The Fisker Karma, Photo by David Herron
Fisker is getting ready to begin selling a high end luxury plug-in hybrid car, the Fisker Karma, whose price clearly aims at the richer-than-god crowd. The Karma is a plug-in hybrid vehicle with a 50 mile battery-only range, after which the gas engine kicks in to provide power. It is a luxury sedan with the features meant to appeal to owners of high-end Mercedes, BMW's and the like. On Sept 23, 2009 the US Department of Energy announced a $528 million conditional loan to Fisker and the right wing fanatics went on the attack leveraging two points. One point was one of their favorite targets of demonization, Al Gore, and his support of Fisker. The other was the fact that the Karma is going to be assembled at a plant in Finland. The turmoil was helped along by a misleadingly titled article published in the Wall Street Journal and inflammatory incorrect news coverage on Fox News. To be clear there are some valid questions here but why did the right wing harumphing machine wait for an Al Gore connected story to kick into their complain and shouting mode? It seems they are pursuing their typical agenda of demonization and the connection between Al Gore (already demonized) and Fisker Automotive simply gave them a target of opportunity.
It is always helpful when the right wing harumphing machine kicks in to go to original sources and learn the real truth. In this case that is the loan agreement between the DoE and Fisker Automotive.
From the Conditional Commitment letter between Fisker Automotive and the DoE we learn that there are in fact two loans, the Karma Loan ($169 million) to assist bringing the Karma luxury sedan to market, and the Kx Loan ($360 million) to assist development of a lower cost Sedan aimed at a mass market. This second car is what Fisker calls Project NINA and is targeted at a more modest $39,000 list price and will be produced in the U.S.
The Karma (high end luxury sedan) is slated to begin production at a factory in Finland (see TH!NK to resume making electric city cars soon). That factoid is the nugget of truth in the shouting by the right wing harumphing machine, however they are blowing it up out of proportion. According to the Commitment Letter the Karma Loan includes support for R&D and parts production facilities in the U.S., vehicle certification to meet both U.S. and EU requirements, commencement of production, selling 11,000 vehicles by Sept 30, 2011, and creation of a dealer network in the U.S. Hence the right wing harumphing machine is making noise about a fraction of a fraction of the total loan.
Returning to the Kx Loan (modest priced sedan) portion of the Commitment Letter we see the requirements are purchase of a site for a factory, retooling the site for vehicle production, vehicle engineering, design and certification, commencement of production, and creation of a dealer network. Fisker has stated the production of this car will be done in the U.S. hence the Kx Loan is completely in support of jobs and production inside the U.S. The right wing harumphing machine should be happy about this, yet they are focusing on the fraction of a fraction as outlined above.
Another factoid which should please right wing harumphing machine is that the DoE loans include certification requirements to meet EU regulations. This means that vehicles made by Fisker will be eligible for export to Europe. This means creation of American manufacturing jobs making exportable products made in America.
All through the Commitment Letter conditions are stated under which Fisker will be eligible to apply to be advanced money from the loan. Each time Fisker is to apply for an advance from the loan they must give documentations and justifications. Hence this loan is not a case of the DoE simply writing a check and wishing Fisker luck with the money, instead Fisker has to follow through with a business plan and set up a real company producing real cars for sale to real customers.
The same right wing harumphing machine is using this opportunity to latch onto and demonize an earlier loan to Tesla Motors. They're misleadingly stating that Tesla is a British company and that both the Fisker and Tesla loans are going to production of high end luxury sports cars. As already noted only a portion of Fisker's loan is for their high end sports car with the majority going towards a modest priced family sedan. The case Tesla Motors loan is for the Model S sedan, again a more modest priced family sedan. Further Tesla Motors is an American company based in San Carlos California, not British. While Tesla does use car bodies made in England by Lotus, the final manufacturing and assembly is done in the U.S.
Fisker Automotive has responded to the critics stating that no DoE funding will be used for overseas operations and to detail the breakdown of the two loans and the milestones Fisker must meet, as already written above. Their statement is a little suspicious as the Commitment Letter requirements do include production of the Karma which will be done in Finland. Again if money from the DoE loan does go towards production in Finland it will be a fraction of a fraction of the whole loan. And for their part Fisker Automotive states they searched the U.S. for a U.S. plant to produce the Karma "but none were willing or able to build the 15,000 of these advanced vehicles per year Fisker required." Fisker's statement went on to say "The low-volume Karma will therefore be assembled in Finland by Valmet Automotive, one of the most respected contract auto builders in the world."
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Comments
“(Please freely repost this)
This funding for the car companies was all "pay to play", insider, self-dealing. The companies that were turned down had the exact same things in common:
1. They did not pay hundreds of thousands to buy influence. This is on public record and can be investigation under lobby and cost filings.
2. They did not make campaign contributions.
3. Each of the reasons they were told they were turned down were violated with each of the companies that did get money.
4. They were doing all of the work in the U.S. unlike those who did get the money.
5. They had a car design and those who got the money were “thinking about doing a car design”.
6. You could not draw a line from them to a politician or a person who made money or political gain unlike those who did get the money.
Every one of the people that did get money got the “requirements” of the section 136 law waived or were in direct violation of the intent-of-the-law yet the DOE team for that money us
You forgot: 7) None of them were run by aliens from Mars; 8) They did not promise sexual favors to Congressmembers; 9 through 9999) lots of other "not"s.
Many were denied loans that are worthy of them. To late to argue. Got to think of the positives, Finland will now be under pressure to buy US military products ,which is what we are best at,sadly.
Just have to wait and see if Fisker can deliver on Jobs.
Only 2 comments on this boring article:
1) How many times can you say "right wing harumphing machine"?
2) News should aim to leave extreme political bias out of its articles. Especially the transportation or cars sections of news sources. They typically report about......wait for it........cars, and not vommit their political slant all over the text.
Better luck next time, Dave.
@Jeff, how is it an "extreme political view" to demonstrate that a set of "journalists" are doing blatantly misleading pieces that are purporting to be "news"?
Good article! If we have American companies building vehicles all over the world, profits come here. Ask the Japanese and Korean manufacturers why they are building more cars in Canada and Mexico than the USA.
If you're trying to demonstrate that a set of journalists are doing blatantly misleading pieces.....then follow that line!
You reference a "misleading" article by the Wall Street Journal, and what you call "inflammatory coverage" by Fox News. One sentence. That's hardly demonstrating.
You spent the rest of the paragraphs saying "right wing fanatics", "going on the attack", "targeting" "demonizing Al Gore", and the "right wing harumphing machine" ad nauseum without defining who they are and failing to link these descriptors to WSJ and FOX.
You didn't demonstrate that a set of journalists are doing blatantly misleading pieces. All you did was provide you political view.
www.energy.gov/news2009/8050.htm
Fisker received a loan. They weren't bailed out like GM and Chrysler.
Under ATVM (Advanced Technology Vehicles Manufacturing), Ford got $5.9 billion, Nissan got $1.6 billion, and Tesla got $465 million. But they didn't get any adverse press.
Somehow it took Al Gore to bring ATVM to the light of day. Oy. Fox News and the WSJ look oh so desperate.
Sander Oker:
You are full of it. You don't cite any evidence whatsoever for any of your conclusions. In particular, you say none of the loan recipients have designs...but Nissan and Tesla actually have road-going prototypes!
Also, you act like making campaign contributions and hiring lobbyists is some kind of crime...sorry to break it to you, but this is the real world.
Then you accuse the recipients of violating the law. Again without evidence. Maybe you should just STFU.
"the richer-than-god crowd" What total nonsense !
I have signed up for an $89,000 Karma (#675) and I expect it to be $100,000 when all said and done. I just sold my Nissan 350Z roadster for $28,000. That means I have only $70k to find before the delivery date of end 2010. This is not a lot of money.
Please stop with your "only for the rich" communist drivel. Making and spending lots of money is exactly the American Dream so stop being a commie traitor and start writing intelligent things people will pay for (I second the above comments!) and you too may one day be able to buy a car !
Isn't Finland in Minnesota?
SInce when is 1/3 a fraction of a fraction? Where I come from, $169,000,000.00 is still a lot of money. When you add on top of that the fact that the damn car won't even be built (if it is ever built) in FINLAND ( The nearest thing to communist Russia), then I really have a problem with it as I think most taxpayers would! Any such money should stay in the U.S. if it has to be spent at all !!!!!!!!!!!!!!!
All of these grants and loans, financed by U.S. deficits make me ill.
Like Bill Gates said: "if they have a good business model, the market will invest in them."
If they don't, our stupid f'ing government will give them a handout. All of these loans are down the toilet - guaranteed.
And how smart is it to bail-out GM, and then loan money to people competing with them. MORONS running the government.
VOTE against all incumbents in the next election. PERIOD
Hey Sander,
You're right. I just read that Elon Musk made 14 trips to Washington in the past year (article about their plane crash).
It's not who you know in Washington, it's who you blow.
Business as usual in our debt ridden democracy.
The best government that money can buy.
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