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DOE Finances 'Old Guard' Auto Companies as Startups Lose Out

Some automotive entrepreneurs are feeling like when it comes to getting DOE funding, it's who, not what you know.

The $2.4 billion in federal funding for advanced battery and vehicle electrification announced this week boosted battery manufacturers that had prior relationships with the DOE, while some lesser-known innovators were left with hat in hand.

Matt Mattila, a consultant in the Rocky Mountain Institute's Mobility and Vehicle Efficiency Practice says the money "went to the old guard" and left out new EV companies such as Aptera where "$100 million could make or break them."

Also missing out on funding were battery companies including Valence, Boston Power and Bright Automotive, a company spun out of RMI. The DOE's funding philosophy was conservative, opting to forego many newer companies while providing funds to perennial research partners Ford, GM and Chrysler. "There's huge open space for new guys to make a move, and the funding could have done a lot to accelerate them," Mattila said.

Felix Kramer of plug-in hybrid advocacy group CalCars.org says the Obama administration's pledge of transparency and accountability in the allocating recovery program funds has not been completely fulfilled. Kramer wrote today that results so far have been mixed as "the bulk of the awards went to large established companies -- especially automakers and component suppliers."

The DOE also provided funding not aimed at commercialization or reducing carbon emissions on a grand scale, but instead will share the cost of pilot projects to get a smaller number of plug-in and electric vehicles onto the roads that will result in temporary jobs.

General Motors received $30 million to put 125 Chevrolet Volts on the road; Ford got $30 million to deliver and test 150 plug-in Ford Escape Hybrids; Chrysler received $70 million to deploy 220 plug-in vans and trucks.

While $160 million may seem a lot to test less than 500 vehicles (by comparison, 1,000 professional green jobs could have been paid for), the trials are considered crucial to understanding the performance of the vehicles and the batteries so prior to commercialization, and to share the automaker's steep development cost.

ECOtality, one of the oldest electric vehicle charging equipment manufacturers (10 years) will install 12,750 charging systems through its eTec subsidiary. The $100 million grant will create small vehicle networks in Portland and three other Oregon cities, three cities in Tennessee, and in Seattle, San Diego, Phoenix and Tucson.

John Gartner is Editor in Chief of Matter Network and an Industry Analyst at Pike Research.

Comments By Readers

Nice to see someone looking out for the little guys – after all, it’s not just the Big 3 running the show anymore. These companies are really thinking outside the box and deserve to be recognized. Start up companies like Valence, Boston Power and Bright Automotive should receive get government funding so that they can help bring the U.S. into the next phase of utilizing alternative energy.

GoGreen2009 on August 10, 2009 at 12:50 PM

So, the story that the key fed people will give is that: "we are choosing to invest tax dollars in known entities with whom we have worked in the past".

What this actually means is:

"The big 3 in Detroit still own us and they told us to only give them more money and make sure we don't let anybody compete with them"

What is really going to happen is:

There will be a federal and media investigation and those who gave out what are called "lock-off deals" to fund insiders and cut-off independents will be fired and shamed. IF this is really a government of "CHANGE" then they will correct the oversight quickly before it becomes a HUGE bit of ammo for the oposition to use against the administration.

Sandy Malou on August 11, 2009 at 08:46 PM

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