Fisker Automotive lays off 75% of workforce

Rick Moran
They are blaming the layoffs on their inability to find a partner to fund operations. This isn't surprising. Who wants to get in business with a company selling lemons as electric cars?

Bloomberg:

Fisker Automotive Inc.'s mass firings after receiving federal loans to build luxury plug-in cars is adding to the political debate over the U.S. government's funding of clean-energy programs.

Most of the assets of Fisker's battery supplier that received a $249.1 million federal grant, the former A123 Systems Inc. (AONEQ), were acquired last year by a Chinese company. Now Fisker, awarded $529 million in U.S. loans, is firing 75 percent of its workforce after failing to secure a deal with an automotive partner to fund operations. 

The debacle is reviving questions over whether the government should be funding makers of alternative energy ventures. Fisker and A123, whose bankruptcy halted Fisker's output, have drawn Republican criticism of President Barack Obama's support of green-energy programs intended to spur more fuel-efficient cars.

"The Department of Energy has never owned up to its mistakes and acknowledged it didn't do a good job of choosing Fisker and A123 as worthy of taxpayer investment," Senator Chuck Grassley, an Iowa Republican, said in an e-mailed statement.

Another Republican, Senator John Thune of South Dakota, predicted "the company could go bankrupt and cost millions of taxpayer dollars."

Fisker, the maker of rechargeable $103,000 Karma sedans, told a "core group of employees in Southern California" this week of the plan and expects about 25 percent of workers to stay, the Anaheim, California-based company said in an e-mailed statement. Fisker said last week it had about 200 employees.

"Our efforts to secure a strategic alliance or partnership are continuing in earnest, but unfortunately we have reached a point where a significant reduction in our workforce has become necessary," the carmaker said in the statement. The cuts are a "strategic step in our efforts to maximize the value of Fisker's core assets," the company said.

And just what are those "core" assets? Certainly not the product they sell:

Fisker, with celebrity customers including singer Justin Bieber and actor Leonardo DiCaprio, has raised more than $1 billion from private sources, including Silicon Valley investor Kleiner Perkins Caufield & Byers, and was awarded $529 million in low-interest federal loans in 2009 to develop and build its plug-in hybrid cars.

That hasn't been enough to sustain operations after a slow startup, technical flaws that led to two Karma recalls and the bankruptcy of A123, also a recipient of federal funds. The Waltham, Massachusetts-based battery supplier, bought last year by China's Wanxiang Group Co., said last week in a U.S. regulatory filing that it changed its name to B456 Systems Inc.

Fisker reached a settlement this week with B456 that reduced its claims by 89 percent to $15 million.

Fisker said last year that the Energy Department blocked access to its loans after the carmaker failed to meet an initial timetable for Karma deliveries.

By most accounts, the Karma is a nice car - when it worked - and nice to look at. But if Fisker goes belly-up, it is likely that taxpayers won't see much of their $500 million investment. This isn't unusual for Obama's green revolution which appears to have a knack for picking losers in instead of winners. Fisker's business plan has been questioned since they came into existence so it's not like no one was expecting this.

In fact, it is exactly what we've come to expect for Obama's pet green projects.

They are blaming the layoffs on their inability to find a partner to fund operations. This isn't surprising. Who wants to get in business with a company selling lemons as electric cars?

Bloomberg:

Fisker Automotive Inc.'s mass firings after receiving federal loans to build luxury plug-in cars is adding to the political debate over the U.S. government's funding of clean-energy programs.

Most of the assets of Fisker's battery supplier that received a $249.1 million federal grant, the former A123 Systems Inc. (AONEQ), were acquired last year by a Chinese company. Now Fisker, awarded $529 million in U.S. loans, is firing 75 percent of its workforce after failing to secure a deal with an automotive partner to fund operations. 

The debacle is reviving questions over whether the government should be funding makers of alternative energy ventures. Fisker and A123, whose bankruptcy halted Fisker's output, have drawn Republican criticism of President Barack Obama's support of green-energy programs intended to spur more fuel-efficient cars.

"The Department of Energy has never owned up to its mistakes and acknowledged it didn't do a good job of choosing Fisker and A123 as worthy of taxpayer investment," Senator Chuck Grassley, an Iowa Republican, said in an e-mailed statement.

Another Republican, Senator John Thune of South Dakota, predicted "the company could go bankrupt and cost millions of taxpayer dollars."

Fisker, the maker of rechargeable $103,000 Karma sedans, told a "core group of employees in Southern California" this week of the plan and expects about 25 percent of workers to stay, the Anaheim, California-based company said in an e-mailed statement. Fisker said last week it had about 200 employees.

"Our efforts to secure a strategic alliance or partnership are continuing in earnest, but unfortunately we have reached a point where a significant reduction in our workforce has become necessary," the carmaker said in the statement. The cuts are a "strategic step in our efforts to maximize the value of Fisker's core assets," the company said.

And just what are those "core" assets? Certainly not the product they sell:

Fisker, with celebrity customers including singer Justin Bieber and actor Leonardo DiCaprio, has raised more than $1 billion from private sources, including Silicon Valley investor Kleiner Perkins Caufield & Byers, and was awarded $529 million in low-interest federal loans in 2009 to develop and build its plug-in hybrid cars.

That hasn't been enough to sustain operations after a slow startup, technical flaws that led to two Karma recalls and the bankruptcy of A123, also a recipient of federal funds. The Waltham, Massachusetts-based battery supplier, bought last year by China's Wanxiang Group Co., said last week in a U.S. regulatory filing that it changed its name to B456 Systems Inc.

Fisker reached a settlement this week with B456 that reduced its claims by 89 percent to $15 million.

Fisker said last year that the Energy Department blocked access to its loans after the carmaker failed to meet an initial timetable for Karma deliveries.

By most accounts, the Karma is a nice car - when it worked - and nice to look at. But if Fisker goes belly-up, it is likely that taxpayers won't see much of their $500 million investment. This isn't unusual for Obama's green revolution which appears to have a knack for picking losers in instead of winners. Fisker's business plan has been questioned since they came into existence so it's not like no one was expecting this.

In fact, it is exactly what we've come to expect for Obama's pet green projects.