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Fisker Stops Work on Delaware Car Factory After U.S. Blocks Loan February 07, 2012, 7:36 PM EST
By Angela Greiling Keane and Jef Feeley
Feb. 7 (Bloomberg) -- Fisker Automotive Inc. said it halted work on a Delaware auto factory to make plug-in sedans after the U.S. Energy Department, citing unmet milestones, blocked access to its federal loan.
Fisker, behind schedule in selling its first car in the U.S., laid off 26 people in Wilmington, Delaware, the company said yesterday in an e-mail. Access to the loan has been blocked since May, said Roger Ormisher, a spokesman.
“It’s been frustrating that Fisker and the Department of Energy weren’t able to come to terms on the revisions to the loan in time to avoid this,” said Brian Selander, a spokesman for Delaware Governor Jack Markell, a Democrat. “I’d say the project is on hold while the two sides try to get things sorted out.”
The Energy Department awarded Fisker, based in Anaheim, California, $529 million in loans in April 2010 from a program intended to spur development of advanced-technology vehicles. Part of the loan will be used to redevelop a closed General Motors Co. auto plant in Wilmington for Fisker’s use.
Fisker sells the Karma plug-in electric sports car retailing for $102,000 in the U.S. The car is produced by a contract manufacturer in Finland. It’s planning to make the Nina, a lower-priced model, in Wilmington.
“They won’t release any more money given where they’re at with the programs,” Ormisher said by telephone. “It’s a fairly standard procedure. It’s nothing unusual. But these things take some time to go through.”
Short on Milestones
The Energy Department’s loan programs are under congressional scrutiny since the September bankruptcy of solar- panel maker Solyndra LLC, a loan-guarantee recipient. Beacon Power Corp., an energy-storage company, and Ener1 Inc., a supplier of batteries for electric cars, both filed for bankruptcy protection after receiving Energy Department aid.
The agency last month canceled a $730 million loan commitment to OAO Severstal, Russia’s second-largest steelmaker, that the company had planned to use to expand high-strength steelmaking operations in Michigan.
“Our loan guarantees have strict conditions in place to protect taxpayers,” Damien LaVera, an Energy Department spokesman, said in an e-mail. “The department only allows the loan to be disbursed as the company meets certain milestones and demonstrates results.”
Fisker sent 225 Karmas to dealers and has 1,200 units “in the pipeline,” Chief Executive Officer Henrik Fisker said in an interview in December. Toyota Motor Corp. on Jan. 4 reported sales of 136,463 Prius hybrid vehicles last year.
The U.S. awarded Fisker $169 million for engineering of the Karma and $359 million for production of the Nina, a midsize sedan. Fisker has drawn down $193 million from its loans and has raised $850 million in private capital, according to the company’s statement. Chief Executive Officer Henrik Fisker in a December interview said the company had hired about 100 people in Wilmington.
Delaware gave another $21 million in grants and loans to Fisker for its investment in the state. Fisker’s private investors include Kleiner Perkins Caulfield & Byers, Palo Alto Investors LLC and lithium-ion battery maker A123 Systems Inc.
--With assistance from Alan Ohnsman in Los Angeles and Brian Wingfield and Steve Geimann in Washington. Editors: Steve Geimann, Timothy Franklin
To contact the reporters on this story: Angela Greiling Keane in Washington at email@example.com; Jef Feeley in Wilmington, Delaware at firstname.lastname@example.org
To contact the editor responsible for this story: Bernard Kohn at email@example.com