Here’s a story with something to inflame just about everybody. An EV firm the U.S. president hyped, and twisted corporate arms to fund, is broke. Republicans horrified. Free marketeers horrified. Proponents of alternative energy horrified. But the President who applied improper pressure on GM to help Lordstown Motors borrow too much money for a product nobody wanted was… Donald Trump. Democrats horrified, first because it’s Trump and second because he was pursuing their dreams of electric trucks and aggressive state industrial policy with little regard for formal rules. Republicans horrified because Trump acts like swamp thing… or should be. Independents horrified at lack of meaningful difference between parties. Commentators delighted as more morally feeble idiocy arrives just at deadline.
Wall Street Journal also horrified. And vindicated. Its editorial board reminded readers of a supposedly settled principle, at least among the economically and politically literate, that “Politicians are lousy at picking business winners and losers.” Oh, that.
Then it quoted Mark Stewart, the North American CEO of Stellantis, which in case you haven’t heard of it calls itself “a leading global automaker and mobility provider that offers clean, connected, affordable and safe mobility solutions” with the investment-discouraging slogan “Powered By Our Diversity, We Lead The Way The World Moves” and is in fact the merger of Fiat Chrysler with PSA Group in 2021 and makes Jeeps, Citroens, Vauxhalls and other things you might not want. And what Stewart said was that Stellantis was buying out a bunch of workers because “The competition is fierce, and the cost of electrification cannot be passed on to the customer”. And then the Journal sneered:
“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.”
The reason they say so is that the origin of the Lordstown debacle was GM phasing out gasoline car production to cash in on government subsidies for EVs people don’t want back during the Trump years. So after persuading GM’s CEO to lend Lordstown $40 million, Trump used the firm as a 2020 campaign prop. As any typical politician would.
It didn’t really work. The Journal notes that:
“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.”
Some Trump backers are mysteriously uninterested in the former President’s chronic mendacity although you might think if your goal was to drain “the swamp” the first habit you’d want to change was politicians’ infamously distant and contemptuous relationship with the truth. And the second would be cavalier disregard for fiscal probity.
As for Lordstown ever selling vehicles, well, um, “In January 2021, its pickup prototype burned during testing.” As EVs will. And it wasn’t the only thing incinerated:
“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.”
Now as naïve funders flee, it’s warning of imminent bankruptcy.
In the U.S. alone, the Journal adds, “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%).” But if you’re not American, or you’re a Trump-hater, or both, don’t laugh too loudly.
Your own politicians are lighting cash on fire on a vast scale, with the host of Inflation Reduction Act subsidies for unwanted products bound to fuel inflation in the U.S., the Canadian government giving Volkswagen $13 billion for batteries that might sell if they don’t catch fire first, with subsidies for many other things in the offing, and similar expensive follies around the world including Stellantis, headquartered in Amsterdam and boasting of dozens of EV models and its aggressive pursuit of subsidies which, their overall CEO explained, are a “major driver for the industry because it impacts the affordability.” As in without subsidies they cost far too much for what they deliver.
Stellantis is also getting Canadian battery subsidies, if only from three levels of government. So it’s all hands on taxpayers’ wallet. Accompanied by politicians posing for glossy pix in front of this wonderful technology you’re paying for whether you want it or not and whether you ever get a car or not.