Another green tech company that got millions in federal dollars after the fiscal crisis only to declare bankruptcy is back in business.
But there’s no indication U.S. taxpayers will recover the $139 million loss.
Electric car company Fisker announced earlier this month it is coming back, setting up shop in a 555,670-square-foot factory in Moreno Valley, California to eventually sell its sleek plug-ins.
In 2009, Fisker was slated to receive $529 million in loans from the U.S. Department of Energy. But as the company ran out of cash and declared bankruptcy in November 2013, the loan was drawn down to $192 million.
The DOE was able to recover some money, although U.S. taxpayers lost $139 million.
In a bankruptcy auction, Wanxiang Group, a privately held company based in China, bought Fisker in February 2014 for $149.2 million.
That means Wanxiang bought Fisker for just $10.2 million more than the $139 million taxpayers lost.
Watchdog.org emailed a series of questions to Fisker spokeswoman Judy Hoste, including the status of the loan and whether, under the terms of the bankruptcy and purchase, Wanxiang has any responsibility to repay some or all of the $139 million. Watchdog.org did not receive a reply.
Martin Zimmerman, the Ford Motor Company Clinical Professor of Business Administration at the Ross School of Business at the University of Michigan, suspects the $139 million is gone for good.
“I assume that was part of the bankruptcy settlement,” Zimmerman told Watchdog.org. “And I would assume whatever those arrangements were and are, the government would not have the ability to come back at them now that (Fisker is) back in business.”
At the time of the Fisker bankruptcy, a DOE spokesman said safeguards placed in the loan agreements protected taxpayers from nearly three-quarters of the loan’s original commitment.
Watchdog.org asked DOE in an email if the department has regrets regarding the Fisker loan, but the agency declined comment.
Fisker’s loan was a part of the Advanced Technology Vehicles Manufacturing Loan Program, which was created and funded at the end of the George W. Bush administration and accelerated during the first term of President Obama.
The program racked up a couple successes but also had its share of high-profile flops, including production shutdowns by Fisker, wheelchair van company Vehicle Production Group and solar panel maker Solyndra.
Taxpayers in Delaware watched millions go down the drain.
Delaware government officials including Gov. Jack Markell committed $21.5 million in economic development incentives in the hope Fisker would take over a former General Motors plant near Newport, Delaware and hire 2,500 employees within five years.
“This is seed money that will return back to the American consumer in billions and billions and billions of dollars in good new jobs,” Vice President Joe Biden said in 2009.
But that never happened, and Delaware officials were embarrassed to learn that in the event of bankruptcy the state’s $21 million was subordinate to the rights of other lenders to get their money back. Delaware got just a fraction of the $21.5 million repaid.
Delaware’s director of Economic Development, Alan Levin, still holds out hope a reinvigorated Fisker will return to Delaware.
“I don’t want the $20 million, I want the jobs we tried to create,” Levin told the News Journal of Wilmington, Delaware, June 18.
An investigation by Reuters reported Fisker burned through $1.4 billion in public and private funds before declaring bankruptcy. One research firm determined Fisker produced fewer than 2,200 cars.
In a couple interesting wrinkles, the renamed Fisker Automotive and Technology company is now owned by a company, Wanxiang, which recently bought a green tech company based in the U.S. that also declared bankruptcy — A123 Systems, a battery maker with offices in suburban Detroit.
As reported earlier this month, A123 Systems executives announced the company is on track to turn a profit for the first time ever.
But by all indications, the $133 million in federal dollars spent on the company is gone.
A123 Systems also received an estimated $141 million in tax credits and subsidies from the state of Michigan.
The state agency in charge of the $141 million largess refuses to give details about whether any of the amount was repaid, saying contract details are private.
A123 Systems and Fisker have connections.
A123 Systems supplied the batteries for Fisker’s Karma model, but some of its batteries were involved in a recall in late 2011, which dealt the electric carmaker a big blow.
But despite that history, last week’s announcement of Fisker’s return included the fact the newly organized car maker will use A123 Systems batteries again in its new fleet.
Why go back to A123 Systems after the earlier problems? That was one of the questions Fisker spokeswoman Hoste failed to answer in the Watchdog.org email. But when Wanxiang bought Fisker last year the company said the purchase of A123 could lower production costs.
“In many ways we are a startup again, but we have an existing product and a business,”Jim Taylor, a former General Motors executive now running Fisker’s marketing, told the Wall Street Journal.
Taylor said Wanxiang is “totally invested and serious.”
In its first iteration, Fisker built an expensive plug-in sports car called the Karma that sold for nearly $110,000. Buyers included Al Gore, Leonard DiCaprio — who also invested in the company — and pop singer Justin Bieber, who tricked out his Fisker Karma with an all faux-chrome exterior.
According to the Wall Street Journal, executives at what is now called Fisker Automotive and Technology haven’t revealed a price range for its new fleet.
Zimmerman, a retired executive at Ford, sees a mixed economic climate surrounding the rebooted Fisker.
“The first time around was in the middle of the fiscal crisis,” Zimmerman said in a telephone interview. “So they have a more favorable economic climate this time around, which would obviously be to their advantage. The problem they have now is that oil prices have come down significantly, and my sense is that enthusiasm for electric vehicles is pretty limited in the public at large.”
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