The U.S. Department of Energy (DOE) proposes to issue A123 Systems, Inc. (A123), loan and grant funding to retrofit several existing facilities and construct and equip a new facility to support lithium-ion phosphate battery manufacturing operations for hybrid electric vehicles and plug-in hybrid electric vehicles. All facilities associated with the Proposed Action would be in the Detroit metropolitan area of southeastern Michigan. DOE prepared this Environmental Assessment (EA) in accordance with the National Environmental Policy Act of 1969 (NEPA), Council on Environmental Quality NEPA implementing regulations (40 Code of Federal Regulations CFR] Parts 1500-1508), and DOE NEPA implementing procedures (10 CFR 1021). The EA examines the potential environmental effects associated with the Proposed Action and the No-Action Alternative. Using the targeted benchmark of 2012 for production, the incorporation of 1 year's output of A123 lithium-ion phosphate batteries into plug-in hybrid electric vehicles and hybrid electric vehicles would be expected to reduce national fuel consumption by more than 1 billion gallons of gasoline and reduce emissions of carbon dioxide by approximately 12 million tons over a 10-year period. Therefore, the A123 project would help avoid and reduce emissions of air pollutants and human-caused greenhouse gases, as mandated by the U.S. Environmental Protection Agency for passenger cars and trucks pursuant to federal emissions requirements under the Clean Air Act (65 Federal Register 6698, February 10, 2000). The analysis did not identify adverse impacts to land use (zoned use), visual resources, water resources, biological resources, cultural resources, noise, or public health and safety from implementing the Proposed Action. The analysis identified small adverse impacts to air quality and traffic. The analysis identified small short- and long-term beneficial impacts to socioeconomics in the region of influence from job creation associated with the proposed project. The No-Action Alternative would not impact the environmental resources evaluated in the EA. If DOE did not issue A123 loan and grant funding, A123 would not proceed with the project. Without the financial assistance a DOE loan and grant would provide, A123 would not pursue creation of lithium-ion phosphate battery manufacturing centers in the United States. This would not be consistent with DOE Incentive Program and Vehicle Technologies Program goals.