Fisker Automotive CEO Tony Posawatz didn't attend yesterday's House committee hearing on the company's loan from the U.S. Department of Energy.
He's out desperately seeking saviors to avert bankruptcy for the struggling startup electric-car maker, but he still may have had the better day.
The title of the hearing, Green Energy Oversight: Examining the Department of Energy's Bad Bet on Fisker Automotive, promised rough sledding for the five witnesses called to testify.
Subsidizing Bieber, DiCaprio
And Representative Darryl Issa [R-CA], who heads the House of Representatives panel on Economic Growth, Job Creation, and Regulatory Affairs, didn't disappoint, slamming the Obama Administration for its lack of oversight.
"Mitt Romney, the day he left graduate school, would not have made [the] mistake" of loaning Fisker more money, Issa told cofounder Henrik Fisker.
Nor did Representative Jim Jordan [R-OH] disappoint, noting accurately that, "Taxpayers effectively subsidized luxury, novelty vehicles for the likes of Justin Bieber, Leonardo DiCaprio, and Al Gore."
The hearing came two days after Fisker missed a $10 million payment on its DoE low-interest loan, as predicted.
It was covered by international news services--including Reuters and Bloomberg--D.C. political outlets, including The Hill and Politico, and the newspapers The Detroit News and the Detroit Free Press.
The House committee released selected documents at the hearing, including memos from DoE officials.
White House spokesman Jay Carney quickly attacked the release as a partisan ploy by Issa and his fellow Republicans to embarrass the Obama White House and its green energy programs.
“The committee’s efforts to stoke false controversy by selectively leaking a few out-of-context documents," Carney said in a statement, "just do not stand up to scrutiny."
The partisan aspect of what one D.C. political reporter privately termed a "show trial" led other Democrats to respond as well, noting that the bulk of the DoE loans are being repaid on time.
Representative Gerry Connolly [D-VA] echoed that assessment, referring to the hearings as a "Soviet show trial."
By far the largest loans granted by the DoE advanced-technology vehicle manufacturing program went to Ford ($5.9 billion) and Nissan ($1.45 billion).
Silicon Valley startup Tesla Motors [NSDQ:TSLA] received $465 million; its Model S electric car is now in production.
Multiple missed deadlines
Among the points established during the hearings and afterward:
- The Department of Energy under President George W. Bush encouraged Fisker to apply for the DoE loan program, according to cofounder Henrik Fisker
- John Mizroch, formerly an acting assistant energy secretary and the person who Fisker said urged him to apply for the loan, disputed that assertion, telling Bloomberg it was "inaccurate"
- A skeptical consultant to the DoE questioned whether Fisker was not meeting milestones in its loan agreement as early as June 2010, just nine months after it was granted a $529-million DoE low-interest loan
- Fisker received funds for a further year, until the DoE froze disbursements in June 2011 after the company had drawn down $192 million of the loan funds
- Of the funds received, $32 million came after Fisker said in February 2011 it had begun production of its Karma luxury plug-in car--although in fact it hadn't
- That same year, the DoE downgraded Fisker's loan and began a credit-monitoring plan to keep close tabs on car sales, orders, and parts inventories
- The company came close to running out of cash several times, including just as the Karma finally launched in the fall of 2011
- Late that year, the DoE secretly agreed to extend the company's repayment deadlines by one year to allow it to sell the cars it was then building
- A previously undisclosed quality problem was that if the driver left the car with the key, it would lock after 8 minutes--trapping other passengers inside with no way to escape
- The Energy Department has recovered funds of $21 million from Fisker in the last few weeks
- Fisker may seek bankruptcy protection, according to its COO Bernhard Koehler
The long and tortured history of Fisker Automotive included big promises, missed deadlines, and several hundred early vehicles riddled with quality problems.
It is thought to have built roughly 2,000 Karma electric sport sedans, the sole vehicle it managed to produce.