Public, private sector lose big on Fiskar bet
Of all the arguments for the Obama administration’s green-energy loan program, one of the worst is that federal aid leverages private capital.
Consider Fisker Automotive. In August 2009, this wannabe plug-in electric hybrid car company was hard up for cash to pay suppliers and faced potential layoffs.
A green-energy loan was the only hope, Fisker executive Bernhard Koehler explained in an e-mail to the Department of Energy — because it would help bring in private money. “We are oversubscribed in this equity round with the DOE support — and nowhere without it,” Koehler pleaded.
A month later, in September 2009, the Energy Department approved a $529 million low-interest loan. Vice President Biden stood before the proposed site of a Fisker plant in Delaware and described the department’s program as “seed money that will return back to the American consumer in billions and billions and billions of dollars of good new jobs.”
Sure enough, private money started flowing in to Fisker by the tens of millions. Apparently, investors liked the idea of a firm that enjoyed access to cheap government funding.
All told, Fisker attracted $1.1 billion in private investment, the vast majority of which took place after it got the DOE loan.
Alas, government loans could not overcome Fisker’s fundamental problem: no experience mass-producing automobiles, let alone the complex battery-powered luxury cars that it proposed to sell for more than$100,000. Today, the company is nearly bankrupt; taxpayers are on the hook for $171 million, and private investors are probably nearly wiped out. (The story is well told, with documents, at PrivCo.com.)
In other words, that’s more than a billion dollars in capital that can’t create jobs elsewhere in the economy — but might have, if the government had not propped up and promoted Fisker.
...Like Lane I have been dubious about the prospects for electric autos. I am even more dubious about Obama's "investment" in the ventures. None of the projects deal with the fundamental shortcomings of electric cars. They have a limited range and they take too long to refuel. Until those issues are addressed not even the one percent will waste much money on them.