123, sets goals and deliverables to be met by contract ending. A123, is expecting to earn its $12.5 million dollar contract by producing a battery at the end of of its contract no more than 36 months out, that will meet those specifications.

GM will need the batteries for installation on Volt Job 1 by September 2010, or 28 months from May 2008. Even if A123 had not yet met the final specifications, internally, their product would be getting pretty close. Even at triple the cost, (however unlikely), the batteries make the Volt price point of $10k per Chevy Volt.

I have another comment. to add.

I recall seeing an inteview with Mr. Lutz in which he discussed automation of the Li-Ion battery. He “expects” ( i.e. requires) the battery makers to create factories near the automaker assembly plants, for “just-in-time” manufacture of such critical high value components.

In light of Ford’s painful expereince with Sanyo Electric not meeting production from Japan of hybrid components for the Escape hybrid, crippling production, many a Manufacturer will be requiring suppliers to locate facilities near the assembly site.

The dollar exchange rate has made manufacture in the US somewhat more competitive then heretofor as well.

Intrinsically mass manufacture of Li-Ion batteries should be an easy to automate process. It should be relatively easy for adaptation of existing kinds of facilities.

Making a Li-Ion battery is actually a process of joining sheets of different films, together; rolling into a cyclinder; and encapsulating in a container.

This lends itself to extruding rolls of different films, combining rolls in a set of Rolls, bonding them together before slicing to individual size from the rolls, and then rolling each into shape; and then wrapping a protective container around the created film roll, to create a battery.

Such automation equpment exists from automation companies, for use in products as diverse as filmaking, coated wallpapers, packaging materials, to publishing of laminated documents. Many manufacturers could adapt their automation machinery to fit the job.

Knowing that the automation equipment is available, speeds up the creation of highly automated factories. Indeed I would not be surprised if the US ABC contract did not involve involve research, and working with automation machnery firms, to adapt their equipment to automating Li-Ion manufacture.

Here is an example of the superiority of the govermental sponsored R&D organization driven by the benefitting companies as opposed ot the assininity of say the PNGV excercise of the Clinton adminsitration.

There bureaucrats dreamed up stupid ideas, paid outrageous sums to politically well connected phonies like Amory Lovins, to create impossible products with out a prayer of practical manufacture.

For example well-connected Mr. Lovins convinced the bureaucrats that they could save several hundred pounds of weight in a car using carbon films like the B2 bomber, instead of steel auto bodies. PNGV autos had these carbon composite components, instead of steel. The carbon film car was 1000 pounds lighter than a steel car. almost wonderful, But…

Instead of a steel car that is 97+% recyclable, and costs about $4.00 a pound, Lovins specified an auto body that is unrecyclable; and creates, auto bodies from the material for billion dollar B2 bombers. Further the auto bodies are no longer recyclable. When burned, toxic, cancer causing dioxin pollution is emitted. Did I mention that the carbon films cost $400-1600 dollars per pound. Did I mention that the carbon autobodies are made from lots of barrels of Oil too?

Such a car bodiy only costs $250,000 per car merely for the auto frame, nothing else, instead of $5-8000 dollars.

When every customer has plenty of money and the automakers can offer such commuter vehicles at a price of only $750,000 to a cool one $ million a copy, and have googles of buyers lined up to purchase. The weight savings does help mileage though. It might add as much as 4-5 miles per gallon, too.

Is there any wonder that the PNGV led nowhere except to pure government boondoggle? As soon as the government money ended, the PNGV’s ended up in crushers or museums. No car company was the slightest bit interested in these pink elephants, designed by government committee.

USABC is different. Created to enable the actual car companies to co-operate with each other without fear of monopoly laws, the USABC can actually address real honest problems, important toall the member automakers.

The output of its contracts result in useful products, not pie in the sky, hare brained schemes.

Mr. Bush created the USABC, on a different and rational template, and brought the Li-Ion from lab curiosity, to the verge of powering autos like the Volt. Lawyer-politicians and Bureaucrats poured taxpayer money down a forgotten rathole, for the PNGV program, telling the automakers what to do.