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A123 Systems Files for Chapter 11

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    AEI Resident Scholar Kenneth Green on what A123 Systems’ bankruptcy means for taxpayers.

  • Duration 4:31
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Obama's -- scheme is taking a turn for the worse.

Electric car battery maker -- 123 assistance is filing for Chapter Eleven bankruptcy protection.

After the administration gave it nearly 250 million dollars in loan guarantee so.

To taxpayers have any hope of getting that money back joining me now Kenneth green.

Environmental scientist and resident scholar at the American Enterprise Institute.

They can't great to have you here -- about what went wrong at this company went public they raised about 300000380.

Million dollars in an IPO.

What went wrong.

-- and wrong is that the market for their products failed to appear people aren't buying the kind of electric cars in the numbers that were necessary to support that technology.

And I have problems getting their technology in the market and not having problems with their technology is well.

We'll take a look at the stock chart I don't know -- put that up yet or not but it's abysmal I mean that think tanks like a stone.

That we have that yep there it is that's not what you wanna see if you're CEO of a company.

Now the Obama administration's defense is -- the factories aren't disappearing -- being taken over by another company Johnson Controls should we feel better about that.

Now because the question is what's important is whether or not taxpayer they're gonna get their money back.

And Johnson tells me take them over but Johnson Controls is not going to be buying them at the full market price.

The taxpayer sunk their money into and so Johnson Controls in the -- -- get a freebie here that somebody else build factories for them.

But that's all part of venture socialism where the government.

And invests taxpayer money if things go well the profits are privatized if things go poorly the risk is socialized in this case Johnson Controls just gets to pick up afridi.

Freebies so they got bush grant in 2007 -- six million Danone nine they got an Obama grant.

The 249.

Million.

Or where do you draw that line is the government what should you be funding which should -- not be funding.

There's a lot of literature on this and it's pretty -- pretty green the government has a legitimate role funding basic are indeed that's university level stuff.

It's chemistry it's electro chemistry it's physics is biology things like that it's not.

How to scalable technology to bring it to market it's not how to deploy new technologies in the market it's very much further back along the development change.

When the government gets into these kind of valley of death things things go there to die.

Well that's what we've seen.

With all of these -- Department of Energy companies so many of them in bankruptcy now and so many of them actually had ties to the Obama administration so not only do you have the government and they are doing what it does.

Least well they also have crony capitalism.

Is that just and necessary.

By function of having the government involved in this kind of thing that at the end of the day end up getting money the people we already know.

Pretty much yeah I mean he wanted to people you know and or you if you don't know them the prospect of money when they see it on the horizon means they won't make sure you do learn who they are.

And the hook up with the EU and the obvious sort of reciprocal deal where.

He gives here reminded them they your money do you and everybody lives happily ever after except of course the taxpayers who are from money both of.

Take a look at this list for the 26 companies that were in this program.

Are bankrupt a 123 system Solyndra which we talked a whole lot about beacon power and abound solar.

Yeah I guess there are people out there who will make the point.

That the government got involved at just the wrong time that if they've been involved a little earlier are a little later the fortunes of these companies might have turned around what we use data that.

That's always the excuse me -- cycles like this before we've seen the electric car mandate in California where we heard the exact same promises from California politicians that.

They were going to build the next generation battery technology plants in California -- was going to be the next great California Renaissance.

In the 1990s -- can be building batteries for the electric cars that they politicians and mandated on the road.

A couple of years later they're all in ruins there is no electric car program that GM has recalled all of its electric cars destroyed them and then ten years passes and we forget the whole thing.

-- -- they can't have only been talking about electric cars since like the twenty's or something I mean.

Is it ever gonna take off.

Well doesn't really look like Robert prices agree and it becomes Anderson that electric cars are always the next great thing and -- always will be.

And you rightly been chasing -- since my early nineteen hundreds the problem is is the batteries are just not getting dense enough in terms of how much Kennedy -- store.

To compete with an internal combustion engine powered by gasoline gasoline is amazingly high in energy -- -- And -- you just can't match it was -- to consumers want their range of performance.

Well and and I guess the moral of the story is that not all energy sources are created equal all.

Some are better than others some are a lot better than others can't thanks for coming on tonight really appreciate your time thank you.

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