Our federal government sure knows how to pick ’em.
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!
The Chinese automaker that was in talks to buy struggling Fisker Automotive has backed out, Reuters reports, leaving Fisker without its best bet for avoiding bankruptcy.
Geely, which owns Volvo and is one of China’s biggest car manufacturers, was reportedly on track to acquire Fisker, but dropped out of talks due to conditions that come with paying back the $193 million Fisker has borrowed from the United States Department of Energy.
For perspective, according to the National Venture Capitalists Association, the average VC fund (not loan, but fund) was $149 million in 2010.
Check out the foresight on this GM-turned-Fisker plant in Delaware, which was supposed to start production in 2012, but has been put on hold until 2014-15 (probably indefinitely), but not before we dropped $23 million on it!
$23 million of that was used to purchase and refurbish an old General Motors plant in Delaware, which is supposed to produce the Atlantic, Fisker’s high-volume model, and create about 2,500 American jobs — the crux of the DOE’s justification for making the loan.
A source familiar with the case told Reuters:
Those obligations are too complicated to handle and seem too risky. The plan’s footprint was too big. It would take a long, long time to fill up the plant with products and restore employment there.
According to Reuters’ sources, the resignation last week of Henrik Fisker, who co-founded the futuristic car company in 2007 and designed the Karma and Atlantic models, did not have an impact on Geely’s decision to back out of talks.