UPDATE 1-Obama says electric car battery prices to tumble

* Obama sees price of EV batteries down by 70 percent

* White House price targets more aggressive than industry

* LG Chem sees pricing down 50 percent by 2015

By Bernie Woodall

HOLLAND, Michigan, July 15 (BestGrowthStock) – The cost of the
high-powered batteries needed for a coming wave of electric
cars is projected to drop by as much as 70 percent over the
next five years, according to a U.S. government forecast.

The forecast was released as President Barack Obama
attended a groundbreaking ceremony for a battery plant being
built in Holland, Michigan by a U.S. unit of South Korea’s LG
Chem(051910.KS: ) and funded by the U.S. Department of Energy.

The Obama administration has provided more than $5 billion
in grants and low-cost loans to battery manufacturers and auto
companies to support projects intended to spur the development
and sale of rechargeable electric cars and plug-in hybrids.

But the high cost of the lithium-ion batteries to power
those vehicles has been seen as one of the biggest barriers to
their widespread adoption.

The U.S. government had never set a target for the kinds of
cost reductions it expected to see in the fast-developing
industry it is attempting to jump-start with taxpayer funding.

“Because of advances in the manufacture of these batteries,
their costs are expected to come down by nearly 70 percent in
the next few years. That’s going to make electric and hybrid
cars and trucks more affordable for more Americans,” Obama told
an audience of politicians, business leaders and
representatives of the 300 workers building the new plant.

The battery price declines projected by the Obama
administration, which has set a target of putting 1 million
plug-in hybrids on the road by 2015, run deeper and faster than
most forecasts by outside analysts.

LG Chem Chief Executive Bahnsuk Kim told Reuters his
company sees a 50 percent drop in battery prices by 2015, and
he expected that would be enough to drive increased demand.

“In the next five years we see the prices in half. Our
target is half,” Kim said on the sidelines of the Holland,
Michigan event.

In the terms tracked by the emerging electric vehicle
industry, the Department of Energy said it expected battery
costs per kilowatt hour to drop from about $1,000 in 2009 to
$300 in 2015 and $100 in 2030.

Major U.S. automakers have set a long-term target of
reducing costs on that basis to near $250, a price that would
be in line with the cost to produce batteries for laptops and
cell phones.

The lithium-ion battery that powers Tesla Motors Inc’s
(TSLA.O: ) $109,000 Roadster cost more than $33,000, according to
the Department of Energy report.

The smaller battery LG Chem is supplying for the upcoming
Chevrolet Volt from General Motors [GM.UL] cost $13,000 last
year but will drop to $4,000 by 2015, the report said.

Both GM and Tesla have received Energy Department funding.

LG Chem’s Compact Power unit has won deals to supply
batteries for the Chevy Volt and the upcoming all-electric
version of the Ford Motor Co (F.N: ) Focus.

It said that it had also been selected to supply batteries
for hybrid systems which Eaton Corp (ETN.N: ) is developing for
commercial trucks and buses.

Compact Power’s Holland plant will have the capacity to
supply batteries for up to 250,000 electric vehicles once
completed and will employ 400 workers, the company said.

LG Chem and the U.S. Department of Energy split the costs
of building the $303 million plant. The Korean chemical and
battery maker invested $151.5 million and $151.4 million came
from a U.S. government grant.

White House economists estimate that the United States
accounted for 2 percent of global production of batteries for
electric cars and hybrids in 2009. That share is expected to
rise to 40 percent of global production by 2015.
(Reporting by Bernie Woodall, writing by Kevin Krolicki,
editing by Leslie Gevirtz)

UPDATE 1-Obama says electric car battery prices to tumble