In a stark reminder of the perils of politicians wagering taxpayer money on business ventures to advance their political agendas, Proterra, the electric bus and battery company once championed by President Joe Biden, has filed for bankruptcy. The company's rise and fall serve as a cautionary tale about the potential consequences of government intervention in private sector enterprises.

Proterra, founded in 2004, saw limited success in the market, having sold only 550 electric transit buses to date. The majority of these sales were underwritten by government agencies through federal grants. However, the company's vehicles were plagued with mechanical defects and performance issues, such as limited range and lengthy charging times. Despite these quality concerns, Proterra managed to survive with the help of powerful political connections, including former Michigan governor Jennifer Granholm, who currently serves as Biden's energy secretary and served on Proterra's board.

Nevertheless, Proterra went public in January 2021 and raised a staggering $650 million, more than triple its annual revenue. Shortly afterwards, Granholm was appointed as the energy secretary by Biden, further solidifying Proterra's ties to the administration.

The company's political connections paid off in various ways. In April 2021, Biden praised Proterra during a virtual tour of one of its facilities, using the company as an example to promote his infrastructure plan, which included significant grants to replace diesel-powered buses with electric ones. Biden stated that Proterra and similar electric vehicle companies would "end up owning the future."

Proterra's fortunes continued to rise when the Biden administration passed the 2022 Inflation Reduction Act, which provided substantial subsidies to the green energy sector. One provision of the act included a $40,000 per vehicle tax credit for the purchase of electric commercial vehicles, along with additional tax credits for EV batteries. Proterra acknowledged in its quarterly report that this unprecedented level of government funding greatly contributed to its growth prospects.

However, the excessive government spending under the Biden administration led to soaring inflation rates, reminiscent of the 1970s. In response, the Federal Reserve aggressively raised interest rates, leading to increased production and operational costs for many companies. Proterra, unable to pass on these rising costs to its mostly government clientele and hindered by requirements to produce a significant portion of its EV components in America, found itself in financial turmoil.

Bankruptcy became inevitable for Proterra, filing in August as government subsidies failed to offset the financial pressure of rising inflation, higher interest rates, and declining sales. Last week, Volvo, a Swedish automobile manufacturer, acquired Proterra's battery business for a mere $210 million, a substantial drop from the company's valuation of $1.6 billion a year earlier.

Another figure who profited from Proterra's trajectory was Granholm herself, who sold her shares in the company for $1.6 million last year. Holding on to those shares until the recent bankruptcy would have rendered them worthless. Ultimately, it is the American taxpayers who suffer the most significant losses in the Proterra saga.

Proterra's demise is not an isolated incident within the electric vehicle industry. Electric Last Mile, an EV company based in Michigan, filed for bankruptcy in June 2022, while Lordstown Motors, based in Ohio, followed suit a year later. Even established automobile companies with EV divisions, like Ford, are facing difficulties, projecting losses of $3 billion this year. These companies, though initially benefiting from the Biden administration's climate incentives, were eventually doomed by the economic consequences of the same policies.

Furthermore, the Wall Street Journal reports that Americans have become disillusioned with EVs due to their higher price tags compared to gas-powered vehicles. The limited travel range and scarcity of charging stations across the country further dampen consumer interest. GM and Tesla, among others, are even considering delaying additional EV investments due to weak demand.

The failure of Proterra and numerous other EV companies should serve as a reminder that government subsidies alone cannot guarantee business success. President Biden, who was previously involved in the ill-fated Solyndra solar panel debacle during the Obama administration, should have been more cautious in his support for politically-driven green initiatives.

However, the allure of green energy has become a moral and political imperative for elected officials, indicating that taxpayer-funded ventures like Solyndra and Proterra may continue in the future at the expense of American taxpayers. The only way to curtail this cycle is through voting out politicians who engage in such practices and holding them accountable to ensure that any profits gained from taxpayer-funded bets are returned, ultimately safeguarding the interests of the American people.