Posted on 11/26/2023 11:04:55 AM PST by Signalman
Energy Secretary Jennifer Granholm made $1.6 million from an electric car company the Biden administration boosted that just went bankrupt.
Proterra, an electric bus and battery company that President Joe Biden touted as a success of his green energy initiative, filed for bankruptcy in August. Last week, it finally sold its embattled battery business at a rock-bottom price as part of the bankruptcy proceeding. The rise and fall of Proterra demonstrates once again that politicians should refrain from betting taxpayers’ money on business ventures to advance their political agenda.
According to the Wall Street Journal, Proterra has sold only 550 electric transit buses since its founding in 2004. Most of the sales were underwritten by government agencies with federal grants. Proterra’s electric buses were plagued with mechanical defects and other performance issues, such as limited range and long charging times. Besides government subsidies, the company only survived as long as it had due to powerful political connections. Former Michigan governor Jennifer Granholm, Biden’s energy secretary, served on its board.
Despite all the quality issues of its EV buses, Proterra went public in January 2021 and raised $650 million, more than three times its annual revenue. A month after the company’s IPO, Biden tapped Granholm as his energy secretary. Proterra’s political connection to the Biden administration paid off in many ways.
Surviving on Grants and Tax Credits
In April 2021, Biden took a virtual tour of a Proterra facility to promote his infrastructure plan. The proposal included $6.5 billion in grants to help replace diesel-powered school and transit buses with electric ones. During the tour, Biden lauded Proterra for “getting us in the game.” He predicted that Proterra and other electric vehicle companies would “end up owning the future.”
Biden’s 2022 Inflation Reduction Act further enriched Proterra’s coffer. The law had little to do with reducing inflation, but it gave massive government handouts to the green energy sector. For instance, IRA includes a $40,000 per vehicle tax credit for purchasing electric commercial vehicles and an additional tax credit for EV batteries.
Proterra admitted in its quarterly report that “the availability of this new unprecedented level of government funding for our customers, suppliers, and competitors to help fund purchases of commercial electric vehicles and battery systems will remain an important factor in our company’s growth prospects.” Proterra’s political profile rose even more after Biden appointed Gareth Joyce, CEO of Proterra, to serve on the President’s Export Council in February this year.
Backed by Biden, Buried by Biden
Excessive government spending under Biden has sparked high inflation rates that were last seen in the 1970s. To bring inflation rates down, the Federal Reserve has aggressively raised interest rates. Higher rates increased production and operations costs for many companies. As legendary investor Warren Buffett famously said, “Only when the tide goes out do you learn who has been swimming naked.” Proterra was one of those companies that had been caught “swimming naked” in this new environment.
The company struggled because it had difficulty passing rising costs on to its existing customers, since most were government agencies with little budget flexibility. Nor could Proterra outsource its production overseas or import components at lower costs. Receiving government grants comes with strings attached. One requirement is that companies like Proterra must produce at least 70 percent of their EV components in America. Proterra couldn’t afford to cut the prices of its EVs to drum up sales.
Finally, Proterra filed for bankruptcy in August. Government subsidies could not offset the financial pressure of rising inflation, higher interest rates, and falling sales. Last week, a Swedish automobile manufacturer, Volvo, bought Proterra’s battery business for $210 million, a great deal considering Proterra was valued at $1.6 billion a year ago.
Another party who got an excellent deal was Granholm. She sold her Proterra shares for $1.6 million last year. They would have been worth nothing if she had held on to her Proterra shares until this August. The biggest loser of the whole Proterra saga is American taxpayers.
No Good News for Electric Vehicles
Proterra was not the only EV company that went under. Michigan-based Electric Last Mile declared bankruptcy in June 2022. Ohio-based Lordstown Motors went bankrupt a year later. Ironically, these companies benefited from the Biden administration’s climate handouts, but the economic consequences of the same policies eventually doomed them. Even large automobile companies’ EV units are struggling. Ford estimates it will lose $3 billion this year on its EV business. The company relies on sales of gas-powered vehicles and government subsidies to keep the EV business afloat.
More bad news about EVs is coming. The Wall Street Journal reported that Americans seem to have fallen out of love with EVs because they are more expensive than gas-powered ones. After all, the EVs cost more to make.
Additionally, the travel range of EVs is limited because few charging stations exist around the country. When Granholm took a road trip with EVs to highlight the Biden administration’s climate initiatives this summer, a Georgia family reportedly called the police on her staff for using a gas-powered vehicle to block access to a charging station.
Companies from GM to Tesla are considering putting additional EV investments on hold due to weak consumer demand. The WSJ Editorial Board remarked, “One lesson from Proterra’s failure is that government subsidies alone don’t create business success.”
A History of Government-Backed Failure
Biden should have known better. He was the vice president under former President Barack Obama when Solyndra, the solar panel manufacturer that Obama claimed would be a “sure winner in the solar industry,” filed for bankruptcy less than two years after the Department of Energy provided Solyndra with a loan guarantee for $535 million.
Although politicians have a poor record of picking business winners, don’t expect them to learn lessons from their spectacular financial failures. Ryan Yonk, a Research Fellow at the Independent Institute, observed that “support for renewable energy has reached the status of a moral imperative, and more importantly, a political imperative that elected officials must engage.”
That means American taxpayers will see more Solyndra and Proterra in the future and continue footing the bill for “green-washing” Democrats’ failed climate policies. The only way to stop this madness is to vote these politicians out of office. If any of these politicians made money from taxpayer-funded bets, they should surrender their profits to make taxpayers whole.
Corrupt government kickbacks.
Ronald Reagan
I think we are in the “stops moving” phase on most green nonsense.
I ain't stupid.
But apparently many,many,many people in our GOBMENT are real STUPID...and have been for decades.
When is this going to stop....OR will it ever stop? OR..is that our GOBMENT is totally COURRUPT?
Wait I know the answer.
Power corrupts..and absolute power corrupts..absolutly. I believe a fellow by the name of Lord Acton said that....
He was right.
Disaster......
Companies with government loans going under is a feature, not a bug. The people who own the company make far more money from going under than they would if the company succeeded. If they back-door ten cents on the dollar to their favorite party or politician, it’s still 100% profit for them.
If you look at battery companies, what happens is they develop and manufacture a product for which there is too little market. This is the problem with everything the government gets involved in. Assuming that electric cars were the future (They’re not) the capacity to absorb batteries would need to develop along with the market instead of beating the market. That’s because you need to sell enough product to stay alive and not flood the small present market with too many batteries and drive down the price below the cost.
A $6.5 trillion budget creates many opportunities for crooks and communists.
"The rise and fall of Proterra demonstrates once again that politicians should refrain from betting taxpayers’ money [??? emphasis added] on business ventures to advance their political agenda."
FR: Never Accept the Premise of Your Opponent’s Argument
In stark contrast to "betting taxpayers' money," I think Helen Raleigh may be overlooking that desperate federal Democrats and RINOs possibly used Proterra to funnel unconstitutional federal taxes into the pockets of elite Democrats and their friends.
Proterra Bus Fire Prompts California Agency to Consider Shelving Electric Bus Fleet (7.23.21)
Philadelphia's [Proterra] electric bus fleet has disappeared (7.17.21)
In other words, patriots need to elect a new Congress that will support hopeful Trump 47 in putting a stop to federal Democratic and RINO junk science remedies for government / industrial-manufactured crises.
In the meanwhile, Democratic and Republican Trump-supporting patriots need to primary ALL incumbent federal lawmakers up for reelection in 2024, except for MTG, Gaetz & Company, Jordan (and others?), replacing them with patriot lawmakers who will actually do their constitutionally enumerated duty to provide accurate, constitutionally justifiable federal spending receipts to the public.
"Article I, Section 9, Clause 7: No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time [emphasis added]."
Feature not a bug from the Griftocrat party.
Although politicians have a poor record of picking business winners, don’t expect them to learn lessons from their spectacular financial failures. Ryan Yonk, a Research Fellow at the Independent Institute, observed that “support for renewable energy has reached the status of a moral imperative, and more importantly, a political imperative that elected officials must engage.”
That means American taxpayers will see more Solyndra and Proterra in the future and continue footing the bill for “green-washing” Democrats’ failed climate policies.
I prepared a tax return for an organic chicken business. Cost of Goods was much greater than sales of good, very obvious on the tax return. But the business showed a profit ONLY because of grants. But investors bought it because it was showing a profit.
Government employees are rather stupid (otherwise somebody else would hie them), but think about themselves as only ones who know.
Since they are not under pressure to deliver anything, they are free to think out all kind of regulations to show everybody else how smart they are!
The legislative Build Back Better 5 trillion dollar spendfest scheme was stillborn in Congress and so, it was reborn as the Inflation Reduction 1.1 trillion green spendfest scheme so Joe Manchin and others could use the fake name to sign on to it while making believe to their constituents they were fighting inflation. Nothing got built back better and Bidinflation was not reduced but the Solyndras of the world are getting a second life in a green spendfest that in reality is the Bring Back Cronyism Act
Everything the Biden Administration touches goes Solyndra the crew is looking for more academic charts.
Author Ms. Raleigh was doing fine discussing the politics of green-washing, but she should clearly stay away from the technical aspects of EVs.
It’s baked into the scheme, just like Solyndra.
Steal billions of taxpayer dollars, award them to shell companies formed by your donors and yourself, spend 20% of it on some peripheral hardware, to create the illusion you’re doing something, go bankrupt and pocket the dough.
It works every time.
This is a textbook case of classical fascism … and it’s been going on for far longer than the Biden clown show.
This winter should be interesting for the green car crowd. Many have been purchased during the warm months, lets see bow they perform when it gets cold!⚡️⚡️💥
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