As more details come to light, we’ve learned that Fisker Automotive continued receiving funds from the U.S. Department of Energy as much as a year after it was known that the company wasn’t meeting milestones.
That conclusion comes on the same day that Fisker executives and former employees are scheduled to testify before a U.S. House committee on why the company floundered despite receiving $192 in federal tax dollars. Actually, make that $171 million. This week, Fisker Automotive was due to make a $10 million loan repayment to the DOE, but it didn’t come up with the cash. Instead, officials seized $21 million from the company, leaving its liquidity similar to that of a dry lake bed.
In December 2011, Fisker told its shareholders that it “will not meet certain financial covenants and project milestones.” But in June 2010, Sandra Claghorn, an official in the DOE’s finance department, said in an email that Fisker “may be in limbo due to a lack of compliance with financial covenants.”
Yet the money still kept rolling in, albeit cut from Fisker’s originally promised $529 million. By comparison, rival automaker Tesla Motors received all of its expected $465 million and has said that it plans to pay the funds back in full five years ahead of schedule.
As the once-promising company clings to life, we now have to ask what went wrong and why–two questions that will surely be answered in the U.S. House starting this week. Fisker founder Henrik Fisker (above), his cofounder, Bernhard Koehler, and CEO Tony Posawatz will testify starting today. They’ll have to answer questions about everything from how they got the funds to what happened to the $1.2 billion in private funding they received to the potential of uprooting the company and selling it to a Chinese investor.
“The Obama Administration owes the American taxpayer an explanation as to why this bad loan was made in the first place, and what they are going to do to minimize the loss that taxpayers face,” said Rep. Jim Jordan (R-Ohio), chairman of the subcommittee.
Even if Fisker had the means to get restarted, it may not have the supplies. Earlier this month, the automaker laid off 75 percent of its 210 employees. And its battery supplier went bankrupt, changed its name from A123 to B456, and was sold off to a Chinese firm, effectively voiding its contract with Fisker. The car company hasn’t produced a single car since last summer at its contract plant in Finland.
“I’m not sure there is anything anyone can say or do to help Fisker,” said Theodore O’Neill, an analyst with Litchfield Hills Research LLC, in an interview with Reuters. “The company is adrift without Henrik.
Added O’Neill: “The supply chain is broken so they can’t get parts on credit anymore and while it is one of the most beautiful cars on the road, there is insufficient demand.”
We’ll keep you updated as we learn more.