How Fisker got $500 million in government loans for a fuel economy flop

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When Fisker Automotive won heaps of praise from Vice President Joe Biden and a $529 million loan from the U.S. government, officials touted the Karma luxury sedan as getting up to 100 miles a gallon, going 50 miles on a full battery charge and offering "supercar" performance. None of those targets were met — but Fisker's moving ahead, your tax dollars in hand.


The news of Fisker's shortfalls in its mileage targets announced yesterday was the latest in a series of misses since designer Henrik Fisker unveiled his concept in 2008. Fisker is still sticking to the goal of selling 10,000 Karmas this year, even though it can't legally deliver cars in California yet. And company officials pushed another deadline back Tuesday, telling the Wilmington (Del.) News-Journal that the smaller Nina sedan has been delayed from 2012 to mid-2013 at the earliest.

While the actual electric range and fuel economy numbers of the Karma — 32 miles of electric-only range, a 52 mpg-e overall rating and only 20 mpg when its 2-liter GM turbo engine is on — surprised many, they weren't shocking to auto industry observers who've noted the Karma was not just an expensive electric sedan, but also the largest and heaviest one to date. Early prototypes were hidden with bodies of Chevy Silverado crew cab pickups, and the Karma tips the scale at roughly 5,300 lbs. unloaded, thanks to 22 kWh of batteries stored under the floor.

The figures — along with performance results that now peg the Karma's 0-60 time at an un-supercar 6.3 seconds — were enough to convince one long-awaiting Fisker customer to consider asking for his deposit back on the $97,000 sedan:

I ordered this car because I wanted an eco-friendly ride that didn't suck. But this car isn't seeming so eco-friendly right now since my Aston gets the same MPG on gas. Plus, the crappy tires that wear out in a year, and the 0-60 has been downgraded to 6.3 seconds. It just gets worse and worse every day that this drags on... sooo... disappointed.

Fisker has said it still expects to meet its sales targets for this year, and that the mileage figures are being blown out of proportion, since most drivers will use electric-only travel for much of their driving as Chevy Volt owners do.

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Yet the overpromising and underdelivering from Fisker so far highlights what can happen when a government-anointed winner in new technology fails to win. Dozens of other electric-car start-ups — Wheego, Aptera, EcoMotors and Think to name a few — also asked for government loans but most were turned down, many with no explanation. Fisker, who counts among its early investors and customers former Vice President Al Gore, was able to use its government loan as a selling point to private investors who have since pitched in an additional $500 million; the company is raising an additional $150 million.

The $528 million loan from the U.S. Department of Energy was split between $169 million for the Karma and $359 million for Fisker to launch Nina production at General Motors' old plant in Delaware. The announcement for that came way back in October of 2009 — and Vice President Joe Biden was even there in attendance. Whether some other company might have used that money to build a better electric car that came to market faster will never be known.


The silver lining for Fisker buyers: Now that the Karma's actually arriving, even in small numbers, they might get their $7,500 federal tax credit for buying an electric vehicle before the end of the year. If Fisker fails, it won't be because of a lack of help from Washington.


Matt Brown

From what I've read and because I know a few people related to the project (and because I've seen quite a few photoshops in my time?), Fisker is an overall sub-par vehicle, and I'm sure they've either going to dramatically change their engineering direction or slowly fade into oblivion.

Maybe someday all the extra parts will get bought up by a Texas company who will make them all electric?

In any case, I'm not sure this is an all around bad bet for the government. They might lose, but that's true for any investment; you don't get progress without risking some money. When Biden was heaping on the praise, the future of Fisker was still murky, and optimists could easily point to some evidence that they would succeed. Also, Fisker has a lot of outside investors who do their research. Kleiner Perkins doesn't just give $150 million to anyone.

If the argument is "gub'ment shouldn't give money to private companies." then that's an argument where Fisker is a small fish, and the finger should be pointing at the Bush administration for setting up that loan program. If the argument is "Fisker was a bad investment," well, maybe, but for the sake of jobs and economic growth in a new and risky field, I think those are risks we should take, knowing that the jobs and MPGe's might never come.