The Truth About Cars » Carbon Motors The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Mon, 21 Jul 2014 13:35:12 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Carbon Motors Cop Won’t Drive Cop Car Part 2: So, Hoosier Daddy, Carbon Motors? Tue, 18 Jun 2013 11:30:41 +0000 Click here to view the embedded video.

If the Carbon Motors business model was so bad, how did the company last as long as it did? To paraphrase an especially sharp-tongued commentor from one of the many Carbon E7 threads I’ve followed on the web over the years, the company’s business plan seemed to revolve around borrowing money from the government to build cars that they would then sell exclusively to the government. Only the government would be dumb enough to fall for such a scheme and the government of Indiana apparently did.

But did they do so out of malice or out of a desperate attempt to kick-start the economy in a depressed region of the state? Once known as “little Detroit,” Connersville was a Ford factory town up until the joint Ford/ Visteon plant closed in  2007.  890 jobs went directly down the drain and city leaders were left wondering what to do in response to keep the town afloat.

Into the void stepped Carbon Motors, which was looking for a place to build its super police cruiser and promising up to 1,500 jobs. The Visteon plant was available, but as a start-up company with no cash, Carbon couldn’t buy it. They needed Connersville (which was just one of several desperate towns looking for someone, anyone, to employ some of their unemployed citizens) and the state of Indiana to make it worth their while.

The first step was for Connersville to buy the plant, which the city was able to do for the low, low price of $500 plus an agreement to take responsibility to the tune of an additional $4 million to clean the site up.  In order to do that, Connersville had to borrow $3.5 million dollars with the remaining $500,000 coming from realocated money in a state environmental trust fund. If Carbon Motors been able to secure the DOE loan, or an equal amount of funding from other sources, Connersville would have straight up given them the plant.

So Connersville was ready to play, but the state of Indiana had to kick in as well. It did so in two ways. The first was a $5 million grant through a regional development fund paid for by the sucker tax riverboat casino gambling in Lawrenceburg, IN, which is about 15 minutes down I-275 from Cincinnati. The second was a $2 million grant from the Indiana Economic Development Corporation, which is the state’s primary economic development agency.

That $2 million figure from the IEDC doesn’t include $16 million in tax breaks that were to be granted to Carbon Motors over ten years. The cost to state coffers per job would have been a little over $10,000. That was higher than the average cost per job of approximately $8,700 in similar arrangements with other employers and the IEDC.

This is as good a place as any to take a moment and direct you to an investigative report by the Indianapolis Star first published on May 20. It’s a rather long piece but it paints a very thorough and detailed picture of the problems that arise when government looks to spend money picking winners in the marketplace. The article details not only the Carbon Motors fiasco, but also how money has been blown on any number of projects that often directly benefited the elected officials who championed them. Take 30 minutes and read the whole thing.

What becomes apparent as you read the article is that overt corruption that rises to the level of a criminal offense is hard to prove. Still, there’s an awful lot of smoke and the whole project ends up being tainted, especially since the whole thing was such a, well, dumb idea to begin with.

For example, how did Connersville end up in the running to land Carbon in the first place? Well, Indiana’s governor at the time was Republican Mitch Daniels who happened to have served in the George W. Bush administration with former director of Homeland Security and Carbon Motors board member Tom Ridge. People who work together in one capacity often work together on other projects. It’s to be expected and it’s (usually) not illegal. And yet when you consider the breaks that Carbon got that others didn’t, such as the amount in tax breaks referenced above,  it’s hard to not be cynical.

So what happened to the money? Most of it was ostensibly spent on legitimate projects like R&D and work on refurbishing the Connersville plant. BMW got $1.8 million towards powertrains that it no longer has to deliver. But there were also a lot of questionable expenditures. Over $200,000 went towards executive salaries, which was apparently allowed even though other similar grants had prohibited such practices, which raises yet again the question of why did the company on which the governor’s former administration mate sits on the board get to do something that other companies would have been forbidden to do?

Another $214,000 went for “travel expenses.” And, as you might expect, much of the travel was to luxury resorts and at least two five- figure expenditures weren’t itemized. Again, the actions aren’t illegal, but their appearance is less than ethical.

Then there’s the miniscule expense of $11,500 that went to a Mr. David Jobe for his services as a “contract employee.” The problem is that Mr. Jobe was a Connersville city councilman at the time and appears to have voted on several items of business related to Carbon’s relationship with the town.

In response to the light shown on these expenditures by the Indy Star, all of the government entities involved resorted to the “O.D.D.I.” ( The Other Dude Did It) defense to avoid to deny responsibility for what appears to be almost the complete lack of oversight of tax payer funds when it came to Carbon Motors.  Connersville claimed that oversight was supposed to happen at the state level.  The IEDC claimed that officials in Connersville made final approval for payments. In the end, $7 million dollars was flushed down the Carbon Motors rathole and the government entities involved don’t appear to be terribly embarrassed about it. As Connersville Mayor Leonard Urban was quoted by the Indianapolis Star: “That was gambling money and this was a gamble.”

But that’s the government and the government can almost always be expected to make crap economic decisions based on politics and nepotism instead of common sense regardless of which political party is in charge at the time. What about Carbon Motors practices in general? How shady was the private half of this public- private partnership?

In order to examine that I’m going to focus on one piece of the entire Carbon Motors saga, one single claim that I always suspected to be a pretty naked falsehood: the number of “orders” for a prototype police car that Carbon claimed to have received.

By 2009 it was being reported that Carbon was claiming that they had received 10,000 pre- orders for a car that they hadn’t even officially priced yet.  By the end of 2012 they claimed to have had over 24,000 orders for the E7 and announced that they would be taking orders for their proposed police supertruck called the TX7.  Anyone with even a passing knowledge of how government budgeting works knows that couldn’t possibly have been true. State and local governments, Carbon’s customer base, decide year to year how many police cars they are going to buy and then place the orders for a specific number of cars. They have to have the money, either in actual revenue or in the proceeds from bond sales, in hand when they place the order. The idea that government entities were actually committing tax payer dollars to a car that didn’t exist is ridiculous.

And, in fairness to Carbon, if you carefully peruse their materials and press releases at the time, they spoke only of “reservations” in printed materials. Agencies weren’t ordering cars. They were filling out an on-line form on Carbon’s website that really only expressed interest in the concept. There was no actual commitment to buy. There was no real way to know if the person filling out the form, allegedly for a law enforcement agency, really had any authority to make purchasing decisions anyway.

The problem is that the mainstream and automotive press called these “reservations,” which they really weren’t, “orders,” which implied to the casual reader that money was actually being put down and agencies were actually expecting to receive cars.  I can find no record of Carbon Motors trying to correct this perception.

So, like the behind the scenes machinations by government officials to land the plant and ditch the rulebook governing the disbursement of taxpayer dollars to Carbon’s benefit, is Carbon Motor’s failure to correct a misperception that benefitted them proof of illegal behavior? Not really. It raises the question of ethics.

In the wake of Carbon’s demise residents of Connersville took to the local internet gossip site, which has become the 21st century version of a party- line telephone to many rural communities, to vent about  both Carbon officials and their local potentates. Reading through the threads, it’s hard to tell who they despise more: Carbon CEO William Santana Li or Mayor Leonard Urban. Rumors swirl and accusations fly, but proof of any actual wrong doing will be hard to come by.  Perhaps the bankruptcy proceedings, as well as a lawsuit filed by three former Carbon VPs, will provide definitive answers somewhere down the line.



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Cop Won’t Drive Cop Car: Carbon Motors Declares Bankruptcy Fri, 14 Jun 2013 16:26:51 +0000 Click here to view the embedded video.

The video above is the closest we’ll ever have to enjoying a World’s Wildest Police Chases segment featuring the Carbon Motors E7. Somewhat lost in the breaking news of March regarding the bankruptcy of Fisker Automotive and Coda was the demise of the nation’s other other startup vehicle manufacturer, the Carbon Motors Corporation. Although Bertel correctly predicted Carbon’s death shortly after they failed to qualify for a DOE loan last year, the company maintained a brave public face and soldiered on defiantly until the end of March. As late as mid March they were announcing the introduction of two new vehicles: an armored truck called the TX 7 and a skateboard shaped drone called the CT 7.  Two weeks later they would be slipping out of their Indiana state taxpayer funded digs  without so much as a “Dear John” letter to the desperate Hoosiers who needed the jobs they’d promised

I’d been watching and waiting for an official announcement that the company had liqudated before poking the body with a stick. That moment finally came on June 7 with a Chapter 7 filing in Indianapolis. The bankruptcy filing shows that Carbon Motors had assets of less than $19,000 and outstanding liabilities of over $21 million. It seems that the dream of a purpose-built police car is dead.

In the post-mortem analysis, there are three questions that I think need to be answered. The first, which this piece will attempt to address is “Was there really ever a market for a dedicated police vehicle?” The second question is “Was Carbon Motors all just a big scam to suck at the government teat?” The third question is “Did the Big 3 learn anything from Carbon Motors that will benefit police and emergency vehicles in the future?’ Those opinion pieces will be forthcoming, but for now I just want to focus on the first question of whether it was ever a good idea.

To narrow the scope of this piece even further, I’m also going to limit my analysis to the fiscal case against Carbon Motors. There were other bad ideas, such as using a BMW powertrain combo that would be difficult to get serviced in wide swaths of flyover America, but I believe what would have really killed the Carbon E7 was it’s projected cost. Yes, I know many of you will laugh when I say that fiscal austerity matters to government, but the truth is that at the state and local level it does. State, county, and local governments buy the vast majority of patrol cars, not the Federal government. Unlike the Feds, they can’t print money.

The E7 concept struck me as the answer to a question that nobody asked. While readers will no doubt recall my documentation of and endless bitching about the shortcomings of the Ford Police Interceptor Sedan and the Dodge Charger, I just didn’t see the need for a dedicated patrol vehicle, particularly for one at the price point that the Carbon E7 was rumored to cost. The price point was a moving target and never officially disclosed by Carbon. Their representatives were always cagey, claiming that their car would come straight from the factory at a price that was “competitive” to a “completely equipped” patrol car.

“Completely equipped” in Carbon’s viewpoint meant a car loaded down with every crime fighting tool and toy ever invented, from the necessary and mundane stuff like lights and a siren to the fantastic yet probably not necessary such as their biological and chemical agent detectors. The first estimate that I can remember hearing was $70,000. A search of articles about the E7 archived through the Wayback Machine gave me estimates ranging from $50K in a 2009 article to a statement in 2008 by Carbon Motors officials that the average cost of a fully equipped police car was $80,000.

That’s an insane amount of money for a patrol car. I spoke with the technicians at my department’s fleet services unit and asked how much extra it costs to completely outfit a new cruiser. The reply was “About $10,000.” That sounds like a lot of money, but through the magic of the public bid process, it’s actually not. The taxpayers get a lot of stuff for ten large that really is necessary to turn a Taurus with blacked out trim and a cheap interior into a functional patrol unit. The Carbon Motors’ estimate of $80K per completed unit is way off. It raises the question of whether or not you could even spend that much money on a patrol car if you tried, so I did.

Using the fleet pricing information I got when I wrote my article on the Dodge Charger, I started off with a basic V-8 powered RWD Charger Pursuit for $23,585. I added $1,460 worth of factory options (wheel covers, Bluetooth, a few other odds and ends) for a total price of $25,045 for the basic car delivered from Dodge.

I then used retail pricing from Gall’s and other emergency equipment vendors to add everything else I could dream of to a patrol car. Whenever there was a choice in a piece of equipment, I picked the mid- range/ mid- priced option. I “spent” $2,375 on lights, which included a full light bar as well as a UFO’s worth of extra strobes hidden in the foglights, grille, and other places on the car. A mid- level RADAR unit went for $2,300, while a video recording system costs $3,200. A Panasonic Toughbook, which is one of the most popular choices for use as a Mobile Data Computer, was $3,500.

By the time all was said and done I came up with a total of $14,440 worth of additional pieces and parts. Add that to the base price of the car and you get $39,485 for a complete patrol car, less than half of what Carbon Motors claimed a fully equipped patrol car would cost in 2008.

No, a cash strapped police department (and there isn’t any other kind these days) could have two fully equipped patrol cars for $80,000 and that’s only if the person in charge of purchasing was stupid enough to pay retail for everything and the agency insisted on adding every bell and whistle invented to every car. The vast majority of department’s don’t add half of the stuff I added to my dream cruiser and none of them add everything to every car.

Carbon Motors appeared to operate on the theory that police departments do. One of the innovations that Carbon claimed was the establishment of their “Carbon Council,” which did manage to achieve some acclaim as an early example of crowd sourcing. While Carbon’s website makes the “Carbon Council” sound like a highly screened and elite panel of law enforcement experts selected to give valuable input into the police car of the future, in practice the group appears to have served up the law enforcement equivalent of The Car Built For Homer.

As a low-level cog in the Big Blue Machine of an urban police department I’m always more than happy to grumble about the condition of various pieces of my equipment to my fellow low-level cogs, but I don’t want the high level cogs to spend $80,000 on a single super cruiser. One of the (many) hats I wear is that of union goon Grievance Committee Chairperson for Bluegrass Lodge #4 of the Fraternal Order of Police. Our fleet has been neglected over the last couple of budget cycles and we’ve got some pretty ancient Crown Vics on the road. It appears we’re finally going to be getting a decent number of new cars this coming fiscal year. If the powers that be were going to buy only half the number of cars to replace some of our more ragged out units because they wanted to buy Carbon E7s instead of Ford Police Interceptors, I can assure you that the union would throw a very public fit. Municipal financing is a zero sum game.

The fiscal case for Carbon Motors never made sense, which explains why the company was never able to attract private investment. If a simple union goon with an Associate’s Degree in Police Studies gets that, than obviously people who are paid to make and manage money for other people would get it too. The only entity silly enough to invest in Carbon Motors appears to have been the state of Indiana. Part two will examine how that happened.


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Has the Dept of Energy’s Advanced Technology Vehicle Manufacturing Program Been a Failure? Not Really Sat, 18 May 2013 22:35:38 +0000

Click here to view the embedded video.

Critics of the current administration have pointed to the impending bankruptcy of Fisker Automotive and the recent suspension of operations at taxi maker Vehicle Production Group as examples of why the government shouldn’t be picking winners and losers in it’s zeal to promote alternative energy. The DoE effort under which those two companies received financing is the Advanced Technology Vehicle Manufacturing Program, ATVM. Putting aside political ideologies, contrary to the image given by the apparent failure of Fisker and VPG, the ATVM program actually has a pretty decent track record when it comes to picking winners and losers.


Revolution Motors

The ATVM was actually started during the Bush administration, in 2007 and received $25 billion funding from Congress in 2008, before President Obama took office, though the final determination of all loans awarded so far has been made by the Obama administration. Only a few loans have been made so far, so it’s easy track the program. In part the small number of loans is because of the political fallout over the 2011 failure of Solyndra, which got over a half billion dollars from the DoE as part of a different program at the DoE. So far less than $9 billion of that $25 billion has been awarded and none since March of 2011, though in the video above, posted in March of 2012, the Department of Energy explicitly was soliciting more companies to apply for loans.


Vehicle Production Group

Of the car companies that were actually awarded loans, the DoE did pretty well, three out of five seem to be thriving. Ford was the primary recipient of ATVM loans, $5.9 billion, used to upgrade factories in six states. Nissan came next, with $1.45 billion, used for a battery factory and preparing their Smyrna, Tennessee plant for Leaf production. Tesla, currently flying high with investors and now producing Model S EVs at a rate of 20K/year, got $465 million and has repaid it in full.



The status of Ford and Nissan’s debt to the ATVM is unclear, though I presume they are not behind in their payments. Ford has been very aggressive in retiring corporate debt since its turnaround following the mortgaging of the company for something like $23.6 billion in 2006. Of the two failures, Fisker got promised just over a half billion, of which about $200 million was drawn before the DoE put the brakes on after Fisker failed to meet loan criteria, and VPG got the smallest loan, $50 million.


Bright Automotive

Not only is the ATVM currently batting .600 on moneys disbursed, looking at the companies that have been turned down for loans, the Department of Energy has actually done a even better job picking winners and losers in determining which startup car companies had truly viable business plans.



While it’s true that two out of the three startups funded under the program are failures, assuming that Tesla is indeed a success, those three were the only automotive startups out of 18 that applied were approved for loans. We know about seven of those rejected because they went public with the denial. All seven are pretty much out of business today. Of them, only Coda actually produced real production cars for sale to the public and in their case they only sold about 100 cars. Perhaps if your business model is significantly dependent on government financing, maybe you need a different business model. Tesla has had ample private financing and looks to be viable, but Fisker had over a billion dollars put up by private investors, about six times the amount loaned by taxpayers, and even that wasn’t sufficient.


XP Vehicles

In addition to Fisker, VPG and Tesla, whose loans were approved, companies that applied for loans and went public with their refusal, were:

Company Loan Request Amount Company Status as of 5/13
Bright Automotive  $450 million  Shut down 2/12
Aptera  $150 million  Shut down 12/11
Coda  $334 million  Filed for bankrupcy 5/13
Think  Withheld under privacy laws  Multiple bankruptcies
Carbon Motors  $310 million  Plant shuttered
Next Auto Works  $342 milion  Factory cancelled in 2011
XP Vehicles  $40  Suing Dept of Energy over claims of political bias

Next Autoworks

Actually, a lot more than 7 other companies applied for loans. A Freedom of Information Act request filed in 2009 revealed a list of 108 applicants. So in all, there were only five companies approved for ATVM loans and 103 that were rejected or put on hold. Looking over the FOIA response, I identified another eight automobile startup companies, Zap, Revolution Motors, Electrorides, Wrightspeed, Phoenix Motors, Electric Motors Corp, Environmental Transport Solutions, and Local Motors.


Carbon Motors

Zap has been perpetually troubled, Revolution hasn’t gotten beyond a prototype for their leanable reverse trike, and Electric Motors is out of business. Four of the companies that seem to be surviving, Electrorides, Wrightspeed, Phoenix and Environmental Transport, are concentrating on electrified commercial vehicles, not passenger cars. It look like investing money, private or public, in startup passenger car companies, is not a very good bet.



Rather than being a profligate waste of taxpayers’ money, the  Advanced Technology Vehicle Manufacturing Program appears to have been managed in a responsible manner. The majority of the companies that received funding are in business and appear to be thriving. The majority of startup car companies, which are high risk enterprises in the first place, that were turned down for loans or that had their applications put on hold in 2011, are either no longer in business or financially troubled.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS

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Denied DOE Loan Makes Carbon Cop Cars DOA Thu, 08 Mar 2012 14:30:53 +0000

When solar panel maker Solyndra went bankrupt last year, which cost the taxpayer $528 million in DOE loan guarantees, the end of the DOE loan program was quickly prognosticated.  The loan program is still around, but new loans have for all intents and purposes dried up. Just a week after presumptive EV maker Bright Automotive called it quits and withdrew a DOE loan application, the program claims another victim. It is Carbon Motors, the Connersville, Ind. startup that wanted to sell fuel-efficient cop cars.

Yesterday, Carbon Motors said it was denied a $310 million DOE loan. Carbon Motors CEO William Santana Li says in a statement on the company’s website:

“We are outraged by the actions of the DOE and it is clear that this was a political decision in a highly-charged, election year environment. Since Solyndra became politicized last fall, the DOE has failed to make any other loans under the ATVM program, has pulled back one loan that it previously committed and, as of this month, the DOE has pushed aside the three remaining viable loans under active consideration.

Each of these applicants has been caught for several years in a costly and extensive DOE due diligence process. Carbon Motors simply appears to be the last victim of this political gamesmanship. In failing to deploy the tax dollars that Congress allocated for the creation of advanced technology manufacturing jobs in the U.S., the DOE ATVM program represents a glaring failure of the Obama Administration to create jobs that are clearly within its power to create.”

Bloomberg says that at least 14 members of Congress wrote to the Energy Department in support of Carbon Motors.

Asked for a comment, the DOE replied to Bloomberg:

“Over the last two and a half years, the department has worked with Carbon Motors to try to negotiate a deal that supported their business while protecting the taxpayers. While we were not able to come to an agreement on terms that would protect the taxpayers, we continue to believe that Carbon Motors is an innovative company with an interesting project and we wish them luck.”

Li thunders back:

“Although the DOE’s new found focus on protecting taxpayer interest may be a good talking point for the media, in this particular case, it fails to ring true. The highly efficient Carbon E7 vehicle would have had dramatic savings for the U.S. taxpayer and every city, county and state struggling with budget deficits. The DOE’s thoughtless decision just cost the U.S. taxpayer over $10 billion dollars of potential savings.”

It sounds like the Carbon cop car is DOA.

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License And Registration, Please: Will You Be Pulled Over By A BMW? Mon, 22 Mar 2010 14:27:14 +0000

As the avid reader of our cop car chronology and our on-going coverage of crime-buster conveyances knows, that market of 75,000 units a year in the U.S.A. alone is in a bit of a turmoil. The Crown Vic, holder of approximately 70 percent of the fuzz market, is about to be retired. Ford, GM, and Chrysler want to get a bite out of that crime-driven market. Not to forget a little known company, curiously and politically incorrectly named “Carbon Motors.”  Since our own Sajeev Mehta directed our attention towards Carbon, it got a little quiet around the formerly Atlanta, now Connersville, Ind. based upstart that wants to build dedicated police-mobiles. Until today.

Today, Germany’s Automobilwoche [sub] reports that Carbon Motors “ordered more than 240,000 diesel engines for their new super police car E7.” And where did they order the engines? From Germany’s BMW. The Bavarians can’t believe their luck. “Never before has BMW sold so many powertrains to a third party,” says Automobilwoche. The Bavarians will sell more than the engine. The whole shebang comes with the cooling, exhaust, and slushbox system. The powertrains will be built in BMW’s engine plant in Steyr, Austria. First deliveries will be made in 2012. Speaking of carbon, the BMW engine promises a 40 percent better mileage than other, unnamed contenders.

But an order for 240,000 engines? So far, the Carbon company, founded by former Dallas police officer Stacy Dean Stephens and former Ford executive William Santana Li, has collected 12,500 reservations, says USA Today. Maybe Carbon, which now calls itself a “Homeland Security Company” has just landed a big carbonated order. Or they are making it up.

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