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Fisker gets $528 million in government funds

Posted by: David Welch on September 22, 2009


The U.S. Government sure is hot on these electric car programs. The Energy Department granted Fisker Automotive, a California electric-car startup, a $528 million loan to finish work on its $88,000 Karma plug-in electric sports car and to develop a smaller, cheaper model. The loan deal follows a $465 million loan to Tesla Motors, another California electric-car startup, made by the DOE in May.

In both cases, the government is betting on technology that has yet to prove its way with consumers. Electric cars are still too expensive and in most cases can’t drive far enough on a charge to appeal to the masses. Tesla has delivered 700 of its $109,000 roadsters and is trying to get its $50,000 Model S sedan ready to sell in 2011. Fisker has yet to sell a car, but plans to launch its Karma sports car next summer. Fisker, started by former Aston Martin designer Henrik Fisker, expects that its sports car will go 50 miles on electric drive before the gasoline engine kicks in. It’s a similar concept to General Motors Corp.’s Chevrolet Volt, which will likely go 40 miles before the gasoline engine kicks in to recharge the battery. GM got a preliminary city fuel economy rating of 230 miles per gallon for the Volt.

Is this money well spent? It’s a big gamble. Both companies will need to get their less expensive cars on the road and in big numbers to lower production costs and start showing consistent profits and positive cash flow. If not, paying those loans back could be a tall order. Fisker’s second project, called Nina, is designed to do just that. The company wants to sell 100,000 of them a year at around $40,000 apiece. Maybe at that kind of sales volume they can make money. At lower sales volumes, electric cars are a money loser. GM, which expects to sell about 10,000 Volts in the first year of production, is likely going to lose money on the first-generation car. It’s hard to see sales of 100,000 Fisker Ninas since the BMW 3-series sells that many cars in the U.S. in a year at about the same price. And it’s an established brand in the marketplace. Another big point: Battery costs need to come down to gin up consumer appeal and improve the profit picture.

Using government funds for technology projects always sparks a hot debate. On one hand, if the government is going to dole out loans to businesses, why not spend the money on something that could change the game? Electrification of the car could do that for an industry that has made gas burners for more than 100 years. On the other hand, promising new technologies have usually been funded by risk-taking venture capital firms and daring investors. To date, Fisker has raised more than $100 million in private capital. Tesla has raised much more, including $82.5 million in private funds and $50 million from Daimler AG recently. For Fisker, that means tax payers are being asked to gamble roughly five times more than the private players who invest in technology. In other words, if the true believers who think electric cars are the future don’t have enough conviction to invest more money, why should the public? There’s nothing inherently wrong with public funds spurring new technology. But at a time when the nation is running huge deficits, it would be nice to see the private players match Uncle Sam’s skin in this game.

Reader Comments


September 22, 2009 7:37 PM

We are spending millions of tax-payer dollars on getting technology we already have. Another clunker idea that should be junked.

Green Jobs

September 22, 2009 8:04 PM

Here come the Green Jobs! No doubt the UAW will get in on this too!

Russell Datz

September 22, 2009 8:05 PM

The plug-in technology in the Fisker Karma, and other alternatively-fueled vehicles, has not yet been developed for mass production. This is why costs are high right now. However, market studies show sales of PHEV technology will catch on, and when they do development — and ultimately product — costs will come down quickly and dramatically. Remember when flat screen TVs cost $10,000 or more? If those who could afford that technology then didn’t support it, we wouldn’t have $600 flat screens today. Same for cell phones, computers and even refrigerators. It’s important to note, too that these are conditional loans dependent on our meeting certain milestones, and we will be creating or saving at least 5000 jobs. Fisker didn’t just get a half-billion dollar check — we have to earn it.


September 22, 2009 8:14 PM

You should use KickApps for comments and ratings. There is a social graph behind it.

Franqui v

September 22, 2009 8:51 PM

I'm almost convinced that one day in my life time, we will all be lining up to charge our vehicles, wheather they be at home in their garages or charging stations for renters and transits. I'd like to see electric motor wheel as the leading direction of motoring as some testing convinced me. Electric motor wheels have conceptually the greatest design ratio being closest to the contact point on the surface of the road.


September 22, 2009 9:43 PM

The government should remove subsidies from gasoline power before adding subsidies to other energy methods. Have drivers pay the true cost of building roads, environmental remediation, disposing of old cars, etc. through a more realistic gasoline tax. Then this government-distorted transportation system based on large heavy cars traveling long distances will be replaced by a market-driven sustainable combination of private cars, shared cars, bicycles, public transportation, and innovations we haven't even seen yet. In the current system well-connected companies who can siphon taxpayer money are the only winners.


September 22, 2009 9:56 PM

Ironic tax dollars going to companies where the Average Joe can't afford their cars. If I wanted a fuel efficient car, I just buy a Civic or a Scion.


September 23, 2009 4:07 AM

Why give money to develop high price, low volume motors.
It's mass market, high volume models that should be being developed.

Johnny Dollar

September 23, 2009 7:23 AM

There is absolutely nothing wrong with the government using tax dollars and legislation to distort a market for the better. If we only allow profits to drive early stage innovation, we are unlikely to benefit in the long term. Too many negative externalities would occur. For example, if George Bush had actually done SOMETHING to leave a legacy of improvement when the economy was in better shape, more investment would have followed, and we wouldn't have to do it now under less optimal financial conditions. However, we must proceed.

R Nelson

September 23, 2009 8:12 AM

Not only that, but government is not always good at picking winners. When they choose a few companies to invest in, it also creates a disincentive for venture capitalists to invest in other promising companies because of the competition from government funded companies. Good intentions don't always equal good results.

Ed Straker

September 23, 2009 8:31 AM

Do I have this right?

* $528 million loan to finish work on its $88,000 Karma plug-in electric sports car
* Fisker,~,expects that its sports car will go 50 miles on electric drive before the gasoline engine kicks in
* ~ Chevrolet Volt, which will likely go 40 miles before the gasoline engine kicks in to recharge the battery

These sound more like hybrids than
electric. Tesla's car doesn't have a gas engine - that's all electric.
Perhaps a new car category is created:



September 23, 2009 3:56 PM

I like Ed's comment - funny
Here's some things to think about...
Electric vehicles require electricity. Who/what makes the energy in the form of electricity? Right now there is wind, water, solar, coal, and nuclear. Out of those, which is the cleanest and most efficient? What is the government doing towards supporting the energy suppliers that are the cleanest and most efficient? Wouldn't it seem more practical to support the energy supplier with the purpose of creating cheaper and more affordable energy for the United States? Homeowners still need to pay for the electricity for their $40,000 hybrid that they can't afford. If one were to break it down, what's the cost of electricity per mile for the homeowner? Most importantly what is the cost/benefit of spending large amounts of money on expensive hybrids when the cost of energy and living is still very expensive? Think about the statement from the above article, "But at a time when the nation is running huge deficits, it would be nice to see the private players match Uncle Sam’s skin in this game" (David Welch). Washington is full of people who have band aids for problems and not solutions. The ones investing into these start-up companies are poring tax-payer's money into companies who are out to make MONEY, not to make our lives better. The makers of Fisker, I'm sure, are paying themselves generously with our money with a sole purpose to place a band aid over a continuing issue rather than find a solution to an on-going problem. And most importantly, Fisker's plans to make money and pay off their loans seems questionable if there desired goal is to sell 500,000 of their vehicles in five years. GOOD LUCK!! Wheres the market research for that?


September 23, 2009 6:40 PM

Whats with the big push for electric vehicles? Greenies think ev's are the answer to global warming or whatever new junk science they ascribe to. Do they ever think of how the electricity is generated for these plug in vehicles. Probably not because they can't think for themselves. Coal power plants are this countries #1 electricity source. Then there is the toxic batteries that last 7-10 years. and what happens in an accident. you need a hazmat crew to clean up and evacuate 3 city blocks. I just don't understand these sheeple


September 25, 2009 6:46 AM

Theme : Addressing Range Anxieties.

1. The range of noticeable EVs are sufficient to meet the daily driving needs of more than 95% of drivers ((The vast majority of people (95%) drive less than 100/km a day, 82% of the respondents said they drive 40 miles or less a day, with an average daily driving distance of 27 miles.)).

As for long trip needs, all but Americans and many of developed nations have existing automobiles, in this regard, EVs are best suited to their daily use until the infrastructure comes into wide use. And people are already doing that.

2. The on-board IT system shows the driving radius on a maximum range display under the current state of charge and calculates if the vehicle is within range of a pre-set destination. And the navigation system points out the latest information on available charging stations within the current driving range.

3. In 21st century, home, workplace, or stores etc also serve as a charge station as electricity is everywhere. With a long extension code inside, just in case, riders can get help from almost anyplace, not to mention the stores to provide charge service, and many of EVs are equipped with a quick charger.

4. Unlike fuel price, as time goes by, the price of battery is expected to drop dramatically in the foreseeable future as with computer components, in that case, mounting additional battery might be not a problem. And the EVs that come in a range of 200 to 300 miles between charges are on fast-tract toward mass-market, as Batteries become more efficient.

5. Indian EV maker Reva said it has also set about addressing anxieties about e-car range, this fantastic wireless electricity/ "instant remote recharge" will be widely available down the line.

6. The vehicle-to-grid communication technology is helping the battery serve as a storage to prevent the costly blackout standing at about $90 to 100bn per year. That means utilities are shedding cost for additional storage facilities and ratepayers are selling electricity during peak demand so that EVs can make more economic sense, as we know. ((The cost of running the vehicle should be 1 to 2 cents per mile, compared to 10 cents or more per mile to run a gas car. Electric vehicles require little maintenance -- no oil changes, for instance --. Better still, they can sell electricity or charge at the stores offering charge service.))

It is also in the best interest of electricity utilities that EVs are going mainstream, thereby they need to put in charge stands where needed around highways, major roads with card readers or cell phone tech.

7. I'm hopeful that the charge network will extend the select districts to nation-wide scale throughout the world, and this environment can usher in "active private investings" in EVs. And I remain confident that investing in charge stands could give rise to multiple times as much investing effect, so to speak, some billions of investing, this simple deployment, could call into the most-sought energy independence and solid recovery around the world.

Thank You !

Paul (Vw)

September 26, 2009 10:24 AM

>>> - A tiny car company backed by former Vice President Al Gore has just gotten a $529 million U.S. government loan to help build a hybrid sports car in Finland that will sell for about $89,000.

I used to think Gore was a dope for blowing an election he should have easily won in 2000 (no, I don't mean the Florida recount, I mean the general election). But his moves on making money off of "green" are amazing.

So let me get this straight: over 1/2 billion American dollars to build a car in Finland which the average American can't afford to buy?


September 28, 2009 5:33 PM

We have to find an alternative solution before crude oil gone forever.


September 28, 2009 5:41 PM

According to experts working for a primary research company, we only have around 150 to 200 years of crude oil available for use, so yeap! it would be smart to find a new way other than oil to use in our cars to drive us home

Bill S.

October 1, 2009 9:15 AM

Just another typical pipe dream from our government; a waste of money in my opinion.


October 27, 2009 8:44 AM

Of course none of the managers or employees will get paid more than $200,000 because they received government money. Right!!!!!


December 21, 2009 2:58 AM

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.



November 1, 2010 12:43 AM

talk to me I can give you a vehicle that DOES NOT REQUIRE PLUG IN and will travel more 300 miles all Electric. I keep reading how all the auto makers getting millions but thier cars are still having a hard time reaching the 100 mile with a full charge. I am trying to raise 25,000. to build 2 prototypes and I'm not having much luck in raising the funds needed to build both vehicles to present them to the auto makers. There are no cosmetics involved simple cars that can maintain freeway speeds and city streets.

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