For politicians betting on electric vehicles to drive job growth, the view from inside Think City’s plant here is their worst nightmare: 100 unfinished vehicles lined up with no word on whether they will be completed.
Only two years ago, the tiny Think cars (two can fit in a regular parking space) were expected to bring more than 400 jobs to this ailing city and a lifeline to suppliers who once made parts for gas-guzzling recreational vehicles.
“We’ve said we’re out to make Indiana the electric vehicle state. It’s beginning to look like the state capital will be Elkhart County,” Indiana Gov. Mitch Daniels said in January 2010 in announcing government incentives used to attract Think to his state.
Instead, the Hoosier State’s big bet has been a bust. The plant is devoid of activity; there are just two employees. A Russian investor who recently purchased Think’s bankrupt parent in Norway has been silent about its future. A government-backed Indianapolis battery maker that was to supply Think wrote off a $73-million investment in the car company and Thursday declared bankruptcy. Two unrelated electric truck makers Indiana planned to nurture have yet to get off the ground.
Indiana’s foray into electric vehicles is a cautionary tale for states in hot pursuit of high-tech manufacturing jobs. Think’s story illustrates how politicians so badly wanted to stimulate job growth that they showered the automaker and the battery supplier with tax benefits and incentives while at the same time failing to determine whether there was a market for the car: a plastic two-seater with a top speed of about 65 mph and a price tag approaching $42,000.
“Where’s the value?” Gregg Fore, an Elkhart recreational vehicle industry executive, said of Think. “I could buy a golf cart for five grand if that’s what I wanted to drive.”
Fore says the federal and state governments as well as Elkhart subsidized the Think project apparently believing those tax benefits would drive down the vehicle’s price and make the cars more attractive. “By giving money to the battery company and electric car company, they are saying, ‘We want you to buy their products even though we know you don’t want them.’”
Indiana’s total losses aren’t immediately known. Katelyn Hancock, a spokeswoman for the Indiana Economic Development Corp., the state’s economic development arm, declined to disclose how much Think and battery-maker Ener1 had received in taxpayer-funded credits and incentives, saying such information is confidential. Ener1 also refused to provide the information.
What is known, however, is that the Obama and Bush administrations poured millions of dollars into battery production in a quest to power thousands of Think City vehicles with lithium-ion batteries. To date, Ener1 has spent $55 million in federal funding, according to the U.S. Energy Department.
Some analysts say government backing of the car didn’t seem like a bad investment at the time. “It looked like electric vehicles were it in 2008. It really did,” said Theodore O’Neill, an analyst who has followed the electric car industry. “You had the government calling the shots and doling the money out with the major” automakers.
Still, O’Neill says he wouldn’t buy such a car. “For $40,000, you can get a certified pre-owned BMW convertible and a Vespa scooter. Both of them. And if you want to have a good time, put the top down.” General Motors’ Chevy Volt electric car sells for about the same price.
Think City’s plant, a 10-minute drive from Elkhart’s Main Street, appears all but abandoned these days. When a reporter visited recently, the parking lot was empty and the visitor entrance and lobby were laced with cobwebs. A single pickup truck and a sign telling visitors to ring the buzzer were the only signs of life near the rear of the building. Inside two men were quietly baby-sitting the plant, awaiting headlights and seat belts from Europe so the cars could meet U.S. standards.
What eventually is supposed to happen to these cars isn’t clear. No one in Elkhart could point to a local executive in charge of production. A person identified as a spokesman declined to comment, saying he was no longer on the payroll.
The person who may have the most to say about Think’s future also isn’t talking. Russian investor Boris Zingarevich bought Think Global, the Norwegian parent company, at auction a month after its bankruptcy.
Reached by phone in Russia, Slava Bychkov, a spokesman for Zingarevich’s Ilim Group, said he could not provide details of plans for the car company.
“The management is now under the restart process and will communicate their strategy in [the] near future,” Bychkov said.
The situation is a far cry from what was envisioned in 2009: a bustling plant building cars that would be part of the American dream of a gasoline-free future. Every level of government, from city to state to federal, pledged millions of dollars in incentives and tax benefits to Think, which promised to build those cars.
Over the next two years, Gov. Daniels announced deals across the state that he said would bring electric vehicle-related employment: 1,600 jobs in Elkhart County for hybrid pickup trucks, 300 jobs in Central Indiana for plug-in hybrid work trucks. The truck ventures have yet to get off the ground. Battery supplier Ener1, with three locations in Indiana, envisioned creating 1,400 jobs; Think itself was supposed to create 415 jobs in the state.
Vice President Joe Biden seized on the excitement over Think, posing a year ago beside a car to promote Ener1. He heralded the battery maker’s work as one of “100 Recovery Act Projects changing America,” giving people jobs and helping transform the economy.
President Obama swooped into Elkhart three times, turning the battered city into a poster child for an economy in need of government intervention. Unemployment had topped 20% as the recreational vehicle industry, which during its peak employed as many as 50,000 people in Elkhart County, had nose-dived and failed to recover. That Think City had set up shop in a massive building where RV windows and doors were once manufactured was seen as a sign of rebirth.
The people involved apparently became so jazzed about jobs that they didn’t spend much time thinking about who would buy Think cars. “I would get knots in my stomach. ‘What are we going to do?’ Your heart ached because you knew how hungry they were for jobs,” said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County.
Barkley Garrett, Elkhart’s economic development director, said, “You have to look at it in the context of dealing with almost 20% unemployment. When you have 1 out of every 5 people in your community out of work, every job looks like a good job.”
Think was to have 415 workers by 2013. By the end of 2011 it was projected to produce 2,500 vehicles and have the potential to build 60,000 cars a year.
The concept worked like this: The first cars were produced in Europe, then shipped to Elkhart, where seat belts and headlights would be replaced to meet U.S. standards. Ultimately, the entire car was to be produced in the Midwest.
Think’s future looked bright in December 2010. Indiana Gov. Daniels proudly accepted the first 15 Think vehicles, to be used by the Department of Natural Resources, thanks to federal tax incentives and a $5-million grant from the federal government.
But it didn’t take long for things to start to unravel. The vehicle launched in the U.S. at the end of 2010 with a sticker price of $41,695, about $8,000 higher than Think’s previously announced target price. Sales were a fraction of what had been projected. At its height, Think City’s plant employed only 25 people. And most of the 200 or so vehicles Think City sold in the U.S. were to government fleets, sweetened by government subsidies.
Recalls added to Think’s woes. The first, in January 2011, was related to improperly installed seat belts. A month later, a recall involved defective defroster systems. And the National Highway Traffic Safety Administration determined that the car had a tendency to slip out of the park position.
The recalls occurred just as a $5-million loan from battery partner Ener1 was coming due. When Think couldn’t pay, Ener1 lent an additional $10 million to keep the car company afloat because it needed a buyer for its batteries.
Last May, Ener1 wrote off its $73-million stake in Think. The following month, Think Global filed for bankruptcy in Norway listing $32 million it owed Ener1.
That marked Think’s fourth trip through bankruptcy court, and the ramifications for Ener1 were profound. The recipient of a $118.5-million Energy Department grant saw its shares tumble to pennies and its stock delisted from Nasdaq. Shareholders sued, claiming management hadn’t flagged the severity of Think’s financial woes when they decided to invest in the battery maker.
On Thursday, Ener1 filed for bankruptcy protection in New York. About 275 Indiana employees are expected to continue with the company as it restructures through a pre-packaged bankruptcy, the U.S. Energy Department said Thursday.
Michael Lew, an analyst who has followed Ener1 and Think — which has been renamed Electric Mobility Solutions — said no one is sure what’s supposed to happen with the two companies.
“There’s always hope,” he said. “But you need to know what exactly the plan is.”
Tribune staff writer Michael Oneal contributed to this report.