What was the government thinking? President Obama's Energy Department handed out a $529 million loan to Fisker Automotive, a sexy startup headed by a dashing Dane that sought to put a $104,000 plug-in hybrid car on the market. It looked too good to be true, and it was.
The holes in the plan should have been obvious from the first. CEO Henrik Fisker (a world-famous car designer) had no track record as an automaker, the drivetrain was unproven and the build plan — a factory in Finland before a hoped-for manufacturing base in Delaware — left the federal involvement politically vulnerable.
From Obama's point of view, it's a blessing that Fisker held on through the November elections, robbing Mitt Romney of a Solyndra-like debating point. But now the chickens have really come home to roost. Fisker has laid off 160 employees without severance, and the government lawyers had to swoop in and liberate $21 million from Fisker's rapidly diminishing bank account to help pay back the loan.
The federal spigot was actually turned off in 2011, after $192 million of taxpayer money was spent. An Energy Department spokeswoman put a positive spin on the debacle by noting that two thirds of the loan amount never went to Fisker.
The company is likely to have declared bankruptcy by the time you read this. Efforts to sell Fisker's assets to Chinese buyers came to naught. After only 900 cars (and those trouble-prone) reached customers, Fisker is not exactly a hot commodity.
So what are the lessons learned from this? First, electric car startups are not Internet companies. There's not going to be any meteoric rise in valuation or instant billionaires here. The electric car revolution is moving slowly, and the best that can be hoped for is modest but steady growth as demonstrated by arch-Fisker rival Tesla Motors (whose stock hit $50 a share recently).
Second, a better bet than funding risky ventures like Fisker is adding research dollars into basic battery and charging technology. I note that Tesla is patenting some work on metal-air batteries, which promise to give electric cars 1,000 miles or more of range (but have cost and charging challenges). Let's take the unallocated money from the $25 billion fund that floated Fisker (and Tesla too) and use it for research that can benefit the entire industry.
Fisker's story is ultimately one about bad luck, bad timing (200 cars were flooded by Hurricane Sandy), and inexperience. No one did anything criminal as far as I can see. We don't need Congressional hearings (though we already have them).