As the U.S. authorities prepare to investigate the ongoing financial difficulties at automobile manufacturer Fisker, there is growing evidence that the U.S. government was aware of financial troubles before the recent demise of the company. In line with policy at the time in 2009, the U.S. government announced a $529 million loan facility for the electric car manufacturer of which $192 million was utilised.
A number of documents have come to light which seem to suggest that the company was experiencing financial difficulties back in 2010 with concerns about the its ability to meet Department of Energy targets set at the time of the loan. So what exactly happened?
Targets under pressure in 2010
There is evidence from a variety of meetings that the U.S. authorities became concerned about Fisker’s ability to meet targets as early as June 2010. While there was nothing particularly startling about an electric car company missing various targets along the way, perhaps the fact that the company continued to draw down on the U.S. government loan until June 2011 is of more concern.
Quote from ElectricForum.com : "The US government is under severe pressure today with the discovery of documents which seem to suggest that the authorities were aware of potential financial problems with electric car manufacturer Fisker as far back as 2010."
It was in June 2011 at the Department of Energy decided to freeze the remaining US$337 million made available to the company, leaving the authorities with a liability of $192 million. Quite why it took 12 months for initial fears to be realised, and quite why the authorities did not err on the side of caution, is something which will be covered in great detail during the ongoing government review.
While the authorities did finally react in in June 2011, freezing the remaining balance of the loan available, at the time of the company's financial demise just a few weeks ago, U.S. taxpayers had liabilities of $192 million. The government has since been able to recoup a further U.S. $21 million from the company's balance sheet leaving a potential loss of $171 million on this disastrous transaction.
There has been and continues to be talk that the U.S. government will eventually acquire some of the assets of Fisker in exchange for the remaining debt, although quite how this would work remains to be seen. If this was the case, we would likely see a very swift sell-on to a more financially secure third-party in the industry that could make more use of the data and assets available.
Have lessons been learned?
There is nothing that the U.S. government can do about the past and the potential $171 million loss, but will lessons be learned by the authorities?
The problem now, in the minds of many electric car experts, is that the U.S. authorities may soon move to an over cautious stance, which could potentially starve the industry of much-needed financial assistance. The fact is that Fisker has had troubles, is on the verge of going under, and taxpayers have paid the price but if we sit back and look at the industry as a whole, progress has been made. It will be interesting to see the blame game start to emerge in the U.S. and how this will impact further funding for this vital area of the automobile industry going forward.