Photo: Fisker Automotive
The sudden resignation on Wednesday of Henrik Fisker, co-founder and executive chairman of hybrid electric automaker Fisker, puts the company’s already uncertain future on even shakier ground.In a statement sent to Autocar, Henrik Fisker cited “major disagreements” with “executive management on the business strategy.” In its own statement, the carmaker said its strategy has not changed, and that Fisker’s departure should not impact its partnerships or financing.
Whatever the details, it is another troubling sign for the hybrid automaker, which is seeking new financing after vastly underperforming growth expectations from September 2009, when it received a $528.7-million conditional loan from the Department of Energy.
For the White House, Fisker has the making of another green loan going bad.
A Troubled History
The $528.7 million loan was part of the DOE’s Advanced Technology Vehicles Manufacturing program, created by the 2007 Energy Independence and Security Act to allocate $25 billion to fund highly fuel-efficient vehicles.
Fisker was expected to save or create at least 5,000 jobs and build a manufacturing plant in Delaware that would produce as many as 100,000 cars annually.
More than three years later, however, Fisker has sold only around 2,000 of its high-end Karma model, a car riddled with problems.
Since the $110,000 Karma first reached customers in 2011, it has been recalled three times, and its 54 mpg is considered lackluster for a plug-in hybrid. Consumer Reports gave it a failing grade.
Just as fellow electric carmaker Tesla followed its Roadster with the more practical and affordable Model S, Fisker means to build on the Karma with the Atlantic.
The mid-size sedan was originally meant to go into production in 2012, and sell for around $50,000.
In October, Fisker delayed production of the Atlantic to late 2014.
On a conference call discussing the delay, Posawatz confirmed the importance of the new model: “The Atlantic is really the volume car that begins to build growth.”
That same day, A123 Systems, which provided the lithium ion batteries used by Fisker, filed for bankruptcy. Before the end of November, Fisker halted production of the Karma, due to a lack of new batteries.
(A123 has been purchased by Wanxiang, China’s largest auto part maker, with US government approval, and courts are now dealing with A123’s bankruptcy payment plan, according to Fox Business. It’s still not clear if it will continue to provide batteries to Fisker.)
Meanwhile Fisker has a history of leadership issues, going through three CEOs in a bit more than a year. Former Chrysler CEO Tom LaSorda took over for Henrik Fisker in February 2012. He was replaced by GM veteran Tony Posawatz in August, according to Autoblog, who is still at the helm.
Fisker has not had access to federal cash since May 2011, when the Department of Energy froze its loan due to Fisker’s failure to meet certain deadlines.
A Department of Energy spokesperson confirmed to Business Insider the loan is still frozen, but said the Department will continue to work with Fisker moving forward, and that the automaker could see its access to the money renewed at some point.
The automaker had already spent $193 million, a bit more than the portion of the loan set aside for investing in the Karma.
The loss of that money was a major blow for Fisker, which counted on the remaining $335 million for getting the Delaware plant up and running.
Fisker has raised $1.2 billion in private equity over the past several years, according to Forbes, but it needs more to meet even the late 2014 production date for the Atlantic.
“We need financing or a partner,” spokesman Russel Datz told USA Today in January, a month after Fisker announced it had hired investment bank Evercore Partners to help if find potential buyers and investors, according to the Wall Street Journal.
In October 2011, DOE Office of Public Affairs Dan Leistikow justified loans to Fisker and Tesla, saying “cutting our dependence on foreign oil means taking some risks.”
That caveat won’t go far, however, considering the harsh backlash following the bankruptcy of solar panel manufacturer Solyndra, which received a $535-million loan from the Obama Administration.
Photo: Travis Okulski / Business Insider
Although the Solyndra and Fisker loans were part of different programs — and the DOE could potentially recoup funds from Fisker — many would see a Fisker bankruptcy as a repeat of the Solyndra fiasco, and the nearly empty Delaware plant as a symbol of poorly thought out and administered federal loans.Questions from elected officials began months ago: In October, the House of Representatives Committee on Oversight and Government Reform wrote a letter to DOE Secretary Steven Chu, accusing the Department of mishandling the Solyndra case, and of “withholding important documents regarding” the Fisker loan.
In July 2012, Republican presidential candidate Mitt Romney described the federal loan to Fisker as “the kind of crony capitalism that does not create jobs,” according to Inc.
If Fisker does not find financing from an American source — and the Journal reports Fisker is looking for investors primarily in China and Europe — those accusations will have merit.
As it stands, Fisker’s best bet for financing may be from China’s Geely Automobile, Forbes reported. That may save the company, but it will mean that a foreign automaker will have a majority stake in a company on which the American people spent nearly $200 million.
Unless Fisker pulls out a miracle, the loan will go down as another mistake for the White House.
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