Green-lighting a half-billion dollar loan to help a California electric car startup build a fleet of sleek plug-ins four years ago, the Obama administration’s Energy Department promised cutting-edge cars and thousands of jobs.
“We’re making a bet in the future,” Vice President Joe Biden said in October 2009, standing in a shuttered Delaware plant slated to spring to life with electric cars. “We’re making a bet in innovation.”
The thousands of Fisker Automotive cars never did roll off assembly lines, and the thousands of jobs never surfaced. This month, Fisker filed for Chapter 11 bankruptcy protection — a symbol of a larger Energy Department electric car program that has yet to fully take off.
In October 2011, The Center for Public Integrity and ABC News explored the Energy Department’s risky $1 billion bet on Fisker and another California electric car maker backed by political powerhouses, Tesla Motors. Tesla paid off its $465 million U.S. loan nine years early, but Fisker’s project never gained traction.
The Energy Department earmarked $529 million to Fisker and ultimately dispersed $192 million. Of that, DOE said, it recovered $53 million.
Fisker was financed under an Advanced Technology Vehicles Manufacturing (ATVM) Program central to Obama’s long-shot goal of putting 1 million electric vehicles on the road by 2015. The DOE said this week it is moving ahead, accepting applications and conducting outreach.
The program “will help the U.S. compete in a rapidly-growing, global market for advanced electric and fuel-efficient vehicles,” the agency said in a statement. “The Department has committed more than $8 billion in loans to date supporting projects that are supporting tens of thousands jobs, reducing our dependence on foreign oil and promoting U.S. leadership across an array of innovative vehicle technologies, including plug-in vehicles and high-efficiency gasoline vehicles.”
While saying the Fisker loss “is not what anyone hoped,” energy officials said it “represents less than two percent of our advanced vehicle loans.”
“All our loan agreements include strong safeguards that allow us to protect taxpayers when a company can’t meet its obligations. Accordingly, the Department stopped disbursements to Fisker in June 2011 after the company fell short of the rigorous milestones that we had established as conditions of the loan,” the DOE statement said.
This year’s GAO report found that the ATVM program had not closed a loan in two years and had spent just a fraction, $8 billion, of the $25 billion Congress allocated. The program was infused with another $7.5 billion to cover credit subsidy costs; according to the GAO report, $4.2 billion remained in that pool of money.
“Most applicants and manufacturers we spoke with told us that, currently, the costs of participating outweigh the benefits,” the report said.
Fisker had hoped the $529 million loan guarantee would help it build thousands of luxury Karmas along with another car on its drawing board, the more affordable Atlantic. This April, company co-founder Henrik Fisker told the House Committee on Oversight & Government Reform about a series of setbacks — from slow moving regulatory approvals to recalls and a bankruptcy dogging outside suppliers — that derailed his vision.
“From the outset, Fisker Automotive aimed to be a new American car company, setting pioneering standards for low-emission technology and cutting-edge design,” he said.
While Fisker filed for bankruptcy last week, another company, Hybrid Technology, purchased its assets, including paying $25 million of its DOE loan. In its bankruptcy filing, Fisker estimated assets between $100 million and $500 million — and liabilities between $500 million and $1 billion.
Fisker was backed by an electric car program that is one piece of a larger, $30 billion green energy portfolio “that is helping to diversify our energy portfolio with clean, renewable domestic energy, spur U.S. industry, and make America more competitive in a rapidly-growing, global market for advanced vehicles,” the DOE said.
The portfolio includes several other firms that filed for bankruptcy after receiving DOE money, including California solar panel maker Solyndra. In several cases, the Center and ABC reported last year, green energy companies paid six-figure bonuses or payouts to executives before filing for bankruptcy.
The Energy Department cited “estimated losses to date of approximately two percent” — less, the DOE said, than the 10 percent Congress set aside.
Congressional critics cited Fisker’s bankruptcy filing as “yet another sad chapter” in DOE’s portfolio. “The jobs that were promised never materialized and, once again, taxpayers are on the hook for the administration’s reckless gamble,” House Energy and Commerce Committee Chairman Fred Upton, R-MI, and Oversight and Investigations Subcommittee Chairman Tim Murphy, R-PA, said last week.
Others who closely scrutinize green energy spending say the Fisker bankruptcy, combined with the other failings, spotlight larger questions about the role of government in financing start-up ventures with public money.
“I think structurally there were challenges right from the outset,” said Doug Koplow, founder of Earth Track, a consulting firm that tracks energy subsidies.
For years, Koplow has raised questions about the way DOE allocates taxpayer money. “I’m not surprised to see some of these things go bankrupt,” he said. “I think it would be inevitable.”
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