Battery manufacturing capacity rampup and short and long term impact

An article in the Wall Street Journal (May 31, 2012) describes the US government’s $ 1.26 billion investment in battery capacity, and demands for rapid ramp up and hiring to create 6400 jobs. The slow growth rate implied only 2000 workers and excess capacity, with plant shutdowns looming or completed. But the size of the battery capacity implies that car manufacturers can count on available batteries as they launch their electric vehicles, thus providing a domestic source of supply. Is it appropriate for the Federal government to invest in component capacity to reassure or stimulate downstream demand ? Is this an example of market failure and will such industries always require the government to step in ? Should DOE’s supply driven evaluation be modified to permit battery manufacturers to synchronize supply with demand ? Or should the US let Chinese battery manufacturers accept the demand risk and thus be suppliers to US automakers ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues, Sustainability and tagged , , , , , , , , , . Bookmark the permalink.

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