Fisker Automotive lays off workers after the Dept of Energy freezes loans
Fisker Automotive, the designer and manufacturer of high end luxury plug-in hybrid cars, has run into a cash crunch and is laying off workers. Fisker is one of the recipients of Dept of Energy low-interest loans meant to jump-start electrified vehicle manufacturing in the U.S., but their plans have met delay after delay. Having missed one or more of the required loan program milestones, the Dept of Energy has frozen Fiskers line of credit. Which, of course, puts a kink in the company's plans.
Fisker Automotive is the brainchild of Henrik Fisker, a famed luxury car designer. The company focuses on hybrid electric cars and is currently producing the Karma sedan at a contract automotive manufacturing plant in Finland. Plans are to develop several other car models and to move manufacturing to a former GM plant in Delaware. The first of those new cars, the Surf, is planned to begin manufacture at the end of 2012 and begin delivery in 2013. That is, if the company can navigate this cash crunch.
The company was one of the recipients of the giant Dept of Energy loan program announced in the summer of 2009. Fisker's slice was $527 million, most of which was to go for development of the Surf and other later models, and reopening the GM plant in Delaware to manufacture the car. A small portion of that loan was to prepare the Karma for production, in Finland. Note that Fisker received low-interest loans from the federal government, not grants as has been done in other cases.
The loan program required that Fisker meet several milestones, and as each milestone was met some cash from the loan would become available. This means that Fisker would only receive the funds they qualified for, by virtue of having met the required milestones. “Our loan guarantees have strict conditions in place to protect taxpayers,” Damien LaVera, an Energy Department spokesman. “The department only allows the loan to be disbursed as the company meets certain milestones and demonstrates results.”
The company has drawn $193 million from its loans and has raised $850 million in private capital. It's expensive to launch a car company, right? “To date we have received $193 million of the $529 million Department of Energy loan, mostly for the Karma program, and received our last reimbursement in May 2011,” Fisker spokesman Roger Ormisher said in a statement Monday. “We are renegotiating some terms of the DOE agreement for the $336 million balance of the loan related to the Project Nina program.” Fisker also received a $9 million grant from the State of Delaware, about half of which has already been used.
Ornisher went on to say “A flex model of expanding and contracting staffing for development of new cars is routine in the automotive industry. Project Nina [the Surf] is already well-advanced. Much of the engineering, design and development is near complete and we expect to ramp up operations again quickly.”