US Attempts at Car Battery Industry Get a “Scarlet F”

According to a piece in last week’s Wall Street Journal, the US government’s attempts to “jump start” innovation in the car battery business (not much of a pun intended), has produced little success:

What happened? The U.S. provided grants that tied the battery makers to aggressive timetables, requiring each to achieve production and staffing targets that would supply tens of thousands of vehicles a year. But those production timetables weren’t linked to market demand leaving to a shake out among suppliers.

The mismatch between production and market demand has resulted in one casualty. Ener1 Inc., a battery maker that built a plant in Indianapolis with $54.9 million of a $118 million government grant, sought bankruptcy protection earlier this year. It has since exited Chapter 11 and its plant is operating, a spokesman said, albeit with 250 workers, well short of the 1,700 originally envisioned in 2009.

The Department of Energy, which oversees the administration’s advanced battery grants, says it is too early to judge the effort, and believes it will bear fruit when electric cars become a regular sight on American highways.

“We are trying to build the infrastructure for the American battery industry,” said David Sandalow, the Acting Under Secretary of Energy in an interview. “Short-term trends can be important, but let’s keep our eye on the medium and long-term.” The White House deferred comments to the DOE.

Any attempt at innovation has a high risk of failure.  The question becomes how that failure is treated.  Is it seen as a “scarlet F” that stigmatizes the effort and has a chilling effect on future attempts to innovate, or is it seen as cost associated with eventual success?  WSJ reports, you decide.  (Hint:  the culture in places like Silicon Valley lean to the latter approach.)

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