'Green' car firm defaults on $529M government loan
WASHINGTON — Lawmakers on Wednesday grilled top officials of Fisker Automotive Inc. over what was termed “the U.S. Department of Energy's bad bet” by backing the “green” automaker with hundreds of millions of dollars in loans.
A House Oversight and Government Reform Committee hearing focused on the DOE's decision in 2009 to grant the company a $529 million loan only to see it veer toward bankruptcy — a chain of events with echoes of Solyndra, the government-backed, solar manufacturer that went out of business in 2011.
Fisker's troubles were the result of a string of green technology flops, including last year's bankruptcy of its lithium-ion battery supplier, A123 Systems. Forecasts in 2009 for sales of hybrid and electric vehicles far outstripped subsequent demand.
The company has not built a vehicle since July; however, it has the potential to bounce back and repay nearly $200 million in government loans if able to find the right “financial and strategic resources,” according to former CEO Henrik Fisker.
In prepared testimony about his eponymous company, the Danish-born Fisker blamed the company's problems on its parts suppliers, delays in regulatory approval and recalls of its flagship Karma plug-in hybrid sports car. He was forced to resign as chairman in March.
The automaker is on the verge of collapse. Among the questions is whether Fisker's prospects were strong enough at the start to warrant the DOE's backing, which helped trigger a flood of private financing for Fisker.
“After resolving initial launch challenges, the cars perform well and customers love them,” Fisker asserted.
Fisker's failure to make a payment on the DOE loan on Monday is the latest of its troubles. In recent weeks, Fisker has fired 75 percent of its workforce and hired bankruptcy advisers.
“The Obama administration owes the American taxpayer an explanation as to why this bad loan was made in the first place, and what they are going to do to minimize the loss that taxpayers face,” said Rep. Jim Jordan, R-Ohio, chairman of the subcommittee.
Fisker founded the company in 2007.
“While the company retains my name, we are not one and the same,” Fisker will say, according to his testimony.
Nicholas Whitcombe, supervisory senior investment officer for the DOE loan program and Fisker co-founder Bernhard Koehler also are expected to testify.
The DOE's early backing helped open doors for Fisker, which sells the $100,000-plus Karma plug-in hybrid sports car. Fisker has raised $1.2 billion in private funds to date, according to SEC filings.