Bloomberg View: Incentives for Car Buyers, Not Carmakers

Much has been made of the U.S. government’s botched $535 million in loan guarantees to Solyndra, the California solar-panel maker whose business imploded, leaving taxpayers burned. Less known is that the government, in its quest to spur investment in environmentally friendly vehicles, has been handing out essentially free money to well-known companies that don’t seem to need cheap credit.

Since 2009 the Federal Financing Bank, the U.S. Treasury Department bank that funded Solyndra, has been providing loans with rates hovering near 1 percent to Nissan Motor, Ford Motor, and other companies to develop electric cars and other fuel-efficient vehicles. These loans, guaranteed by the U.S. Department of Energy, carry low interest because the Federal Financing Bank bases its rates on Treasury’s borrowing costs. In May, Ford drew down more than $148 million from a guaranteed loan with a 1.3 percent interest rate.