Likely-bankrupt Ecotality was ‘nearly bankrupt’ before it got stimulus dollars
Ecotality is facing possible bankruptcy, as “neither the company’s direct sales force nor the independent dealers have generated sales volumes of its commercial [Electric Vehicle Service Equipment] products sufficient … to support the company’s operations in the second half of 2013,” according to its Securities and Exchange Commission filings.
And Ecotality was also near bankruptcy in 2009 — before it was approved for a $100 million stimulus grant from the Obama administration to install electric car chargers across the country.
“Ecotality was nearly bankrupt before the stimulus grant money was awarded by [the Department of Energy],” said Maryland Republican Rep. Andy Harris in a committee hearing last year, adding that the company was saved when it entered into a joint venture with Chinese investors to set up a subsidiary in China.
Those Chinese investors agreed to pay Ecotality executives $1 million in bonuses if they were able to secure taxpayer dollars that were being handed out by the Obama administration in the stimulus package.
“The company hired lobbyists to engage the White House on DOE projects, went on to be awarded $100 million in Stimulus funding, and the Chinese-funded performance bonuses were awarded,” Harris added. “Within a few months of the award, the company’s president was an honored guest of the first lady at the 2010 State of the Union.”
The company was also investigated by the Securities Exchange Commission, according to Harris, for insider trading while the DOE was still giving it taxpayer dollars.
“About nine months after that, the SEC initiated an investigation into potential insider trading by company executives associated with the award,” Harris said. “During the time period of this investigation, DOE continued to expand the scope of Ecotality’s award and even awarded a new $26 million grant to the company in July 2011.”
Ecotality has been criticized for focusing on political connections to secure government funds instead of improving its products. President Barack Obama made big promises to the electric car industry during the 2008 campaign, promising to get 1 million electric cars on the road by 2015.
One month after Obama was elected, the company told the SEC, “We believe the focus by the Obama administration [on electric vehicles] will provide strong funding opportunities for us and our core technologies.”
Ecotality recently doubled down on its political strategy by appointing Brandon Hurlbut, who was once the chief of staff for former Energy Secretary Steven Chu, to its board. Hurlbut was also served as the former deputy director of cabinet affairs at the White House and also worked for the Obama campaign in 2008 campaign.
“I’m a political beast,” then-CEO Jonathan Read told shareholders in a 2007 conference call. “Playing the political card is something that when the time is right we’re going to play very hard.”
Ecotality drew down $96 million of its stimulus grant before the DOE froze payments to the company pending an assessment of its viability.
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