Carmakers Promised Incentives to Make Electric Vehicles
The move toward electric-powered vehicles attained speed this week, as major automakers outlined production plans and became the first to tap a $25 billion government fund. Ford, Nissan, and the upstart California carmaker Tesla will get the first portion of the fund to be disbursed – $8 billion in loans to boost development and production of advanced energy-efficient cars in the United States. The Energy Department, which stated the funding, said it plans to make loans in coming months to other large and small automakers and parts suppliers.
Separately, Nissan announced it will commence selling electric cars in Japan and the United States next year and to have them in mass production by 2012. Nissan will utilize the government loan to support its plan.
The statements signal an industry in transition. Even as carmakers struggle to weather a deep recession, they want to be ready to meet the changing demands of consumers and government policymakers. They need to make cars that their customers can afford to buy. But they also can’t afford to be caught without cleaner technologies at a time of potentially rising oil prices and tightening standards for emissions.
At a shareholders meeting in Japan, Nissan CEO Carlos Ghosn stated that he is expecting to thread that needle.
“If it’s not affordable, it’s not going to work,” he stated, according to an Associated Press report. But “I can tell you I’m not at all worried about how to sell these cars, because there is an appetite for zero-emission cars.”
The aim of the loan program, passed by Congress and the Bush administration in 2007, is to accelerate clean-car production and sales. But the funding will also act as a sort of jobs program for a hard-hit industry.
Meanwhile, the Obama administration is introducing additional carrots and sticks – such as a recent move to tighten emissions standards – to force carmakers and consumers toward so-called “zero-emission” vehicles. Legislation to battle the threat of climate change could force the industry further down the electric road.
Energy Secretary Steven Chu stated the new loans in Ford’s home town of Dearborn, Mich. “These investments will come back to our country many times over – by creating new jobs, reducing our dependence on oil, and reducing our greenhouse gas emissions,” he stated.
The department said the program will promote multiple clean-car technologies, an aim evident in the first loans announced.
- Ford Motor Co. will get $5.9 billion to finance engineering advances in traditional internal combustion engines as well as gas-electric hybrids.
- Tesla Motors in San Carlos, Calif., will receive $465 million, mainly to ramp up production of an all-electric family sedan. The company assumes its Model S will have a base cost of $49,900 (after a $7,500 federal tax credit) and run as many as 300 miles on a single charge.
- Nissan will get $1.6 billion to produce electric cars and batteries in Smyrna, Tenn. Where Toyota and other huge automakers have been pushing gas-electric hybrids, Mr. Ghosn has committed Nissan to an all-electric strategy. The new Nissan may cost nearly 4 cents a mile to operate versus 13 cents a mile for a gas-powered car that gets 30 miles per gallon.
Read more about Commercialization of Alternative Fuel Vehicles
Regarding the politics of the DOE ATVM Loan awards:
So it turns out to be all the best loans money can buy.
Ford paid over $14M to elected officials and consultants in order to get the loan. Ford paid the third largest amount and Ford got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. 21 elected officials had direct benefit from the deal.
Nissan paid over $10M to elected officials and consultants in order to get the loan. Nissan paid the third largest amount and Nissan got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. The law and public statements by elected officials state that the money was to increase American competitiveness for America car companies yet the money was given to a Japanese company who will send all of the profits back to Japan. 7 elected officials had direct benefit from the deal.
Tesla paid over $100,000.00 to elected officials and consultants in order to get the loan. Tesla paid the third largest amount and Tesla got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. Tesla’s filings show that their business model is unsustainable compared to competitors, that they were 200% off on the BOM of their car, that all of their first funding was wasted so they have to pay back twice as much to investors as competing companies and that their technology is so old, it all needs to be redone yet they still got money. 18 elected officials had direct benefit from the deal. Tesla did not even read the rules for the loan and planned to build a building when the NEPA rules make that option impossible so they had to restart the process, which is supposed to put one into a new cycle yet they were kept in the previous cycle and put ahead of Fisker, Bright and others who had applied earlier than Tesla. Tesla provided massively creative accounting records to show that they were financially sustainable and have issued numerous press releases to try to make people think that but, in fact, the truth is that they are not because of bad management issues that they cannot get past.
The ATVM program was created by Ford, GM & Chrysler lobbyists to pad their company’s pockets and those three had pre-hardwired the entire $25B for their own pockets but something happened in the process when Senator Bingaman added a few key lines that opened the door for OTHERS to apply to build green technology and required that those who get the money were “financially sustainable” businesses. Back when the ATVM was authored to save Detroit, it was fully known that Detroit was going to go bankrupt. Ford had the same problems as GM and Chrysler but they went around the world getting bailout money instead of going first to US funds. As law required public exposure of the bankruptcy, Bingaman’s brilliant plan to finally create a green transportation industry was revealed. The very people that had stopped green cars for over 100 years suddenly became the first people to, accidently, cause them to happen but now others could do it too.
Bingaman should get the Congressional Medal of Honor for pulling off this impossible trick and finally giving America the Electric Cars it should have had for the last hundred years.
Once Detroit realized this, they tried to hijack the whole ATVM program with a takeback at the end of 2008 but that effort was defeated by a close late night vote. Now that it was out there, Detroit lobbyists and influencers fought to get the review of applicants delayed for as long as possible because they realized that, in a recession, most of the smaller competing interests could be forced to go out of business if they could just be kept away from the money for long enough. Major American TARP banks have said that the standard commercial loan process that each of these 26 applicants (not hundreds of applicants- There were 26 applicants in the round) should take 4 weeks at the longest and 3 weeks nominally.
The lobbyists for Ford & Nissan forced DOE to change the rules part way through and eliminate the “first come- first served” traditional American business ethic that had been written into the law of ATVM Section 136. They got it changed to “It does not matter how together you were, or that you had your application in on time, we are moving these three guys in ahead of you because they spent more money on the politicians and lobbyists”. It seems clear that the loans were delayed due to political agendas and not process issues. It is not that there were no resources for the review as the Section 136 law provided over $10M in staff fees to review 26 people (Banks spend $10,000.00 to review 26 applications).
Bright Automotive had applied on time, ahead of the others, turned in low overhead numbers and a great path too profit but they were virtually ignored while intensive meetings were conducted with Nissan, Ford and Tesla because those parties paid for it. The law says that this, and the purchasing of favors, gave those parties an unfair business advantage using taxpayer dollars, over Bright. A case Bright would easily win if they choose to run with it.
Clearly, it isn’t over yet. Stay tuned for the Senate, Congressional, Ethics Committee and media reviews of this one. Watch for the charts connecting who-to-who. (It is OK to re-post this).