This is what happens when the government “invests.” In a free market, capital flows to good ideas that appeal to the public. But when the government invests, capital flows to political ideas which often don’t have a lot in common with what the public actually wants or needs.
Nothing is more emblematic of the industry’s troubles than the Fisker Karma. In 2010, Fisker got a $529 million taxpayer loan to build a luxury electric sports car.
But the government cut off the loan to Fisker after $193 million when Fisker failed to meet its ambitious sales and production goals. Then, a Consumer Reports test dealt the Karma another blow.
“It is low. It is sleek. It is sensuous,” the Consumer Reports’ video narrator says.
“It’s also broken,” the narrator adds as a clip of the Fisker Karma being towed on a flatbed airs.
Fisker blamed the car’s lithium ion battery, which happened to be made by another government loan recipient, A123 Systems.
A123 got a $249 million taxpayer loan. This year’s first-quarter losses totaled $125 million.
The industry’s misfortunes have seriously undermined President Obama’s goal.
“We can replace our dependence on oil with biofuels and become the first country to have a million electric vehicles on the road by 2015,” Obama said in January 2011.
To get to one million, the White House pinned its hopes on 11 models of electric vehicles — including the Karma. Our CBS News investigation found that six of the 11 — Ford Focus, Ford Transit Connect, Fisker Nina/Atlantic, Tesla Model S, Tesla Roadster and Think City — either haven’t made their first delivery or are already out of business.
Others aren’t even close to the government’s 2015 projections. For example, 36,000 Fisker Karmas and 505,000 Chevy Volts were supposed to be made. But current projections slash the Karma’s 2015 number in half to 18,000 and put the Volt at one-eighth of the goal at 62,000.
I don’t think Americans have a bias against the concept of electric cars. I think they have a bias against cars that don’t work very well and/or aren’t very practical.
Most electric cars are really just hybrids that you can plug in. They all run on gas, eventually, and the miles-per-gallon ratings aren’t really all that much of an improvement over what you can get from the more fuel efficient gas-only vehicles which also have a much lower price tag.
Americans aren’t buying electric cars because electric cars don’t work very well. They’re only on the market because, politically, they’re favored.