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EV Hell – Paved With Good Intentions

July 20, 2011

Salinas Start-up Green Vehicles Turns Out The Lights

I am an advocate for electric vehicles (EV) and clean energy technologies. However, not all technologies and all projects are worthy of funding. We know it’s a safe bet that in the future smart EVs will help reduce; energy consumption, traffic hassles and dependence on foreign oil. We don’t know when EVs will be practical, affordable and widely adopted by customers.

It is a gamble betting on winners and losers in the innovation business. It is best left to those who are professional and can afford to invest their own money.

It’s been said that the road to hell is paved with good intentions. We might also add that the trip is too often fueled with tax dollars. Like the billions of dubious “investments” in high-speed rail projects and many of our tax dollars being wasted on green energy and clean transportation companies.

Money is always wasted (no return on investment) in the introduction of new technologies, companies and industries. It is the way of the world and how things get done. The question is who’s money is being wasted. Is it professional investors and venture capitalists who decide where the best place to get the biggest return on their investments or is it tax payer money being  allocated by politicians and dolled out by bureaucrats into what they believe to be good works?

Politicians and bureaucrats have a dismal record in picking winners and losers in the technology market. They have a better record in supporting scientific research and university/industry applied research.

I think it’s better to let the private sector risk its dollars betting on specific technologies and companies in a free market. Where they can earn their rewards or suffer their losses. I also think the X-Prize competitions are a splendid way to stimulate specific technology solutions.  And, I do support local programs for incubators, enterprise zones, industry clusters  and other non-specific investments. But, I think it is unwise for taxpayer dollars to be put at risk in start-ups.

For example, here’s the sad story of Salinas, California and how its good intentions went hellishly awry.

Happier Days with Mike Ryan and his Triac EV

On July 12, 2011 Mike Ryan announced:

“It is with great regret that I must report that Green Vehicles has been unsuccessful in bringing in the resources necessary to continue as an organization, and we will be shutting our doors. As an entrepreneur, I know I’m expected to approach this moment with the perspective that we take chances that sometimes will pay off and at other times will not, but it would be disingenuous for me to adopt such a view.” See Mark’s full statement and what he would do differently.

$2M funding from California Energy Commission didn’t Pan Out.

Back in November of 2010 Green Vehicles Inc. started accepting reservations for its two-passenger, all-electric, three-wheeled car. The compact, lightweight “Triac” features 80 mph maximum speeds, a 100 mile range, and a list price below $25,000. The company believed they were to receive an investment from the state.

October 6, 2010, The California Energy Commission allocated $2 million to help fund the building of 2,000 Triac EVs per year at an 80,000 square-foot manufacturing facility in Salinas, Calif. In addition to Green Vehicles, participants in the project of manufacturing the Triac include Leyden Energy, supplier of the Triac’s lithium-ion batteries; Automotive Technology Group, a designer and manufacturer of concept vehicles; and the City of Salinas. The project team will provide funding of $2.8 million to match the state grant.

The Commission expects the project to add nearly 500 jobs relating to the EV’s assembly, supply chain, and electronics. Additionally, the Commission reckons that each Triac sold will lesson petroleum use by 575 gallons per year and cut greenhouse gas emissions by 72 percent relative to the environmental costs of a conventional vehicle.

On July 18, 2011 KABW reported…

The city of Salinas had invested more than half a million dollars in Green Vehicles, an electric car start-up company.

The start-up company set up shop in Salinas in the summer of 2009 after the city gave Ryan a $300,000 community development grant.

When the company still ran into financial trouble last year, the city of Salinas handed to Ryan an additional $240,000 in investment money.

All of that money is now gone, according to Green Vehicles President and Co-Founder Mike Ryan.

Council member Kimberly Craig defended the city’s decision to pump money into Green Vehicles. “We had good intentions,” Craig said Tuesday night. “It was a forward movement that had state and federal funding behind it. They needed local funding as well.”

Fool’s Gold in the New California “Green Rush”

Salinas is a lovely city with a current population of 150,000, it was the home of writer John Steinbeck (1902-1968), a champion of the working man.  The city had the best of intentions betting tax payer dollars on the success of the risky start-up Green Vehicles. But, sadly that future is not to be.

Jeffrey Weir, the city’s economic development director and a prime architect of the city’s participation in the Green Vehicles deal, said late Monday that the company’s decision to shutter itself was unfortunate.

“It’s embarrassing and disappointing to myself and to the City Council,” Weir said. “But, we will not stop in our efforts to reboot our city’s economy and to create jobs for our residents. We will learn from this and move on. We have to. No one is going to save us but ourselves.”  As reported by the Californian…

Citizen comments in response to the article expressed, unsurprisingly,  a very different assessment of the decision.

In Related News…

From the “Tied to the Whipping Post” file: There’s tough news from Aptera Motors, another California based 3-wheel EV maker in purgatory.

Aptera still stalled, puts reservations (and cancellations) on hold, but raises $2.2M of the $3M need to keep rolling along.

On July 14, 2011, WiredVC wrote

Aptera Motors, the 3-wheel car of the future maker based in Carlsbad has raised what may be its last chance of survival, if not one of its last. A start-up with earlier backing from Google has been standing still despite this and other high profile investors.

The company has stated in an SEC filing from early in July that the $2.2 million in financing recently closed on is part of an effort to raise a $3 million round.

Aptera Motors has raised tens of millions of dollars in private funding. Investors have included Pasadena-based Idealab and Google.org, the nonprofit philanthropic arm of search engine giant Google. Others were Corpus Christi-based Esenjay Petroleum Corp.; Newport Beach-based The Quercust Trust; and the Beall Family Trust.”

Ironically, if Aptera does survive it plans on moving its manufacturing from California.

“Economically, it’s just more affordable to build elsewhere. The numbers were never big enough for me to ever write them down,” he said of Aptera’s courtship of California.

“We have states calling us to actually compete for the manufacturing,” Wilbur said. “They are offering us tens of millions of dollars to come into their state. It is hard to turn them down.” Wilbur said Aptera is likely to end up in a factory east of the Mississippi River. See full article in North County Times…

These are but tales of two cities. However, the story is universal and being told around the globe. As the world, full of the best intentions, seeks the Holy Grail of clean energy and green transportation. It is prudent to ask. “Who should be funding the quest?”

My suggestions to cities is to keep your (our) money in your pocket but create a good environment for business, manufacturing and entrepreneurs. Reasonable taxes, sensible regulations and a motivated workforce make the right elements for a fertile industrial Garden of Eden.

Related Stories…

Forbes: The New Green Economy Is Bleeding A Great Deal Of Green

All Cars Electric: Want an Aptera? You Can’t Reserve One (For Now)

The Herald: Finance killed the electric car

Hybrid Cars: EV Maker Think Files for Bankruptcy

Autoweek: Aptera refunds deposits, future unclear

The Herald: Green Vehicles sued: Salinas aims to recoup investment in electric car fiasco

 

 

 

 

 

 

 

 

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2 Comments leave one →
  1. Sam Womack permalink
    July 25, 2011 11:19 am

    Nice write-up! I hate seeing politicians think they know how to engineer. We see the same thing in Energy stuff I work on every day. Wind power is great in some places, but when politics tell you that you are required to buy the expensive subsidized wind energy and dump the water over the dams, it gets a bit tough to understand how this is good for the people who buy the energy. Especially as unstable as wind is, you have to have backup generation at the ready 24/7 to pick up the slack.

  2. July 26, 2011 10:01 am

    Thanks Sam, asking pols to act like engineers is a bridge too far. I’d settle for a little common sense and a lot less interference.

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