Layoffs Hit Taxpayer-backed ECOtality

40 employees laid off as green energy company eyes bankruptcy

ECOtality charging station / AP
September 16, 2013

A taxpayer-backed green energy company teetering on the edge of bankruptcy laid off dozens of employees on Friday, including all remaining employees in its industrial division.

ECOtality received about $115 million in taxpayer funds through the 2009 stimulus bill and an additional grant from the Department of Energy to build electric vehicle charging stations.

ECOtality laid off 40 employees on Friday. The San Francisco-based company still has 51 people on staff, but its industrial division is empty, and it has stopped filling orders for chargers.

"It’s been a bloodbath," one employee, who still has her job, said in documents obtained by the Washington Free Beacon.

"We heard that last Friday's pay was the last paycheck," the employee said.

ECOtality announced in August that it might file for bankruptcy. The Energy Department, which selected ECOtality as its primary contractor for the EV Project, suspended payments to the company in light of its financial troubles.

ECOtality faces a class action lawsuit from investors who say company executives misled them regarding its financial health.

"Neither the company’s direct sales force nor the independent dealers have generated sales volumes of its commercial EVSE products sufficient, in combination with other sources of revenue, to support the company’s operations in the second half of 2013," ECOtality said in an August filing with the Securities and Exchange Commission.

It disclosed in the same filing that some of its chargers have experienced significant manufacturing defects, in some cases even causing charge ports to melt.

"The government kept throwing good money after bad even though the inevitability of this was clear for over a year," one company executive told the Free Beacon in an email.

The executive, who spoke on the condition of anonymity, blamed the company’s problems on former CEO Jonathan Read, who "offered no leadership and either directly or indirectly … squandered or pocketed all the government money."

Requests for confirmation were directed to chief marketing officer Joshua Katz, who refused to comment. Efforts to reach employees who were reportedly laid off were not successful.

The Department of Energy has defended its stimulus awards to ECOtality, which were integral to President Barack Obama’s stated goal of getting a million electric vehicles on the road by 2015. The department has since backed away from that goal.

Members of Congress have questioned the initial decision to award EV Project contracts to ECOtality, citing investigations into company practices by the SEC and the Labor Department.

ECOtality recently agreed to pay $855,000 in back wages to settle the latter investigation, which involved alleged violations of the Fair Labor Standards Act and the Davis-Bacon Act.

"I could write a book on ECOtality and how a company that should have been nurtured was used by few select people to line their pockets," a former executive told the Free Beacon. "America loses in the end."