More "Green Energy" Boondoggles
What do we taxpayers get for “only” $249 million? A battery company that has to replace the batteries that it has already delivered. A123 Systems of Waltham, MA, received $249 million grant from the Department of Energy (DOE) to build the plant, located in Livonia , MI, as part of a strategy to bring battery manufacturing to the U.S.
The grant A123 received is part of a $2.4 billion DOE program, which will be matched by $2.4 billion in private investment, and will go to battery and component suppliers as well as the big US automakers, General Motors, Ford, and Chrysler. The “Big 3″ received over $400 million for manufacturing and to test the performance of electric vehicles, such as the Chevy Volt. Let’s see… Chrysler went bankrupt, killing its electric car and costing us $70 million, and we all know how successful the Chevy Volt is. Can DOE pick ‘em, or what?
A123 Systems will spend $55 million replacing defective batteries it manufactured. The announcement was the latest setback for A123 that reported earlier this month that it lost $85 million in the fourth quarter of 2011, largely because Fisker Automotive had ordered fewer battery packs than previously expected. Fisker is one of A123 Systems’ largest customers. Yes, that is the same Fisker that received a $529 million loan from DOE, only to have it pulled after Fisker has already spent $190 million. And, yes, the cause of a $107,000 Fisker Karma shutting down in Consumer Reports tests is associated with A123’s defective batteries.
The $55 million battery replacement has had an effect on the A123 stock price, trading at $1.27 per share as of March 27, 2012, a new 52 week low. It was trading at over $25 per share as recently as 2009. A123 lost a net $172 million over the first three quarters of 2011 and has yet to see a profit. A Deutsche Bank analyst wrote: “We no longer have enough confidence that (A123) can raise sufficient capital (without massive equity dilution) and/or continue to augment their book to future business. Recent quality issues may lead to concerns over (A123’s) ability to manufacture with quality at high volumes, potentially leading to customer defections or at least difficulty in procuring new contracts.”
Former Michigan Gov. Jennifer Granholm (D) once said A123 was a federal stimulus “success story.” Former House Speaker Nancy Pelosi (D-CA) visited A123 headquarters and hailed it as a “great example of how Recovery Act funding is helping American companies.”
Meanwhile, A123’s Compensation Committee approved a $30,000 raise (from $350,000 to $380,000) for CFO David Prystash just days after Fisker Automotive announced that DOE cut off what was left of its $528.7 million loan it had previously received. Further, Jason Forcier, vice president of the automotive solutions group, was raised from $331,250 to $350,000.
BTW, A123 Systems President and CEO David Vieau has contributed at least $14,900 to Democrat candidates and groups since 2007. And it has spent at least $730,000 lobbying Congress on federal issues pertaining to the batteries they produce.
Again, I have to say: “Can DOE pick ‘em, or what?”
But that’s just my opinion.