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THe 2012 Fisker Karma (Fisker).
A start-up car company promising to make plug-in electric vehicles with the help of a $529 million government loan guarantee is facing fresh scrutiny after assembling its first cars in Finland and under-delivering on its fuel economy promises made when it won the government support.

Fisker, which is building extended range electric vehicles, which allow the cars to be driven on a battery charge for more than 30 miles before a gas engine kicks in to power the car's batteries, has begin building its first car, the Karma, with a firm in Finland.

To be fair, the DOE loan guarantees were never directly tied to the production of the $97,000 Karma, but rather a $57,000 model called the Nina, which, by agreement with the DOE, has to be manufactured at a U.S. plant. That car is not expected to arrive until the end of 2012 at the earliest.

The fact that Fisker is building its first cars in Finland is not new, but the scrutiny is since solar panel maker Solyndra went bankrupt not long after receiving $535 million in loan guarantees from the DOE as part of a massive policy of support for "green" start-ups.

Republicans, trying to unseat President Obama in next year's election, are seizing on the Solyndra deal, as well as deals to support Fisker and Tesla Motors, another electric vehicle start-up. The strategy is to show the Obama Administration's "green" initiatives have been designed to favor campaign donors and that subsidizing start-ups is not a proper function of government.

Tulsa billionaire George Kaiser, a key Obama backer who raised between $50,000 and $100,000 for the president's election campaign, was one of Solyndra's primary investors. Former vice president Al Gore's investment group is a Tesla investor.

In the case of Fisker, founder Henrik Fisker told ABC News this week that the money guaranteed by the DOE has been spent on engineering and design work for the Karma and Nina that stayed in the U.S., not on the 500 manufacturing jobs that went to a rural Finnish firm, Valmet Automotive.

"The problem Fisker has right now is that money is fungible and it's campaign season in the U.S.," said AOL Autos Editor-in-Chief David Kiley. "There is nothing new here except the scrutiny turned on Fisker after the Solyndra bankruptcy."

Rep. Daryl Issa (R-CA), chairman of the House Oversight and Government Reform Committee, has had his committee investigating the Obama Administration's support of start-ups like Solyndra and Fisker. "There's been this attitude that somehow the government can weigh-in with loan guarantees and money and pick specific company winners and losers," Issa said recently on C-SPAN's "Washington Journal" program. "We see that as a backdoor, easy way to end up with corruption in government." Issa has been criticized for that position since he previously tried to secure DOE support for a California start-up, Aptera Motors.

Plenty of skeptics

Fisker, as well as Tesla, though, faces plenty of skeptics about the viability of the cars they are building to be sold on a scale large enough to justify the DOE's risk. Not only are the cars expensive, but both companies are unproven in their ability to successfully manufacture finished automobiles that are reliable and distributed properly.

The extended range electric car's drivetrain is based on GM's Chevy Volt technology that allows a Volt driver to go up to 40 miles on a charge before a gas-fueled motor kicks in to propel the car by keeping the battery charged. This past week, Fisker reported that the Karma's 32 miles of electric-only range would score only a 52 mpg rating from the government, and only 20 mpg when it burns gas.

The Volt is also a target of small government advocates who oppose the $7,500 tax credit that the Volt gets after a consumer plunks down in excess of $40,000 for one of the vehicles.

Henrik Fisker says the DOE loan guarantees have allowed the company to secure some $600 million in financing.

Tesla might be considered ahead of Fisker in the credibility department. More than 2,000 of its first electric car, the Tesla Roadster, are on the road today, while Fisker is just starting to get its first car into showrooms. Tesla, which has investments from Toyota and Mercedes-Benz, is further along in advancing a second, lower-cost car, the Model S.

Between Fisker and Tesla, the two companies have secured nearly $1 billion to start production of their cars, and they have drawn down more than $300 million.

Bottom Line: The money received by Tesla and Fisker are government loan guarantees, which mean taxpayers will be in the hook for the money if either company goes bankrupt. With unproven companies, that is not out of the realm of possibilities if the cars, if they are produced, are not scooped up by buyers. But the fact that Fisker is now manufacturing its first car in Finland, not in the U.S. has been public record for two years.



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  • 496 Comments
      topmind
      • 3 Years Ago
      The government subsidy is just a device to generate campaign contributions. The subsidy goes to the company which then Pac's a chunk back to Obaminable's campaign fund. Perfectly legal and almost ethical. The fact that the company was created for a fictitious product is irrelevant.
      • 3 Years Ago
      Follow the money where do you think a billion dollar war chest for a campaign comes from???? The money should go to American companies that will produce American jobs. More than just a thousand or so. Or just have a lottery and make 1000 millionaires with it and then tax them. I know throw some more money out there to unions next and call it the Americans job act. Tax those that create jobs (small business) and give it to the ones who are basically promised a job for life no matter if they are qualified or not. I do feel for those teachers, firemen and police men who are truely dedicated to their jobs and do the best they can for us and our children. I wonder how many have been passed over for promotion because there is some one there longer than them. I long for the day there isnt an R or D behind the names of those elected and they just work for those who elected them. Why 2 strong parties? We need 3. or none at all. God bless America (if I'm still permitted to say that).
      xwrench58
      • 3 Years Ago
      It seems these loans have little to do with jobs and everything to do with who is lining Obamas pockets with campaign donations.
      cbs102642
      • 3 Years Ago
      Are you s******g me. $529 million to build a $57,000 car that most Americans won't be able to afford in the first place. Have we lost our f*****g minds?
      lulu0510
      • 3 Years Ago
      What I find fishy here is that all this green energy start up money always goes to Obama contributors. And yet the Canadians have a new type diesel engine the Radmax engine ( Google it ) that is 30 % more efficient than standard internal combustion engines, is much lighter and has much less moving parts. Yet you wont hear a peep about it. Is there some kind off trickery going on here from US auto makers, Canadian oil interests, Washington DC? It would be good for HF Post to investigate that, dont you think???
      msferrari2000
      • 3 Years Ago
      obama bailed out the european banks with the stimulus so why not help european auto makers too??? he's done!!!!!
      LadyStahr
      • 3 Years Ago
      I work for a company that received a DOE grant of over $60 million to develop green technology for different types of vehicles. I can assure all the Obama-haters on here that our CEO is not an Obama supporter, and never will be. I am, however! Because I still have a job thanks to that grant.
      japantalo
      • 3 Years Ago
      just type in missing trillions and see why we are in debt.....this happened in 2001
      Randy
      • 3 Years Ago
      I need to call Barry right now! I pledged 25.00 to him and want to start a pest control company. This should be worth a 1 million dollor grant to my company. And besides the spray maybe being tokit who cares. I want my MILLION Now! It;s owed to me as a donor!
      alasusu
      • 3 Years Ago
      Who is going to buy a car for $97,000?? The fuel economy is not what was projected?? Why is my money and my fellow taxpayer money going to fund these kinds of companies?? There must be demand and I don't see a lot of demand for this type of car. Federal loans to suspect companies that produce such specific and high-cost products should never be done on the taxpayer dime.
      lovelaurie
      • 3 Years Ago
      Wanted: A competent POTUS
      • 3 Years Ago
      Why dont you Anti-Obama 's ask yourselves... why shouldn't Mr. president be re-elected ?, I mean seriously?, why wont y'all just be supportive rather than criticize?. I bet those of you who hate him just wanna see him leave the presidential seat just for any ''white-skinned'' dude to take over.. I mean, any white-skinned man at all. wake up from your slumbers!, Obama is da bomb yo ! praaaaaaaaaaaaaaaa :D
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