Another electric-car disaster looms.
Get ready for the next Solyndra. Sure, you’ve heard those words before. Over the past few months, several companies that had federal backing — Beacon Power, Range Fuels, and Ener1 — all failed. And another one is almost surely on the way. Here’s my prediction: Within 18 months, A123 Systems, the battery maker that got a $249 million grant from the Department of Energy, will be bankrupt.
My prediction doesn’t have anything to do with the explosion that occurred on Wednesday at a GM laboratory near Detroit, sending one worker to the hospital. The explosion occurred while the worker was testing a battery made by A123. That news came on the heels of the announcement last month that A123 would have to spend $55 million to replace defective battery packs it sold to Fisker Automotive, the car company that is using a U.S. government loan to make high-performance $100,000 vehicles in Finland. But predicting A123’s failure doesn’t depend on the latest news, or require any special analytical skills or inside market knowledge. It requires only a quick look at the company’s financials.
More on that in a moment. First, though, the broader and more essential point to be made — yet again — is that the Obama administration made a huge mistake in backing the electric-vehicle industry. The administration has handed out $2.4 billion in grants to the electric-vehicle sector, as well as nearly $2.6 billion in loans. And it did so despite the EV sector’s dismal history, which is a century of failure tailgating failure.