Fisker Atlantic Design Prototype - 2012 New York Auto Show
Fisker said over time that it had raised at least $1 billion in private capital, aside from its $529 million loans. And still, that would not be enough to fund a car company, not when a simple refreshing of an existing vehicle can cost upwards of $800 million. By the time Fisker showed a concept of its future American-built Atlantic at the 2012 New York Auto Show, the wheels had already come off the company.
Fisker Atlantic Design Prototype - 2012 New York Auto ShowEnlarge Photo
In 2011, the ATVM monies allocated to Fisker dried up. The company was forbidden access to the rest of its $529 million--of which it eventually drew $192 million--when it could not meet performance targets, including 65-percent American content for the Karma, and sales of at least 11,000 vehicles by October of 2011. In fact, it had only delivered a thousand vehicles by then, most visibly to celebrities like Leonardo DiCaprio and Justin Bieber.
The ATVM itself had effectively shut down, no doubt affected by the wider scrutiny of the coming presidential elections. No loans were approved after March of 2011.
In the meantime, car fires began to follow the Karma, about the same time its battery supplier A123 seemed headed to its own bankruptcy. A final indignity came when Hurricane Sandy struck the Northeast in October. Some 230 Karmas were submerged, of which 16 caught fire, while being stored at a port facility.
The whole of last year has been report after report, cataloging Fisker's agonizing downward spiral. By May of 2012, Fisker had mostly abandoned plans to build the Atlantic in Delaware and began to seek out new sources of capital. There would be no Atlantic, no Surf or Sunset to follow up the Karma.
And then, there was no Fisker at all. Last month, Henrik Fisker was separated from the company, which last year had hired--of all people--the lead on Chevy Volt development, Tony Posawatz. Fisker's departure was said to have come after clashes with Posawatz over the direction of the company, which seemed to be headed to a partnership with Chinese investors. At least, that was until the Chinese companies, including Volvo parent Geely, backed away, likely because of the Federal strings attached to Fisker's loans.
No financing has come through. Fisker has reportedly hired bankruptcy attorneys, and as of today, has laid off all but 53 employees. It has no visible means of making a payment due on April 22 toward its ATVM loans.
It has effectively gone dark.
Expensive green lessons learned
Without significant investment, Fisker Automotive is dead, worth only the lesson that the ATVM program has written for future public-private partnerships.
There are marked differences in the companies that prospered from ATVM, and those who have failed. Ford and Nissan have made the most and widest use of the loans. Sales of the Volt and Leaf are surging, but at a significant cost. Those companies can afford to subsidize sales, to cover the ten-year cost cycle that green vehicles inevitably consume.
Tesla has charted a course where sustainability seems possible. It's headed in the cash-positive direction, and is accruing a reasonable set of assets that could appeal to either of its major automotive investors--Toyota and Mercedes-Benz parent Daimler AG.
From the start, Fisker had few real hopes of winning on all major fronts--engineering, marketing, technology--at once, in a way that makes them realistic competitors in an already crowded new-car market.The fistful of dollars thrown at companies with no track record whatsoever in mass production of modern automobiles is just that. The tremendous lack of oversight of ATVM money would come as no surprise. That it was wasted on private enterprise, not a truly pressing national need such as disaster relief, is shocking.
It's a point delivered by failed presidential candidate Mitt Romney--unfortunately, the messenger least capable of delivering the salient point. Romney wrote last year that,
"...The U.S. government shouldn't be playing venture capitalist. It's not merely that government bureaucrats are bad at picking winners. The very process invites cronyism and outright corruption."
With Fisker, public officials refused to put clearer distance between campaign contributors and campaign promises. It doesn't take much imagination to cast doubts on the unpleasant end to a program conceived with the best of intentions. There's every reason to question whether Fisker ever would have come to pass, without its unusual hold over some of our most important elected leaders.
An influential disaster has unfolded at Fisker. Once again, we're all paying for a remedial lesson in economics--that laissez-faire may be the only "fair" the Federal government can, and should, guarantee.
High Gear Media editors John Voelcker, Bengt Halvorson, and Nelson Ireson contributed facts and links to this opinion column.