The past year was a dismal one for the passé idea that government would use taxpayer dollars responsibly, and that was nowhere more evident than with President Obama’s initiatives to promote “clean” energy technology companies and projects with so-called “stimulus” funds and other public money. NLPC reported extensively on some of the most egregious examples.
The little-reported bankruptcy of a relatively small electric vehicle battery manufacturer last month illustrates the many problems with President Obama’s green energy stimulus program, and why the more appropriate location for the ramblin’, gamblin’ White House might be Las Vegas.
Taxpayer stimulus waster A123 Systems has not only declared financial bankruptcy – its executives also seem to be driving toward moral bankruptcy as well.
CEO David Vieau and his lieutenants, after receiving well over $279 million in Recovery Act funds and at least $135 million from Michigan taxpayers, have run the company into the ground. Yet they have asked a bankruptcy court judge for his blessing to receive up to $4.2 million in executive and retention bonuses to see through the company’s takeover, likely by Johnson Controls.
As Bloomberg reported today, stimulus-funded electric vehicle battery maker A123 Systems filed bankruptcy in federal court after failing to make a debt payment that was due. Milwaukee Business Times has reported that Johnson Controls will purchase the “automotive business assets” of A123 for $125 million, and that A123 will receive from Johnson $72.5 million in “debtor in possession” financing to continue operating during the sale process.
Regular readers won’t be surprised, as the company’s gradual sink to its current depths – despite receiving hundreds of millions of dollars from taxpayers – has been covered by NLPC since late last year. A review:
Contrary to the excuses that Nissan has supplied about the loss of capacity for owners of the all-electric Leaf in the desert Southwest – especially super-hot Phoenix – a tightly-controlled test of a dozen of the vehicles showed that all of them experienced reduced range. Even a month-old Leaf could not recharge to 100 percent.
The Kansas City Starreported last week that Smith cut its production expectations and warning it is running low on cash, citing filings with the Securities and Exchange Commission. The company announced nearly a year ago it would seek $125 million through an IPO, but now says it hopes to raise about $76 million at a stock price of $16 to $18, according to a Kansas City Business Journalreport.
Seems like every time stimulus recipient battery-maker A123 Systems suffers bad news or a stock price hit, its leaders miraculously produce great news via press release that temporarily bumps shares higher.
The latest example came yesterday, when A123 announced a “technological breakthrough” called Nanophosphate EXT that officials claim would reduce or eliminate the need for cooling systems for overheating batteries, and lower the cost of electric vehicle batteries by $600. This followed news that A123 plans to hire 400 employees (125 were laid off in November) in the coming months, thanks to new contracts it has won. Apparently Wall Street was unjustifiably non-skeptical, as heavily subsidized A123 saw its stock price shoot up from $1.04 to $1.58 yesterday. A123 was given $249.1 million in stimulus funds to help launch two battery-manufacturing plants in Michigan, and also received grants and tax credits from the state that could total more than $135 million.
Despite a new report out of the United Kingdom that says the future of the business is bleak without government subsidies, a three-year-old unprofitable electric truck company that received $32 million in U.S. taxpayer stimulus plans to raise more money via an initial public offering.
In administrating its stimulus-fed loan and grants programs, the Department of Energy has been accused of incompetence, carelessness, recklessness, and cronyism. Now it can add inconsistency to those distinguishing characteristics.