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Fisker burned through $1.3B in private and government funding

The latest massive failure in the automotive industry to take a huge chunk of taxpayer money with it is Fisker. The automaker has been struggling and earlier this month laid off 75% of its workers. The company is also expected to file bankruptcy, seeking protection from its creditors.

Through all of its troubles, Fisker has only produced 2,500 of its Karma plug-in hybrid sedans (it hasn’t even begun production of the smaller Atlantic plug-in hybrid sedan). When you consider the amount of investor and U.S. taxpayer money given to Fisker in the form of government-backed loans, each of those 2,500 Karma electric vehicles cost $660,000 to produce compared to a retail price of $103,000.

Fisker had planned to spend part of the $529 million loan from the U.S. government to reopen an old General Motors manufacturing factory in Delaware. Despite the fact that Fisker had violated loan terms for the use of government-backed funds from being Energy Department, it was allowed to continue using the money according to a report released last week by a company called PrivCo.

Fisker Karma

“They made a mistake” in awarding the loan, PrivCo Chief Executive Officer Sam Hamadeh said of the Energy Department in an interview yesterday with Bloomberg. “Should they have fought this sooner? Obviously -- as soon as it became evident that they had begun to default.”

However, the Energy Department takes issue with the PrivCo report stating that the report contained errors. The Energy Department says that it halted Fisker's funding in late June of 2011 after the company had used about $193 million from the government loan.

Overall, Fisker spent $1.3 billion in venture capital and taxpayer money according to the report. Fisker is supposed to make the first repayment of $20.2 million on the loan granted from the Energy Department today. It remains unclear whether or not that will happen. 

Source: Bloomberg

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Attempt to Create Jobs
By Crazyeyeskillah on 4/22/2013 11:36:20 AM , Rating: 5
How many jobs could have been created with 550m dollars being handed out from the government? Wasn't that the real reason this got approved in the first place? I know the focus is on higher earning, degree based career jobs, but those aren't the people struggling to feed a family living on welfare. Typically a person with a post HS degree is going to be willing to work whatever to make ends meet and help the family than just living off welfare that provides better benefits and a quality of living than whatever SH*T job you can get at minimum wage working 50 hours a week.

There is NO incentive for a person living handily off welfare to EVER work.

A lot of section 8 housing where i live costs people renting in the same buildings about 1200-1600/mo. On top of that you get free food for the family for the month, free health insurance, and other benefits of having ZERO income. When you start earning even a small amount (say 12 hours a week part time at minimum wage) your benefits are slashed if not revoked completely.

9$/hr @ 40hrs/wk = 360$ x 4 = 1440 before taxes. take away 25% and you're down to $1080. Want insurance? that's about 50 bucks a week. Now you have $880 take home at the end of the month. Wanna pay rent? Good luck. buy food? Good luck. Pay for a car, gas, repair, ect Good luck.

I know that investing money into karma to create higher paying jobs and some mid level manufacturing jobs is a nice idea, but how about creating jobs that can take people from being on welfare and offer them a reason not to stay on it for life.

By inperfectdarkness on 4/22/2013 12:08:16 PM , Rating: 3
I'm glad someone else gets it. Once you give out the freebies, getting the leeches off them is impossible--unless you kill the handout entirely.

RE: Attempt to Create Jobs
By BRB29 on 4/22/2013 12:24:21 PM , Rating: 1
While I agree with you that it seems like a complete waste of money. The primary goal of the funding was not creating jobs, it was to create/advance EVs. They gave the grant to anyone willing to do the work, show a solid plan, meet progress milestones. The path to creating an infrastructure for mass production of practical EVs was mostly an unbeatened path. The funding was to get entrepreneurs get over that hurdle.

Not all plans by the government works and it's hardly noticeable when it succeeds but always attract massive attention when it fails. Even when it succeeds, some people will still criticize because they don't agree with that direction.

Can we just be happy that Tesla actually got it right so most of our money did not go to waste. Isn't Tesla paying it back also?

All I can say is that the intention was good. We will need to depend on hybrids and especially EVs to carry us in the future. We all know that hybrids are a short term solution to our energy problems. Even the automakers admit that. Hydrogen is still far from mainstream but EV can go mainstream in a decade if the infrastructure is set up and demand is high.

RE: Attempt to Create Jobs
By Reclaimer77 on 4/22/13, Rating: 0
RE: Attempt to Create Jobs
By Mathos on 4/22/2013 12:38:07 PM , Rating: 2
It's not as easy as you think. Most states require you to look for work full time if you're an able bodies individual that can work. That means applying to no less that 15 jobs per week, or doing community service 30+ hours a week. And that's just to get food stamps. At least thats the requirements for a male with no children.

The free medical thing is a lie, very few states have that. And even then, those programs are paid for on a state level. True section 8 housing(where the state pays the rent), has a waiting list well over 8 months long, I've had to check for people I've known. Subsidized housing, you have to pay part of the rent, and the state picks up the rest, though the state also dictates the max monthly rent. Either way, living there you still have to look for full time work, or they will put you out. The only time that isn't the case, is if you have had debilitating injury, or mental/physical illness that makes it so you can't work.

What is truly more effective though.. Creating 12 million part time minimum wage jobs? Or creating a good mix of high paying, to mid range jobs? So people who've put in the effort to educate themselves can find meaningful employment. Instead we have people paying tens of thousands for college, to guess what, be over qualified for a minimum wage job. Oh, but you can have an exciting career in fast food management......!

People refuse to open their eyes and see whats really going on here. For decades, it was the middle class, that had been created by manufacturing jobs, and union labor, that was driving this economy. They were driving the demand for goods, and more newer luxury items, and services. They were paying the brunt of the tax bill to the government. Which allowed for lower taxes on the poor, and wealthy. Then the government, failed to protect our manufacturing sector from outside influence (countries like china, and japan do this). For example, our deal with china is fairly 1 sided. We have no middle class anymore. Big business is trying to see to that personally.

What they're doing is, starving the economy of jobs. The longer you starve them, the more they'll be willing to give up. It will start with making it illegal to unionize, or form labor protection groups. Then, they'll abolish minimum wage, because by that time, people will be so desperate for work, that they'll be willing to take less than that. And next will come, the overturning of labor protection laws, like overtime, OSHA, the 8 hour work day, and 40 hour week, along with minimum amount of rest hours between shifts. And then, we'll be back to the 1800s, where a mule in a mine was worth more than the lives of 20 miners.

RE: Attempt to Create Jobs
By BRB29 on 4/22/2013 12:59:05 PM , Rating: 2
You had a point and then you went south in the 2nd half. I know as an employer, I will not want to underpay skilled labor. You can look at up in Operations Management and Human Resource books. You can cheat unskilled labor a lot of times because they don't have anything to back them up and no unique skills. You can find anybody and turn them into a cashier but you can't just put any person in to do engineering or accounting.

China has a lot of problems. One of which is overpopulation but they are handling that to a level no other countries have done before. So far, it looks like it's working.

In our country right now, we have more middle class than ever due to higher education becoming common.

Minimum wage will never be abolished. The whole mule in a mine thing is worth more than 20 people is because those were unskilled and unprotected workers. We have a broad education system and federal laws to protect workers. Our people doesn't have 20 kids anymore because we don't have to worry about their survival.

what is this conspiracy?

RE: Attempt to Create Jobs
By Crazyeyeskillah on 4/22/2013 2:28:39 PM , Rating: 2
I know a 'woman' who is annually pregnant because she knows as long as she is pregnant she will continue to get complete coverage (thousands spent medically) along with money and housing to take care of her growing family. She has had 3 children with 3 different fathers and is in progress with another. She has been doing this for roughly 6 years, all the while having full coverage of housing, food, medical with no lapses. Her partner never works and shares all the same benefits with her. She has not worked a day in 7 years and continues to make it clear that she never will.

The system has no penalty for such abuse and has instead turned a person with average ability and skills yet willing to learn/grow and be productive into someone who will potentially never be a productive member. I know this is off topic from Fisker, but this is the type of person that jobs need to be available for that can at least give them a standard of living that is the equivalent of welfare, which unfortunately seems to be closer to the 40-60k/yr expense level opposed to the 15-25k/yr level that a person like this has potential earnings of.

RE: Attempt to Create Jobs
By BRB29 on 4/22/2013 2:35:22 PM , Rating: 2
And they pay no tax :)

It's clear she is not willing to really do anything besides live off the government. There are plenty of baby factories in this country.

RE: Attempt to Create Jobs
By Mathos on 4/22/2013 11:00:57 PM , Rating: 2
Oh, don't get me wrong, not all companies are like that. But you have to take a look back at our history as a country and the way real big business has been in the past. But, there are quite a few that are. Look back at the history of Carnegie Steel, with the whole thing about Frick. You can't find it on a few wiki's. But none of them go into why the workers were striking to begin with.

Most anyone could learn pretty much anything, given the time and training. We all learn that way, that's what school is. I talk about the wellfare thing from first hand experience. Been a tax payer here in Texas since I moved here 7 years ago. When I lost my job, I couldn't get assistance at all. Plus it doesn't help that right now, I don't live in an area where there are a lot of jobs to be had.

Problem comes down to though. Whats your definition of a skilled worker? And as far as the protections go. All it takes is one nut, running on the platform of deregulation being elected, to tear down those protections. Be happy that Rick Perry didn't get elected. And a lot of companies, have been lobbying to make unionization, or collective bargaining illegal for a long time. And as the lower tax income of the states, and fed continue to become and increasing problem, the public education system will continue to decay, since they can't afford supplies, and teacher pay.

It is happening. I was watching it happen in cities like Flint, Pontiac, and Detroit Michigan. I'd say it's happening down here, but these people were already fairly ignorant to begin with.

And as far as the middle class goes, if that were the case, there weren't be 20million people unemployed, or severely under employed for their qualifications.

RE: Attempt to Create Jobs
By Mint on 4/23/2013 3:13:15 PM , Rating: 2
Then the government, failed to protect our manufacturing sector from outside influence (countries like china, and japan do this). For example, our deal with china is fairly 1 sided. We have no middle class anymore. Big business is trying to see to that personally.

What they're doing is, starving the economy of jobs.
Jobs have always been under assault from foreign cheap labor, competition/efficiency of big business, etc. Outsourcing was simply a preview of automation getting ridiculously good recently and in the future. Manufacturing is coming back, but jobs barely are.

What has kept the economy alive in the last 30 years is that all the income/profits from these factors was used to:
1. Buy more/better stuff;
2. Invest in equipment to build that stuff; or
3. Lend it, via the bank, to others who needed money to buy/build stuff.

The less we have of #1, the less we have of #2, and all the rest becomes the banks' burden in #3. We though #3 could get as big as it wanted and the private market would always want to borrow whatever it could, but we were wrong. It's obvious that #3 became so big that it was impossible for banks to lend it all back out safely. What's happening now is that a bunch of money is just sitting around as excess reserves, and it's growing.

There's only a few options to shrink #3:
a) cross your fingers that the rich will start spending more
b) redistribute their income to people who will spend it
c) tax their income and spend it via democracy
d) don't do anything and just accept high unemployment

RE: Attempt to Create Jobs
By TakinYourPoints on 4/23/2013 5:25:08 PM , Rating: 2

I never do this but there was a lengthy post you made several days ago that I didn't see until yesterday when someone else brought it up. My response so you don't see that I'm completely full of crap. :)

tldr - I didn't short stock because trying to catch a top is insanity. I sold call spreads against it instead, profiting when the stock didn't exceed the value of my calls and then profiting further when the stock finally did reverse.

RE: Attempt to Create Jobs
By lelias2k on 4/22/2013 5:28:07 PM , Rating: 4
The funny thing is that people are always trashing those taking advantage of the government hand, but I hardly see anybody criticizing those absurdly high-paying jobs.

How many CEOs have broken big companies in the past 15 years, only to get the boot accompanied by a hefty bonus?

How many CEOs earn hundreds of times more than the bottom employee?

The salary disparity in the US has grown exponentially in the past 30-40 years.

You want to keep doing it? Go for it. But I don't want to be there when people start getting really desperate.

RE: Attempt to Create Jobs
By epobirs on 4/23/2013 7:59:05 AM , Rating: 2
Those companies have stockholders who wield the power to say how much the CEO is worth. Nobody is forced to do anything, nor is anyone forced to buy that company's products if they think them overpriced due to executive compensation. (Hint: the salaries may sound big but rarely translate to more than even a penny out of each dollar taken in on sales.)

That is entirely different from government activities funded by tax payers who don't have a choice. They can or they can die. No, they don't execute people for tax evasion but if you try to escape from prison there is a good chance of being shot. Ultimately, the price of not cooperating with the government's tax agenda is death.

RE: Attempt to Create Jobs
By kmmatney on 4/22/2013 6:00:34 PM , Rating: 2
I've been behind people in line at the grocery store paying with food stamps, and they were getting way more expensive food than what my Wife and I buy. They can easily slash 10% off of whatever they give for food stamps, and save a lot of government money.

When we moved into our most recent house, I kept my old house and rented it out, and the renter was a section 8, single mom with 5 kids. At first it was kind of cool, since I didn't have to worry about the rent - we received a direct deposit of $1600 from the government for the 4-bedroom house in a decent neighborhood. Turns out that there was a guy living them who was the father of at least a few of the kids - they didn't marry just so they could stay on the dole. I hated being part of that, so I just sold the house as an excuse to kick them out. That was lucky too, since we sold it only a few months before the housing market crash. Anyways, this is nothing to do with the topic at hand, but there isn't much incentive for many people to work when they have such great benefits.

RE: Attempt to Create Jobs
By StormyKnight on 4/22/2013 11:12:36 PM , Rating: 2

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller

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