Problems Pile up for Taxpayer-Subsidized Tesla

Tesla Tenn fireFires, faulty drive units, financial losses and stock price deflation marked Tesla Motors news in a week that seemed as bad as the last couple of years were good.

Fortunately for CEO Elon Musk and his support staff he’s mastered the art of celebri-preneur showmanship that he’s built enough standing with the media to endure a really bad week. The multi-billionaire who’s dazzled with innovation at Paypal, SpaceX and SolarCity will be permitted his stumbles because of his track record and his self-assurance. Henrik Fisker, whose taxpayer-backed luxury electric auto company didn’t get nearly the same favor, must be jealous.

But even Fisker Automotive didn’t suffer three vehicle fires in the space of six weeks, like Tesla’s Model S just did. The latest occurred Wednesday afternoon near Nashville.  The Tennessee Highway Patrol told Associated Press that the car’s driver ran over a tow hitch on Interstate 24. … Read More ➡

SPECIAL REPORT: The Carnahan Wind Deal: Crony Capitalism in Missouri

In this 23-page report, NLPC Associate Fellow Fred N. Sauer looks at Wind Capital Group (WCG), a St. Louis-based company that has been the recipient of Obama administration stimulus funding, as well as other significant tax credits and subsidies.

WCG was founded in 2005 by Tom Carnahan, son of the late Missouri Democratic Governor Mel Carnahan and his widow, former Missouri Senator Jean Carnahan. He also is the brother of former Missouri Secretary of State Robin Carnahan and former Congressman Russ Carnahan.

The firm’s core activity is building and operating wind farms in the Midwest, with a focus on the northwest part of Missouri. But to really understand how the firm operates is to know who has become wealthy as a result. WCG is now almost wholly owned by an Irish company, NTR plc. The Carnahan family’s expertise is politics, not business. And Wind Capital Group, though touted as an … Read More ➡

Inspector General Says DOE Hid Vital Info from Audit of Bankrupt Ecotality

Blink chargerAfter an Inspector General’s audit earlier this year of now-bankrupt electric vehicle charging company Ecotality, which determined that millions of taxpayer dollars were wasted in a nearly unworkable program, the IG has returned with findings that the Department of Energy withheld information about the project’s problems during his first investigation.

The audit, released by DOE IG Gregory Friedman in July, determined (among other things) that the persistent weak demand for electric vehicles harmed the deployment and timeliness of a $135 million-plus taxpayer funded charging network, which led to excessive grants and project expansion that became virtually unusable under the grants’ guidelines. Investigators discovered that conditions for reimbursement to Ecotality for the EV charging demonstration project were “very generous” and that cost-sharing requirements were extremely lenient.

Shortly after that report was released, on August 7, Ecotality informed DOE that it was in financial distress and that its ability to do … Read More ➡

Chevy Volt Sales Plunge; Cost to Taxpayers $15 Million in October

Volt and AkersonGeneral Motors had another disappointing month of sales for its much-hyped green wonder-car in October. Sales for the Chevy Volt plunged over 31 percent from last year, down to 2,022 units for the month. To put that number in perspective, Toyota sells that many Toyota Camrys in about two days. Or, GM is selling less than one Volt per Chevy dealership per month.

Despite the dismal sales figures, the loss to taxpayers for federal tax credits of $7,500 per vehicle that go to the wealthy buyers of Volts tallies out to $15,165,000 in October. If GM had come anywhere close to its initial lofty sales goals for President Obama’s favorite car (remember, he’s promised to buy one in three more years!) the tax bill would have been ten times the amount. I guess this is one instance where taxpayers can be thankful that GM’s false hope for the Volt did … Read More ➡

Alternative Bulbs: Another Phony Market Propped Up by Govt Mandates, Subsidies

Obama SwobodaEntrepreneurs in industries tied to the energy efficiency gambit, justified by the climate change House of Cards, all have the same false bravado: they are “game changers” and “market leaders” (for products nobody wants); all their squandered revenues are “investments;” their technological breakthroughs are always “just around the corner;” and it just takes one more round of mandates/grants/loans/tax breaks to achieve viability in the free market.

It’s true of renewable energy and electric vehicles, and as Cree Inc. CEO Chuck Swoboda (in photo with President Obama) revealed last week, it’s true of the alternative light bulb industry too. In a shareholder meeting at the company’s Durham, N.C. headquarters, he boasted about his marketing acumen that he says will persuade the public to embrace Cree’s light-emitting diode (LED) technology and abandon the traditional light bulb – which consumers will soon have no choice about. The meeting featured some new Cree television … Read More ➡

New Tesla Fires, Old Volt Ones Explained, Not Absolved

Tesla fireTesla’s once-Teflon Tony Stark Elon Musk, the adored Paypal/SpaceX/electric-car innovator who’s been showered with unmitigated media praise and highly inflated stock values, has another lithium ion battery fire to explain.

This one happened after a Model S crash in Mexico. The last one happened less than a month ago in Kent, Wash. Since then Tesla’s share price has fallen from $193.90 on Sept. 30 to $160.58 this afternoon. The irrational exuberance that made the electric automaker the darling of Wall Street has now become merely excitable, although still unjustifiably so. Even Musk himself told Bloomberg last week, “The stock price that we have is more than we have any right to deserve.”

While the fanboy fave exhibited a measure of humility about Tesla’s stock market prestige, the two fires have not moved the needle in that respect. The official stance the company took in both cases … Read More ➡

State Pension Funds and Big Investment Firms: What Could Possibly Go Wrong? (Part 2)

Piggy bankLast month, I wrote about pressure on state pension funds, many of which are underfunded and are facing immense pressure to chase higher returns. I profiled a $125 million investment made by the New Mexico Educational Retirement Board (NMERB) into Gramercy, a Connecticut-based hedge fund.

As we showed last month, there were some gaps between what Gramercy disclosed to NMERB and what we found in official records. Now Gramercy is making big news as a potential facilitator of a settlement between Argentina and holdout creditors.  According to news reports, Gramercy and other bondholders who took Argentina’s 2010 bond exchange are pushing a settlement.

Apparently this has been in the works for a while, according to a presentation Gramercy made to New Hampshire’s retirement fund in 2012. Click here to download a 47-page pdf version. We obtained this via New Hampshire’s Right-to-Know law. Note the detail on page 22 on Gramercy’s … Read More ➡

Taxpayer-Funded Solar Company Leaves Environmental, Financial Mess

solar panelsIt may be the height of irony that a company that was supposed to soar to the top of the new clean energy economy, with the help of U.S. taxpayers to undergird President Obama’s stimulus visions, has instead left both an environmental and financial mess after its demise.

Yet that’s exactly the case with miserable failure Abound Solar, which the president’s Department of Energy thought so much of, they awarded it a $400 million loan guarantee. That proposition quickly soured and the government halted payouts after about $70 million. The company went bankrupt in June 2012, leaving taxpayers out between $40 million and $60 million that was never recovered.

There was other collateral damage, not the least of which was a huge toxic mess from unused panels and abandoned chemicals at Abound’s former facilities. The environmental nightmare was discovered earlier this year, but this month – thanks to … Read More ➡

GM Dealers Say Low Demand, Not Lack of Supply Explain Poor Truck Sales

Chevy pickupThe past month has brought much confusion and concern for General Motors’ shareholders regarding the most important and profitable segment of sales for the company. As the company prepares to report earnings for the third quarter this week, media reports are still unclear on just what is going on with GM’s new truck lineup; specifically pertaining to the reasons behind the disappointing sales figures that were reported for the month of September when Ford’s truck offerings left them in the dust.

While GM’s Obama-appointed management spun the story (claiming supply could not keep up with demand) to some in the media who are gullible enough to print the misinformation without question, some GM dealers were more honest with their assessment.

GM’s management has lots of experience when it comes to trying to deceptively explain away poor sales of much-hyped vehicles. The Chevy Volt has never lived up to … Read More ➡

FBI Again Raids Offices of Dr. Salomon Melgen, Sen. Menendez Biggest Donor

Melgen and Menendez

As the Palm Beach Post reports, the offices of Dr. Salomon Melgen were yesterday again raided by the FBI, evidencing an ongoing investigation into what appears to be Medicare fraud. Melgen is the largest campaign donor of Senator Robert Menendez (D-NJ). In 2012, he contributed $700,000 to a super PAC affiliated with Senate Majority Leader Harry Reid (D-NV) that spent the bulk of the funds for Menendez’ re-election.

The Post notes that Menendez went to bat for Melgen on a port security deal in the Dominican Republic. These actions on Melgen’s behalf were first reported by the New York Times on February 1, 2013, based on information provided by NLPC. The Washington Post reported in March that Menendez’ advocacy on behalf of Melgen is the subject of a grand jury investigation in Miami.

New York Times reporters Ray Hernandez and Frances Robles detailed how Menendez sought to … Read More ➡