Congressional Republicans are going to have a field day with this one. Last Friday, luxury electric carmaker Fisker Automotive laid off 75 percent of its workforce as it copes with a series of financial and production troubles. Some 53 senior managers and executives are being retained primarily to help sell off company assets.
The Anaheim-based, Obama-backed green carmaker says it will continue to pursue “strategic partnerships” but has reached a point where layoffs are necessary. The company added that it “regrets having to terminate any of its hardworking and talented people” but the layoffs were “a necessary strategic step in efforts to maximize the value of Fisker’s core assets.”
Fisker makes the $100,000 Karma plug-in hybrid sports car, which has seen a profusion of misfortune since coming to market in 2011. Last summer, the company was forced to recall 2,000 vehicles to replace a cooling fan and lost $32 million when Hurricane Sandy destroyed 320 Karmas awaiting delivery in New Jersey. In November of last year, Fisker halted Karma production altogether after A123 Systems, the company’s battery supplier, filed for bankruptcy.
Pike Research’s John Gartner told the New York Times: “Once Sandy hit, it seemed like that was it. There has been no positive news from the company since that time, except for rumored discussions with potential new investors.”
But the new investors never materialized. While Fisker previously managed to raise some $1.2 billion from private sources such as Silicon Valley venture capitalist firm Kleiner Perkins Caufield & Byers and celebrities like Leonardo DiCaprio, in February the company’s best hope vanished when the Zhejiang Geely Holding Group of China, which had made a bid of $200 million to $300 million to acquire a majority stake, jumped ship.
Matters only worsened from there. On March 13, Henrik Fisker, the company’s co-founder, executive chairman and namesake, left the company over “disagreements with business strategy.” Shortly thereafter, the company put most of its workforce on a five-day furlough, which culminated in Friday’s mass termination.
Fisker has until April 22 to repay a portion of a $193 million low-interest loan it won as part of the Advanced Technology Vehicles Manufacturing Incentives Program, authorized by a 2007 bipartisan law championed by the Obama Administration. The company originally secured a $528.7 million loan in late 2009, but the remaining funds were frozen after Fisker failed to achieve production goals.
While the president’s critics are likely to cite Fisker’s failure as yet another reason the Department of Energy loan and loan guarantee programs are a waste of taxpayer dollars (Solyndra, anyone?), the Obama Administration says the programs have been successful overall.
In a statement to Bloomberg, DoE spokeswoman Aoife McCarthy said: “Despite Fisker’s difficulties, our overall loan portfolio of more than 30 projects continues to perform very well, and more than 90 percent of the $10 billion loan loss reserve that Congress set aside for these programs remains intact.”