WASHINGTON, Dec. 8 (UPI) -- Industry analysts say the $5 billion of taxpayer funds President Barack Obama put into a green car initiative was a risk that is not yielding predicted results.
During his 2008 campaign, Obama predicted green cars would create thousands of jobs in the United States as demand soared, but that has yet to happen, The Washington Post reported Wednesday. Since then, about $5 billion has been put into the electric car industry, offering incentives to manufacturers, their suppliers and car buyers.
However, in recent months, the demand for green cars has dropped, forcing companies that manufacture them to scale back.
A123 Systems, a battery maker that received $380 million in government aid to create 3,000 jobs in Michigan, recently announced declining orders had forced it to lay off many employees. Battery maker EnerDel, which received a $118 million federal grant, declared bankruptcy this year.
"Many in this industry have jumped the gun on how aggressive the growth of electric vehicles will be," said Kevin C. See, an analyst at Lux Research.
Even with as much as $7,500 in stimulus tax credits for buyers, electric cars are far more expensive than their gas-powered counterparts. A spokeswoman for Navistar, which received a $2.4 billion grant from the government to make electric trucks, said only 100 of the company's trucks have been sold.
Sam Eitel's Maryland car dealership had to sell its lot of the electric trucks back to Navistar after not selling a single one.
"People are scratching their heads saying, 'How will we pay this?'" Eitel said of the trucks that cost buyers $150,000.
Supporters of Obama's green-car initiative say the investments will be worthwhile in the long run.
"Certainly, with electric-vehicle sales, we're not on track to meet the president's goal," said Brendan Bell, clean-vehicle expert at the Union of Concerned Scientists. "But ... these investments are good ones toward that goal."