Henrik Fisker, co-founder and namesake of Fisker Automotive, blames many factors for his company’s failure — everything but the company itself.
The House Oversight and Government Reform Committee will grill Fisker and other company executives Wednesday afternoon on the Department of Energy’s $192 million federal loan to the company. Based on prepared testimony, Fisker still finds the company nearly blameless in the affair.
Fisker’s testimony describes the company’s Karma hybrid with as “exceptional” and “cutting edge,” and says repeatedly the cars perform well and customers love them.
But that’s not quite true. Consumer Reports described its test Karma in 2012 as “broken,” and owners on Fisker Buzz forums complained their new hybrids had spent more time in the shop than in their own garages.
The company’s co-founder will also tell lawmakers at Wednesday’s hearing that Fisker made its $104,000 premium model first so sales could absorb the cost of production. But a recent report found each Karma cost the company $660,000 to build, based on the $1.3 billion it spent divided by the 2,200 hybrids it sold, meaning Fisker still paid $556,000 for each car it made.
Fisker originally received approval for a $529 million green car loan, but DOE stopped payments at $192 million in June 2011, when it became apparent the company was struggling financially. It stopped making the Karma in July 2012, laid off most of its employees earlier this month, and is expected to file for bankruptcy because it can’t find an investor willing to take on the terms of the DOE loan.
But other factors take the blame in Fisker’s testimony. He blames a slow regulatory process for production delays, and now-bankrupt battery maker A123 Systems — also a DOE loan recipient — for technical problems, recalls and halted production.
“After deliveries to customers began, the Karma had two recalls related to parts supplied by outside vendors. Millions of cars are recalled in the United States every year, including by some of the largest and most well-established auto groups,” Fisker wrote. “We were no exception.” Lawmakers at Wednesday’s hearing will look at whether Fisker was really a sound prospect for the DOE loan approved in 2009, and when the DOE knew the company wasn’t meeting financial and production milestones that qualified it for the loan. Also testifying are Fisker CEO Tony Posawatz and COO Bernhard Koehler, as well as Nicholas Whitcombe, former acting director of the DOE loan program that gave Fisker its loan.