The writer, a Los Angeles freelancer and former Detroit News business reporter, blogs at Starkman Approved. This column first appeared on his blog.
By Eric Starkman
It’s a sad commentary on the U.S. corporate media if this is news to you: The U.S. Department of Energy last month granted Ford Motor Co. a sweetheart $9.2 billion below market interest rate loan to finance the construction of EV and battery plants in Tennessee and Kentucky. The loan far and away was the single biggest financial commitment the Biden administration has made in its effort to build an electric vehicle manufacturing network in the United States.
The loan was made through the Energy Department’s Loan Programs Office, whose mandate is to provide financing for long shot projects with potentially high impact benefits that America’s banking cartel wouldn’t prudently provide. With reported 2022 adjusted earnings before interest and taxes (EBIT) of $10.4 billion, up from $10 billion in 2021, Ford hardly seems a deserving recipient of a below market interest rate taxpayer loan.
Ford’s credit ratings, the FICO equivalent for corporations, is below investment grade, meaning the company has to pay higher rates of interest to borrow money to finance its projects. Getting the Biden Administration to lend the company cheap money for projects that Ford hailed as critical to the company’s future was an impressive coup for the executives responsible.
When Ford announced its claimed $11.4 billion investments in Tennessee and Kentucky, the company touted the projects as “two new massive, environmentally and technologically advanced campuses” that would produce the next generation of electric F-Series trucks and the batteries to power future electric Ford and Lincoln vehicles.
“This is a transformative moment where Ford will lead America’s transition to electric vehicles and usher in a new era of clean, carbon-neutral manufacturing,” said Ford Executive Chair Bill Ford. “With this investment and a spirit of innovation, we can achieve goals once thought mutually exclusive – protect our planet, build great electric vehicles Americans will love and contribute to our nation’s prosperity.”
Ford’s announcement two years ago made no mention that its investments were subject to obtaining financing, meaning the company was confident it had the financial wherewithal to move forward with them.
Sen. John Barrasso, R-Wyo., has keen olfactory senses and he smelled the odor reeking from the DOE’s Ford loan, which had to be approved by Energy Secretary Jennifer Granholm, a former two-time governor of Michigan and a poster child for failed green energy projects. Barrasso, the ranking member on the Senate Energy and Natural Resource Committee, earlier this month sent a letter to Granholm inquiring about a seeming conflict of interest Chris Smith, Ford’s top lobbyist and chief government affairs officer, possibly played in securing Ford’s sweetheart $9.2 billion loan.
Granholm in April named Smith as an advisor to her Energy Advisory Board, which she said was “an important component of DOE’s strategy to improve its research and development portfolio and program activities.” Weeks later, Granholm signed off on Ford’s sweetheart $9.2 billion loan.
“The totality of these circumstances amounts to, at the very least, the appearance of an undue influence by Ford on the Department of Energy,” Barrasso wrote in the letter. “The Department must be guided by a spirit of impartiality and competition as it allocates hundreds of billions of dollars of taxpayer funds.”
What’s also troubling Barrasso is Granholm’s under-oath testimony in April that she didn’t own any individual stocks. Turns out, Granholm’s husband owned $2,457.89 shares of Ford, which admittedly is trivial for the multimillionaire couple but nevertheless has bad optics.
Forbes in 2021 reported that Granholm, a former beauty queen and the 1977 Miss San Carlos, and her husband had an $8 million fortune, including two homes in Oakland. Contributing to Granholm’s wealth was exercising options in an electric vehicle company called Proterra, on which she pocketed $1.6 million. While Granholm squandered billions of dollars of Michigan taxpayer money on her parade of failed green energy initiatives, she seems to have more of an investment flair when it comes to managing her own money.
Smith’s Ford bio makes clear he knows his way around Washington, particularly in the power halls of energy policy and regulation.
From 2009 to 2017, Smith served in the U.S. Department of Energy during the Obama Administration, rising to assistant secretary for fossil energy. Earlier in his career, Smith held managerial and analytical positions at Chevron and analytical roles at Citibank and JPMorgan in New York City and London, positions that likely allowed him to hone his project financing skills and understanding.
Smith’s educational background is impressive. He earned a bachelor’s degree in engineering management and mechanical engineering from the U.S. Military Academy at West Point, beginning his career as an officer in the U.S. Army. He has a master’s degree in Business Administration from the University of Cambridge in England and a degree in applied mathematics from American Public University.
Smith reports to Steven Croley, Ford’s chief policy officer and general counsel, who I have mentioned quite favorably multiple times, including this post. I’ve yet to come across a general counsel better credentialed than Croley and his importance to Ford is underscored by the fact that he reports to CEO Jim Farley and and Jon Huntsman, Ford’s vice chair for policy and a senior advisor to Farley and Executive Chair Bill Ford.
According to his Ford bio, Croley earned his law degree from Yale, holds a doctorate in government from Princeton, and made partner at the powerhouse law firm Latham & Watkins. He also served as associate dean at the University of Michigan Law School.
Croley also knows his way around the Beltway’s corridors of power.
From 2014 to 2017, Croley served as general counsel for the U.S. Department of Energy. He spent the previous four years in the White House, first as special assistant to President Obama for regulatory policy, then as deputy counsel overseeing legal policy.
With Croley and Smith, Ford has two very strong former executives with formidable Department of Energy and Democratic party leadership connections. Understandably, Ford felt compelled to fortify its Republican connections, hence this week’s announcement that the company has hired Jessica Carter to oversee its Washington government affairs office.
As reported by the Detroit Free Press, Carter is a longtime chief of staff who has worked for five Republican members of Congress, most recently for U.S. Rep. Dan Newhouse, of Washington, a leader of former President Donald Trump’s 2020 reelection campaign who became one of 10 House Republicans to vote to impeach Trump for inciting the Jan. 6 Capitol attack, and one of two such Republicans to win reelection in 2022.
Carter previously served as chief of staff for U.S. Reps. Francis Rooney, of Florida, Stephen Fincher, of Tennessee, Steve Pearce, of New Mexico, and Richard Pombo, of California.
“Jessica’s substantial experience and deep relationships on Capitol Hill will help Ford identify, navigate and advance policy, from securing global supply chains to supporting homegrown advanced technology research and American manufacturing jobs. Our country and our industry are at a pivotal crossroads in the transition to the connected, zero-emissions transportation future, and Jessica is exceptionally well-prepared to help fulfill our shared interests,” Smith said in a news release.
One of Carter’s mandates no doubt is to mitigate growing Republican and some Democrat awareness and opposition to Ford’s EV initiatives. One of them is the battery plant the company is planning on fertile farmland in rural Michigan, a move strongly opposed by some local residents.
Building the plant in the U.S. will make Ford’s electric vehicles eligible for lucrative tax rebates under the Inflation Reduction Act. Some Republicans and West Virginia Senator Joe Manchin objected to the deal because Ford is partnering with a communist China-based company and will pay it 12% royalties on the batteries the plant produces.
“I’ll be damned if I’m going to give (Ford) $900 out of $7,500, to let it go to China for basically a product we started,” Manchin told the CERAWeek energy conference earlier this year. “You’re telling me we don’t have the smart people and the technology, and we can’t get up to speed quick enough? That doesn’t make sense.”
Granholm’s $9.2 billion sweetheart loan to fund Ford’s EV projects could attract more scrutiny as it has become apparent that Ford’s electric vehicle business is faltering. Ford in the first half of this year sold a mere 25,709 EVs in the U.S., compared to 336,892 sold by Tesla, 38,457 sold by Hyundai/Kia, and 36,222 sold by GM. Ford has been forced to slash the price of its Ford Lightning electric pickup and offer nearly zero percent financing and other incentives on the electric Mustang the company proudly assembles in Mexico. The company has increased its projected EV loses this year to $4.5 billion, up from the $3 billion it originally projected.
I think of Granholm and Michigan’s Senator Debbie Stabenow every time I fill up at the gas pump.
The accompanying video featuring a Bloomberg TV interview with Granholm laughing when asked about then rising gas prices will be forever imprinted in my memory. Stabenow, the biggest Congressional recipient of Sam Bankman-Fried’s political donations, famously told a Congressional committee her delight seeing posted rising gas prices after she bought a 2022 Chevy Bolt EUV.
“I just have to say, on the issue of gas prices, after waiting for a long time to have enough chips in this country to get my electric vehicle, I drove it from Michigan to [Washington, D.C.] this last weekend and went by every single gas station and it didn’t matter how high it was,” Stabenow said. “So I’m looking forward to vehicles that aren’t going to be dependent on the whims of the oil companies and the international markets.”
Stabenow’s EV crowing might have been premature. A just released a study by Michigan’s Anderson Economic Group revealed that some gas engine cars these days are cheaper to fuel than electric. The value of Stabenow’s Bolt has fallen about 22% since she bought it.
As for being at the whim of oil companies, Bloomberg reported that Exxon is in early stage talks to provide lithium to car manufacturers that include Tesla, Ford, and Volkswagen.