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Posts Tagged ‘FIsker Automotive’

Solar Panel Companies Investigated for $500 Million Fraud; Fisker Out of Batteries & Money

In Electric Cars, Government Spending, Obama Administration on December 16, 2012 at 9:51 pm

Electric car

Electric car


Direct Federal aid to private, for-profit companies in the energy sector continues to careen off the road. The Washington Post reported the Inspector General is looking at three specific firms.

“Three of the country’s most prolific installers of residential solar panels are under federal investigation to determine if they inflated the cost of their work to increase the payments they would receive from the government, according to government and industry officials familiar with the probe.”

“SolarCity, SunRun and Sungevity have received subpoenas from the Treasury Department’s office of inspector general for financial records to justify more than $500 million in federal grants and tax credits the firms tapped for performing work. The probe seeks to determine whether the companies accurately reported the market value of their costs when applying for federal reimbursement, which was calculated at one-third of the costs.” [1]

This expense is part of the Obama Administration’s $13 billion 1603 Program that provides energy give-aways.

Another recipient of government energy policy largess, Fisker Automotive, who cashed $192 million from the Feds, is in a different sort of trouble. Fisker is the maker of the flop Karma, one you won’t seen on the road since it’s sold fewer than 2,000 cars. The vehicle has the wrong sort of karma, with numerous recalls and quality problems (like catching on fire [3] [4] [5]. Its battery supplier A123 Systems, another government cash recipient, failed [6]and now Fisker needs another battery maker in order to restart Karma production. Money-losing Fisker also lacks cash to complete the engineering on a planned second electric car model, the Atlantic. [2]

[1] http://www.washingtonpost.com/politics/solar-firms-probed-for-misrepresentations-in-getting-public-money/2012/12/13/0ba07656-4496-11e2-8e70-e1993528222d_story.html
[2] http://pevc.dowjones.com/Article?an=DJFVW00020121207e8c7ifi2s&cid=32135016&ctype=ts&pid=32&ReturnUrl=http%3a%2f%2fpevc.dowjones.com%3a80%2fArticle%3fan%3dDJFVW00020121207e8c7ifi2s%26cid%3d32135016%26ctype%3dts%26pid%3d32
[3] http://reviews.cnet.com/8301-13746_7-57543123-48/swamped-fisker-karma-electric-cars-catch-fire/
[4] http://www.autoweek.com/article/20120508/CARNEWS/120509860
[5] http://www.insideline.com/fisker/karma/2012/second-2012-fisker-karma-fire-under-investigation.html
[6] https://econscius.wordpress.com/2012/10/18/249-million-obama-grant-recipient-defective-battery-maker-a123-systems-bankruptcy/

Photo by author.

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Government Backed Fisker Car Breaks Down for Consumer Reports

In Electric Cars, Obama Administration, Top 1% on March 12, 2012 at 1:14 am

Consumer Reports tests new cars.  Sometimes flaws are exposed but the US government backed Fisker, a subsidized $107,850 car for the ultra-rich, gave Consumer Reports a new experience when it suffered a catastrophic malfunction with less than 200 miles on the odometer. [1]

We the taxpayers are playing venture capitalists through the US government’s backing of start-up electric car companies.  Fisker, which builds its cars in Finland, received a $529 million US government loan. [2]

Consumer Reports wrote: 

We have owned our [Fisker] car for just a few days; it has less than 200 miles on its odometer…. After calling the dealer, which is about 100 miles away, they promptly sent a flatbed tow truck to haul away the disabled Fisker.

We buy about 80 cars a year and this is the first time in memory that we have had a car that is undriveable before it has finished our check-in process.

We encountered other problems with a Karma press car that visited the track for a few hours, and we have heard of problems at press events. In addition, we see that some owners are experiencing a variety of issues, as evidenced by forums such as FiskerBuzz.com. [1]

Financing a brand new venture is always a risk.  The US government deals to back private car companies are wrong on many levels. 

First, the risk is asymmetric: if a company like Fisker is successful, the benefit goes to its investors.  They might become very rich.  At best, the US taxpayer gets its money back, but the interest rate charged Fisker is below market rates, meaning it is a lousy deal, even if successful.  At worst, companies like Fisker fail and the taxpayer is never repaid.

Second, it is an improper role of the government to back private, for-profit companies.  It is picking winners and losers.  It amazes me we hear so much about bank bailouts and the “1%”, yet few decry this sort of corporate welfare. 

Thirdly, there is no need.  Venture capital and banking are long-established in the US.  Private companies with promising outlooks will find financing without burdening the already stressed US Treasury.

Fourth, the money is subject to politics and it may or may not be coincidence Obama campaign contributors just happen to back a private electric car company that received a government loan. [2] 

 

[1] http://autos.yahoo.com/news/bad-karma–our-fisker-karma-plug-in-hybrid-breaks-down.html

[2] http://abcnews.go.com/Blotter/car-company-us-loan-builds-cars-finland/story?id=14770875

For more on electric car subsidies, specifically Tesla, see also: https://econscius.wordpress.com/2012/02/01/road-trip-to-see-your-tax-dollars-at-work-140000-car-for-the-1/.  Pictures from Wikipedia.