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Posts Tagged ‘A123 Systems’

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.