Talk about clean-energy boondoggles. Here's the latest one from the Obama administration.
Electric hybrid car maker Fisker Automotive Inc. is now on the verge of bankruptcy and owes the U.S. government more than $180 million - which would be the biggest loss of federal loan money since the Solyndra fiasco.
According to PrivCo, a New York-based researcher, Fisker has not produced a car since last summer and has gone through more than $1.3 billion in private investment capital and government loans.
"Fisker Automotive may well go down as the most tragic venture capital-backed debacle in recent history," PrivCo CEO Sam Hamadeh said. "The sheer scale of investment capital and government loan money - over $1.3 billion in all - was squandered so rapidly and with so little to show for it that the wreckage is breathtaking. Bankruptcy will be the end of Fisker, but for the taxpayers, venture capital firms, individual investors, and Fisker's suppliers, it will all be too little too late."
Fisker's failure comes more than three years after Vice President Joe Biden stood outside a shuttered GM plant in his home state of Delaware and announced the federal government would loan $529 million to the start-up Fisker so it could build its plug-in cars.
"We're on our way to helping America's auto industry reclaim its top position in the global market," Biden told more than 1,000 people, touting the clean-energy initiative with a promise of more than 2,500 jobs.
Today, the plant where hybrid cars were to be manufactured remains empty.
While the Anaheim, CA-based Fisker's downfall may come as a surprise, one of the company's top executives had portrayed it as desperate and near bankruptcy about a month before it received conditional approval for the more than half-billion-dollar loan from the Department of Energy, according to a Fisker email obtained by Hamadeh.
In the email, sent to a DOE official Aug. 23, 2009, Fisker COO Bernhard Koehler pleaded for a loan from the Obama Administration, saying that without it, Fisker would file for Chapter 7 liquidation within two weeks, lay off most of its employees and be unable to receive private-sector investment.
Hamadeh claims the email and other documents relating to Fisker prove the electric car maker secured the loan even though it was at the time an "insolvent, unproven automaker."
"The Department of Energy made a loan that no rational lender would have made," Hamadeh continued. "This loan was the equivalent of staying execution on a company that was terminally ill to begin with."
Last week, Fisker came under scrutiny from Republican lawmakers, who demanded answers at a congressional hearing titled "Examining the Department of Energy's Bad Bet on Fisker Automotive."
Rep. Jim Jordan, R-OH, questioned why the government ever considered Fisker a sound bet to receive the loan.
"The Obama administration owes the American taxpayer an explanation as to why this bad loan was made in the first place, and what they are going to do to minimize the loss that taxpayers face," Jordan said.
Jordan noted the start-up had a below-investment grade credit rating when it received the loan and that its luxury Karma, made not in the U.S., but in Finland, was out of financial reach for all but the rich.
"Fisker should have never received taxpayer money," Jordan said. "It was rated triple-C+. It was a junk-grade investment. The company built a car that cost $100,000. They build them in Finland. It was a taxpayer-subsidized vehicle for the likes of Justin Bieber and Leonardo DiCaprio."
Fisker had received more than $190 million of the DOE loan before the department suspended the loan in 2011 after Fisker repeatedly missed production targets and other deadlines. The company failed to make a payment last week, prompting the DOE to seize $21 million from a Fisker reserve account, a department official said.
The company made only about 2,500 of its luxury $103,000 Karma models and none of the lower-priced sedans it was to make at the Delaware plant.
Fisker becomes the latest in a series of failed clean-energy initiatives, perhaps mostly notably Solyndra, which went bankrupt despite a $535 million loan guarantee from DOE.
A123 Systems Inc., which made rechargeable batteries for hybrid cars, including linthium-ion batteries for Fisker, went bankrupt in October after receiving $377.1 million in federal and state government tax credits, loans, grants and other assistance.
And in November, the Heritage Foundation identified 19 clean-energy companies in a "green graveyard" that went bankrupt despite the government's promise to provide assistance totaling $2.6 billion.
Which begs the question: Which clean-energy initiative will fail next?
- Bloomberg News:
Fisker Spent $660,000 on Each $103,000 Plug-in Car
- The Detroit Free Press:
Energy Dept. seizes $21M from electric car maker Fisker Automotive
- The New York Times:
Breaking Down on the Road to Electric Cars
- FOX News:
House Republicans demand answers about possible missed signs on Fisker loan
- The Wall Street Journal:
Fisker Edges Closer to Chapter 11