Solyndra

Fisker = Solyndra

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Fisker car
Credit: Boykov | Dreamstime.com

This afternoon the House Committee on Oversight and Reform will hold a hearing entitled, "Green Energy Oversight: Examining the Department of Energy's Bad Bet on Fisker Automotive," about the imminent bankruptcy of that would-be electric car maker. As all the world knows, the Obama Administration's minions shoveled billions in loan guarantees out of the Department of Energy in a bid to jumpstart a Clean Energy Revolution.

Then came the parade of bankruptcies: Solyndra, Beacon Power, Ener1, A123 Systems, Range Fuels, Abound Solar, and more. Yesterday, Reason 24/7 reported that the Department of Energy has seized $21 million from Fisker, the electric car company that received $192 million in federal loans that were suspended amid problems in 2011.

Today's New York Times reports:

Veering on the edge of bankruptcy, without a buyer in sight, Fisker has become — to lawmakers and others — the Solyndra of the electric car industry. Not only private backers but millions of dollars in government loans gave life to a company, some would argue, that was a shaky investment from the start.

No electric vehicle initiative backed by Washington seems more of a debacle than Fisker, which was given a $529 million federal loan in 2009 to advance the project. Two years later, after Fisker repeatedly missed production targets and other deadlines, the Energy Department suspended the loans.

Of course, the world-weary venture capitalists at DOE can explain it all away:

An Energy Department spokeswoman, Aoife McCarthy, said the loan to Fisker was one of only a handful of 33 clean-energy loans that did not prove successful. She asserted that its problems should not be considered representative of the Obama administration's broader efforts to promote cleaner cars.

"There will always be an element of risk with investments in the most innovative companies," she said. Major automakers like Ford and Nissan received billions of dollars in federal loans to produce electric cars and, so far, have succeeded.

Of course, when venture capitalists take risks with their own money, that's a bit different than when bureaucrats risk taxpayer dollars.

And Ford and Nissan have succeeded so far? That remains to be seen. In the case of Nissan, it's battery plant in Smyrna can manufacture 200,000 Leaf all-electric car battery packs per year, but since demand for the Leaf is running at 2,000 per month, it actually produces around 24,000 per year. By the way, the project is backed by a $1.4 billion federal loan.

The Times quotes Detroit-based corporate restructuring executive Van Conway:

"The government is playing in a space where they have to recognize their limitations."

Well, yes.

Maybe an argument can be made that the government should support basic and applied research, but the overwhelming evidence is that the feds do a terrible job when it comes to development and commercialization. 

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  1. No electric vehicle initiative backed by Washington seems more of a debacle than Fisker, which was given a $529 million federal loan in 2009 to advance the project.

    There’s nothing more American than taking risks!

    1. Having the taxpayer take the risk for you, and keeping the reward for yourself if it goes well.

    2. With other people’s money!

  2. I just don’t get all of this. Gas prices are pretty high these days, so there’s a small, but growing market for alternatives. Not to mention the small market for “greener” alternatives. Why not leave this to the market? If they want to look like they’re doing something, they could just offer some tax relief or some other bullshit.

    1. If they pick the right thing they get all the credit. Plus they can send money to friends or important districts.

      1. Sure, they crave the pork to dole out, but there are plenty of other ways they can do that rather than dropping the money in an unprofitable hole.

        1. I love the money fires!

          1. If you love America you put money in its money hole!

    2. Why not leave this to the market?

      Because all greedy capitalists care about is profits.
      Even with gas prices where they are, there still is no profit in alternative fuels.
      Since greedy capitalists care only for profits, and stupid selfish consumers don’t do the right thing and pay more for alternatives, these ventures must be subsidized by our betters in government.

      If only the market were abolished, and all economic decisions were up to central planners. Then we’d have an electric Trabant!

    3. Why not leave this to the market? If they want to look like they’re doing something, they could just offer some tax relief or some other bullshit.

      Because markets don’t move quickly enough. They need to be nudged along by wise bureaucrats who are always ahead of the curve.

      Bullet point: There’s this new craze that’s going to sweep the nation: Fixed-rail street cars. Politicians in cities all over the west are one step ahead.

    4. It’s Springtime for Hitler. They invest in schemes they are 99.9% sure to fail, because the failure will mask the graft.

      1. They invest in schemes they are 99.9% sure to fail, because the failure will mask the graft.

        This.

        It’s all about giving as much money to their friends and donors as possible. The only thing the government is “investing” in is the future of its friends.

  3. How could anybody be opposed to subsidizing rich people’s lifestyle accessories?

    Fucking nihilists.

    1. We subsidize things for rich people all the time, but it’s okay when we subsidize things for the right rich people. That’s why the class warriors don’t mind subsidies for things like Fisker, NPR, and high culture.

  4. I am aware of an environmental products company that built a $350 million plant on a guaranteed federal loan. The capacity of the plant is approximately 200% of the current market demand for its product, it is currently operating at about 30% capacity based on estimated sales of its product. Many in the industry are curious about when and whether this foul malinvestment will reveal itself to be bankrupt. It’s hard to imagine that it is even making enough to cover the interest payments on the load, based on sales and the product’s known selling price.

    The kicker is that this project has quite possibly discouraged other competitors from entering the market because of the plant’s serious overcapacity compared with the predicted market size.

    1. That’s what the educated people in our big media outlets call “Keynesian economics”.

      If you don’t understand the genius behind it, then you must be a redneck.

      1. If you don’t understand the genius behind it, then you must be a redneck capable of solving basic math equations.

    2. “It’s hard to imagine that it is even making enough to cover the interest payments on the load”

      Maybe they got Ben to do one of his “reverse interest” loans, like he did with the banks.

  5. Well, obviously, if venture capitalists around the world won’t back your technology, then it’s because they don’t understand the dynamics of the new economy.

    It takes a genius like Obama to see through it all and into the future.

    1. Yeah, what would the private sector know about what does or doesn’t work in the private sector? For that, we need politicians and community organizers.

      1. Yeah, if Obama thinks he knows something that the venture capitalists, who picked over these deals and rejected them, don’t know? Then he’s even more ignorant and dangerous than we feared.

        1. News flash: He’s more dangerous and ignorant than we feared.

          1. Hahahaha, too true. Oh wait, too true, FUUUUUUUCK.

  6. If you’re trying to develop a seriously energy inefficient platform, the best thing to do is load it up with a lot of additional weight and complicated energy-sucking gizmos.

    1. And make sure your owner’s manual says to turn off the AC if you want to get to the next charging station.

  7. The original sin here is not shoveling out free money to “clean energy” companies, but giving the feds the power to shovel out money to any company for whatever half-assed reason they come up with.

    “Clean energy” is just the favored idea of the current set of guys. For guys in the past and the future it will just be something else. Granted they’ve managed to select one of the least profitable industries in the country, but it’s still worth noting that the problem goes well beyond “clean-energy.”

    1. This is exactly what I was thinking. It’s not like these people are a bunch of venture capital sharks in a room deciding if they want to invest their own money in something; it’s braindead political hacks deciding where to shovel someone else’s (our) money. There probably isn’t even a fig leaf of an attempt to justify ROI; just idiotic political considerations.

      I’ve said it many times, but I guarantee that if any of us were privy to the insane shit that goes down behind closed doors with politicians, even we would be absolutely stunned by how fucked it is. I guarantee it’s beyond any of our comprehension.

      1. Same here. I know it’s accepted wisdom (right up there with FDR saved us from the Depression) that basic research is something that government should be doing but what makes them able to pick winners and losers accurately in that when they can’t in any other area? I mean, there’s not unlimited funding for all research. Something has to be prioritized at the expense of some other pursuit.

        Maybe I should have just put they’re poor at picking winners because they’re excellent at picking losers.

      2. This is why claims that the stimulus even could work are bullshit. If I’m taking a lot of my money and investing it, I’ll do everything in my power to ensure that the investment pays off. Even if I’m giving the money to a charity and expect no return on my investment, I’m going to pick a charity that actually spends the money primarily on things I care about, not just lining its pockets.

        With the government, the decisions are always about politics. Usually about the personal politics of the person leading the funding charge. So, naturally, that funding rarely makes economic sense.

    2. “The original sin here is not shoveling out free money to “clean energy” companies, but giving the feds the power to shovel out money to any company for whatever half-assed reason they come up with.”

      At the time, they were calling it Keynesian. Us rigid ideologues were just too stupid and rednecky to understand the genius behind it.

  8. even if it had worked out, why is government subsidizing luxury cars for the rich a good idea?

    1. even if it had worked out, why is government subsidizing luxury cars for the rich a good idea?

      The subsidy is lame, but its lame because it’s a market distortion. A great many technologies started off as play things for rich early adopters. They work out the kinks and make the technology more cost effective and then the rest of us get it. Gadgets and gizmos are a prime example, but hybrid cars have already gone from being pure status symbols to relatively common place.

  9. Fisker = Solyndra = Tesla with fewer connections, if you know what I mean.

    1. Fewer connections… I see what you did there.

      Nice.

  10. You see, Mr President, in order for a new product to be successful, it needs be BETTER than the product it is replacing. No amount of subsidy will entice people to trade in their current cars for a vehicle that can only go 80 miles on a charge.

    /Business 101 student

    1. Only Randroid teathuglicans think like that.

    2. …”a vehicle that can only go 80 miles on a charge.”

      Tesla is claiming ~200m/charge.
      First, like any advertising claim, knock 10-15% off just ’cause we know the one that got that far never left the factory. Now, assume you’re running the AC or heater or wipers and knock, what, another 10-15% off.
      Finally, did anyone here ever run a tank empty (on purpose)?
      So let’s be honest; along about 100 miles, you’re beginning to look around for the next charging station.
      What a relaxing, enjoyable way to cruise up to the wine country!

      1. They do seem to work for limited situations. Namely if you have a short to mid range commute to work and maybe a charging station at work.

        1. And never drive anywhere else….

        2. Auric Demonocles| 4.24.13 @ 12:01PM |#
          “They do seem to work for limited situations. Namely if you have a short to mid range commute to work and maybe a charging station at work.”

          It seems plug-ins are ideal for certain applications; in-city delivery vehicles, as you mention, commute; short distances, long parking times.
          But take a look at the Tesla; that’s designed to compete with big, cruising sedans.
          SF to LA in only three days!

        3. So then I need to buy two vehicles. One for short commutes and one for trips. Thats efficiency!

          1. “So then I need to buy two vehicles. One for short commutes and one for trips. Thats efficiency!”

            Agreed. And those pitching the Tesla as ‘green’ conveniently ignore that.

            1. Sure, but many families/couples already have more than one car anyway. If one of them could be electric for commuting/errands and the other gasoline for highway trips, all would still be OK. Sure the electric car costs more upfront, but the long term O&M/Fuel costs might be lower (repeat, MIGHT be lower).

        4. I’d think they could work for city buses that travel a specific route over and over, although I don’t know how many extra batteries you’d have to have to swap in/out.

          1. I’d say you could pack enough batteries in a regular bus for a 6-8 hour shift. They don’t really suffer if they’re heavier than the minimum.

          2. Aren’t these batteries HUGE? I, mean like a hundred pounds plus? And even if they are small enough to swap out, who in their right mind is going to say, “that’s BETTER than pumping gas” and sign up to hefting replacement batteries every 100 miles?

            Nope. People are not going to inconvenience themselves when something easier is readily available. I sure as shit won’t.

            1. How much do you think 20+ gallons of gasoline weighs? The battery swap technologies will not require you to manually swap the battery yourself – it will be automated, like an auto carwash. It might be even faster than filling up using a cute little hose.

      2. Tesla is claiming ~200m/charge

        Truth in advertising at last!

    3. In the example I note above, the product produced in the plant is actually inferior to most other products competing in the market. Because the cost to produce it is so low, mainly because of the guaranteed loans, it can be sold for ridiculously low prices and therefore potentially outcompete the better competitors.

    4. No amount of subsidy will entice people to trade in their current cars for a vehicle that can only go 80 miles on a charge.

      This is pretty much the reason why electric cars have never done well. It’s stupid how many prog-tards I’ve known who actually believe the electric car was “killed” in the early 20th century by greedy conspiratorial oil companies.

      *facepalm* No, they were killed because people wanted to be able to drive across country on their own schedule, as opposed to relying on the train’s schedule, and not have to stop and recharge the car for 12+ hours when they ran out of power. IOW, it was killed by consumer preference.

  11. Fisker? But I just met ‘er! …And then they built a supercollider.

    1. Yeah, I always read it as “Fister”. The American public being “er”, obviously.

  12. the feds do a terrible job when it comes to development and commercialization

    No shit. Most people do a terrible job, because running a business is hard, and most people fail. But when they fail with their own money, it dies a quick death. But when it fails with our government malinvested money, it can drag on for years.

    1. See Shuttle, Space

      1. Yet NASA remains the rally call of the government “investment” crowd. Whenever someone says “without the investment in the space program, we wouldn’t have a ton of products we use every day,” I always ask them to name two. Hasn’t been done successfully yet.

        1. I always ask them to name two. Hasn’t been done successfully yet.

          Velcro, Tang, and Tempurpedic mattress foam. Hah! There’s three! /sarc

          In all seriousness though, a lot of the technological “spin-offs” from NASA/ the space program are not examples of the government succeffully developing a commercial product, but would go more in the category of basic research and development that is then used in some way by an enterprising entrepreneur, often in a way that the scientists and engineers at NASA would have never come up with on their own.

          I like the space program as an aerospace engineer/ space nerd type, but it does annoy me when statist assholes use it and the internet as examples of why we need government “investment”. They don’t understand the difference between basic technology R&D and actual commercial product development. They seem to actually think that the government developed the internet, wholesale, and “here it is, enjoy everyone!” when in reality DARPA developed the basic technology behind the internet, but private actors found ways to conduct commerce and make money using it.

          1. “a lot of the technological “spin-offs” from NASA/ the space program are not examples of the government succeffully developing a commercial product, but would go more in the category of basic research and development that is then used in some way by an enterprising entrepreneur,”

            See: Internet.
            Yes, the gov’t decided to link a bunch of computers and then left it at that.

          2. It’s not NASA, but defense-related would be GPS.

            Of course, the sort of people who claim we need NASA for R&D are the sort of people who would probably like to cut defense.

            1. I had this discussion with a friend of mine the other day. Yes, the gubmint did create and put GPS sat in orbit. And they work great. But who’s to say the same functionality couldn’t/wouldn’t have been provided in another way?

              I put it to you, with the invention of the cell phone in an environment absent GPS sats, the same functionality would have been invented and installed in land based cell phone towers. As with all technology, it would have started with limited capability and improved as demand rose.

          3. Tang was created by General Foods in the late 50’s. George de Mestral invented velcro.

  13. C’mon. Everyone knows the reason these companies went bankrupt is because we didn’t spend ENOUGH on them.

  14. While a relatively few of us are reading this, Gene Sperling, head of Obama’s National Economic Council, is telling TIME readers that these policies “are vital, and often misunderstood.” And that “Policy that supports creating strong manufacturing ecosystems is not only economically sound; it is economically imperative.”

    1. manufacturing ecosystems

      ?

    2. “Policy that supports creating strong manufacturing ecosystems is not only economically sound; it is economically imperative.”

      He uses these words, but it seems he has no knowledge of what they mean.

    3. “are vital, and often misunderstood.”

      Misunderstood… yes. But by whom?

  15. An Energy Department spokeswoman, Aoife McCarthy, said the loan to Fisker was one of only a handful of 33 clean-energy loans that did not prove successful. She asserted that its problems should not be considered representative of the Obama administration’s broader efforts to promote cleaner cars.

    So, to recap: the Obama administration has made 33 bad loans, but this one should not be considered representative of their efforts. Nope, just an anomaly. One that has happened 33 times. But it’s an outlier, honest.

    1. The wording seems vague… do they mean 33 companies went bankrupt or that a handful out of 33 total went bankrupt?

    2. to be fair, tesla seems to be going OK, but in the end, they probably didn’t need the loan, and are just using it as a backstop to give them more breathing room.

  16. This loan on its face should never have passed their qualifications. This is a former-luxury-coachbuilder company, getting into the luxury electric sports automobile space. Their entire goal was to make a luxury sports car that only rich people can afford ($100k).

    So the DOE gives them a big loan to build luxury cars for rich people, and on top of that, these rich people get to take a $7,500 tax credit for buying one and they get to lord their smug over everyone because they are such good people, caring about the environment and buying impractical electric vehicles.

    This whole debacle is so precious.

  17. I posted one of these in the AM links, but I thought putting both together would be nice here:

    2012: Warm spring symptom of global warming.

    2013: Cold spring symptom of global warming.

  18. I wonder what this means for the VL Destino, which is one of these without the dopey mustache and an LSx engine in place of the EV drivetrain. Oh, and less 1,000 pounds or so.

  19. “Maybe an argument can be made that the government should support basic and applied research.”

    No. The government supporting basic research runs up against the problem that good governance has to be accountable – and there’s no way to keep ‘basic research’ accountable. The only way you can decide how to fund basic research is with panels and credentialism or pedigree and that’s basically cronyism. Government supporting applied research runs into several problems – the first that, if it really is so awesome, why isn’t private industry (or at least a private non-profit, to push it past the ‘less than profitable’ parts) funding it. And when government DOES get it right, it’s still blatant cronyism, because when it’s applied science it’s a quick turnaround to profit, so the government is subsidizing a select few to make a buck with the government covering their risk. And then there’s the issue that Panels are also notoriously terrible at deciding what works and what doesn’t.

    1. disclaimer: I am currently being paid by the Department of Energy. My project is totally ridiculous (from a practicability aspect) but fun (from an awesome I get to hack bacteria aspect), and about to be cancelled, so for the next few months I get to fuck around on your dollar.

      disclaimer (2): I am launching a non-profit science research institute to try and fix this problem.

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