Tags: Fisker | Car | US | Loan

Fisker Stops Work on Car Factory After U.S. Blocks Loan

Thursday, 09 February 2012 09:54 AM

Fisker Automotive Inc. said it halted work on a Delaware auto factory to make plug-in sedans after the U.S. Energy Department blocked access to its federal loan, citing unmet milestones.

Fisker, behind schedule in selling its first car in the U.S., laid off 26 people in Wilmington, Delaware, the company said in an e-mail. Access to the loan has been blocked since May, said Roger Ormisher, a spokesman.

“It’s been frustrating that Fisker and the Department of Energy weren’t able to come to terms on the revisions to the loan in time to avoid this,” said Brian Selander, a spokesman for Delaware Governor Jack Markell, a Democrat. “The project is on hold while the two sides try to get things sorted out.”

The Energy Department awarded Fisker, based in Anaheim, California, $529 million in loans in April 2010 from a program intended to spur development of advanced-technology vehicles. Part of the loan will be used to redevelop a closed General Motors Co. auto plant in Wilmington for Fisker’s use.

The development shows more congressional attention is needed to the Energy Department loan programs, said Representative James Sensenbrenner, a Wisconsin Republican who has criticized loans to bankrupt solar-panel maker Solyndra LLC and other companies.

Process Reforms

“It is important to understand what happened with Solyndra, but recent events show congressional oversight should not stop there,” Sensenbrenner said in a statement. He said a bill he has introduced would require “a thorough, independent analysis of all DOE loan guarantees and makes needed reforms to the process to ensure any future loans make sense.”

Sensenbrenner pushed the White House to release an audit it ordered of the Energy Department’s loans. White House spokesman Eric Schultz said in an e-mail today that the audit will be released later this week, without specifying a day.

Fisker sells the Karma plug-in electric sports car retailing for $102,000 in the U.S. The car is produced by a contract manufacturer in Finland. It’s planning to make the Nina, a lower-priced model, in Wilmington.

“They won’t release any more money, given where they’re at with the programs,” Ormisher said by telephone. “It’s a fairly standard procedure. It’s nothing unusual. But these things take some time to go through.”

Short on Milestones

The Energy Department’s loan programs are under congressional scrutiny since the September bankruptcy of Solyndra, a loan-guarantee recipient. Beacon Power Corp., an energy-storage company, and Ener1 Inc., a supplier of batteries for electric cars, both filed for bankruptcy protection after receiving Energy Department aid.

The agency last month canceled a $730 million loan commitment to OAO Severstal, Russia’s second-largest steelmaker, that the company had planned to use to expand high-strength steelmaking operations in Michigan.

“Our loan guarantees have strict conditions in place to protect taxpayers,” Damien LaVera, an Energy Department spokesman, said in an e-mail. “The department only allows the loan to be disbursed as the company meets certain milestones and demonstrates results.”

Senator Debbie Stabenow, a Michigan Democrat who helped create the vehicle loan program, and former Delaware Republican Representative Mike Castle wrote letters in 2009 to the Energy Department to support Fisker’s loan application.

Funding Removal Amendment

Senator Orrin Hatch, a Utah Republican, planned to introduce an amendment to a transportation bill today that would strip the money left in the advanced-technology vehicle manufacturing program that’s yet to be committed, an estimated $1.5 billion over 10 years.

Republicans last year tried to take the money left in the program to use for disaster aid following storms in the U.S. Chrysler Group LLC is among the companies with pending applications for the vehicle loan money.

Fisker sent 225 Karmas to dealers and has 1,200 units “in the pipeline,” Chief Executive Officer Henrik Fisker said in an interview in December. Toyota Motor Corp. on Jan. 4 reported sales of 136,463 Prius hybrid vehicles last year.

The U.S. awarded Fisker $169 million for engineering of the Karma and $359 million for production of the Nina, a midsize sedan. Fisker has drawn down $193 million from its loans and has raised $850 million in private capital, according to the company’s statement. Henrik Fisker said in a December interview the company had hired about 100 people in Wilmington.

Delaware gave another $21 million in grants and loans to Fisker for its investment in the state. Fisker’s private investors include Kleiner Perkins Caulfield & Byers, Palo Alto Investors LLC and lithium-ion battery maker A123 Systems Inc.

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Thursday, 09 February 2012 09:54 AM
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