Fisker spent $600K for every car it sold, skids toward bankruptcy

posted at 10:01 pm on April 22, 2013 by Mary Katharine Ham

$1.3 billion in venture capital and taxpayer funds, and they spent $600,000 per $100,000 car they sold. What an investment!

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.

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.

A brief history of this investment:

Fisker is an electric car company, founded in 2007, which holds the dubious distinction of producing the only car to ever break down during its Consumer Reports test drive. It was supposed to be an American leader in new technologies, with a revamped factory in Delaware and all the jobs that come with it. It ended up producing cars in Finland— cars that caught on fire and konked out due to the company’s use of faulty batteries from another taxpayer-funded company, A123. Facing recalls and possible bankruptcy, Fisker’s CEO Henrik Fisker stepped down while the company searched for buyers. All this colossal failure could be chalked up to doing business in new technologies if it had been done with the $1 billion or so in private funding Fisker got. Sadly, the company also blew through $193 million from us, via the Department of Energy, which is now giving pause to the Chinese companies looking to buy it. Stimulus!

Fisker has been heading toward bankruptcy for several months, laying off employees, and missing payments to the Department of Energy on its way. The Obama administration seized $21 million from the company this week to satisfy its loan agreement, allowing the Fisker to escape expected bankruptcy for a little while longer.

The Obama administration says it has seized $21 million from troubled automaker Fisker Automotive Inc., just weeks after the company laid off three-fourths of its workers in Finland amid continuing financial and production problems.

Fisker had received $192 million in federal loans before a series of problems led U.S. officials to freeze the loan in 2011.

In a statement Monday, the Energy Department says it recovered money from the company’s approximately $21 million reserve account, which was set up as part of the initial loan commitment in 2009.

The US Government had planned the company would at one point create 2000 jobs and make 100,000 cars a year, but by the end of 2012 Fisker claimed only 1,800 cars had been delivered.

Only $170 million or so to go! I’m sure this will work out swimmingly for all of us.

Breaking on Hot Air