Army buys EV trucks despite costs, fires

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News,Watchdog,Richard Pollock

U.S. Army officials are buying electric-powered trucks that can cost three times as much as the vehicles they replace even though the manufacturer admits its batteries are like those that have experienced fires during development tests by other automakers.

The Army EV trucks are part of the Department of Defense's response to President Obama's May 2011 Executive Order requiring that the entire federal fleet of vehicles use alternative fuels by 2015. Federal civilian agencies have nearly 60,000 cars and trucks. The Department of Defense is estimated to have more than 185,000 vehicles of all types.

The new trucks are designed and built by Smith Electric Vehicles, a financially troubled company that received $32 million in federal stimulus funds. The U.S. Army contract for the first five vehicles cost $1.47 million.

As Smith ramps up with increased production, the per-unit cost for the new trucks could come down, but still adversely affect the military's operational budget, according to some critics.

"If you're pulling money away to do things in the less efficient, more costly manner, that is going to take money away from readiness and training and it is going to impact your operational capability," said James Jay Carafano.

Carafano is a national security expert at the conservative Heritage Foundation, a retired Army Lt. Colonel and a weekly opinion columnist in this newspaper.

The Pentagon would be among the biggest purchasers of electric vehicles. The Army's Tank Automotive Research Development and Engineering Command (TARDEC) in Warren, MI, bought five Smith Electric "Newton" trucks in its first order.

Grace Bochenek, a former TARDEC director, said TARDEC's purchasing recommendations go beyond the small testing agency. "I have influence over somewhere between $35 and $40 billion of the budget that TACOM (the Army's Tank Automotive Command) executes," she said in an agency web posting.

A knowledgeable DOD official told The Washington Examiner that, depending how they are equipped, costs for each Smith Electric Army vehicle range from $168,000 to $228,000.

The vehicles include two stake bed trucks, a refrigerated box truck and a weapons reset vehicle. A bus remains to be delivered. Each EV truck has a range of 100 miles per charge and takes eight hours to recharge, according to Smith.

One of the trucks is in use at Fort Carson, CO, where a base utility manager claimed on the facility's web site that such vehicles would cost the Army 12 cents per mile, versus 40 cents for a conventional truck, a saving of 28 cents per mile.

Including in the upfront costs for the most expensive truck, and the projected fuel savings, the Army would break even on its $228,000 investment when the vehicle reached 564,000 miles. Traveling 100 miles per day would take 21.7 years to recoup the initial investment.

The Army's breakeven point for the cheaper trucks would be 350,000 miles. It would take 13 years to break even.

Battery fires have long been a problem for EV development. The Chevy Volt and Fisker Karma have experienced battery fires. Fires have been reported in both models, which use lithium-ion batteries, as does the Smith military truck.

Lithium-ion batteries, which are often used to power EVs, are listed as hazardous materials by the federal government.

Smith Electric told the U.S. Securities and Exchange Commission that similar battery systems on rare occasions "have been observed to catch fire or vent smoke and flames."

The Fire Protection Research Foundation warns the technology is still young. "Lithium-ion battery development in the automotive industry is in a formative stage," it said last year in a July study.

Smith Electric is in fragile financial condition. It has never turned a profit and recently reduced its production goals by 40%.

The company hoped to raise $125 million in an initial public offering last month. But that effort collapsed the day before the offering was scheduled for release when investors balked. The company then withdrew its IPO.

Despite that setback, CEO Bryan Hansel told the Examiner the "momentum has never been stronger." Investment response "was amazing" during his pre-IPO road show.

"But when it came down to it, we knew we were early. We were an early-stage company." He said prospective investors, looking at Smith's balance sheet saw too many risks and demanded a discount the company could not offer.

Richard Pollock is a member of The Washington Examiner's Watchdog reporting team. He can be reached at either rpollock@washingtonexaminer.com or 202-459-4909.

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