More Green Car Woes

It’s not every day that I get to blog about something I read in Car and Driver, but there’s a great article today about A123, a major manufacturer of lithium-ion batteries for hybrid and electric vehicles.  They’ve filed for bankruptcy after 14 straight quarters of losses, and no one’s quite sure what impact that’s going to have on the whole hybrid and electric vehicle market.  The problem’s summed up nicely in the piece when they say,

New hybrid cars and EVs are busting out of automakers’ floodgates and being purchased at a trickle. Every car company is taking a long look at its current and planned hybrid and EV portfolio and asking, “Don’t we need to cancel some of this stuff?”

Of course, that’s more easily said than done because A123 is yet another “green” company that’s received taxpayer money.  The government doesn’t want it, or the vehicles that use its batteries, to fail.

All of the negative press about A123, EVs, and green cars will unquestionably have a chilling effect on the market. Already-timid retail consumers might back off for fear that manufacturers could go broke or that the technology isn’t ready for primetime. Investors, seeing public reaction and the general frailty of automotive startups and suppliers, could be even less keen to sink hundreds of millions of dollars into companies like A123 or Tesla or anyone else.

And in this election season, that will likely make the whole thing highly political.

A123, which also borrowed from the feds, will be wearing an even bigger target in the next three weeks. For Mitt Romney, A123 will be a symbol of unholy government participation in the private sector and a punching bag because of the unofficial Republican position that “green” policy is deeply uncool. For Democrats, who initiated the loans, A123 will be a case of—hey, look over there while I run out of the room!

It’s all just another example of the mess that government tends to make when it tries to get involved in things that ought to be left to the market.

Julie Tisdale / City and County Policy Analyst

Julie Tisdale is City and County Policy Analyst at the John Locke Foundation. Before coming to the Locke Foundation as the research publications coordinator, she worked at the...

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