Yesterday members of the House of Representatives grilled the founder of the failing electric car company Fisker Automotive. The Department of Energy announced in 2009 that they would be loaning Fisker Automotive $529 million, part of a raft of loans made to car companies intent on producing fuel-efficient and electric vehicles. But now, four years later, Fisker has sold only 2,000 of its $100,000 plug-in hybrid sports car, and Uncle Sam wants his money back. The WSJ reports:
Barring a last-minute rescue, Fisker is poised to become another DeLorean Motor Co. or Tucker Corp., a symbol of the difficulties of creating entirely new car companies. Unlike those others, it also represents one of the most prominent failures of the government’s use of public funds to wean American industry from fossil fuels—and of how that government interest pushed Fisker to reach too far.Originally, Fisker wanted to start small. But, says investor David Anderson, the U.S. asked it to think big. ‘”We can’t loan you money to make a low volume car [in Finland],'” he said the U.S. argued. ‘”But if you wanted to bring forward in time your idea of the small car to be produced here in the U.S.,’ then, they’d say ‘OK,'” Mr. Anderson said. […]Today, Fisker looks headed toward a bankruptcy restructuring. The U.S. could wind up owning all or part of the company’s assets because its loans were backed by Fisker assets. So precarious is the company that the U.S. seized $21 million this month from Fisker in anticipation of a default.
The company’s idea was remarkably similar to Tesla’s, which also received nearly half a billion dollars in government loans. But Tesla is on track to pay back its loans ahead of schedule, and founder Elon Musk seems confident about the company’s future. At Fisker, by contrast, founder Henrik Fisker resigned as the company’s chief executive last month. So what went wrong?The company was plagued by production problems from the start. GigaOm has a good round-up of the ways in which these two electric car startups were not created equal. But the details of Fisker’s failures are less important than the fact that American taxpayers now find themselves on the hook for them.Fisker defenders are likely to point out that only $192 million of the $529 million loan was actually dispensed; the cashflow was frozen in 2011 due to delays in production. And the DoE was able to reach into Fisker’s back pocket and recover $21 million of the money it loaned the flailing start up. But that’s still $171 million likely lost in a bet on a single company with no track record of success—a company whose product was a $100,000 sports car.The US should get out of the business of picking winners and losers in emerging industries like electric vehicles, particularly for companies whose products cater largely to the rich.If the US wants to kickstart an electric car industry in this country, its money would be much better spent on research and development of new technology. Battery technology would be a good place to start: No matter how sexy the cars are, electric vehicles won’t take off in this country until people feel confident in their range.[Fisker Karma image courtesy of Shutterstock.]