Parent of Obama-backed battery maker goes bankrupt

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**Frazzled**

http://www.foxnews.com/politics/2012/01/27/parent-obama-backed-battery-maker-goes-bankrupt/

Parent of Obama-backed battery maker goes bankrupt

WASHINGTON – The parent company of an electric car battery maker that received a $118 million grant from the Obama administration filed for Chapter 11 bankruptcy protection on Thursday.

New York-based Ener1 said it has been affected by competition from China and other countries.

Ener1 subsidiary EnerDel received a $118 million stimulus grant from the Energy Department in 2009, and Vice President Joe Biden visited the company's new battery plant in Indiana last year.

Ener1 is the third company to seek bankruptcy protection after receiving assistance from the Energy Department under the economic stimulus law. California solar panel maker Solyndra Inc. and Beacon Power, a Massachusetts energy-storage firm, declared bankruptcy last year. Solyndra received a $528 million federal loan, while Beacon Power got a $43 million loan guarantee.

Solyndra, of Fremont, Calif., was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently touted it as a model for its clean energy program.

Since then, the company's implosion and revelations that the administration hurried a review of the loan in time for a 2009 groundbreaking has become an embarrassment for President Barack Obama and a rallying cry for GOP critics of the administration's green energy program.

The chairman of a House subcommittee that is investigating Solyndra said the latest bankruptcy showed that the administration's clean energy program has failed.

"Unfortunately, you can now add Ener1 to the growing list of failed companies that went belly up after hundreds of millions of dollars in administration backing," said Rep. Cliff Stearns, R-Fla.

"One bankruptcy may be a fluke, two could be coincidence, but three is a trend," Stearns said. "Our investigation continues, and we are working to ensure taxpayers are never again stuck paying hundreds of millions of dollars because of the administration's risky bets."

An Energy Department spokeswoman said EnerDel had received $55 million so far under a program in which EnerDel matches federal investment dollar-for-dollar. Ener1 said in a statement that the restructuring would not affect EnerDel's operations. The company makes lithium-ion batteries for electric cars such as the Chevrolet Volt.

"While it's unfortunate that Ener1, the parent company, has entered a restructuring process," a recent infusion of $80 million in private investment "demonstrates that the technology has merit," said Jen Stutsman, a spokeswoman for the Energy Department.

"The restructuring is not expected to impact EnerDel's operations and they do not expect to reduce employment at the site" near Indianapolis, Stutsman said.

**Alexzandvar**

I love how you made now attempt yourself to dicuss the matter.

And ALSO quoted Fox News. Cheers.

**DeadlySquirrel**

Deep down, we all knew it would happen.

**purplefood**

Alexzandvar wrote:I love how you made now attempt yourself to dicuss the matter.

And ALSO quoted Fox News. Cheers.

Lighten up...
Frazzled posts a lot of news things in OT.
That contribution alone is good.
He may or may not contribute later, maybe he went to get a snack or to do something suitably Texan...

**sebster**

For some reason we seem to be assuming that when investing in developing technologies, it is absolutely unacceptable if a single investment fails.

This isn't how venture capital works one bit, where they work on an assumption that about 70% of companies will fail to return a single dollar, about 2 in ten will give some kind of return, and one in ten will produce the kind of spectalur pay-off that justifies all the rest. But it seems to be how FOX news, and in turn Frazzled, are pretending things work.

I might even go so far as to suggest this is for partisan political reasons...

**schadenfreude**

The reason green car companies and mass transit both do not do well in the USA is really simple. We pay to little for gasoline. Yes I said we pay to little for gasoline. The US economy can't be sustained unless we import 2/3 of our oil, so without foreign oil the US has no economy or national security. Drill baby drill won't increase domestic production by 300% which is minimum it would need to be increased by to meet current domestic demand. The only way to lower consumption is to raise the price, and we pay way too little for our gasoline.

How ridiculously low is American gas prices? Last time I went to the pump it was $3.50 a gallon. The average American has no idea how cheap that is.

Let's for the sake of mathematics say I live in a state with a higher gas tax and I pay $3.78/gallon. That would come to $1/liter, or in European terms petrol costs about 0.64 pounds per liter or 0.76 Euros per liter.

In American terms gas costs about $8/gallon in most European countries. That's why public transportation and fuel efficient cars both do better in Europe than they do in the USA.

**WarOne**

Is there a list of the successful companies out there that the Feds have backed as opposed to just the three that have failed?

**dogma**

schadenfreude wrote:The reason green car companies and mass transit both do not do well in the USA is really simple.

There are other reasons as well. Two major ones are:

1) European cities are designed such that small cars are naturally preferable (And cars in general are not preferable), which immediately increases the incentive to buy smaller, and generally therefore more efficient, vehicles. This means that Europe has never developed the "big car" culture that the US has (though it is dying out).

2) Everything in Europe is, generally speaking, closer to everything else than it is in the US. The entire continent of Europe is only about 300,000 square km larger than the US. This makes mass transit more difficult to provide due to simple logistics.

**Ouze**

Hey, you guys don't like the government being in the venture capital game, stop electing Republicans. The acts passed that allowed all these loans to happen were passed by a Republican majority congress and senate, and signed by a Republican president. It was in 2005 - don't you guys remember all the protests about socialism when it passed?

**Frazzled**

purplefood wrote:
Alexzandvar wrote:I love how you made now attempt yourself to dicuss the matter.

And ALSO quoted Fox News. Cheers.

Lighten up...
Frazzled posts a lot of news things in OT.
That contribution alone is good.
He may or may not contribute later, maybe he went to get a snack or to do something suitably Texan...

I had steak yesterday. I brought some of it home for the three doggies. They went berserk.

Often when I post and article I don't discuss it.

Automatically Appended Next Post:

WarOne wrote:Is there a list of the successful companies out there that the Feds have backed as opposed to just the three that have failed?

Quiet you! We won't have none of that talk around here.

**biccat**

schadenfreude wrote:The reason green car companies and mass transit both do not do well in the USA is really simple. We pay to little for gasoline.

I fully agree with this. The reason green cars don't do well here is because energy is inexpensive and affordable so people don't need public transit or green cars. If gas were more expensive, people would tend to concentrate in smaller urban areas and walk or use public transportation.

Did you know that the difference between US and European gas prices is almost entirely due to taxes?

**Howard A Treesong**

dogma wrote:
1) European cities are designed such that small cars are naturally preferable (And cars in general are not preferable), which immediately increases the incentive to buy smaller, and generally therefore more efficient, vehicles. This means that Europe has never developed the "big car" culture that the US has (though it is dying out).

"Designed". Many of our cities are older than your country, they weren't designed they've just grown in a sprawling mass from the days when people thought a horse and cart were luxury items...

**WarOne**

Frazzled wrote:Automatically Appended Next Post:

WarOne wrote:Is there a list of the successful companies out there that the Feds have backed as opposed to just the three that have failed?

Quiet you! We won't have none of that talk around here.

Oh yes, because nothing good can come from any sort of government intervention not involving the use of tanks, helicopters, and guided missiles.

**Frazzled**

WarOne wrote:
Frazzled wrote:Automatically Appended Next Post:

WarOne wrote:Is there a list of the successful companies out there that the Feds have backed as opposed to just the three that have failed?

Quiet you! We won't have none of that talk around here.

Oh yes, because nothing good can come from any sort of government intervention not involving the use of tanks, helicopters, and guided missiles.

Don't forget A bombs, really big dams (which we can't build any more), and the IRS!

**WarOne**

Frazzled wrote:
Don't forget A bombs, really big dams (which we can't build any more), and the IRS!

IRS: "Iran, we have discovered you owe the United States over thirty years in back taxes on the property known as the "Former United States Iranian Embassy." You have thirty days to pay us or we will be forced to foreclose on your nation."

**Frazzled**

WarOne wrote:
Frazzled wrote:
Don't forget A bombs, really big dams (which we can't build any more), and the IRS!

IRS: "Iran, we have discovered you owe the United States over thirty years in back taxes on the property known as the "Former United States Iranian Embassy." You have thirty days to pay us or we will be forced to foreclose on your nation."

Now you understand.

**Rented Tritium**

schadenfreude wrote:The reason green car companies and mass transit both do not do well in the USA is really simple. We pay to little for gasoline. Yes I said we pay to little for gasoline. The US economy can't be sustained unless we import 2/3 of our oil, so without foreign oil the US has no economy or national security. Drill baby drill won't increase domestic production by 300% which is minimum it would need to be increased by to meet current domestic demand. The only way to lower consumption is to raise the price, and we pay way too little for our gasoline.

How ridiculously low is American gas prices? Last time I went to the pump it was $3.50 a gallon. The average American has no idea how cheap that is.

Let's for the sake of mathematics say I live in a state with a higher gas tax and I pay $3.78/gallon. That would come to $1/liter, or in European terms petrol costs about 0.64 pounds per liter or 0.76 Euros per liter.

In American terms gas costs about $8/gallon in most European countries. That's why public transportation and fuel efficient cars both do better in Europe than they do in the USA.

This has nothing to do with the company failing, however. A company that makes automotive batteries still has a huge market in industrial equipment. A considerable portion of all heavy equipment is electric or has gas/electric components requiring better batteries.

Anyone advancing battery technology shouldn't be looking at electric cars as a primary source of income. Electric cars are a potential future source of income, but not actually the primary market.

**WarOne**

Rented Tritium wrote:

This has nothing to do with the company failing, however. A company that makes automotive batteries still has a huge market in industrial equipment. A considerable portion of all heavy equipment is electric or has gas/electric components requiring better batteries.

Wouldn't they have to spend capital to change what they have invested in making car batteries in order to make industrial equipment?

**Rented Tritium**

WarOne wrote:
Rented Tritium wrote:

This has nothing to do with the company failing, however. A company that makes automotive batteries still has a huge market in industrial equipment. A considerable portion of all heavy equipment is electric or has gas/electric components requiring better batteries.

Wouldn't they have to spend capital to change what they have invested in making car batteries in order to make industrial equipment?

They're the same thing using the same technology and the same process. It's just a matter of marketing. If they could afford to make 2 kinds of car battery, they can afford to make 1 car battery and 1 forklift battery.

My point is that you can't blame this company failing on the car industry not going electric. That's not an excuse for a battery company to fail since the market for large cell batteries is huge even without cars. Schadenfreude posted about why electric didn't work out here. That point is only relevant if you assume this company committed 100% to car batteries only, in which case they failed because they didn't read the marketplace correctly.

**Frazzled**

I believe this one also blamed cheaper Chinese competition.

**Rented Tritium**

Frazzled wrote:I believe this one also blamed cheaper Chinese competition.

That's probably true. Chinese manufacturers are able to get the materials that go into batteries for a lot cheaper than we are.

Of course, this is less an excuse than an explanation.

Automatically Appended Next Post:
But more on-topic, it is normal when you give grants to a bunch of companies that some of them are going to fail. The goal is to get a net positive out of a larger number of investments.

The silver lining is that the companies that supplied these guys with materials had more business for a while and this company's competitors probably get to buy all of their work and materials at a deep discount.

**ShumaGorath**

"One bankruptcy may be a fluke, two could be coincidence, but three is a trend," Stearns said. "Our investigation continues, and we are working to ensure taxpayers are never again stuck paying hundreds of millions of dollars because of the administration's risky bets."

And the award for bs loaded yellow journalism turned political think tank broadcsting goes too... Stearns! I'm so glad that frazzled decided to class up this place by smearing a stain on the front page again.

**biccat**

WarOne wrote:Oh yes, because nothing good can come from any sort of government intervention not involving the use of tanks, helicopters, and guided missiles.

Not true.

Government intervention involving the use of tanks, helicoptors, and guided missiles is usually not a good thing. It would have been far cheaper to take out Hussein and his top advisors and then let Iraq deal with its problems itself, or deal with them ourselves. Unfortunately, some people get a little upset when you start tossing around terms like "political assassination" and "puppet government." So we make allowances.

Even if you're only talking about defense spending, it's usually not a good use of money, the government is universally inefficient.

**dogma**

biccat wrote:
I fully agree with this. The reason green cars don't do well here is because energy is inexpensive and affordable so people don't need public transit or green cars.

Then why do more people in France own cars of any sort than people in the US?

biccat wrote:
If gas were more expensive, people would tend to concentrate in smaller urban areas and walk or use public transportation.

People do tend to concentrate in small urban areas, though use of public transit is low.

**juraigamer**

I say, a car battery company going bankrupt in a economic state where fewer people are buying new cars? Say it isn't so!

**CT GAMER**

purplefood wrote:
Alexzandvar wrote:I love how you made now attempt yourself to dicuss the matter.

And ALSO quoted Fox News. Cheers.

Lighten up...
Frazzled posts a lot of sensationialized fox journalism in OT.
That contribution alone is good.
He may or may not contribute later, maybe he went to get a snack or to do something suitably Texan...

Fixed that for you.