Critics: $2.4 Billion in Electric Car Grants Were Biased

Department of Energy

Sour grapes or legitimate gripe that real innovation was overlooked?

The Department of Energy showed bias toward large well-capitalized companies when choosing recipients of $2.4 billion in grants to support electric-drive vehicles and batteries, according to critics of the DOE program. It left small more needy start-up companies—with innovative and promising new technologies—in the cold. Companies and organizations that were turned down are also claiming the DOE showed bias against states where political leaders opposed the $787 billion economic stimulus program—the source of the DOE electric car funds. And it showed favoritism toward Michigan, home of the ailing auto industry, assert critics.

An article in McClatchy Newspapers suggested political payback, explaining that Kentucky is a Republican state and home to Senate Minority Leader Mitch McConnell and other Republican leaders who had opposed the stimulus legislation that created the car-battery program. A consortium of 50 companies hoping to build a new battery plant in Kentucky lost out in its application.

Investing in Innovation, Or Political Payback?

California companies were also overlooked for grant money. Prior to the announcement of grant winners, Jeff DePew, CEO of Menlo Park-based battery-maker Imara, told San Francisco Business Times: “If the government just invests in the ones that are big names and already incumbent, they’ll be investing in first generation technology that may or may not be able to withstand the competition that will be coming form Asia.” DePew wanted DOE instead to invest in “more forward companies that have demonstrably better technology and better performance but maybe not as connected or at the same level of development.”

General Motors will receive more than $240 million in grants; Ford will receive nearly $100 million; and Chrysler will get $70 million. US-based auto battery maker, Johnson Controls, the single largest recipient, will receive $299.2 million for production of its lithium ion battery packs.

Grants were also provided to educational institutions—a dozen universities and colleges—to demonstrate electric-drive technology, to train the next generation of engineers, and to increase consumer awareness of plug-in hybrids, electric cars, and fuel-cell vehicles. (Full disclosure: HybridCars.com was a partner with public television in an unsuccessful application for funds for consumer education.)

CalCars, a California-based plug-in hybrid advocacy organization, was a partner in several applications that were not selected. Felix Kramer, CalCars founder, said, “Institutions that are now and have for years been at the center of the successful campaign to educate consumers and public officials are entirely missing from the grantees.” Those institutions include Plug In America, Friends of the Earth, and Project Get Ready, according to Kramer.

“We have heard from a number of smaller battery and automotive companies that feel their constituency was overlooked,” wrote Kramer in an email. “One made the comparison to funding dinosaur land-line companies at the birth of the cell phone age.”


  • SP

    Its not hard to understand why the money went to those chosen on the list. All of them have been involved in USABC funding programs. What doesn’t make sense is why they received all of it and potentially could receive more through the loan program. A123 has a potential IPO where it could raise additional funds through a public offering, EnerDel has a public venue where it could raise its money, why not cut them in half and fund the next eight on the list of applicants? Rule number one in investing, diversification. If in the end, the innovations in the California start-ups have merit, it ripens the potential for aquisition. California does have its own venue to rebel, it could buy only Teslas, Fiskers, Apteras, Codas using Quallions, Imaras, Mobius, and Powergenix batteries.

  • Paul Beerkens

    I agree that I would like to have seen money go to some small companies. One million can make a big difference for a small company and the big companies have already proven that they are struggling to innovate.

    On the other hand on the political bias. If your state selects a representative that tries to kill any attempt to become less dependent on fossil fuels then I have some sympathy for favoring states that do show a genuine effort to move our country in the right direction. You can not have a both ways as a state.

  • ACAGal

    California ARB supports EVs.

    We have companies that are and will be producing fast, road worthy EVs/ex-EVs (Tesla, Fisker). Cars that can be altered in function on the same base in future designs to build vehicles that can haul loads and passengers in greater amounts than in the first designs.

    CA should have gotten support. Probably the big guys are afraid that creative, beautiful cars that are hydrocarbon free or just use minimal gas would make GM and other old foggy companies look as dated and entrenched in their thinking.

  • sean t

    Many people (especially from GM & Ford camps) accused Japanese government of supporting Toyota finacially in making Prius without any evidence. Now look at what the US governemnt is doing . . . Come on, be fair.
    Wish the program best of luck, though. Electric car is the future.

  • manish

    This report doesn’t share the full picture. If you have dealt with startups, you know that you need to support the best. Others vanish in few years. You would then blame the government for wasting money. They gave funds to “Tesla” as they show promise. You will see “Fisker” die down in few as they are not the best.
    The report doesn’t even mention a123systems which got a big chunk to setup a battery plant in Michigan. Again they are the leaders with technology coming right out of MIT.
    Does anyone seriously think that calcars will be around in 5 years ??

  • Real KY

    Talk nonsense about not wanting stimulus money in districts and you should need to explain to businesses why you don’t support them over stupid political ideologies. Mitch needs to borrow John Boehner’s tanning bed & explain to the folks here why he doesn’t support us lets chew on some grass & say hee-haw.

  • Eddie

    Corporations do not create innovation they stifle it. Major itechnological changes are created by an individual who is allow the freedom to do so without bureaucratic ditates from the coporate elite whose only concere is the bottom line and their own selfish interests. Changes occur when money is not the issue. Without restrictions the indiviual will “think outside the box” and find a way past the roadblocks imposed on them by the corporate bureaucrats.

  • sullivas6

    For a president that touts innovation, the gov’t did not put its money where its mouth is. If you want speed of innovation, we need to look at smaller companies that show promise. I wonder if the big boys are able to use the funds to buy the smaller guys; that would be capitalism, not innovation. Unfortunately, politicians use our money for politics and influence and not for the good of the country.

  • ACAGal

    What sullivas6 said has proved true in bailing out the banks, unfortunately.

  • panthrprey

    IMO diesel + electric will be the future.

    Trains show this tried and true method of transportation is good.

    Diesel motor on bio-D is cleaner than gas , is renewable , and would give people long range clean driving.

    Plug in for city / Bio-D for long trips or when battery gets low for charging purposes.

  • stsmart@net-link.net

    Critics of Diesel say that the new “clean” engines will make a difference in demand. I disagree! Most diesels sold in the US are in higher-priced luxury type cars. Who wants to pay $50-60,000 for a noisy diesel that shakes and rattles???

  • steve e roe

    I agree Califonia could probably produce a very American Car. Whitout the help of the FFFF, Federal Government cannot!!! The big 3 are union losers!! Lose them and let California Build and American Car. Simple strategy, lose the union, gain the production of autos in this country,!!!!!

  • ultralight aircraft

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  • tapra1

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