DOE Doubles Down on Failed Electric Vehicle Subsidies

When it comes to green energy subsidies, the Obama administration has a habit of throwing good money after bad. The latest example comes from the U.S. Department of Energy (DOE), which recently announced an additional $50 million in funding for electric vehicle technology as part of President Obama’s quixotic pledge to “become the first country to have 1 million electric vehicles on the road by 2015.”

The latest infusion of taxpayer funds is part of DOE’s “Electric Vehicle Everywhere Grand Challenge,” launched in March 2012 with a series of “ambitious, far-reaching goals” to make electric vehicles more affordable for American families. The problem is that the Obama administration has a poor track record of picking winners and losers when it comes to subsidies for electric vehicle technology.

To date, the president’s “grand challenge” has amounted to a grand headache—one that has cost taxpayers hundreds of millions of dollars and resulted in a string of well-documented failures:

-> Fisker Automotive declared bankruptcy in November 2013 after receiving a $529 loan guarantee from DOE. When Fisker finally shuttered operations, the company had drawn down $192 million of its loan, of which only $53 million will be repaid, exposing taxpayers to $139 million in losses.

-> Electric vehicle battery maker A123 Systems filed for bankruptcy despite receiving a $249.1 million federal grant from DOE. The company incurred debts of $376 million and was ultimately acquired for less than a third of the final assessment of their remaining assets.

-> ECOtality, an electric vehicle charging station company, was forced to declare bankruptcy in September 2013 after receiving $115 million in federal grants. The company was later acquired for a mere $3.33 million.

The Obama administration’s record on electric vehicles demonstrates that government subsidies cannot replace consumer demand. If consumers wanted to buy more electric vehicles, there would be no need for subsidies. The only way to convince Americans to buy more electric vehicles is for companies that make electric vehicles to make a better product.

IER Policy Intern Daniel Smith authored this post. 

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