By on April 11, 2013

California Congressman Darrell Issa wants to investigate the Department of Energy’s loans to nearly-bankrupt Fisker after the company laid off most of its employees and retained bankruptcy lawyers last week.

According to Bloomberg, Issa is concerned that Fisker’s loan may have prevented other, more deserving companies from getting the money, stating

“[Fisker] is a design company, not a manufacturing company…It was destined to fail from the beginning. The greater concern is, does this affect more viable companies, whether they received loans or not.”

Bloomberg notes that Aptera, an EV start-up that Issa backed in the past (and was based in his congressional district) was denied a DoE loan under the Advanced TechnologyVehicles Manufacturing Program – the same program that Fisker got its funding from. Fisker’s $529 million loan was meant to convert a former GM factory in Delaware into a Fisker production center. But Fisker never produced a single car there, instead relying on Finland’s Valmet to produce the Fisker Karma sedan under contract.

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28 Comments on “Issa Wants House To Investigate Fisker Loan...”


  • avatar

    Building cars that only the rich can afford was their first mistake.

    Hurricane Sandy was the last nail in their coffin. Had that not happened, they’d probably still be in business. There’s no reason they couldn’t have licensed Tesla’s technology – like toyota has – and improved the Karma’s design.

    • 0 avatar

      I would not say this. Only the rich can afford a Tesla and yet they are doing just fine.

      The problem with Fisker is that it was not a particularly good car, and it was very expensive. It neither worked well as a gas car – poor performance, shaky engine – nor an electric – poor performance, lousy range.

      Tesla’s Roadster lost money for the company, just as the Karma did for Fisker. But the Roadster was an excellent car and so Tesla gained the reputation they used to launch Model S.

      The Karma is not so beloved, didn’t gain an excellent reputation and so the company didn’t have the built-up customer base Tesla had for Model S.

      Was Fisker an inevitable failure? At the time both companies hit my radar, I always thought it was dubious. I accepted Tesla’s argument that a pure electric car was needed to optimize performance, and they seem to have proved their point with Model S.

      At the same time, I think Congressional grilling seems a bit harsh. Their mandate was to spend money on startup electric car companies, and quite honestly there weren’t too many of them. I certainly don’t remember feeling Aptera was a particularly viable idea thanks to its extremely strange looks. Fisker was much more conventional in appearance and I can see that as a reason for choosing them. They also had a car they had shepherded to production, like Tesla did. So you could say Fisker was a better bet (even though I think both companies were lousy bets, unlike Tesla), and that reasonable procedures for granting the loans were probably followed.

      Where this program really made a mistake was not getting equity shares in the companies. Taxpayer risk was enormous, and loans do not offer the returns needed to make up for that risk. If we had a stock portfolio consisting of $200m in Fisker (100% lost) and $465m in Tesla (significant profit gained), the government probably would have made a few bucks instead of losing its shirt.

      Of course if we add the solar companies that might no longer be true …

      D

  • avatar

    Hernik is a wanker

  • avatar
    gslippy

    Issa’s backing of Aptera is crazier than Fisker. This is all water over the dam.

    Even if Fisker was successful, the loaned money would still have been unavailable to others.

    • 0 avatar
      DC Bruce

      Yeah, the Aptera was really an enclosed 3-wheeled motorcycle, with design issues all over the place.

      The bigger question is why get the government involved in this stuff with taxpayer money at all. Supporting basic science is one thing, but figuring out who might build and market a successful product is something else. By necessity, government has to do that with military hardware, since there’s no civilian equivalent. Even that process, as we have seen for a very long time, is fraught with waste, cost overruns and the like . . . but there’s no avoiding it.

      But porting those concepts into the civilian market is unnecessary and just invites more waste of taxpayer money.

      • 0 avatar
        highdesertcat

        3-wheeled motorcycles are extremely popular in California and the Southwest (because of the sunny weather, I suggest), and are usually operated by old men, and women of all ages, who cannot balance large, heavy road-riding machines like Hogs, Interstates, Moto Guzzis, Goldwings and BMWs.

        Trikes, as they are called here, come in a variety of configurations that range from old meter-maid Hogs to Bombardiers and even converted VW Bugs converted to a three-wheeler with the front end of a motorcycle. All of them are open and susceptible to weather.

        Having an enclosed one, like the Aptera, would make it an all-weather machine that can still be used on the days that the weather isn’t co-operating with the rider/operator.

      • 0 avatar
        TW4

        The economics behind using taxpayer funds to overcome market failures is relatively straightforward, particularly in a mature oligopoly. The capital costs are enormous, and large companies often bait state governments into tax deals and subsidies, which means start-ups face all kinds of barriers to entry. To make matters worse, automobile technology has been in decline from an economic sense. The primary value activity of personal vehicles is transportation of people and goods from one place to another. The fuel efficiency of the US fleet was in slow, steady decline since the mid-80s until about 2005. Oil prices have been rising sharply in the last decade so economic productivity of personal transportation was plummeting, yet MSRP was rising.

        So we had a perfect storm of market failures. Structured oligopolistic competition with little economic innovation for consumer productivity. Rising global demand for oil. Falling US supply for oil. Downward pressure on US currency. The end result was predictable. A massive collapse in automobile demand (since consumers were paying higher price tags for vehicles with lower economic productivity), and a monstrous trade deficit for oil which still hovers in the $300B range per annum.

        If ever the US needed to subsidize R&D or promote infant industry competition, this was surely the time. Unfortunately, whenever you encourage a bureaucrat to spend money, he turns his brain off. They fall back into the old Keynesian thinking: any demand subsidization is good demand subsidization, regardless of its impact on product possibilities. Darrell Issa is militantly opposed to such sloppiness, perhaps a bit too militantly opposed.

        • 0 avatar
          highdesertcat

          “If ever the US needed to subsidize R&D or promote infant industry competition, this was surely the time.”

          I am completely at odds with that sentiment since I do not believe in bailouts, handouts, nationalization or the mis-utilization of taxpayer money.

          The greatest inventions of all time were accomplished without being taxpayer funded.

          In the case of Fisker, Solyndra, A123 et al, this was purely an Obama-administration goal to further their ill-advised green agenda to appease the greenweenies at the expense of the taxpayers. The Republicans would have done similar things, had they won.

          If these were such lucrative ventures, private industry and venture capitalists would have fallen all over themselves to reap the financial gains for themselves.

          “Darrell Issa is militantly opposed to such sloppiness, perhaps a bit too militantly opposed.”

          If I were to venture a guess, it would be that Issa didn’t become successful in his own businesses, rising from rags to riches, by mis-application of his own money.

          But this is what America voted for, a never-ending escalation of “spend and tax”, now disguised as “invest and raise revenue.”

          It only affects those people actually paying the taxes. At least 47% of Americans don’t give a hoot, since they’re not paying taxes at all, other than consumption taxes.

          I think Issa is beating a dead horse here. America voted. America decided. This is what America wanted and more of the hopey-changey thing.

          And for those actually paying the taxes, even those making less than the mythical $250K/yr, their deductions are going to go up and their refunds will be smaller. They’re the only ones who’ll feel the pain.

          And lets not forget the host of new taxes that are coming down the pike, like the cigarette tax and the Obama-care taxes.

          The majority rules in America, and this is what they voted for. Issa should get over it.

        • 0 avatar
          thelaine

          Gobbledygook. Market failure according to whom?These are the same as*holes who killed the incandescent light bulb. If anything is preventing consumers from getting what they want, it is not the market. It is the government itself, with endless taxes, rules, barriers to competition, favoritism, corruption and regulations.

        • 0 avatar
          ihatetrees

          Wow. The auto industry is THAT simple…

          “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

          Good luck predicting anything as complex as the car industry 10+ years out. Who knows – self driving cars could effectively destroy most of it.

        • 0 avatar
          TW4

          Yes, it is that simple. The same way it is relatively simple for a doctor to diagnose a medical condition like cardiac arrest. Determining the cause of cardiac arrest is also relatively simple in this case b/c the enormity of the problems manifested themselves in generalized macroeconomic data that is made available to the public.

          The difficult part is determining the cause of illness or medical condition and then prescribing a treatment and managing all of the side effects, unintended consequences, and unexpected disruptions to the schedule of predicted events. Naturally, this is what politicians and economists are fighting over, not the degree of the market failures or the root cause. They knew it was fuel-efficiency and lack of domestic supply. Bipartisan support for CAFE 2025 and EPA fracking rules was predictable.

          Given the severity of the problems, particularly the declining economic efficiency of automobiles, measured by falling CAFE, rising MSRP (relative to income), and rising fuel costs; government investment in R&D and competition stimulus was a good idea. Since so many DOE start up loans have resulted in failure, despite prolonged high oil prices, federal investigation is necessary. Hopefully, Issa will use the investigation process to assess the competence of bureaucrats and the integrity of businessmen, rather than pushing an agenda.

  • avatar
    rmwill

    This Fisker business reeks of Solyndra, but having Issa lead the charge is a bit disingenuous.

    http://www.npr.org/2011/01/20/133071575/Past-Haunts-Rep-Issa-Head-Of-Investigative-Committee

    • 0 avatar
      Hummer

      I’d rather have a source that knows beliefs and speaks on them, and backing up with facts and the know how to do my own research, NPR is worse then msnbc as far as left wing extremism.

      I would prefer Issa over any other politician in western US, he’s at least honest to American people. Possibly the only in kalifornia

      • 0 avatar
        jkross22

        You forgot about McClintock. Yep, that’s it. One.

        Sad.

      • 0 avatar
        Michael500

        Issa is awesome! He should investigate this to keep more Solyndras/Codas/Detroit Electrics from p___ing away taxpayer money. Right, the only two decent politicians in Kalifornia are Issa & McClintock. The rest are Socialists/Democrats and RHINOs.

    • 0 avatar
      TomHend

      Maybe AG Holder should investigate?

      This is the problem I have with both the Right and Left in this country now.

      The Left screamed “Halliburton Halliburton Halliburton” during the war and now the Right screams “Solyndra Solyndra Solyndra”

      Maybe both administrations are corrupt beyond belief or is that a conspiracy theory?

      A financial oligarchy runs this country right now and the last and current president have greased the skids for it.

  • avatar
    Syke

    Sounds like a Congressman is pissed that the pork bypassed his district, so he gets all honest and righteous in return. If Aptera had gotten the money than failed like Fisker there would have been no problem, keep moving, nothing to see here.

    Is there a lower form of slimeball than a Congressman?

  • avatar
    wsn

    It’s all about Obama’s green image.

    Does he care the $500M went nowhere? No. He got elected and then re-elected.

    Does he care whether oil pipelines are worse off than other modes of oil transportation? No. He got elected and then re-elected.

    He will just say and do the things that will result in more votes. Even if the nation wastes $1B, if that will give him 1 more vote, he will do it.

    • 0 avatar
      highdesertcat

      Yes, elections have consequences! This is what the majority in America voted for and this is exactly what America got and deserves.

      This wasted taxpayer money is paid for only by the productive, working, taxpaying people of America. Everyone else on the dole doesn’t give a hoot since they’re not paying for it.

      The elections are settled. We know what to expect of the next four years — the exact same as the past four years.

      So it is time for all of us to move on and find ways to circumvent the Obama policies and not support the redistribution of America’s wealth if we don’t share the same vision for America that Obama has.

      And most people are doing exactly that. Time to press on and look out for yourself first!

      • 0 avatar
        JD-Shifty

        Spot on. You’re absolutely right. How could anyone vote for a shady creep like Issa.

        • 0 avatar
          highdesertcat

          Issa is very popular in his overwhelmingly-Democrat California district. He’s treated like a celebrity ever since he started his car-alarm business there.

          And since he runs unopposed every two years, he has gained seniority to chair a committee.

          More Democrats should have voted against him, but they didn’t.

          • 0 avatar
            corntrollio

            Issa’s district has a PVI of +5 for Republicans. It’s not an overwhelmingly Democratic district, so I’m not sure where you’re getting this. San Diego is not exactly known for being Democrat-friendly, so it’s a weird suggestion in the first place.

            Anyway, all of this is politics as usual for both parties. Nothing to see here, move along.

  • avatar
    carrya1911

    This is what comes of “investment” schemes. People using politicians to try and get their hands on funds…funds that were borrowed in the first place.


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