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Gov't Funded Electric Car Company Goes Out of Business
thecarchik writes "Consider yesterday's collapse of electric car company Green Vehicles an object lesson in why it's a bad idea for cities to invest in the risky business of start-up car companies — perhaps especially start-up electric car companies. Even such companies with a viable product have seen their fair share of financial troubles, but Green Vehicles did not even have a product to sell off at a fire sale. The city of Salinas, California learned that lesson as Green Vehicles shut its doors, costing the city more than $500,000."
I'd say it's a bad idea for *anyone* to invest in a company that has no product and/or does not make money.
Business plans are a dime a dozen; ability to execute is an uncommon skill.
There's no -1 for "I don't get it."
ability to execute isn't the only barrier. the economy environment, and frankly a lot of luck, is required as well.
Investing in any company has risk. Cities should obviously weigh the pros and cons of where to invest their moneys and such but to single out an entire industry because one company failed smacks of fear-mongering. You wouldn't have seen such alarmist claptrap if a city had invested in General Motors as "it is a bad idea for the government to invest in an American Car Company".
Rhymes that keep their secrets will unfold behind the clouds.There upon the rainbow is the answer to a neverending story
A "green jobs" investment that went sour. A car without a market. Socialists everywhere scratching their heads.
Yes the pun was intended.
Who exactly expected to have a fully functional prototype of a sale-able electric vehicle with a $500,000 investment? Cities, counties, states and the Federal Government get into all sorts of businesses that take time and money to set up. Medicare, BART, the TVA... it's not always a good idea, nor always a bad idea. But if you're going to do it, do it. $500,000 gets you two engineers, some materials and a fab plant for a year, and not much else. That may be a nice way to do a lean start-up, but it's entirely possible that the only reason that the half-mil was a waste was because that was the limit, so it was doomed to fail.
It may not be an impossible task, but if inventing the next generation of EV were easy and cheap--and in this context, I'd suggest that a $500,000 investment is cheap--then everyone would be doing it.
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> it's a bad idea for cities to invest in the risky
> business of start-up car companies
Perhaps it's a bad idea for cities to heavily invest in any high risk venture. But it should be noted that we don't all come out and cluck at them when their risk pays off.
Anyway, if the good people of Salinas wanted to risk $500 thousand in a questionable startup, it's a free country (sort of). I imagine other cities have squandered far more money on far worse ideas.
Banks and finance companies don't make anything tangible either, yet get government bailouts in the hundreds of millions, if not billions.
Too bad they wern't 'too big to fail' while making nothing.
Divide a cake by zero. Is it still a cake?
This has nothing to do with it being an electric car company, or a car company, or anything else.
It's just the cost of doing business, sooner or later some will turn bad on you, if you can't bear the risk of losing what you spend, don't spend it.
500,000$ may be a lot for an individual, but a city? Not so much. Especially one of 150,000 people. They're going to live through it.
Let me know when we have another Orange County Fiasco.
A typical 'feasibility study' on a new rail line costs 20x as much. And it takes 5-6 studies before it goes ahead or is shut down.
Well I am no enterpreneur and I just read about this, so I may be completely off, but why do I suspect that this whole thing was set up?
500,000$ may be a lot for an individual, but a city? Not so much. Especially one of 150,000 people. They're going to live through it.
Good point; however, imagine if the project had been properly scoped and managed, and had been able to turn out a product with a little more time and money invested. What if they could have produced their own fleet of EVs for city use? Would that have justified the cost? Does the city own the electric power generation or distribution, allowing them to effectively give away the razors to local residents so they could then sell the blades for a bit more profit? Were they going to sell the cars on the open market?
Like I said above, $500,000 not only isn't that much for a city, it's a paltry amount for an automotive startup. When companies making a simple piece of photo sharing software get investments of multiple millions of dollars, you'd think that something like this would get a bit more in terms of resources. The number is right in that range where it actually probably is criminal. Way too much for a simple exploration, but way too little to think you could actually turn something out.
The CB App. What's your 20?
Salinas is essentially a medium sized farming community. WTF were they thinking? I could understand San Jose or Sunnyvale or Mountain View doing something like this, but Salinas?
Obviously these idiots didn't learn from what happened when New Brunswick government had tried to bail out a poorly run company that could only produce one of the worst cars ever built. What a total Pricklin.
Opening ANY manufacturing business in California is nuts! The state is remarkably hostile towards the manufacturing sector.
I will not be pushed, filed, stamped, indexed, briefed, debriefed or numbered. My life is my own.
It is unlikely that every single citizen of Salinas would have been happy with making the investment, so what you should have been able to say is - "if the good people of Salinas wanted to risk $500 thousand in a questionable startup, they should have done so individually"
The Internet's nature is peer to peer - 20050301_cs_profs.pdf
By the time this comment shows up, there's probably going to be a hundred comments critical of everything under the sun, but the article does not give the slightest indication of WHY the company is going under. Who on Earth would think a car company could turn a prophet in a couple years?
AND the city wasn't expecting their return back so soon, just to bolster jobs and produce additional TAXES.
This is pretty much trollbait to put this on slashdot.
Do you know how many people/investors supported how many inventions/inventors that ended up unsuccessful back in 1800-1900 ? ill tell you - you cant even start to count. you only read about the ones who had been successful, and a few of those who were unsuccessful, and you are led to naturally think it was like that. on the contrary.
Read radical news here
What about Rome? Looks to me like it's still doing okay. Don't always consider a divestiture as a loss. The empire will bring safe and secure society
For justice, we must go to Don Corleone
If a company has a viable business plan, it will attract private investment. If a company has to turn to government for funding, then chances are it's going to fail.
The taxpayers of the city lost $500K. It's easy to spend or play with money that you haven't earned through working your ass off.
The good citizens worked hard for that money. Did they have a vote about how it was being "invested" in some feel-good scheme their know-it-all leaders wanted? Seriously, a man can be selling insurance one day, and then after he's elected he's suddenly an expert on everything? Give me a break.
Politicians of every stripe are out of control. Rein them in before they destroy everything.
It may not be an impossible task, but if inventing the next generation of EV were easy and cheap--and in this context, I'd suggest that a $500,000 investment is cheap--then everyone would be doing it.
It's doubtful that the $500k was the sole source of funding for the company. It's far more likely that it's the city that's out of $500k from things like forgone property taxes, perhaps the 'factory' went up on public land that was given to the company worth ~$500k, etc... Meanwhile there's lots of other investors out there that have lost their investment.
Not saying this makes it all that much better, or less of a gamble.
I don't read AC A human right
Ummm, so they invested a half million and the company failed. It seems to me that more than half new businesses fail, as a matter of fact, the last time I checked new businesses have a failure rate of around 80% in the first five years of business. If your starting a new business with a new product, then the odds are stacked against you. Does that mean we stop trying to launch new products? If we stop trying to invest in new projects then I guess the only way to open up new funding is by legislating income for current product lines, which doesn't seem like a viable way to do business.
So the county invested in a new business and it failed. Chalk it up as a loss and move on. While the taxpayers might not like the way the gov is spending their taxes, cities/municipalities, counties, states and national governments do this all the time. Sometimes it works, sometimes it doesn't. But I'd rather fund a new startup that fails, rather than fund the good-ol boy network that siphons money off the top to fund their retirement account. It doesn't sound like the failure was due to mismanagement or corruption, just that they weren't able to continue and that it cost more than expected. This happens all the time. A half-million is a small investment and though it didn't work out this time, the only way to "win" is to make investments in the future. If all the bugs had been worked out before the company went into business there would have been no reason for the gov to invest. They gambled on a decent return and it failed. But one failure shouldn't be held up as an example to bash investing in the future, which is the slant the article seems to imply. If we don't invest in better ways of doing things, where will we end up?
/* TODO: Spawn child process, interest child in technology, have child write a new sig */
But wait: http://www.allcarselectric.com/news/1063329_aptera-answers-our-questions-shares-no-new-information At least Tesla is still making the roadster, but wait: http://www.treehugger.com/files/2011/06/tesla-stop-production-electric-roadster-focus-model-s-sedan.php At least there's the Corbin Sparrow or the Sinclair C5 or ??? http://jalopnik.com/5809904/whats-historys-most-awesome-failed-electric-car I'm an electrical engineer and this is depressing. Oh yeah, and there are still no batteries good enough!
Sorry, but gray text on gray background is making my eyes bleed.
Green jobs are a fraud and Obama and the democrats are still pushing them. Just makes the GOP's job easier in 2012.
an ill wind that blows no good
The town in which I live has 450,000 people, and we are spending $762,000,000 on a second line for the tramway. The same was spent on the first line completed a few years ago. So $1.5bn on a few electric trains that only serves a tiny fraction of the city. $1,400,000 was spent just on planting trees along the side of the first tram line, three times the budget of this tiny EV project. So no, $500k isn't much for a city.
Phillip.
Property for sale in Nice, France
And whatever they learned/developed would now belong to the City of Salinas. Perhaps the city could either:
1) Sell it to G.M, Toyota, Tesla, etc. to recoup some of their loss
or (preferably)
2) Release it to the public domain so that perhaps somebody, somewhere could benefit
.
then they would have gotten a billion dollars a year, no questions asked.
in fact, asking questions would get journalists arrested for espionage and harming the troops.
if you dont believe me, ask Thomas Drake or Bradley Manning.
All those green jobs?
"The average reporter we talk to is 27 years old......They literally know nothing." - Ben Rhodes
because holy fuck, you remember when that baby blew up the empire state building?
god damn it, load me up with a nother 10 billion dollars worth of backscatter x-rays, and dont ask me to give you an itemized list and keep those god damned auditers off our backs!
remember 9/11!
but the republican leaders are just as bad as the democrats though. both of our political parties are horribly corrupt and incompetent.
like Chrysler or General Motors (the latter of which is more like a finance company, GMAC, that happens to sell cars as a tiny part of its business)
then they could have gotten bailed out
Mayor Mayor Dennis Donohue and city Economic Development Director Jeff Weir hoped that this investment would attract green industry to Salinas. Salinas wants to be more than agriculture, and green industry is the current buzz. Unfortunately, the green money that cities must manage has begun to disappear. Money makes the green go around but without it growing lettuce seems more sensible and reliable. Salinas will survive, even if the economy leaves us all feeling green, lettuce continues to grow...
A little is lost on where the tax money came from. A homeless man buying booze. A retired man on a fixed income paying more for his food. People who really cannot afford to give a cent. Taxation in the name of government tampering with the free market is the most insidious device yet conceived by the mind of man.
Forever will these well meaning busy bodies toil in the name of our betterment, because they do so free of guilt, thinking honestly that the strong arm of government is the way to prosperity. How can it be that the wants and desires of the few people elected to office know better than the many individuals and industry from whom they take? How can you tell me you have a better idea for .30 cents on every dollar I make? Look at what the government does with your money! They treat is as if it was theirs to burn! They call steeling less from us a "tax expenditure".
Just think about what that means for a second. Tax expenditure.
For a tax break to be a tax expenditure all profit must first belong to the government. What form of government are we running here? We do not serve at the behest of these temporary politicians. They serve at our will, and we can dismiss any of them any time we desire, and do so in a lawful and peaceful manner. As Alexis de Tocqueville in Democracy in America(1835) said, and I'm paraphrasing: "The difference between the American and European democracies is that in Europe the government cedes a portion of its power to the people while in America the people cedes a portion of its power to the government. " For too long have we imported the top down aristocratic style of rule from Europe. We are a free people and we demand freedom! Government is a necessary evil, the problem, not the solution.
The free market does not need a government solution. Read I, Pencil My Family Tree: written from the point of view of a pencil detailing the process involved in its construction. It talks about the hundreds of processes required for the creation of the simple pencil, and the lack of government control and the harmony created in the absence of such control. The author talks about the "Invisible Hand". This is the invisible force that guides you to get a job, or get a better job, or buy a car, or a candy bar. Basically the desires of society. The government cannot know your desires and cannot want to fulfill them more than you yourself want to. All the government can do is take away from your desires, guide them in new directions you never wanted to go, all the while claiming to do so because they "know better than you" and with the threat of violence if you don't comply. This is a fetter on the invisible hand that can and should be removed!
A free economy is a prosperous one. A happy free people is a prosperous one. The strong arm of government cannot force people to be prosperous and happy, it is the greatest folly that can befall man, destruction in the name of prosperity.
Will be long gone before it breaks off into the ocean, destroying a once lush and rich landscape, and nothing else of value
We need more government, not less government.
People should not be trusted with their own lives.
Government needs to intervene in people's lives.
I so bought into the California Liberal Philosophy when I lived there ... Da Evil Man, Green Green ! Down with Da Nukes ! Wicca Hippies with Tolerance (except towards anyone else) ... I still have my pony tail in my freezer to prove to the grandkids I was Cool Once ...
Thankfully I moved out to the Midwest 10 years ago and met real people and came out of my lifetime of drug infused smokey haze and eventually woke up and realized "WTF" ? not that I'm apposed to drug induced smokey hazes ... but you should avoid making laws and spending other peoples money while so influenced. Drugs and Hallucinations are for personal enlightenment not fiscal policy.
Salinas is a rich agricultural capital of he world ! whats wrong with that ?
Now they are Green Techno-Bubble Idiots of the world.
They should have asked the farmers if it was a sound investment.
maybe they'd have sold some tulips instead and made a killing.
-D
-D
lol hows that working out
Actually this project may have been wildly successful, the car may have failed but the project of transferring wealth to entrepreneurs with an in on the city council succeeded wildly. Expect the city council members to have free dinners and free salmon fishing vacations the rest of their lives. You have to understand how small towns work.
Gov't does this all the time. Local, county, state, federal gov't will cut deals all the time. Often paying for infrastructure, capital improvements, bonding, loan guarantee and even direct/low interest loans. California Teachers Penchant is one of the largest investors in the country, with billions on the line. On a federal level the US gov't gifts hundreds of millions of dollars annually so that private business get preferential treatment and/or avoid tariffs. So what's the news here? How is a green company any different from the defaults from a conventional factory, brick and mortar store or office?
What a stupid conclusion! It makes me sick to see all the free-market apologists chuckling and slapping each others' backs over this. Firstly, in response to the idea that the govt shouldn't be doing this ... in fact this story demonstrates that ONLY the government should be doing this; as it's too risky a business proposition for private enterprise. Governments don't HAVE to make money on these ventures. The articles says this has cost the city more than $500,000. So fucking what! That's NOTHING for even a small town. It's 10 people's yearly wages ... or in the US it's probably more like 50 people's wages :) These 50 people otherwise wouldn't have had a job, and it's well known that the US has the WORST social security and healthcare in the developed world.
In reality, this is $500,000 worth of research and development that otherwise wouldn't have happened. If this was a private company doing the research, it would be either bought up by BP and shelved, or just lost. But being a government body, the knowledge gained is far more likely to make it's way into the common domain.
I am waiting for the day the US does default on it's debts ... we'll see how many free market fanbois there are left after the shit hits the fan. Can't believe the 1st round of the GFC didn't make you wake the fuck up.
That amount of money is nothing. The Rochester, NY Fast Ferry project lost the city millions. "Ferry service had a brief but unforgettable run in Rochester in 2004 and 2005, first as a private venture then as a city-backed endeavor. Both efforts failed and lost millions in taxpayer dollars. " And this:"In 2008, the Fast Ferry was voted "Best Misuse of Public Funds" in City Newspaper's 'Best Of' Awards." See http://rocwiki.org/Fast_Ferry
Sorry, but gray text on gray background is making my eyes bleed.
Just because it's loosing money and going out of business doesn't mean it's a bad idea. It just means it needs more government "investment". (/sarcasm)
Luckily for the government officials and bureaucrats who made this decision, the money was not theirs and their jobs are safe. Way to go accountability.
Invest in this: ---------> the Chevy Volt; Real technology, real patents, real grasp on adapting existing fuels to the platform.... Don't invest in snake oil.
For some reason, I can't get the image of the Simpsons "Monorail" episode out of my mind. "Tramway!" "What's that you say?" "Tramway!" "Will it need trees to provide shade?" "Tramway! Tramway! TRAMWAY!!"
I'm in Portland, where public trans is a huge deal. 1.5 Bn sounds like a lot, but if it's done right, it can pay off in spades.
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Actually, it wasn't city money that Salinas gave to the company, it was Federal and State money. The city was merely the bad decision maker and transfer agent for unrestrained spending by the Feds and State of CA.
"Green Vehicles received $300,000 in federal Community Development Block Grant funding in 2009 and about $234,000 in city General Fund money last fall in advance of the company's planned receipt of a $2.05 million grant from the California Energy Commission.
Donohue added that he intends to ask the California Energy Commission to reimburse the city the $234,000 it advanced Green Vehicles in anticipation of the $2.05 million CEC award." http://www.thecalifornian.com/article/20110719/NEWS01/107190308/Green-Vehicles-experiment-crashes?odyssey=nav|head
Are you really dumb enough to think that the 500,000 investment was their entire expected investment? I can't see why you would assume anything like that, because it is so dumb that it's just not plausible.
You want to allege that the city didn't perform its due diligence? Whatever, but you have no evidence for it, nothing but a suspicion founded on your own faulty assumptions. If you want to make me believe there's corruption, do something like checking out the entirety of their accounting, their funding and their business plan.
Then you may have something. But here? With the obviously limited amount of information contained in this article? You just convince me that you are the stupid one because you're making such claims from such sketchy information.
I hate being so harsh, but you're being so smug and concluding that something criminal happened when your whole idea is based on such a fundamental leap of logic on your part. Even Napoleon knew better than that.
You could have a debate about the wisdom of the government's involvement, but startups fail all the time. Highlighting one as a cautionary tale teaches nothing, other than "don't invest in a startup unless you're willing to lose your investment".
It's a big thing for people in the USA to fund companies that have no product and/or does not make money, the companies are called 'start-ups'.
A big thing in Silicon Valley, where people fund a couple of geeks with a half baked piece of software and a crazy idea (or a couple of marketing wizards who promise a good idea and have a flakey demo). Also big in the space industry, NASA has invested billions into companies that are promising a working earth to space person-rated spacecraft, and in most cases have only got a prototype at best, and certainly no plan for making money (apart from taking it from NASA).
the winners or the losers because in the end we usually are the losers.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
I warned about this previously. For some reason the big study I submitted that blasted electric cars as being unsustainable and economically nonviable never made it into the main slashdot news. Some people even suggested an agenda behind it on the part of me or the publishers of the study. Let me assure you I am a environment hugging hippy and if electric cars had a real potential for saving the planet I would be right behind them. But the facts are that electric cars will only be viable when we have an excess of electrical power generation. Currently we have the opposite, and the opposition to nuclear power plants (which I also agree with) is yet another giant nail in the coffin of electric cars. The idea that we simply stop spending the trillions of kwh of energy that we currently get from petrol and diesel and fill the gap with electricity generation or corn ethanol is a fantasy. No amount of funding will produce an EV which defies physics.
The guy who submitted this story seems to have confused $500K with real money. Sure, that's more than I have, and I've never been to Salinas, so I can speak to what kind of a town it is, but for any sizable institution $500K does not sound like a lot. According to a summary by the city, the 2010-2011 budget of Salinas, CA is 116.9 million. An investment of $500K thus represents 0.4% of what it spent.
From Wikipedia:
Salinas population 150,441 at the 2010 census
So everyone kicked in 3 bucks to try something and it didn't succeed.
Meh.
Towns should be free to vote to try things, even if they might fail badly.
It's the American way
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