January 12, 2009 2:00 am

US carmakers seek help in next-generation technology race

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The beleaguered US car industry is stepping up its drive for government support, calling for more aggressive state support for next-generation car technology.

General Motors, Ford Motor and other carmakers and parts suppliers are pressing Barack Obama's incoming administration for increased funding and industrial-policy measures to promote electric cars, hydrogen fuel cells, next-generation biofuels and other alternative technologies.

Falling petrol prices are causing some consumers to desert early alternative cars such as hybrids, and are raising questions over carmakers' ability to improve their cars' efficiency by about 40 per cent by 2020 under the US's tough new fuel economy rules.

Carmakers also worry that overseas competitors in Japan and China could come to dominate core components destined to drive cleaner cars.

"We do need serious investment in batteries in the US," said Susan Cischke, Ford Motor's head of sustainability, environment, and safety engineering. "It is important to have a strong domestic supply base."

Detroit's carmakers contend that Japanese state support was crucial in Toyota's ability to develop and source the technology used in hybrids, and later dominate the new segment with its Prius model.

In Detroit at the weekend, the Japanese carmaker unveiled a new Prius, and moved up plans to launch a test fleet of plug-in electric cars to this year.

"I think it's an issue of economic security, of national security, of energy security, that the US have that supply base here," Larry Burns, GM's head of research and development, said yesterday. "We don't want to go from being dependent on other nations for petroleum to being dependent on other nations for know-how."

Mr Burns called for "public-private co-operation" to support the commercialisation of technologies such as hydrogen fuel-cell cars.

He did not comment on the effect GM's financial crisis was having on the company's R&D spending, saying only: "Every penny is under scrutiny."

Mr Obama has spoken of doubling a $25bn Department of Energy loan package approved last year for carmakers' investments in more fuel-efficient technologies. Within its stimulus package, the new administration is also expected to announce a package of measures to support battery production, industry sources say.

A123 Systems, a small US battery producer which is competing in a consortium with Germany's Continental to supply GM's Chevrolet Volt electric car planned for 2010, last week said it had applied for $1.84bn from the existing package to build a manufacturing plant in Michigan. The company currently has plants in South Korea and China.

Ford and other automakers also want Washington's help in shielding them from volatile petrol prices, whether through a tax or a price floor. Average petrol prices stood at about $1.75 a gallon last week, down from a high of more than $4 last year.

Sales of the Prius in the US last year fell by 12 per cent last year, and plummeted 44 per cent in December alone.

Ford's much smaller hybrid sales fell by 22 per cent last year, slightly more than the overall US market.

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