Fisker Fiasco Won’t Dent EV Funding

After being awarded $529 million in US loans, Fisker Automotive is laying off 75% of its workforce following the failure to secure a partnership deal to fund its operations for building luxury plug-in cars.

Fisker's supplier of lithium-ion batteries, A123 Systems (AONEQ) went bankrupt last year after receiving a $249 million federal grant and then being largely acquired by China's Wanxiang Group Co. That bankruptcy led to a halt in Fisker's production line and cut off the company's access to loans for failing to meet its production obligations.

The drama continued in March with the resignation of one of the company's founders, Henrik Fisker.

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The California-based Fisker produces the Karma plug-in sedan, which sells for a whopping $103,000. To date, the company has sold around 2,500 Karma sedans and was working on plans for a lower-priced EV. Twice the Karma has been recalled due to technical defaults. The Karma can run for 40 miles on electricity before its gas engine comes online.

The company has about 200 employees. Earlier this week, about 160 of these employees were reportedly discharged.

Fisker describes the workforce cuts as a "strategic step" in its efforts "to maximize the value of Fisker's core assets".

Fisker says it still has some 30 projects ongoing, with funding intact.

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While the criticism of the Fisker "fiasco" has targeted the Obama administration, the loans actually resulted from a program created by President George W. Bush to advance fuel-efficient vehicles. The Obama administration approved Fisker's loans in 2009.

To date, some 87,000 EVs and hybrids have been sold in the US.

Fisker's struggles have not dampened the administration's clean energy ambitions. The new budget proposal will increase spending on alternative vehicles by 75% in 2014, to $575 million. There would also be an annual $200 million fund to boost research in this sector. The proposal is not, however, likely to pass without some major adjustments.

By. Charles Kennedy of Oilprice.com