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With Fisker Automotive on the brink of bankruptcy, a new report reveals how it got to this point by shining some light on just how flawed its finances were.
For starters, Fisker spent more than six times as much taxpayer and investor money to make each luxury plug-in than it received from customers, the report says.
The Anaheim, California-based company made about 2,500 of its $103,000 Karmas before halting production last year, disrupting its plans to use a $529 million U.S. loan to restart a shuttered Delaware factory. But it spent about $660,000 for each car it sold, resulting in a loss of more than $550,000 per car.
Fisker was allowed to keep using money from its Energy Department loan after violating its terms multiple times, according to a report released April 17 by PrivCo, a New York- based researcher specializing in closely held companies. It said it based its report on documents, including the loan agreement, obtained through the U.S. Freedom of Information Act.
“They made a mistake” in awarding the loan, PrivCo Chief Executive Officer Sam Hamadeh said of the Energy Department in an interview yesterday. “Should they have fought this sooner? Obviously; as soon as it became evident that they had begun to default.”
The Energy Department disputes these figures, noting they cut off funding to Fisker sooner than the report estimates. Department spokesman Bill Gibbons said that PrivCo’s report contains errors, particularly in asserting the Energy Department knew by December 2010 that the carmaker wasn’t meeting milestones required to keep drawing taxpayer funds. The department cut off Fisker’s funding in June 2011, after the company drew down about $193 million.
“PrivCo’s assertion that Fisker defaulted in December 2010 is simply false,” Gibbons said. “The milestones that PrivCo includes in its report are also wrong. The fact is, the department stopped disbursements on the loan after the company stopped meeting its milestones.”
Fisker stopped manufacturing cars late last year and fired three quarters of its remaining workers April 5. The company’s first repayment of $20.2 million on the Energy Department loan is due April 22, the report said.
Tony Knight of Sitrick & Co., an outside public relations agency representing Fisker, declined to comment.
A U.S. House panel is scheduled to hold a April 24 hearing on Fisker and its government financing.