Government Money Causes Rush of Green Car Companies

Earlier this Summer Congress passed a bill providing $25 B for the research into “green” automobiles. The New York Times reports that this has led to a rush of established and newly set up companies competing for the money. All three of the main US automakers have applied for loans from the Department of Energy managed “Advance Technology Vehicles Manufacturing Loan Program”; but several smaller existing and new companies have applied.

Of note is that it is another example of when you provide government funding for something, companies will seek it out even if they do not necessarily need it. GM was already independently developing the Volt vehicle, in fact, they had already begun taking deposits on the car for a 2010 delivery. Tesla also was privately developing the Roadster. Both of these companies have applied for loans from the Federal Government. GM could argue that they have run out of money to invest in such things and the government funds are needed, especially when today they asked for a $22 B infusion. Tesla, though, had been going its own way previously. In the end we will have to wait and see if this money makes a difference in this area.