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Is Fisker Automotive Going to Make History?

1975 Views 6 Replies 4 Participants Last post by  Ira
History may well repeat itself at the April 24, 2013 Congressional hearing of Fisker Automotive, a California startup with the audacious goal of taking on the Big Three with its advanced EV technology. At next week’s testimony on Capitol Hill by the company’s founder, Henrik Fisker, this drama looks to unfold much like the story of upstart automobile designer, Preston Tucker, who in 1948 found himself in the crosshairs of the Detroit establishment and Washington’s power politics. Although both individuals were boldly innovative, there is one key difference for Fisker: His company worked through its startup problems and has produced 2000 of its Karmas, regarded by its owners as the best example of American car technology to date. By contrast, Preston’s novel and futuristic design was plagued with problems, and in the end, he was only able to produce 50 sedans before government intervention forced him out of business.

The story of Tucker Automobile also resembles Tesla’s in some respects. As did Tesla, Tucker raised a substantial portion of its capital through an IPO, almost unheard of at the time. And like Tesla, Tucker offered its customers a way to invest in the car before it was even in production. The company guaranteed buyers a spot on the delivery line if they agreed to purchase the car’s accessories. This creative financing scheme prompted a lawsuit by the SEC, and although Preston Tucker ultimately prevailed, the adverse publicity destroyed the company.

At this point, the stories of Fisker, Tucker and Tesla diverge. Fisker Automotive is a privately-held American corporation that spent $1.2 billion primarily for the Karma, the first in a series of innovative hybrid vehicle designs. Approximately $1 billion was raised through private funding sources, while the rest, $193 million, was a loan from the Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) Program.

This $25 billion program had strong bipartisan support when it was first signed into law in 2008 by President George W. Bush. The D.O.E. program included a loan loss reserve of $10 billion “because it recognized that creating American jobs and cutting our dependence on foreign oil means taking some risks.”

In spite of this reserve, the generous loans being made by the D.O.E. began to rattle nerves in Washington. In May, 2011, even before Solyndra went bankrupt, the D.O.E. quietly froze Fisker’s $529 million credit line at the current $193 million level. Many of the original investors weren’t aware that Fisker no longer had access to the D.O.E. loan when the company went back to the well for additional capital through its broker, Advanced Equities. Ironically, as was the case with Tucker, the SEC subsequently accused A.E. of misleading investors (for prior venture capital activities), and the broker went out of business. To make matters worse for the EV industry and green technology as a whole, political pressure has forced the D.O.E. to halt all new ATVM loans – in spite of the $16.6 billion that remains in the program.

So what can we expect from the hearing? It’s unlikely that the partisan members of the Committee will make scapegoats out of Henrik and his management team. Why? Because they have bigger fish to fry. They’ll want to know why the D.O.E. made the loan to Fisker in the first place. They’ll want to know if Al Gore, an early and vocal supporter of Fisker, wielded undue influence. And they’ll want to know if Vice President Biden pressed for the loan to assure that Fisker manufactured its Atlantic model in his home state of Delaware.

What will happen next? The most likely scenario is that Fisker will seek Chapter 11 bankruptcy protection, the government will receive the company’s assets, and, as happened to Tucker, those assets will be auctioned to the highest bidder. Yes, history may very well repeat itself.
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I just hope the highest bidder will continue producing this great car but in my heart I don't really see it happening . I feel bits and pieces will be sold off and the company as a whole wont live on . Thank you posting and spending the time to writing this article .
You're right. Part II is what happens at the auction. Only a major car manufacturer can keep our dream alive.
You're right. Part II is what happens at the auction. Only a major car manufacturer can keep our dream alive.
The more news on the car , the better chance it will live on. At some point, a smart executive will realize that Fiskers name recognition will be worth something. It takes a lot of advertising to get brand recognition, and an old NY PR friend once said, people will forget the bad, but remember the name ...
Arrive in Style - Depart in Style

This photo was taken today. If Fisker gets reincarnated, its ad agency needs to target the Jet Set. Tire Wheel Car Vehicle Sky
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This photo was taken today. If Fisker gets reincarnated, its ad agency needs to target the Jet Set. View attachment 721
That's more like the turboprop set :p

Prefer something more like this:

or this:

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Okay, you da man!
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