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DOE Spent $60M on Electric-Car Tech, and All It Got Was This Lousy Lawsuit

Like the local bookie, the federal government doesn't always bet on winners. Sometimes it hits home runs, and other times it funds companies that die sudden deaths, are rife with mismanagement, spend money wastefully or base their grants on technology that isn't even their own.

The latter charge is being leveled at Remy International (once part of the General Motors subsidiary Delco-Remy). The company, until recently a supplier of electric motors to GM's hybrids, stands accused in a federal lawsuit of fraudulently obtaining some of its technology from key supplier Tecnomatic SPA, an Italian company.
Remy snared $60 million from Recovery Act funds, part of a much-heralded federal effort to build a domestic electric-vehicle supplier base in the U.S. Much of that funding has gone to Michigan and Indiana, where Remy is based.

Let's face it -- federal grants don't always work out:

  • In the 1990s, the Postal Service invested heavily in a GM/U.S. Electricar plug-in delivery van program that flamed out when GM bailed on EVs and high-flying U.S. Electricar went bankrupt amidst charges of stock selloffs and executive Lear jet expenditures.
  • Once the most prominent producer of electric cars in the U.S., Solectria snared a $550,000 federal grant for military conversions. But its EV business fell apart in the mid-1990s after an ill-fated attempt to produce the Sunrise electric car. Solectria was sold, and today it produces solar components.

More recently, the Department of Energy has poured billions of dollars into American electric vehicle suppliers in an effort to to help them compete with the Asian giants that dominate the battery business. Some of those grants will hit their target, but at least a few will probably end up as embarrassments, with the companies missing their targets or getting pulled into some and others may miss by a mile.

On some companies the jury is, as they say, out. Remy may be the first DOE electric car grant recipient to have been accused of intellectual property theft in a federal lawsuit, but some of the agency's EV-related loans could be described as speculative. Fisker Automotive, for instance, received a $528 million DOE loan in 2009, largely based on a future car, the Nina, that was then little more than a concept.

The DOE did not return calls asking for comment on its vetting process, or the lawsuit targeting Remy. But the parties themselves are talking. In an interview, attorney Nicola Fiordalisi, representing Tecnomatic, told me, "Quite frankly, we find it incredible that a company of that magnitude would go about securing our technology and end up referencing it to obtain taxpayer money," Fiordalisi told me.

In a statement, Remy said that the lawsuit is "false and totally without merit," and charged that Tecnomatic was using its new federal lawsuit in a "desperate attempt" to settle a pending state case.


Graphic: Tecnomatic; Photo: Flickr/Jyle Dupuis
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