The electric vehicle industry is getting a major shot in the arm with $2.4 billion in grants from the U.S. Department of Energy – funding coming from the $787 billion in spending and tax cuts encompassed within the American Recovery and Reinvestment Act or “stimulus bill” passed by Congress back in February.

“This marks the single largest investment in advanced battery technology for hybrid and electric-drive vehicles ever made,” said Secy. of Energy Steven Chu. “They will help achieve President Obama’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.”

Those grants are focused on funding three key areas of the electric vehicle industry:

  1. Roughly $1.5 billion for battery and battery component production, plus battery recycling;
  2. Some $500 million for production of electric drive vehicle components, motors, and electronics;
  3. $400 million to fund purchase incentives for plug-in hybrids and electric vehicles for demonstrations, as well as funds to build recharging infrastructure and workforce training.

“This is transformational, and not just in terms of the dollar amount,” Jennifer Watts, spokesperson for the Electric Drive Transportation Association (EDTA), told FleetOwner. “This level of government investment creates a strong policy direction for electric vehicles, making them appeal to investors over both the medium and long term.”

It’s also critical that the grants are “across the board” in the electric vehicle industry, funding not just vehicle development but the creation of recharging infrastructure while funding new battery research. “You can’t just have a shot in the arm in one area of this industry,” Watts explained. “It brings everyone to the table – electric car and truck makers, battery makers, etc. It makes sure all the pieces of the puzzle are in place so electric vehicles can make an impact.”

For example, Navistar received $39 million in funds for its Wakarusa, IN, manufacturing facility to develop and build all-electric delivery vehicles in partnership with British electric truck maker Modec. The deal would see a Navistar-Modec joint venture build electric Class 2 and 3 commercial vehicles for North, Central and South American markers – primarily for urban-suburban pickup and delivery service.

Navistar said plans call for building 400 of the all-electric light duty trucks in 2010 and expects that within a couple of years several thousand such vehicles will be produced annually. “These will be city delivery and UPS/FedEx style electric trucks – medium- and light-duty models,” Roy Wiley, Navistar’s head of corporate communications, told FleetOwner. “This is where it is at for electric truck demand at the present time.”

Smith Electric Vehicles U.S. Corp. received a $10 million DOE grant toward the production of its all-electric medium-duty commercial trucks unveiled in Washington D.C. last week – both for a nationwide demonstration project to validate the unit’s performance across a range of climates and locations as well as fund purchasing incentives to reduce the cost of its electric vehicle.

“[With these grants] the Obama Administration demonstrated its commitment to this fast-emerging industry,” said Bryan Hansel, Smith’s CEO. “This demonstration fleet will allow major corporations to evaluate the technology at greatly reduced cost, which we expect will rapidly accelerate the shift from trial phase to volume orders.”

Electric Transportation Engineering Corporation (eTec), a subsidiary of ECOtality, received $99.8 million in federal funds to test and analyze electric vehicle usage and charging infrastructure – and it’s partnering with Nissan North America on a project to deploy up to 5,000 electric vehicles and 12,750 charging stations in five U.S. markets.

One of those test markets is Portland, OR, with Portland General Electric (PGE) handling the deployment of eTec’s recharging technology. Dependent upon ongoing contract negotiations, up to 1,000 Nissan electric vehicles will be made available at Oregon Nissan dealerships in fall 2010, with 2,500 charging stations to be installed at homes and businesses beginning in the summer of 2010 for residents and businesses that choose to participate, said Jim Piro, PGE’s president &CEO.

He noted that Level 2 (220 volt) charging systems will be installed in residential, public and commercial locations, with Level 3 “fast-charge” systems installed in high-traffic areas and strategic locations to allow consumers to charge on-the-go and extend daily driving range.

“This is … an important step forward to develop the critical infrastructure necessary in Oregon to support next-generation electric vehicles that are coming to market in 2010,” Piro said. “This project will give us a better understanding of how the charging of electric vehicles can effectively be integrated into a smart electric grid at the lowest possible cost.”

Joe Barra, PGE’s director of customer energy resources, told FleetOwner that the utility is in discussions with several all-electric truck manufacturers as part of a plan to include such trucks as part of this electric vehicle pilot program. The key to making this program work, he said, is going to be the recharging infrastructure.

“Battery development has held back electric vehicles for some time and despite recent advancements in Lithium Ion batteries have led to improvements in power density … range will be limited to 100 miles at least for the first generation of electric vehicles,” he said. “A robust charging infrastructure will be important in allaying range anxiety and assuring prospective buyers that this, in fact, is not a test.

Barra added that PGE’s forecasts have plug-in electric vehicles accounting for as much as 30% of new vehicle sales by 2020. “With normal turnover rates, they could account for 10% of all vehicles on our roads by then,” he noted. “[As a result] there may be a few less gas stations, replaced by quick-charge outlets, particularly along major transportation corridors.”