Feds Gambled More on Electric Cars in 6 Months Than Transit Gets All Year

Vice President Joe Biden will return to his home state of Delaware today to announce that California car company Fisker Automotive will reopen a shuttered General Motors plant to build a moderately priced plug-in hybrid that goes by the code name Project NINA.

popup.jpgThe Wilmington, Delaware, GM plant that Fisker plans to reopen. (Photo: NYT)

Fisker’s investment in the Delaware plant was made possible by a $528 million loan from the U.S. Department of Energy, which has offered $8.5 billion to since June to producers of plug-in hybrids.

When that $8.5 billion is combined with the DoE’s $2.4 billion in stimulus grants to car battery producers, Bloomberg notes that
the Obama administration’s total investment in low-emissions autos has
topped $11 billion in six months — about $500 million more than the annual budget of the Federal Transit Administration.

The DoE loan to Fisker has attracted its share of media scrutiny, with the Wall Street Journal suggesting that former Vice President Al Gore’s backing helped the company win government support.

Henrik Fisker, CEO of his namesake company, responded
that the loan was conditional and "will be repaid, with interest, to
the American taxpayer," telling critics of the NINA cars’ $40,000 price
tag that "any new technology is expensive."

Fisker also
noted that this year’s $11 billion haul is just the beginning of
Washington’s investment in hybrid electric cars — the market for which
remains unproven. During the hectic days of last fall’s financial
bailout, Michigan lawmakers secured enough funding to guarantee $25 billion in loans for makers of more fuel-efficient cars. (By way of comparison, the U.S. DOT estimates that the nation’s transit networks need $50 billion to get their equipment into a state of good repair.)

The loans to Fisker and Tesla, which got $465 million from the DoE in June, come from that $25 billion pot. And the government gave the hybrid automakers an undeniably good deal
— interest rates as low as 5 percent, compared with up to 20 percent
on the private market, and a repayment window of 25 years.

Will the government’s growing subsidies to automakers dissuade conservatives from claiming that transit is the nation’s only subsidized mode of transportation? The chances aren’t good.

  • david vartanoff

    Why is anyone surprised? There was a point during Reagan’s term when the Feds gave out bus purchase subsidies to keep the factories running even though they had cut Fed operating subsidies. There is a pattern here.

  • Esther

    I just don’t understand why the Department of Energy gives out incredible amounts of loans to private automakers. Shouldn’t the DoE be focusing on promoting public transportation for obvious eco-friendly, beneficial-for-more reasons? This money should be spent in bettering the public transportation system the working-class heavily depends on. Transit isn’t being subsidized enough in my eyes. On a brighter note, thank God for commuter benefits. I sent my employer a link to the Commuter Nation (http://www.commuternation.com) website and the next thing I know is I’m saving money thanks to the government. If you don’t have commuter benefits, make sure you talk to your employers about it. There’s nothing to lose.

  • Ajay

    “interest rates as low as 5 percent, compared with up to 20 percent on the private market, and a repayment window of 25 years.”

    What? You can get loans for much less than 20% interest rates.

    I can tell from the tone of the article that the author does not like this program, but why lie to make a point?

  • patrick

    Ajay, companies in very new industries, that will be competing with huge multinational companies can find it very expensive to get a loan, if they can get one at all.

    The interest rate available for a home mortgage is not anywhere close to what a start-up can get. Loans for start-ups are much closer to credit card interest rates.

  • Actually, Ajay, I think it’s a potentially winning idea to encourage the construction of cleaner-burning cars in American plants, provided the market is there to bolster the investment. And if you look in the linked article, you’ll find that automakers were facing punishing interest rates last fall when the loan program was approved — in large part because of the bad economy, but also because of what patrick pointed out above.