'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.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Military pilot was killed in Va. crash
- U.S. waffling on ISIS feeds confusion among possible allies
- Military: Pilot was killed in Virginia F-15 crash
- Study examines body’s bacteria on move indoors
- Judge reaffirms Texas’ ‘Robin Hood’ system of school funding unconstitutional
- Arizona county clears girl shooter in gun range death
- Senate to look at earthquake risks at California nuke plant
- Obama backs off immigration vow
- White House ricochets in nonprofits’ birth control coverage fray
- Study: Fewer U.S. teens use sunscreen, even as skin cancer rates rise
- 3 kids among 5 dead in fiery New York car crash