Fisker Automotive: an unfolding scandal?
Fisker Automotive repeatedly violated the terms of its U.S. Department of Justice loans that would have given the electric vehicle maker a second lease on life, according to a financial research company that focuses on privately held companies.
Bloomberg's Angela Greiling Keane wrote an article last Thursday examining the findings of a report produced by PrivCo, the aforementioned research firm. The report found that Fisker was permitted to keep its US$529 million DOE loan even when the government was aware of multiple violations. Fisker spent US$660,000 of taxpayer and private equity funding for every one of its 2,500 $103,000 cars that were sold, the report notes. The company had received $193 million of its DOE loan.
"They [The DOE] made a mistake" PrivCo CEO Sam Hamadeh told Bloomberg. "Should they have fought this sooner? Obviously -- as soon as it became evident that they had begun to default," he added.
Fisker sells the Karma, a hybrid electric vehicle that is equipped with a substantial 260-horsepower engine that averages more than 100 miles per gallon with a 300-mile range. The Karma came to market in 2011, but was initially projected to ship in 2009 and to sell over 15,000 units (it clearly fell far short of that sales target).
Not a single Karma has been produced since last summer, and the DOE loan, which was going toward financing restarting production at a shuttered facility in Delaware, was frozen in February. Fisker also laid off most of its workforce and is pursuing strategic talks with other automakers over the sale of its assets, Forbes says.
Last month, founder Henrik Fisker resigned from his post at the company; though, he could soon find himself testifying in front of a U.S. House of Representatives panel as soon as hearings begin on Wednesday. The company owes the DOE a $20.2 million repayment on Tuesday. It's refusing to comment to the press, Bloomberg reported.
The Fisker affair will no doubt become a political bludgeon used against the Obama administration by its opponents. The Obama DOE has provided loans to several failed businesses including A123 Systems and Solyndra. A123 systems was recently controversially sold to Chinese auto part subsidiary Wanxiang America.
Could there be scandal ahead?
This post was originally published on Smartplanet.com