Car firm takes U.S. cash, stalls creation of U.S. jobs

This Karma S plug-in hybrid hardtop convertible was unveiled in January 2009 but has yet to reach U.S. markets because it has failed to meet energy-efficiency standards.
This Karma S plug-in hybrid hardtop convertible was unveiled in January 2009 but has yet to reach U.S. markets because it has failed to meet energy-efficiency standards.

— Car firm takes U.S. cash, stalls creation of U.S. jobs

CAROL D. LEONNIG AND JOE STEPHENS

THE WASHINGTON POST

WASHINGTON — An electric-car company backed by more than a half-billion dollars in Energy Department loan guarantees has missed early manufacturing goals and has gradually pushed back plans for U.S. production and the creation of thousands of jobs.

Last week, Fisker delayed until 2013 the production of the moderately priced family car it plans to build in Delaware. It also learned that its Finnish-produced luxury model, the $96,000 Karma, which is two years late in reaching U.S. markets, failed to meet a promised energy-efficiency standard because the car cannot travel solely on electricity for a 50-mile stretch.

With the demise of Solyndra, a solar company that also won a half-billion-dollar loan from a program to promote clean-energy technologies, the Energy Department’s loan guarantees have come under scrutiny, and the Obama administration has been under fire for making risky loans to unproven ventures. The administration has stood behind the stimulus-based lending, saying risk is inherent in backing emerging technologies.

Fisker was among the big winners in the administration’s effort for broader development of electric vehicles, and company officials said their problems bear no resemblance to those of Solyndra, which filed for bankruptcy protection in September.

“Without any excuses, yes, we did have some delays,” company co-founder Henrik Fisker said during a stop in the District of Columbia last week to show off his company’s sleek new Karma. “But this is completely different. You can’t compare at all.”

The Energy Department confirmed last week that it has eased expectations after conditionally approving the loan to Fisker and has made allowances for scaling back projections in the final loan agreement. But the agency declined to make public those adjusted terms, including projected car- sales volume or milestones the company must meet in connection with its $529 million loan. Agency officials attributed Fisker’s delays to regulatory hurdles and issues beyond the company’s control.

Fisker said in an interview Wednesday that, as of last week, the Karma had been cleared for sale in the United States. Forty have arrived from Finland to be delivered to dealers.

“Next year we will reach the 12,000 or 15,000 vehicles we predicted,” Fisker said. “We are really past the startup risks. That means the skeptics who said we would never produce a car were wrong.”

Energy Secretary Steven Chu was ebullient in September 2009 when he announced the Obama administration’s conditional backing for the California-based startup.

“This investment will create thousands of new American jobs and is another critical step in making sure we are positioned to compete for the clean-energy jobs of the future,” Chu said in a statement at the time. He and President Barack Obama had used similar language when heralding the future of Solyndra.

The Fisker commitment was questioned by some from the start, partly because of the company’s political connections. A key investor is a venture-capital firm, Kleiner Perkins Caufield & Byers, whose partners include former Democratic Vice President Al Gore. The investment house raised $2 million for Obama’s 2008 presidential campaign.

Fisker’s deal also generated controversy when the company announced it planned to build its luxury model in Finland because it could not line up a U.S. contract manufacturer.

The Energy Department, reacting last week to an ABC News report on Fisker’s Finnish operation, stressed that loan proceeds are going exclusively to U.S. suppliers, not to the Finnish manufacturer.

As a condition for receiving the federal help, Fisker had agreed to build its lessexpensive family sedan in the United States. But the company was near the end of the loan approval process before it scrambled to find a manufacturing plant, according to internal e-mails first obtained by Judicial Watch.

The White House helped the company quickly locate one in Delaware, Vice President Joe Biden’s home state. Biden announced the decision in an October 2009 news conference in Wilmington.

Energy Department officials said Fisker’s loan included $169 million to support engineering work for the Karma that was done in the United States, mainly at Fisker’s headquarters, which has 700 employees.

Another $359 million loan segment supports production of the Fisker Nina, which will be built at a former General Motors plant. Fisker has 100 workers at the Delaware site and said it plans to employ 2,500. Roger Ormisher, a Fisker spokesman, said Friday that the company originally projected to start full production of the Nina in late 2012 but alerted the Energy Department during its final loan negotiations that production would more likely begin in mid-2013.

“Each of these projects, like the loan program itself, has received strong bipartisan support,” Energy Department spokesman Dan Leistikow said in a statement. “More importantly, both were approved on the merits after extensive review by the Department’s loan program office. They represent exactly the type of cuttingedge, innovative manufacturing this program was intended to support.”

In applying for the federal help, the company promised it would produce and sell at least 11,000 Karmas by the end of last month. Energy Department staff members declined to comment on changes between the conditional agreement and the final loan but said that number of cars is no longer required.

Front Section, Pages 4 on 10/23/2011

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