Latest taxpayer-subsidized green fiasco is based in Anaheim

April 25, 2013

By Chris Reed

The latest Californa-based green energy fiasco took center stage in the House Committee on Oversight & Government Reform on Wednesday. It is Anaheim-based Fisker Automotive. This is from the Washington Post’s Wonkblog:

“It’s time for another round of scrutiny over the Obama administration’s clean-energy programs. On Wednesday, House lawmakers held a fractious hearing over federal loans that had been made to struggling electric-car manufacturer Fisker Automotive.

“There’s no doubt that Fisker is in serious trouble. The Anaheim-based company hasn’t built a vehicle since last summer after running into battery-supply issues and other problems. To date, the company has sold just 2,000 Karmas worldwide — a plug-in hybrid sports sedan that retails for $100,000. The Karma never really found a mass audience beyond Justin Bieber, Leonardo DiCaprio, and a handful of other A-list drivers.

“The Department of Energy finally halted all further loans to the company in June 2011 after having disbursed $192 million of a planned $529 million. (Since then, the government has seized some $21 million from Fisker’s accounts.)”

I love this part. As the kids say, epic fail:

“In the spring of 2012, Consumer Reports gave the Karma a failing grade after it died on the track. ‘This is the first time in memory that we have had a car that is undriveable before it has finished our check-in process,’ said Tom Mutchler.”

A fiasco for venture capital investors as well

An article on the Gigaom tech news site makes another interesting point. This wasn’t just a debacle for the Obama administration. It was a debacle for Silicon Valley venture capital investors who put tens of millions into Fisker:

“The heart of Fisker’s business model was in that early deal with Quantum. The idea was to design a gorgeous car, and have suppliers like Quantum provide the technology because off-the-shelf parts from suppliers would help keep costs down.

“But there were problems with this strategy: Sometimes, those parts had to be custom-made to fit the design vision, which resulted in higher prices for Fisker. Other times, parts were delivered late or, worse, faulty, but Fisker was locked in to those supplier relationships. Sources close to Fisker have also said that many of the parts were owned by the suppliers themselves, so Fisker didn’t own a lot of the internal technology. …

“Indeed, Fisker’s business model wasn’t the type that funders in the Valley typically like — it’s the polar opposite of the ‘Intel inside’ approach. That so many investors were so eager to back the company has left many in the electric car and tech industries scratching their heads over the years. ‘It would have only taken a couple a phone calls to industry veterans to have prevented all of this,’ says electric car advocate Chelsea Sexton, adding ‘there’s no excuse for not doing homework. It appears none was done.’”

But at least the venture capital investors lost their own money — not taxpayers’.