NCPA - National Center for Policy Analysis

For Obama's Green-Car Revolution, Fits and Starts

December 9, 2011

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, says the Washington Post.

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 $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 warned early on that economics did not support the administration's push.  Now some fear failures may undermine industry support.

Source: Carol D. Leonnig and Joe Stephens, "For Obama's Green-Car Revolution, Fits and Starts," Washington Post, December 7, 2011.

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