Proton and its hybrid misadventures

Back in February 2012, I wrote about the generous funds being given to Proton for the past few years in order for it to develop a national hybrid car.

Bringing up to the speed on the little facts that we have gathered so far from the previous article I wrote:

a) In 2010, Proton obtained a RM270 million grant to develop hybrid cars

b) Mass production of hybrid cars are scheduled to commence in 2012.

c) 30 hybrid cars were to be delivered by end 2011 and even this promise was hardly kept.

d) Proton has cash balance of RM1.2 billion in March 2011.

e) Consequent press statements revealed that 200 hybrid cars were scheduled to be delivered only in 2013.

f) Proton is in a joint venture with Fraser – Nash Research Ltd (FNR) to develop this technology and it seems that FNR were fully paid upfront without any regards for its deliverables.

I asked 4 questions pertaining this matter:

1) What is the status of these hybrid cars which are currently being used by the government officials? The Energy, Green Technology and Water Ministry or Proton needs to state the road worthiness of the cars. Are all those 30 units doing perfectly well? This is important since RM270 million of government's money were given to Proton to develop it.

2) Since RM270 million was a grant and not a soft loan, the cost of each car (at R & D stage) is roughly about RM9 million. Slightly more expensive than a Bentley Continental. Is this justified?

3) Proton has cash balance of RM1.2 billion as at March 2011. Why would it need a further GRANT from the government of RM270 million? Surely RM270 million can be used elsewhere other than the cash rich Proton.

4) How much of this RM270 million being paid to third party such as Fraser – Nash and others?

This is the latest news as of yesterday:

Proton will be selling electric vehicles by 2014, International Trade and Industry Minister Datuk Seri Mustapa Mohamed told Parliament yesterday. The national car company is currently collaborating with UK-based Frazer-Nash Research to develop its own EV.

In a reply to Gombak MP Azmin Ali, the MITI minister said that Proton had allocated RM500 million for research and development in green technology and is expected to gain profits after commercialising EVs in 2014, The Star reported.

The PKR man asked MITI to state the rationale of investment by Proton through Frazer-Nash, to which Mustapa replied that Proton's R&D spend is much smaller than other car manufacturers.

It was pointed out that GM invested about US$ 1.2 billion to develop its Chevrolet Volt while Nissan-Renault has allocated US$ 5.6 billion for the same purpose. Allegations that Proton spent some RM270 million to test 30 cars and each cost about RM9 million were untrue, Mustapa said.

Meanwhile, Bernama reports that the government is ready to allocate RM120 million next year to Proton for the development of an EV before it can be commercialised mid-2014.

"The government allocated RM100 million this year for Proton to develop a hybrid and electric model and will consider an allocation of RM120 million next year for research and development. All this depends on Budget 2013 which will be tabled by the Prime Minister tomorrow (today) and on Proton meeting its key performance index target," Datuk Seri Mustapa Mohamed said.

So, apart from RM120 million they will provide next year, Proton had already been given RM100 in 2012. This is on top of the RM270 million grant given in 2010. This is a total of RM490 million of grants given to Proton in the span of 4 years in order to mass produce hybrid cars in 2014.

The deadline had been pushed further and further as the years goes by. Basically a two year plan has now been stretched to 4 years with unsuccessful piecemeal products being manufactured during the period.

Word has it that those 30 pilot cars were not up to standard and are no longer running due to breakdowns. In other words, they are not road worthy. Proton and FNR failed in their job and yet we reward them with more money.

After the takeover of Proton from Khazanah Nasional last May, Proton is now under the ownership of DRB Hicom. Why would the government pump more money to a privately owned company where the ultimate owner is already cash rich and could definitely stand on its own two feet?

The purpose of Proton shares being sold was to limit its dependence from the government. And yet, Proton is still being treated with silver spoon eventhough it is no longer the direct responsibility of the government.

Dato' Lukman Ibrahim, the current boss of Proton has so much to answer for this slush of funds coming in.

Is there no key monitoring process being done within the Proton management whereby a hybrid cars R & D of this magnitude has been deemed a failure and yet, they still continue with this venture regardless?

The Proton management will be held accountable for this lack of willpower to call a spade a spade and make the hard choice of terminating any joint venture with a 3rd party research company which could not deliver.

The RM120 million allocated to them in the national budget should have been allocated somewhere else which could be more useful to the rest of the people instead of being invested in a wild goose chase where the cost has begun to outweigh its benefit.

4 years and RM490 million down the road with only 30 lousy cars to show for is definitely a joke.

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