Giving tax credits so wealthy people can buy EV cars is ridiculous. So is providing funding to EV startups when Tesla and legacy automakers are going balls out.
There are a few things our gov could and should do:
China dominates the Lithium & precious metals refining industry. For EV cars in this country to take off, we need to develop our own industry here at home so as not to be dependent on the Evil Empire. Our government would be smart to support that.
Supporting university and scientific research for EV battery tech and power generation.
Trump Picked an EV Loser in Lordstown Motors
The electric truck maker won’t be the last casualty of the new government industrial policy.
By The Editorial BoardFollow
May 3, 2023 6:32 pm ET
Former President Donald Trump stands in front of the Lordstown Motors 2021 Endurance truck at the White House on Sept. 28, 2020. PHOTO: CARLOS BARRIA/REUTERS
Politicians are lousy at picking business winners and losers. Consider the electric vehicle startup Lordstown Motors, once hyped by Donald Trump. Despite rich government subsidies and mandates, Lordstown this week warned it could soon file for bankruptcy.
Lordstown was among a coterie of EV startups that went public during the pandemic through a merger with a SPAC, or blank-check company. Launched in 2018, the electric truck maker had little experience manufacturing vehicles. Yet it raised a trunk-load of cash with the help of Mr. Trump and the Federal Reserve’s easy money.
In 2019 Mr. Trump berated GM CEO Mary Barra for shutting down a Chevy Cruze plant in Lordstown, Ohio. “I asked her to sell it or do something quickly,” he tweeted. Ms. Barra followed orders and provided Lordstown Motors a $40 million loan to buy and retrofit the plant. Mr. Trump then used Lordstown as a prop in his presidential campaign.
In September 2020, Mr. Trump flogged a prototype of its Endurance pickup at a White House event with its then CEO. “The area was devastated when General Motors moved out, and then we worked together, and we made the deal on the plant,” Mr. Trump boasted. “This is a great technology,” and “I heard the sales are great.” Lordstown hadn’t yet sold a single vehicle.
Mr. Trump’s endorsement nonetheless fueled investor interest while near-zero interest rates drove a boom in SPACs. After Lordstown made its public debut in October 2020, its stock surged to $26 a share. Yet amid myriad manufacturing mishaps, its shares have sunk to 40 cents.
In January 2021, its pickup prototype burned during testing. As it burned through cash, Lordstown sold its namesake plant and contracted assembly to Foxconn Technology Group. Last November Foxconn agreed to invest $170 million in Lordstown, perhaps hoping that Inflation Reduction Act subsidies would provide a boost.
Yet Lordstown had manufactured only 31 vehicles by late February 2023—most of which had to be recalled. Losing patience, Foxconn on April 21 threatened to withdraw its investment, triggering Lordstown’s bankruptcy warning.
As interest rates have normalized, companies with little revenue are struggling to borrow and raise fresh capital. This is one reason stocks of other EV startups have crashed from their pandemic highs, including Canoo (down 96%), Nikola (99%), Faraday Future Intelligent Electric (99%), Rivian (90%), Lucid (87%) and Fisker (81%).
Shortly after its public debut in November 2021, Rivian commanded a $153.3 billion market capitalization. Now it’s worth less than $12 billion. Investors are downgrading Rivian’s growth prospects as traditional auto makers ramp up EV production to meet government mandates.
Speaking of which, Stellantis announced last week that it would offer buyouts to 31,000 hourly employees to free up cash for its government-mandated EV transition. “The competition is fierce, and the cost of electrification cannot be passed on to the customer,” North American chief operating officer Mark Stewart wrote to employees.
Translation: Workers will be collateral damage in the transition to EVs as they lose their jobs making gas-powered cars. President Biden flogs the jobs created at EV factories, but he never mentions the losers elsewhere owing to government mandates and subsidies that distort investment. Lordstown is a poster child of the new Washington consensus in favor of government industrial policy, and it won’t be the last casualty of the hubris.
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