Detroit, Michigan Auto Manufacturer General Motors just took a hit on its Chevy Volt. The manufacturer of charging stations for the car has filed for bankruptcy. Most of the debt accumulated were loans from the U.S. Department of Energy, totaling nearly $100 million in grants.
This sounds a death knell for the contemporary electric car. Despite heavy government grants and subsidies, most “green” projects keep failing. Project insolvency persists. Bankruptcy inevitable.
Michiganders have been promised that renewable energy is the key to gaining employment in the state, but that comes at the cost of jobs lost due to malinvestment in a field of industry that cannot compete on terms of cost or distribution with competitors in traditional markets.
Over and over we see the winners are politicians who big headlines for obtaining government grants in their district. Executives at the green companies also get paid handsomely. But where are these two groups when the company bankruptcy and the employees lose their jobs.
Without the federal governments intervention, and misallocation of capital, competent sustainable firms would have a greater chance to grow and build. Instead, we are now left with a laundry list of green companies in bankruptcy court. Michigan deserves better.
(Reuters) – Ecotality Inc (ECTY.O), a maker of charging stations for electric cars that won a $99.8 million grant from the U.S. Department of Energy four years ago, has filed for bankruptcy protection and said it plans to auction its assets next month.
The San Francisco-based company is among a growing number of U.S. alternative-energy companies that have struggled or succumbed amid consumer resistance to the high cost and restricted driving range associated with electric vehicles.
Ecotality and five affiliates filed for Chapter 11 protection on Monday night with the U.S. bankruptcy court in Phoenix.
The company said eight parties have expressed interest in bidding on its assets and that it wants to hold an auction on October 9, with a closing to occur within two days.
Citing “significant liquidity constraints and the difficulty of obtaining long-term financing,” Ecotality said an auction is necessary to maximize value for creditors and avoid a “fire-sale liquidation.”
Ecotality makes systems for electric vehicles under the Blink and Minit Charger brands. It had warned on August 12 that a bankruptcy filing was possible, amid disappointing sales and a suspension of payments from the federal government.
Among other U.S. alternative energy companies, green car startup Coda Holdings Inc filed for bankruptcy protection in May after selling just 100 all-electric sedans.
Meanwhile, the Energy Department on Tuesday said it will in October sell a non-performing loan made to another green car startup, Fisker Automotive.
Ecotality’s $99.8 million grant was awarded in August 2009 to help develop the EV Project, a network of charging stations for vehicles such as the Chevrolet Volt and Nissan Leaf in major U.S. metropolitan areas.
The company said Nissan North America Inc agreed to provide up to $1.25 million of financing to keep it operating during the bankruptcy. Court approval is required for that loan.
According to a court filing, the Energy Department is owed $6.5 million as the largest unsecured creditor of Ecotality affiliate Electric Transportation Engineering Corp.
Reuters: http://www.reuters.com/article/2013/09/17/us-ecotality-bankruptcy-idUSBRE98G1E720130917
