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: 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.”