Green Energy Company A123 Goes Belly Up
By: Giovanna Longobardo
A123 is latest green energy company to receive millions in federal aid only to file for bankruptcy shortly thereafter. The electric car battery manufacturer was expected to help expand the stagnant U.S. electric car industry, while creating thousands of jobs in the process. However, yesterday, A123 filed for Chapter 11 bankruptcy after spending $132 million of its $249 million in federal stimulus grant money joining an ever-growing list of green-energy boondoggles.
A123 is a prime example of how this administration’s policy of giving selected industries special treatment in the name of “job creation” has led to a wasteland of bankrupt green energy companies. Sold as sure-fire ways to create jobs, the President and his Department of Energy sent billions of taxpayers’ money out the door chasing bad investment after bad investment.
In April 2010, the President gave a speech in the Rose Garden of the White House, praising A123’s Chief Executive David Vieux for his company’s plan to create 2,000 jobs by 2012; jobs that never materialized.
The electric battery maker is just one of several green energy companies to receive government assistance before going belly up. Last year, the solar manufacturer Solyndra closed its doors and fired 1,800 workers just two years after receiving a $535 million loan guarantee from the Department of Energy (DOE). The $535 million Solyndra-debacle may be this administration’s most expensive government endowment gone wrong, but there are plenty of other green energy disasters worthy of a closer look.
In October 2011, a Massachusetts-based “next gen” energy company Beacon Power filed for bankruptcy after receiving $43 million in government support. In January of this year, Ener1, an electric-car battery maker, also filed for bankruptcy after one of its subsidiaries already used about half of the company’s $118 million stimulus grant.
And the losses keep piling up. Nevada Geothermal Power received a $79 million loan guarantee before incurring $98 million in net losses and filing for bankruptcy in January of this year. Abound Solar, a solar-panel maker drew $70 million of its $400 million government loan guarantee before announcing it would halt production and lay off 280 of its employees.
The government has tasked itself with the impossible job of taking an uncompetitive industry and suddenly making it competitive with the wave of its special favors wand. Proponents of tax credits, tax subsidies, grants, loans, and loan guarantees for green energy companies claim that all these infant industries need to finally succeed is a little more help from the government.
But what the proponents fail to understand is that if these green-energy companies had a true path to profitability, private investors would fund them. A company heading to the government for handouts is a clear admission of its failing prospects.
This administration’s green energy failures are astounding. Every day the U.S. government throws more and more money at their chosen “renewable” industries in hopes of creating jobs. With stimulus investments in companies like A123 and Solyndra going belly up at a rapid pace, what else will it take for the government to get the point?