Since 1976, Congress has funded programs to develop high-density, low-cost batteries to operate electric and hybrid vehicles. In the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), Congress authorized support for lithium-ion battery manufacturing, with $2.4 billion in grants. Since then, President Obama has asked Congress to further expand these initiatives with additional R&D funding requests and a recommendation that an electric vehicle tax credit be expanded to $10,000 and converted into a federally funded rebate program, available to consumers at the time they purchase a vehicle. Promotion of electric vehicles and the batteries to power them is part of a long-standing federal effort to reduce oil consumption and air pollution. This effort has taken a variety of directions, including mandated use of biofuels and research into hydrogen-fueled vehicles. Development of vehicles that use electricity as a power source, either by itself or in conjunction with smaller, supplementary internal combustion engines, is part of this initiative. In general, the cost of operating a plug-in hybrid or all-electric vehicle is substantially less than the cost of fueling a gasoline-powered car or truck, but up-front costs are much higher. Depending on the source of the electricity, the total carbon footprint of an electric vehicle may be less than that of a vehicle with a traditional internal combustion engine. The major hurdle in providing a large national fleet of hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and fully electric vehicles (EVs) is the size, cost, weight, durability, and safety of the batteries that would power them. Because battery technology is crucial to the development of these vehicles, the U.S. Department of Energy (DOE) has funded research by universities, federal laboratories, and the private sector over several decades on a variety of new types of batteries. Automakers have also invested substantial amounts in research. As manufacturers have brought hybrid, plug-in hybrid, and fully electric vehicles to market, U.S. policymakers have become concerned about the development of an electric vehicle supply chain in the United States. This report examines the nascent battery manufacturing industry and considers efforts to strengthen U.S. capacity to manufacture batteries and battery components for hybrid and electric vehicles. For the last 100 years, Americans have primarily driven vehicles with internal combustion engines. An internal combustion (IC) engine burns fuel inside a combustion chamber when a mix of fuel and air is sprayed into it. The mixture is compressed by a piston while a spark plug produces a spark that ignites the fuel. The resulting combustion, and the expanding gases, drives the piston back down. The piston is connected to a crankshaft which, in turn, powers the axles and propels the vehicle. See Figure 1 for a cross-section diagram of part of an IC engine. Most modern vehicles use either gasoline or diesel as a fuel source because they are energy dense and inexpensive. Gases are a byproduct of the combustion. The engine's exhaust valves remove them from the cylinder and send them on to the car's exhaust system. The engine's heat, another byproduct of the combustion process, is the source of a vehicle's heating system in the winter. A critical element in a car's engine operation is the battery. When a driver turns the key in the ignition, the battery's stored energy is drawn down, powering the electric engine starter and thereby cranking the engine. An electric vehicle operates differently from a vehicle with an IC engine. An all-electric vehicle is powered by electricity with a large, rechargeable battery, an electric motor, a controller that sends electricity to the motor from the driver's accelerator pedal, and a charging system. These parts of an electric vehicle replace the IC engine, fuel tank, fuel line, and exhaust system in a traditional car. While the IC engine is central to the operation of a traditional vehicle, it is the rechargeable battery that is central to the operation of an electric vehicle. All-electric vehicles recharge their batteries by plugging them into a household electrical outlet or a special charging station. As discussed later in this report, there are different kinds of electric vehicles. Some are all-electric and others are hybrids, with small electric motors and small IC engines (using both electricity and gasoline as a fuel). Some of the hybrids can be plugged in for recharging, and others, such as the original Prius, are recharged from their gasoline engine and other internal systems. Batteries are a form of energy storage. They store and release energy through electrochemical processes. All battery technologies have two fundamental characteristics that affect battery design, production, cost of operation, performance, and durability: Power density is the amount of energy that can be delivered in a given period of time, affecting how fast a vehicle accelerates, and Energy density is the capacity to store energy, affecting the range a vehicle can travel. There is generally a trade-off between these two characteristics: some battery technologies have higher power density with a correspondingly lower energy density and vice versa. For vehicle applications, it is desirable to have both high power density and high energy density to compete with the high power and energy density of gasoline and other petroleum-based fuels. Battery alternatives to gasoline power have so far not achieved this parity and are heavy, large in size, and costly. The first rechargeable lead-acid battery was invented in France in 1859. By the 1880s, French inventors improved the design, which in turn enabled the development of new types of electric automobiles at the beginning of the 20 th century. Auto manufacturers, however, soon discovered that the lead-acid battery is better suited for supporting IC engines than for powering vehicles. There are a number of reasons why this 19 th -century technology has been the battery of choice around the world for so long. Lead-acid batteries are simple, inexpensive to manufacture, and based on a technology that is widely understood and easily duplicated. Relatively small in size, the batteries fit easily in the engine compartment, are durable and dependable, and require virtually no maintenance. Most importantly, they provide sufficient bursts of energy to start engines, while recharging over many cycles. In addition, 98% of lead-acid batteries are recycled, among the highest recycling rates for any manufactured product, thus minimizing the environmental impacts of disposal. The typical automotive lead-acid battery is encased in a durable plastic casing. It generates 12 volts of electricity through six interconnected compartments (called cells), each of which contains 16 metal plates, set in an electrolyte solution of water (65%) and sulfuric acid (35%). The internal cell plates and separators are shown in Figure 2 . The positive anode side of each plate is coated in lead oxide; the negative cathode side in lead. As electrons move from the anode, they generate up to 2 volts of electricity within each cell. The cells are arranged in a series so that the electricity passes from one cell to the other, making the charge additive. By the time the charge has passed through each of the six cells, 12 volts of electricity are discharged through the terminals on the top of the battery to start the car and run the other automotive components. Once the gasoline-powered engine is started, it not only powers the pistons in the engine, thereby moving the car forward, but through the alternator it also provides recharging for the battery. In this process, the chemical process that created electricity is reversed: a flow of electrons moves backwards from the cathode toward the anode, restoring the chemicals on the plates to their original position. This ongoing process of charging and recharging the battery takes place automatically as the car is being driven. The lead-acid battery has been the standard battery technology for most of the past century, but because of its low energy density, it is poorly suited for electric vehicles. A 2010 DOE report noted that batteries have been "too costly, too heavy, too bulky and would wear out too soon." Were a group of lead-acid batteries placed in a hybrid or all-electric car, they would take up an inordinate amount of space and would add exceptional weight to a car. Accordingly, new kinds of batteries are being developed that offer higher power and energy densities for these types of vehicles. Given the shortcomings of lead-acid batteries, researchers have sought better battery technologies since the 1970s. One of the first commercially feasible technologies automakers adopted was the nickel metal-hydride (NiMH) battery. Because it has greater energy density and is lighter than a similarly powerful lead-acid battery, NiMH batteries became the choice for early hybrid vehicles. They are used in many hybrid vehicles today, including the Toyota Prius and Honda Insight. Toyota announced in 2009 that after testing alternatives, it would continue using NiMH batteries in many of its hybrid vehicles. A second technological approach involves improvement of lead-acid batteries. Recent federal research grants were given to two U.S. lead-acid battery manufacturers to advance use of lead-carbon in batteries and to further work on an "ultrabattery" that could replace NiMH with a more efficient, lower-cost alternative. A third technology is the "Zebra" battery, using sodium-nickel chloride chemistry. These produce 50% more energy than NiMH and, according to some manufacturers, as much as some lithium-ion batteries. These so-called "hot" batteries have operating temperatures up to 360 degrees (F) and reportedly perform well in very hot and very cold climates. The most prominent major new battery technology is based on lithium, a naturally occurring and lightweight metal used in laptop computer batteries. Li-ion batteries have high energy and power densities. Because lithium is lightweight, it can be fabricated into large battery packs for use in hybrid and electric vehicles. An important characteristic of lithium is that it is reusable and can be extracted from depleted batteries and recycled for use in new batteries.