Fisker Spent $660,000 on Each $103,000 Plug-in Car

Fisker Automotive Inc. spent more than six times as much U.S. taxpayer and investor money to produce each luxury plug-in car it sold than the company received from customers, according to a research report.
The Anaheim, California-based company made about 2,500 of its $103,000 Karmas before halting production last year, disrupting its plans to use a $529 million U.S. loan to restart a shuttered Delaware factory owned by the predecessor of General Motors Co. (GM) The Karma was assembled in Finland.

Enlarge image

Fisker Automotive Inc. co-founder Henrik Fisker resigned last week. Photographer: Peter Foley/Bloomberg

Fisker was allowed to keep using money from its Energy Department loan after violating its terms multiple times, according to a report released April 17 by PrivCo, a New York- based researcher specializing in closely held companies. It said it based its report on documents, including the loan agreement, obtained through the U.S. Freedom of Information Act.
“They made a mistake” in awarding the loan, PrivCo Chief Executive Officer Sam Hamadeh said of the Energy Department in an interview yesterday. “Should they have fought this sooner? Obviously -- as soon as it became evident that they had begun to default.”
PrivCo’s report contains errors, particularly in asserting the Energy Department knew by December 2010 that the carmaker wasn’t meeting milestones required to keep drawing taxpayer funds, Bill Gibbons, a department spokesman, said in an e-mail yesterday. The department cut off Fisker’s funding in June 2011, after the company drew down about $193 million.
“PrivCo’s assertion that Fisker defaulted in December 2010 is simply false,” Gibbons said. “The milestones that PrivCo includes in its report are also wrong. The fact is, the department stopped disbursements on the loan after the company stopped meeting its milestones.”

Production Halted

Fisker has spent $1.3 billion in taxpayer and venture capital money, or $660,000 for each car it sold, the report said.
Fisker stopped manufacturing cars late last year and fired three quarters of its remaining workers April 5. The company’s first repayment of $20.2 million on the Energy Department loan is due April 22, the report said.
Tony Knight of Sitrick & Co., an outside public relations agency representing Fisker, declined to comment.
A U.S. House panel is scheduled to hold a April 24 hearing on Fisker and its government financing. Invited witnesses include co-founder and namesake Henrik Fisker, who resigned last month; CEO Tony Posawatz and Chief Operating Officer Bernhard Koehler, who helped start the company whose customers include singer Justin Bieber and actor Leonardo DiCaprio.

Delaware Plant

“PrivCo’s report raises more questions as to the circumstances surrounding government support for Fisker,” Representative Jim Jordan, an Ohio Republican who is chairman of the House Oversight and Government Reform subcommittee holding next week’s hearing, said in an e-mailed statement yesterday.
The Energy Department, which has had to defend its loan guarantees to failed solar-panel maker Solyndra LLC, gave Fisker its loan primarily to acquire and restart production at a closed GM plant in Delaware, the home state of Vice President Joe Biden, who attended the press conference announcing the venture. The company forecast it would create 2,500 jobs, according to a project summary still posted on the Energy Department’s website.
Activity at the Delaware plant stopped last year and no cars have been made there.
Of the cars produced, about 1,600 were purchased by consumers. Another 338 cars were destroyed during November’s Superstorm Sandy while parked at the Port of Newark, New Jersey.