Electric car maker Fisker is a study in how a startup can quickly implode on itself – and likely take almost $200 Million in taxpayer money down the drain with it. The carmaker that was once touted for the promise of innovative green vehicles, now has so many woes it’s hard to know where to start chronicling them:
- Last Friday the company terminated 160 employees, or 75% of its workforce, reports Reuters.
- Fisker employees promptly filed a class action lawsuit the same day. The lawsuit alleges violation of the Federal WARN Act, for not giving sufficient notice of the firings.
- Barely more than a week ago the company reportedly hired a bankruptcy lawyer. This came after talks to be acquired by Chinese car makers fell through.
- One of Fisker’s core problems is that Fisker apparently doesn’t own a lot of the technology in the electric vehicle. “Much of its core technology comes from other companies and suppliers,” notes Katie Fehrenbacher in an insightful piece at Gigaom.
- About a month ago the company announced that its Executive Chairman and company namesake, Henrik Fisker, had resigned and left the company.
- The cars weren’t made in the United States, but were manufactured in Finland and had to be shipped to the U.S. So much for helping U.S. autoworkers.
- The car was panned by Consumer Reports, after the test car broke down on the test track. A Consumer Reports official noted, “…the Karma’s problems outweighed the good.”
- 320 of the vehicles were lost when caught in Hurricane Sandy at a New Jersey port last October. The company lost $32 million and the insurance company later refused to pay Fisker.
If you were thinking the Fisker cars were some sort of Fred-Flintstone mobile for the masses, they weren’t. The one and only model actually produced, the Karma, is a $100,000 luxury car (image above).
The backdrop to all of this is that the company received a loan from the Department of Energy (DOE) to produce green vehicles, receiving $193 million in taxpayer funds. Back in 2010 when the loan was announced over at Energy.gov, Vice President Biden called it a, ” … commitment to innovation by the U.S. government and the perseverance of the American auto industry.” The company also raised over $1 billion in private investment from venture capitalists and Hollywood stars like Leonardo DiCaprio.
A payment of $10 million is due on the taxpayer-funded loan on April 22. Want to bet whether Fisker will make that payment?
The DOE stopped disbursing the loan in 2011 after Fisker failed to meet milestones, avoiding a much greater taxpayer hit (the full loan, had it been disbursed, would have been over a half billion dollars). The DOE has come under fire after green energy company Solyndra filed for bankruptcy in 2011. The DOE said in a statement, “Despite Fisker’s difficulties, our overall loan portfolio of more than 30 projects continues to perform very well, and more than 90 percent of the $10 billion loan loss reserve that Congress set aside for these programs remains intact.”
Image: Fisker press photo