Veering on the edge of bankruptcy, without a buyer in sight, Fisker has become — to lawmakers and others — the Solyndra of the electric car industry. Not only private backers but millions of dollars in government loans gave life to a company, some would argue, that was a shaky investment from the start.
No electric vehicle initiative backed by Washington seems more of a debacle than Fisker, which was given a $529 million federal loan in 2009 to advance the project. Two years later, after Fisker repeatedly missed production targets and other deadlines, the Energy Department suspended the loans.
The all-but-closed company skipped a large loan payment that was due on Monday, leading the federal government to take the unusually aggressive step of seizing $21 million from the company’s cash reserves to begin recouping the $192 million in taxpayer dollars spent on the company’s flawed strategy.
Fisker, with its technical problems, management turmoil and mounting losses, offers a cautionary tale in the fiercely competitive arena of alternative-fuel vehicles and of government subsidies for start-up businesses.
The company’s messy demise will fall under the glaring spotlight of a Congressional hearing on Wednesday that is titled “Examining the Department of Energy’s Bad Bet on Fisker Automotive.” Some of Fisker’s top executives involved in the Karma’s development are expected to testify, as well as agency officials involved in the loan program.
“The government is playing in a space where they have to recognize their limitations,” said Van Conway, a corporate restructuring executive in Detroit. “Whatever they spent on Fisker was just not going to be enough.”
Others, including members of the Senate and the House, complain that standards for awarding federal loans were overlooked in the rush to promote green technology. “How did the Energy Department determine Fisker’s potential before writing a check?” asked Senator Charles Grassley, a Republican from Iowa. “Was there due diligence, or instead a blind hope that Fisker would produce something useful?”
An Energy Department spokeswoman, Aoife McCarthy, said the loan to Fisker was one of only a handful of 33 clean-energy loans that did not prove successful. She asserted that its problems should not be considered representative of the Obama administration’s broader efforts to promote cleaner cars.
“There will always be an element of risk with investments in the most innovative companies,” she said. Major automakers like Ford and Nissan received billions of dollars in federal loans to produce electric cars and, so far, have succeeded. A smaller manufacturer, Tesla, has also been able to meet the conditions of its government loans while producing an electric model.
But Fisker never realized its early promise as a tiny start-up manufacturer in an industry dominated by automotive giants.
On the surface, Fisker had all the trappings of a potential player in the emerging electric car industry. The brainchild of the Danish car designer Henrik Fisker, the company was based in Southern California and staffed by experienced executives from Ford and other auto companies. A big Silicon Valley venture firm, Kleiner Perkins Caufield Byers, was among its earliest investors.
Its first product, the low-slung Karma sedan, drew attention both for its looks and its $104,000 sticker price. One of a new breed of plug-in hybrids, the Karma could travel an estimated 50 miles on battery power before a gasoline engine kicked in to generate additional electricity.
Article source: http://www.nytimes.com/2013/04/24/business/fisker-broke-down-on-the-road-to-electric-cars.html?partner=rss&emc=rss