Obama Big Bad Electric Battery Blunder
President Obama’s energy policy is in free-fall. First Solyndra and solar panels, now electric cars and batteries. Together both Obama green energy sectors have cost taxpayers nearly $1 billion with nothing to show.
Swept under the political rug last week, Obama-backed electric car battery maker A123 Systems Inc quietly filed for bankruptcy. It lost taxpayers $249 million. That is half the cost to taxpayers of bankrupt Solyndra, CEOed by high profile Obama campaign fundraiser Jon Corzine.
Veiled under green energy glamor is an economic nightmare.
It wasn’t even the first taxpayer supported electric car battery maker to go belly up this year, either. Ener1 went bankrupt in January. That Obama-backed venture cost taxpayers $118 million.
The A123 Systems “success” Story
On May 1st 2010, A123 Systems was paraded before cameras by President Obama as a green energy “success” story at a Rose Garden ceremony. It had been given $249 million in 2009 ARRA “stimulus” money.
It is a touted part of Administration economic strategy, repeated often in Presidential speeches, to corner the world market in electric car battery production by 2015.
At the ceremony, A123 electrical engineer James Fenton gave a speech called “Fulfilling My Father’s Dream” published by the White House.
It is one of those tearjerker stories of a 25-year employee with kids in college who got laid off in October 2009 from an Oregon company during the Great Recession. He was hired full-time by A123 in March 2010 into the new-age futuristic world of electric car battery manufacturing.
Fenton was shown off as an example of new, high paying jobs available in green energy technology. The President said A123 would create 3,000 of those jobs by the end of 2012. Whoops!
Flush with taxpayer money, A123 Systems – ticker AONE – went public in late 2009 with an IPO price of $20/share. At the close of market on Friday, it was trading at 13¢/share and valued at $45 million. Bye, bye $249 million!
A123 Systems “success” story lasted just 29.5 months after Fenton told his story.
Now, circling the carcass like vultures are Johnson Systems Inc and Chinese auto parts maker Wanxiang Group Corp. They are vying for control of A123’s assets. Johnson Systems, another Obama-backed taxpayer-supported car battery company, has offered $125 million. Wanxiang offered $465 million in bailout capital.
A123’s assets are scheduled for sale at auction by bankruptcy court. U.S. taxpayers, of course, are left out in the cold… just like with Solyndra.
Electric Car Industry Faltering
Major automakers are dropping electric vehicles like hot potatoes. Two of the top 5 tax supported car battery manufacturers (A123 and Ener1) have went bankrupt this year.
The electric car battery industry is in disarray. It is for the same reason any industry gets in trouble – too few customers and flagging sales.
In a government CBO report titled “Battery Manufacturing for Hybred and Electric Vehicles: Policy Issues” in March 2011, the Obama Administration projected annual sales of plug-in hybrid and all-electric vehicles at 177,600 in 2012. So far this year, there have been only 31,099 sold.
In the 2011 State of the Union Address President Obama said the United States will “become the first country to have a million electric vehicles on the road by 2015”. That ain’t gonna happen. There are barely more now than there were in 2007, according to the EDTA.
The Administration has seriously underestimated sales of electric vehicles in this country.
It placed horse-racing bets on a losing nag.
Why Electric Cars Aren’t Selling
Electric cars are appealing for two reasons:
- They cost about $1/gallon equivalent to operate
- They produce no CO2 emissions
They got a whole lot of serious down side:
- High vehicle sticker prices
- Limited range (≈150 miles)
- Long battery recharge time (7h on home 240V circuit)
- Short battery lifespan (100K miles)
- High cost of battery replacement ($3,700 for Prius)
- Lack of charging stations
- Environmentally unfriendly battery disposal
With current technology, electric cars are best suited in the 2nd-vehicle, short-distance commuter car niche market. Except for plug-in hybrids run with fossil fuels, they are not good for the open road. They won’t be until after 2020 sometime.
The electric car industry subsidies will run out far short of the time it will take electric cars to become practical.
In the 2012 State of the Union address President Obama said, “I will not cede the wind or solar or battery industry to China”.
Yet if Wanxiang gets its way, and it is offering more money than Johnson Systems, this is what is going to happen.
The bottom line is that electric cars have many years to go before they are practical. Early adopters are discovering that now and the news is spreading. Popularity of electric vehicles is waning with each $3,700 weak Prius battery that needs replacement.
Obama critics fault the Administration’s green energy policy for picking winners and losers that lose. In the case of electric car batteries, they are right.