Senators Question DoE Loans To Fisker, Cite Qatar Investment

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Senators Question DoE Loans To Fisker, Cite Qatar Investment

Antony Ingram

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2012 Fisker Karma

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It's fair to say Silicon Valley start-up Tesla Motors is on a high at the moment.

The first owners finally have their brand new 2012 Tesla Model S cars, and the company is receiving plenty of positive media attention. Meanwhile, its rival Fisker has been much quieter--and when there has been news, it's often been from outside the company.

That trend doesn't look like letting up any time soon. The Detroit News reports that two U.S. senators are now pushing the Department of Energy to answer questions about its loans to Fisker Automotive and troubled battery start-up A123.

The DoE loaned $529 million to Fisker Automotive, and awarded $249 million in grants to A123--themselves in the headlines after faulty batteries in Fisker vehicles, and a serious battery explosion at a GM tech center.

The two senators, Sen. Chuck Grassley [R-IA] and Sen. John Thune [R-SD] , wrote a letter to Energy Secretary Steven Chu, asking "Why should the American taxpayer have to accept the credit risk of a company owned by a foreign government?"

Fisker, whose cars are designed in the U.S. and built in Finland, is part-owned by the Qatar Investment Authority. Fisker responded by saying that the company has already generated more than $100 million in revenue, that it is focusing on creating American jobs, and that it wants to avoid politics.

Fisker has been unable to access the full amount of money allocated, with its loan frozen due to concerns over its business plan.

A123 has not yet used all of its $249 million grant, but both senators question whether this will be released, following its $55 million faulty battery recall. The company is currently unprofitable, with a first-quarter loss this year of $125 million, up 133 percent from 2011.

Both Fisker's upcoming Atlantic and A123's new lithium-ion battery plant plans have been delayed, prompting questions of both companies.

Can either recover? For the sake of the electric car industry, it's vital that they do--but Fisker and A123 will no doubt be wishing for a share of Tesla's good press right now.

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Comments (4)

Kent Beuchert Posted: 6/26/2012 11:35am PDT

Disentangling all this requires going back to the beginning. The problem all stems from a faulty belief (mostly from Chris Paine's
silly movie about the electric car) that if one could just get some automaker to produce electric cars, people would flock to them, they would be a lot cheaper because of mass production, and everything would be hunkey-dory. Well, we actually have a mass produced electric right now in the form of the Nissan Leaf : although the electric version is, per se, not being heavily produced, practically all of its parts are and it benefits greatly by sharing a production line with its gas powered brethren, as I recall. So much for Paine's theory.

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Jeff Hre Posted: 6/26/2012 7:34pm PDT

That's entirely correct. Chris Paine has provided the bulk of the philosophy behind the belief systems for most Americans since 1773. Little known fact. And he has aged remarkably well also.

And Henry Ford's dramatic price drops through the innovative use of production engineering to raise economies of scale for early automobiles, never happened. It was all an illusion foisted on the people by... Chris Paine.

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Chris O Posted: 6/26/2012 2:29pm PDT

Wonder what the game is here behind the hypocritical concerns about the taxpayers money and foreign investment. My guess: Big Oil has set its Grand Oil Party lapdogs on the weakest links in the DoE loan program, but they are not the prime targets. That would be the concept of government funding for disruptive technology. After all access to capital is what makes disruptive technology dangerous and hard to control government loans must be something of a nightmare for vested interests.

Tesla is a prime example of what could happen when disruptive tech meets independent finance. It's far less vulnerable for sabotage by vested interests but the first sign of weakness and the coyotes will attack..

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Roy Harvie Posted: 6/27/2012 4:46am PDT

Both A123 and Fisker have had unforseen setbacks. The government should not use this bad luck to pull the rug out from under them.

A123 buisness plan is sound and although the manufacturing error has been very costly, it was a simple calibration problem and easily fixed.

Fisker has a combination of problems, some by suppliers beyond their control, and they made overly optimistic promises about their rate of progress and number of sales. The DOE should have taken these numbers with a grain of salt and allowed greater leway, and additional time when the supply problems cropped up.

The whole purpose of the DOE loans was to provide funds to high risk ventures. These two are on track to be successful. Killing them now would be a cruel.

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