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For Obama’s green-car revolution, fits and starts

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For Obama’s green-car revolution, fits and starts

Text SizePrintE-mailReprints By Carol D. Leonnig and Joe Stephens,

The Obama administration has poured roughly $5 billion in taxpayer funds into the electric-car industry, offering incentives to manufacturers, their suppliers and even car buyers who might want to go green.

But analysts say the risk is rising that taxpayers in many cases will not see a return on their money soon, if ever. Instead, they warn that some federally subsidized companies could be forced to shut down in coming months.

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?A California solar company backed by a half-billion dollars in loan guarantees from the Obama administration, announced it was shutting its doors and laying off 1,100 employees.

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Renewable but not always new

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For President Obama, who has made clean-technology investment a hallmark of his job creation efforts, troubles in the electric-car sector pose a potential new political problem after the collapse of solar-panel maker Solyndra, which recently defaulted on a half-billion-dollar federal loan after filing for bankruptcy. The administration has channeled an estimated $80 billion of the stimulus recovery effort into grants and loans to clean energy and energy efficiency programs, companies and research.

Obama predicted in 2008 that green cars would create thousands of new U.S. jobs as demand soared. But in recent months, production lines and sales expectations have been dramatically scaled back.

A123 Systems, a battery maker that received $380 million in government support, announced recently that declining orders had forced layoffs. Instead of up to 3,000 new Michigan jobs as Obama and the company had predicted, it now has 690 employees.

Battery maker EnerDel, recipient of a a $118 million federal grant, took a hit when its key customer, electric-car maker Think, declared bankruptcy this year. Johnson Controls, which received a $299 million stimulus grant, opted to build one factory instead of two because of lower-than-projected demand, a company official said, and that one is now operating at half capacity.

California electric-car maker Aptera announced it was shutting its doors because of problems raising capital. And General Motors — whose moderately priced Volt was supposed to drive Obama’s push for 1 million alternative vehicles by 2015 — revealed last week that it would fall roughly 38 percent shy of its goal of selling 10,000 Volts this year.

“Many in this industry have jumped the gun on how aggressive the growth of electric vehicles will be,” said Kevin C. See, an analyst at Lux Research.

Supporters of Obama’s green-car initiatives say that there are still industry bright spots and that this start-up sector will simply take longer to deliver results.

“Certainly, with electric-vehicle sales, we’re not on track to meet the president’s goal,” said Brendan Bell, clean-vehicle expert at the Union of Concerned Scientists. “But .?.?. these investments are good ones toward that goal.”

Alex Molinaroli, a Johnson Controls vice president, said the funds give U.S. factories the capacity to deliver when demand arrives and position them as industry players.

“Is it worth the premium?” Molinaroli said. “We’ll have to wait a long time to see if this was a good investment or not.”

Obama’s green-car goal

Obama started his alternative-vehicle push in the 2008 campaign, and his administration soon after put money behind the plan. Like Solyndra, several of the firms receiving support had investors who were also important Obama campaign donors.

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