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Archive for the ‘Electric Cars’ Category

Solar Panel Companies Investigated for $500 Million Fraud; Fisker Out of Batteries & Money

In Electric Cars, Government Spending, Obama Administration on December 16, 2012 at 9:51 pm

Electric car

Electric car


Direct Federal aid to private, for-profit companies in the energy sector continues to careen off the road. The Washington Post reported the Inspector General is looking at three specific firms.

“Three of the country’s most prolific installers of residential solar panels are under federal investigation to determine if they inflated the cost of their work to increase the payments they would receive from the government, according to government and industry officials familiar with the probe.”

“SolarCity, SunRun and Sungevity have received subpoenas from the Treasury Department’s office of inspector general for financial records to justify more than $500 million in federal grants and tax credits the firms tapped for performing work. The probe seeks to determine whether the companies accurately reported the market value of their costs when applying for federal reimbursement, which was calculated at one-third of the costs.” [1]

This expense is part of the Obama Administration’s $13 billion 1603 Program that provides energy give-aways.

Another recipient of government energy policy largess, Fisker Automotive, who cashed $192 million from the Feds, is in a different sort of trouble. Fisker is the maker of the flop Karma, one you won’t seen on the road since it’s sold fewer than 2,000 cars. The vehicle has the wrong sort of karma, with numerous recalls and quality problems (like catching on fire [3] [4] [5]. Its battery supplier A123 Systems, another government cash recipient, failed [6]and now Fisker needs another battery maker in order to restart Karma production. Money-losing Fisker also lacks cash to complete the engineering on a planned second electric car model, the Atlantic. [2]

[1] http://www.washingtonpost.com/politics/solar-firms-probed-for-misrepresentations-in-getting-public-money/2012/12/13/0ba07656-4496-11e2-8e70-e1993528222d_story.html
[2] http://pevc.dowjones.com/Article?an=DJFVW00020121207e8c7ifi2s&cid=32135016&ctype=ts&pid=32&ReturnUrl=http%3a%2f%2fpevc.dowjones.com%3a80%2fArticle%3fan%3dDJFVW00020121207e8c7ifi2s%26cid%3d32135016%26ctype%3dts%26pid%3d32
[3] http://reviews.cnet.com/8301-13746_7-57543123-48/swamped-fisker-karma-electric-cars-catch-fire/
[4] http://www.autoweek.com/article/20120508/CARNEWS/120509860
[5] http://www.insideline.com/fisker/karma/2012/second-2012-fisker-karma-fire-under-investigation.html
[6] https://econscius.wordpress.com/2012/10/18/249-million-obama-grant-recipient-defective-battery-maker-a123-systems-bankruptcy/

Photo by author.

$249 Million Obama Grant Recipient, Defective Battery Maker A123 Systems Bankruptcy

In Electric Cars, Government Spending, Obama Administration on October 18, 2012 at 12:04 am

A123 Systems, Inc. logo.svg

The flailing saga of private firms going bankrupt after massive infusions of public funds continues with A123 Energy.  It defaulted on its debt and is declaring bankruptcy.  It received a $249 million grant in strings-free taxpayer money, using $129 million to build a factory.  [1]  It was a grant of money, not a loan, not equity. 

Like Solyndra and others who received government money, it didn’t live up to its job creation promises (touted by President Obama in 2009 as going to create “more than 3,000 [jobs] by the end of 2012.” [2]  Not quite.  It shipped defective batteries, leading to a $55 million recall and was selling batteries at a ratio of $1.57 cost to $1 revenue. [3]  Not a long-term winning strategy.

A123 is just another example of why governments, regardless of the party in the White House, should never, ever pick and choose winners, or as Mitt Romney pointed out, “pick losers” in private business.  They use scarce tax dollars and, sadly, fail because politicians like Mr. Obama haven’t a clue about what is a good or bad business idea.

Considering President Obama’s dislike of many for-profit corporations, the hand outs to private firms like Solyndra, A123 and Johnson Controls make no sense whatsoever.  Good ideas will get built on their own, they don’t need government hand-outs. 

[1] http://blogs.wsj.com/corporate-intelligence/2012/10/16/187/

[2] http://online.wsj.com/article/SB10000872396390443675404578060882850041910.html?KEYWORDS=electric+car+crash

[3] http://www.technologyreview.com/news/427991/what-happened-to-a123/

Pictures (A123 Systems logo & Solyndra building with “for sale” sign) from Wikipedia Commons.

Government Backed Fisker Car Breaks Down for Consumer Reports

In Electric Cars, Obama Administration, Top 1% on March 12, 2012 at 1:14 am

Consumer Reports tests new cars.  Sometimes flaws are exposed but the US government backed Fisker, a subsidized $107,850 car for the ultra-rich, gave Consumer Reports a new experience when it suffered a catastrophic malfunction with less than 200 miles on the odometer. [1]

We the taxpayers are playing venture capitalists through the US government’s backing of start-up electric car companies.  Fisker, which builds its cars in Finland, received a $529 million US government loan. [2]

Consumer Reports wrote: 

We have owned our [Fisker] car for just a few days; it has less than 200 miles on its odometer…. After calling the dealer, which is about 100 miles away, they promptly sent a flatbed tow truck to haul away the disabled Fisker.

We buy about 80 cars a year and this is the first time in memory that we have had a car that is undriveable before it has finished our check-in process.

We encountered other problems with a Karma press car that visited the track for a few hours, and we have heard of problems at press events. In addition, we see that some owners are experiencing a variety of issues, as evidenced by forums such as FiskerBuzz.com. [1]

Financing a brand new venture is always a risk.  The US government deals to back private car companies are wrong on many levels. 

First, the risk is asymmetric: if a company like Fisker is successful, the benefit goes to its investors.  They might become very rich.  At best, the US taxpayer gets its money back, but the interest rate charged Fisker is below market rates, meaning it is a lousy deal, even if successful.  At worst, companies like Fisker fail and the taxpayer is never repaid.

Second, it is an improper role of the government to back private, for-profit companies.  It is picking winners and losers.  It amazes me we hear so much about bank bailouts and the “1%”, yet few decry this sort of corporate welfare. 

Thirdly, there is no need.  Venture capital and banking are long-established in the US.  Private companies with promising outlooks will find financing without burdening the already stressed US Treasury.

Fourth, the money is subject to politics and it may or may not be coincidence Obama campaign contributors just happen to back a private electric car company that received a government loan. [2] 

 

[1] http://autos.yahoo.com/news/bad-karma–our-fisker-karma-plug-in-hybrid-breaks-down.html

[2] http://abcnews.go.com/Blotter/car-company-us-loan-builds-cars-finland/story?id=14770875

For more on electric car subsidies, specifically Tesla, see also: https://econscius.wordpress.com/2012/02/01/road-trip-to-see-your-tax-dollars-at-work-140000-car-for-the-1/.  Pictures from Wikipedia.

$10,000 Government Cash For The Rich: $175K Earners Get Volt Rebates

In Electric Cars, Obama Administration, Tax Breaks, Top 1% on February 28, 2012 at 10:44 am

I hope you enjoy subsidizing the rich because President Obama loves the rebate checks sent to the crème-de-la-crème who can afford ultra-expensive electric cars.  Mr. Obama is proposing expanding the free money to $10,000 per vehicle.  Is this a good idea?

Sure, if you are a rich buyer of an electric car.  The average annual income of a Chevy Volt buyer is $175,000. [1]  By comparison, Nissan Leaf buyers are relative paupers, earning a mere $125,000 a year. [2] No wonder they need the check from Uncle Sam!   It turns out the Leaf isn’t attracting buyers new to hybrids for all that money, either, most Leaf buyers already have owned a hybrid. [2]  But they will get your taxpayer money, anyway.

Electric cars still have problems like short battery lives and high costs, thus the Obama Administration is determined to sell thousands more of these expensive cars through highly expensive subsidies.  I would prefer to have people use their own money to buy their cars; this is doubly so for the rich consumers who buy Teslas and Volts. [4]

[1] http://autos.aol.com/article/why-the-chevy-volt-is-attracting-wealthy-buyers/

[2] http://www.greencarreports.com/news/1049202_just-who-is-a-typical-2011-nissan-leaf-buyer-we-find-out

[3] http://content.usatoday.com/communities/driveon/post/2012/02/president-obama-budget-electric-car-subsidies-chevrolet-volt/1

[4] Rebates were $7,500 from the US Treasury (an additional $5,000 available from the State of California), pending the President’s proposed expansion to $10,000 per car.  http://www.mychevroletvolt.com/chevrolet-volt-tax-incentives-and-rebates

Pictures from Wikipedia Commons.

Road Trip to See Your Tax Dollars at Work: $140,000 Car for the 1%

In Electric Cars, Federal Deficit, Obama Administration, Tax Breaks, Top 1% on February 1, 2012 at 11:30 pm

In the interest of optimizing your blog reading experience, econscius went mobile today to see what all the taxpayer subsidies are doing for us in the world of electric cars. 

I took my blog on the road to see a Tesla Roadster at a Tesla Motors showroom.  More precisely, the Tesla vehicle at a Tesla Motors showroom.  These things aren’t exactly flying off the shelves and there is only one at the nearby dealership.  The car is very sharp, indeed, but it runs about $140,000.  The base price is supposed to be $109,000 so I am unclear why they were quoting me a much higher price.  Perhaps this yellow one has some upgraded options or maybe it is just supply and demand, they only have the one for sale here.  Perhaps I’d need to negotiate better.  Nevermind, though.  If you can afford $109,000 plus Illinois sales tax, you probably can afford $140,000.

The car is an example of fine design and engineering.  If I ever sell advertising on this blog and become filthy rich, sure, it would be nice to have one or two of these in an expanded garage!

“Filthy rich”?  Does that imply the 1% to you?  You know, the folks who earn over $343,927 a year? [1]  There are not many working class people who can afford to purchase a Tesla.

I hope you don’t mind a few Reverse Robin Hood manuevers subsidizing your 1% neighbors who’d like a Tesla!  Because you are doing exactly that.  According to the IRS, this Tesla Roadster qualifies for a $7,500 tax credit under Internal Revenue Code 30D, the “Qualified Plug-In Electric Drive Motor Vehicles”. [2]

There was a tax break of up to 50% of the cost of a battery charger installed in your garage, but the new frugal Congress just ended that credit. [3]

Tesla also received a $465 million loan from the Federal Government to develop an electric sedan. [4]  Unlike some other bankrupt Obama Administration green initiatives (think Solyndra, Beacon Power or Ener1), Tesla has not yet defaulted on its loan.  Also, there actually is a car here that runs and is freeway legal in every state.  Perhaps even more surprising, the Tesla is mostly made here in America unlike the Fisker electic car which is backed by a $529 million US government loan, only to be made in Finland! [5]  Tesla liked its first loan from you, the taxpayer, so much it was requesting a new one, but that financing need seems to have died down in the wake of the Solyndra scandal. [6]   Oddly enough, Tesla has never been profitable and continues to rack up a half billion in losses, despite the taxpayer assistance and the high price of the Roadster. [5]

This roadster will only go 244 miles on a battery charge [7], so it is best for cruising around and showing off to the yard help in a 1% neighborhood; it is not for driving the kids to camp or seeing the relatives in Ohio.

Thank you for reading, but please get back to work; President Obama and your Tesla desiring wealthy neighbors would appreciate you working a bit harder to provide the taxes to fund these cool toys for the 1%!  The Obama campaign contributors who will reap the rewards if Tesla is successful [5] surely would appreciate you putting in a little ovetime so they can get richer.

I know, I know, you say “what ever happened to Venture Capital?”  Yes, it is true that way back, before 2009, private investors used to invest their own money in new business ventures.  It worked for Microsoft, Groupon, Facebook, eBay, Amazon and thousands of other companies.  But that is so pre-Obama.  Today, private investors still put forward new companies but instead of turning to Venture Capitalists for funding, you the taxpayer are to be on the hook for tens of billions in government “investments”.  Enjoy the view of the Tesla, you paid for it!

Roadster 2.5 windmills trimmed.jpg

[1] https://econscius.wordpress.com/2011/11/17/who-are-the-top-1-most-arent-in-finance-fewer-still-in-mortgages/

[2] http://www.irs.gov/businesses/article/0,,id=214841,00.html and http://www.fueleconomy.gov/feg/taxevb.shtml

[3] http://www.usatoday.com/money/autos/environment/story/2011-12-30/electric-car-charger-tax-breaks/52234182/1

[4] http://www.wired.com/autopia/2009/06/tesla-loan/

[5] http://abcnews.go.com/Blotter/car-company-us-loan-builds-cars-finland/story?id=14770875

[6] http://blog.sfgate.com/energy/2011/09/28/tesla-fed-loan-update/

[7] http://www.carsdirect.com/electric-cars/how-much-does-the-tesla-roadster-cost

Showroom picture by author.  Windmills and roadster picture from Wikipedia Commons.