Watching The Wheels Come Off The Green Machine

Image by AFP/Getty Images via @daylife

The body count continues to rise as the Green Jobs Revolution sputters its way to the end of a disastrous 2011.  Few seemed to notice last week when the electric vehicle maker A123 Systems—poster child for successful clean tech investing—“temporarily” laid off 125 workers at its flagship manufacturing plants in Michigan on the eve of the Thanksgiving media break. It also reduced its earnings guidance for 2011 by $45 million, because its anchor customer, Fisker Automotive, “unexpectedly” delayed the production ramp-up for its Karma luxury electric car—again.
Could these be the same plants that Democratic congressional leaders hailed as the birth of a new era in American manufacturing? The same plants that received a $249 million U.S. Department of Energy grant from the same stimulus money bucket that funded Solyndra? The same plants for which Michigan shelled out $125 million in incentives to lure away from Massachusetts?
Environmentally correct planners put all this public money to work to relieve the technology bottleneck they believed held back our transition to electric cars. So they invested my money and yours into building the largest lithium ion automotive battery plant in North America—to supply a Finnish electric car manufacturer backed by Al Gore’s venture capital fund and which received $529 million in federal loan guarantees. That Finnish manufacturer was supposed to begin production in 2009, but to date has only shipped 40 cars into the U.S. Those cars were delivered to a handful of millionaires and billionaires like Leonardo DeCaprio and Ray Lane who received tax credits because they bought an electric car.
You can’t make this stuff up. Unless you are a central planner; then you can make up anything you want and get away with it as long as taxpayers keep writing checks, politicians keep spinning tales, and pundits keep giving them intellectual cover.
The coming glut of automotive lithium ion batteries will make for quite a fire sale. Forecasts made as recently as three months ago predicted that electric cars would become the leading application for lithium ion batteries by 2015, surpassing laptop PCs and other handheld devices. Who are they kidding? How many portable electronic devices do you own? How many electric cars have you ever even seen? By any rational standard the introduction of the Chevy Volt and Nissan Leaf, with fewer than 2,000 units sold between them last month, can only be described as disasters.
Investors who piled into the car battery market attracted by the flow of federal largesse had better put on their crash helmets. It’s going to get ugly when the reverse multiplier effect leverages hundreds of millions of public money into billions in private losses.
Watch this space for the post mortem when A123 is forced to declare bankruptcy just in time for the 2012 presidential election. Of course, this won’t happen until after the company blows through its next $134 million in scheduled DOE grants. Investigations to follow.
What is it that green planners don’t understand about the complexities of re-engineering an entire ecosystem? Do they think they’ll get an A for effort if they get a few pieces of the supply chain to work just as the rest come crashing down around them? Do they believe they can simply mothball the A123 plant while someone else figures out how to design and build an electric car that customers actually want?
Or maybe they believe all these problems can be fixed by forcing consumers to buy electric cars. After all, if we can be forced to buy health insurance, why not electric cars?
As silly as that sounds, this seems to be EPA Administrator Lisa Jackson’s plan. She recently overruled Congress by issuing regulations calling for America’s fleet of passenger vehicles to meet an average fuel economy of 54.5 miles per gallon by 2025.

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