A foreign renewable energy company, that U.S. taxpayers hold a major stake in via the Department of Energy Loan Program Office, is imperiled by massive debt and has begun the process of negotiating with its creditors as a prelude to possible bankruptcy.
The company is Abengoa, based in Spain, which reportedly holds 887 subsidiaries around the world. Reuters reported at the end of last month that investors declined to provide needed capital for the firm, which led to what is called, under Spanish law, “pre-insolvency proceedings.” That entails a four-month attempt to alleviate debt burdens. If that falls short, then formal bankruptcy proceedings would likely follow, which would be Spain’s largest in history. Effects would ripple globally.
Oh, sure, after another dismal performance (operating loss of $47 million) for Tesla Motors during the most recent quarter, its stock price took an immediate dive of 9-10 percent. But while that merely returned the electric automaker back to irrational exuberance territory – as compared to the drunken sailor highs it has enjoyed in recent months – it didn’t take long for some market analyst to restore the inflation.
This time the “research” was conducted at the University of Southern California and the University of California at Los Angeles. The test subjects were 20 children between the ages of 10 and 15, who were exposed to up to 300 micrograms of diesel exhaust particles via nasal spray, as part of a project that ran from 2003 to 2010. The information was uncovered in documents obtained via the Freedom of Information Act by the Energy & Environment Legal Institute and the Committee for a Constructive Tomorrow, and explained in detail at the Web site JunkScience.com.
But despite that legislatively unanimous award from three months ago, and a stock price that has flown high for most of the year, there are signs that the shine over the luxury electric automaker is beginning to dull.
Perhaps the most noteworthy skepticism has arisen from popular automotive Web site Jalopnik, which otherwise has been a fairly reliable (but not robotically so) cheerleader for Tesla. An end-of-year article written by blogger Damon Lavrinc recounts the automaker’s legacy of non-fulfillment and asks, “What will Tesla and Elon Musk over-promise next?”
NLPC has extensively documented how Tesla Motors has taken advantage of market distortions to reap revenues – including government mandates, subsidies, and taxpayer support – not the least of which have been so-called “zero emission credits” from the state of California. But much of the revenue Tesla enjoyed last year – which often meant the difference between profit and loss – was credited based upon theoretical technological capabilities and not ones actually put into practice.
CEO Elon Musk has also relied on accounting gimmicks to enhance his bottom line over the last 18 months, during which a couple of quarterly earnings reports even showed a profit – albeit under non-Generally Accepted Accounting Principles. Those handsome returns were achieved in part thanks to a scheme administered under the California Air Resources Board in which additional zero emission credits are awarded to vehicle manufacturers based upon the ability for models to “fast fuel.” In the case of Tesla and other electric vehicle makers, the faster a car can recharge to the point it can drive a longer distance, the more credits it receives.
Last week AAA released findings from tests it had run on three models of electric automobiles, and announced that the heavily subsidized vehicles suffer dramatic driving range loss in both cold and hot temperatures.
The news wasn’t new, but apparently the broader media noticed because the pronouncement from the nation’s largest consumer automotive club made it official. NLPC (beginning with a Consumer Reports experience) has reported from time to time on such problems since late 2011. The Tulsa Worldreported that AAA found driving distance for electric vehicles can be diminished up to 57 percent in extremely cold temperatures, and by one-third in very hot temperatures.
The Obama administration Green-stimulus losing streak continues. The two luxury electric automaking companies, where the Department of Energy deemed taxpayer “investments” should be placed at risk, don’t inspire confidence.
Were the late Saturday Night Live cast member Gilda Radner still with us today, Tesla Motors might look to her character Emily Litella for its latest public relations campaign to address overheating and fires with its Model S charging systems.
“Never mind,” the Weekend Update commentator would say.
That’s was also essentially the response from Tesla on Friday when the company announced – after it had vehemently denied any culpability about overheating systems or power cords just three weeks earlier – that it would send all Model S owners new cords to replace the defective old ones. This followed a garage fire in Irvine, Calif., which local authorities blamed on either “a high resistance connection at the wall socket or the Universal Mobile Connector from the Tesla charging system.” New charger connectors will be mailed in the next two weeks, according to a Bloomberg report.
Last year at this time NLPC reviewed 2012 as “The Year of Taxpayer ‘Green’ Waste,” and that description applied to 2013 as well. But additional trends of government opaqueness and inattention to safety and security – often related to stimulus-funded programs and their corporate beneficiaries – were also revealed.