Two Republican Senators Ask Questions on Loans Granted to Fisker Automotive
June 27, 2012 1:21 PM
comment(s) - last by
Senators fear Fiskercould default on giant government loans
The United States government granted a number of loans to different high-tech startups in an attempt to kick start innovation and research into alternative fuel and power. Among the companies that received these loans were Fisker Automotive and Tesla Motors. Tesla Motors has been undeniably successful and
its Model S and made deliveries to the first buyers of the electric vehicle.
Fisker Automotive, however, hasn’t been as fruitful. The auto company has experienced issues with battery packs that had to be replaced, and a test vehicle loaned to Consumer Reports
“died” with just a few hundred miles on the odometer
As the recipient of a government loan, U.S. Senators Chuck Grassley R-Iowa and Senator John Thune, R-South Dakota are now questioning Energy Secretary Steven Chu about why a loan was made to Fisker Automotive considering it is partly owned by Qatar Investment Authority, a foreign-owned company.
The letter to Chu read in part, "Why should the American taxpayer have to accept the credit risk of a company owned by a foreign government?"
The Energy Department loaned Fisker Automotive $529 million and awarded battery supplier A123 $249 million in grants. A Fisker spokesperson responded by stating that the company sold more than 1,000 cars globally and generated more than $100 million in revenue. The spokesman also stated that Fisker was focused on creating American jobs.
Fisker has already
delays in producing its lower-cost family sedan due to setbacks with the battery packs for the plug-in hybrid vehicle. Battery supplier A123 is
replacing 600 battery packs
in Fisker Karma vehicles at a cost of $55 million after manufacturing flaws were found in the batteries.
The letter from the Senators also asked, "Will DOE consider A123's ongoing financial struggles before distributing the rest of the grant?"
A123 intends to hire as many as 400 new employees in the coming months, as was a condition of receiving the state and federal money. The company currently has about 780 workers in Michigan.
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RE: Anyone need an extra billion?
6/27/2012 6:30:38 PM
Loaning to Fisker only pays off if they remain in business and are able to repay the loan. If not then it becomes no different than the spending on defense, except for the fact that spending on defense does help protect the country while spending on Fisker if it defaults does not.
Is there wasteful defense spending, yes, but there is also necessary and useful defense spending, just as this loan will be useful if Fisker can pay it back, but it will be wasteful if they can not. And as for it creating jobs, between the two that is nullified since spending on both military and Fisker create jobs and feed some of that money back into the economy. The big question is how much (percentage wise) of each goes to domestic versus foreign entities? Also if Fisker is partly owned by Qatar, why would they need a loan in the first place?
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