The United States Department of Energy has announced on its website that it will auction off the loan that it made to Fisker Automotive, a loan for which the hybrid luxury startup carmaker only repaid a small fraction of the principal. Peter Davidson, the executive director of the department’s Loan Program Office, said that the DOE decided to auction off the loan, “after exhausting any realistic possibility for a sale that might have protected our entire investment.”
Fisker originally won a $529 million loan guarantee from the DOE’s Advanced Technology Vehicles Manufacturing Loan Program in September 2009, from which it drew down $192 million before defaulting. After the Energy department ruled that Fisker was not complying with terms of the loan, missing important deadlines and struggling to make its payments on the loan, it froze the rest of Fisker’s credit line in May 2011. Less than $21 million of the $192 million was repaid.
Fisker built about 2,450 Karmas and according to Reuters it lost $35,000 or more on every one of the $100,000+ extended range hybrid cars. Company founder Henrik Fisker resigned in March 2013 citing differences with management. Soon after that, Fisker Automotive defaulted on its government loan and hired bankruptcy advisors. All but a few FiskerAutomotive employees were laid off this spring.
The Fisker Automotive brand and rights to produce the Karma have attracted a number of potential buyers including Fritz Nols AG, a German investor group lead by Ingo Voigt. According to the Autobild magazine, Fritz Nols has offered $25 million for Fisker. In a Facebook post last week, Voigt said that his group had submitted a “detailed offer including a signed [letter of intent] and a short presentation of our restructuring plan” to the DOE. Chinese auto parts maker Wanxiang Group and a Hong Kong investment group have also expressed interest.
Bids on the remaining $168 million in Fisker’s outstanding debt are due by Oct. 7. The auction will take place Oct. 11. Davidson said that the DOE “will require all bids to include a commitment and business plan that promotes domestic manufacturing capabilities and related engineering for advanced technology vehicles here in the United States.”
Fisker Automotive had no comment.