Those who endorse the Department of Energy’s loan guarantee program tried to explain away the massive Solyndra scandal as one bad apple in an otherwise great program.  We’ve already pointed out that the Beacon Power fiasco disproves that excuse, and today we’ll talk about another DOE-backed flop: A123 Systems, a manufacturer of batteries for electric vehicles.

As reported by the Cleveland Plain Dealer:

A123 Systems has cut 35 percent of the workers at two Michigan plants that supply lithium-ion batteries for electric vehicles in response to a reduction in orders from major customer Fisker Automotive.

A123 cut about 225 full-time workers on temporary contracts in early November and laid off another 125 staff workers last week, company officials said Tuesday.

A123 had employed about 1,000 workers in Michigan, a hiring record over just two years that the Obama administration has heralded as evidence of its success in creating green jobs with government funding.

The company, which developed as a startup at the Massachusetts Institute of Technology, received a $249 million grant from the Department of Energy to fund battery production in Michigan.

The state of Michigan gave the company another $125 million to offset the cost of setting up a battery plant in suburban Detroit.

Fisker, which builds the $96,000 plug-in Karma, has received $529 million in loans from the Department of Energy.

The Livonia plant was described as the largest lithium-ion factory in North America when it opened in September 2010 with a ribbon-cutting ceremony attended by U.S. Energy Secretary Steven Chu as well as U.S. Senators Debbie Stabenow and Carl Levin from Michigan. President Obama called in for the event.

At the time, the White House said A123 planned to employ 3,000 workers at its Livonia and Romulus plants.

In a return visit to the plant in July, Chu called it a “a great example of how we are working with industries to create jobs, strengthen our manufacturing industry and help our auto companies compete in the global market.” [Bold added.]

The Obama Administration’s embarrassing embrace of the “success” of its renewables initiatives doesn’t end there, however. Recall that in July 2010 the President himself visited Holland, Michigan for a groundbreaking ceremony on a plant that would build lithium ion battery cells for the Chevy Volt. He said, “And by the way, these aren’t just any jobs. These are jobs in the industries of the future.” (See video.)

Unfortunately it seems that that future may be further than he thought at the time of the speech. The AP reports that General Motors has offered to buy back Chevy Volts from any customers who are afraid that their electric vehicle might start on fire:

In an exclusive interview with The Associated Press, CEO Dan Akerson insisted that the cars are safe, but said the company will purchase the Volts because it wants to keep customers happy. Three fires have broken out in Volts after side-impact crash tests done by the federal government.

Akerson said that if necessary, GM will recall the more than 6,000 Volts now on the road in the U.S. and repair them once the company and federal safety regulators figure out what caused the fires.

“I think in the interest of General Motors, the industry, the electrification of the car, it’s best to get it right now than when you have – instead of 6,000 – 60,000 or 600,000 cars on the road,” he said.

Yes, we agree that it is a good thing only 6,000 people have bought Chevy Volts thus far, in light of this disturbing development. The number would have been even lower, if not for the $7,500 tax credit the federal government offers on electric vehicles such as the Volt.


The Institute for Energy Research is neither “for” nor “against” electric vehicles, alternative energy sources, and all of the other chic technologies promoted by today’s progressives. Rather, we want to leave these decisions to the private sector. If solar panels or lithium ion batteries really are the wave of the future, then private investors can shoulder the risk of investing in their development. Government officials should not be in the business of using tax dollars to pick winners and losers in the energy sector.

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