Another ‘Green Energy’ Failure?
By: Mark Hyman
The residents at Boxwood, Stanton, Brandywine Springs and other surrounding communities may have lost the opportunity to get back to work at a nearby automobile assembly line.
Many of these residents were among the work force at the General Motors Boxwood Road plant outside Wilmington, Delaware. The plant was closed in July 2009 as part of the GM bankruptcy orchestrated by the Obama Administration. The Boxwood plant produced the Pontiac Solstice and Saturn Sky roadsters. GM shedthe Pontiac and Saturn (as well as Saab and Hummer) nameplates as part of the company’s bankruptcy reorganization.
Three months after the closing, Vice President Joe Biden visited the Boxwood plant. He announced $529 million in taxpayer guaranteed, low-interest Department of Energy loans to the California-based “green energy” auto manufacturer Fisker Automotive. In return Fisker would establish a vehicle assembly operation at the plant in Biden’s home state. Biden promised, “This is seed money that will return back to the American consumer in billions and billions and billions of dollars in good new jobs.”
The vice president was joined by Delaware Governor Jack Markell (D), U.S. Senator Tom Carper (D) and then-U.S. Representative Mike Castle (R). About 1,000 United Auto Workers stood in as the political and literal background for Biden’s announcement. Biden also promised that the plant would be turning out 100,000 cars a year by 2014.
Fisker was founded by Henrik Fisker and Bernhard Koehler, a pair of senior executives formerly with German automaker BMW.
In July 2010, Fisker Automotive completed the purchase of the 3.2 million square foot Boxwood plant for $18 million and another $2 million was paid for assembly line equipment and a modern paint shop. Shortly thereafter, workers began the process of removing the installed assembly line equipment. Reportedly, about $18 million of the $22 million in state aid has already been spent.
Fisker has spent $193 million of the $529 million federal loan package. That money went to the production of Fisker’s “Karma,” a luxury, four-passenger sports car with a base MSRP of $102,000 and costing almost $120,000 with added options. The Karma is being built in Finland in limited numbers.
Fisker named its more affordablepassenger vehicle the “Atlantic” — if one believes an MSRP of about $50,000 is “affordable.” According to a 2012 New York auto show report, the Atlantic is similar in styling to the Karma and also features four-passenger seating, which limits its usefulness to many American families. Even with tax credits, the car will sell for a hefty premium above the price of a typical mid-sized family automobile.
Unfortunately for the car manufacturer, the Department of Energy-Fisker money-train appears to have derailed. No additional money beyond the $193 million has been disbursed to the green-energy car company since 2011. There have been hints that Fisker has failed to reach established milestones in order to trigger additional disbursements. But the blame for the loan delay, according to former Fisker chairman Ray Lane, lies with Republican presidential candidate Mitt Romney.
“The DOE would have negotiated a new draw timeframe by now if it weren’t for Romney targeting these loans,” he claimed. Lane is a partner with Silicon Valley-based venture capital firm Kleiner Perkins Caufield & Byers, a major investor in Fisker. Lane is also a longtime major donor to both Republican and Democrat political campaigns.
Fisker Automotive’s financial and milestone concerns were enough to lead to an executive shake-up earlier this year. Henrik Fisker was relieved of duties as chief executive and was moved into the role of chairman replacing Lane. Fisker was replaced as the car company’s chief executive by Tom LaSorda, former Chrysler CEO, who also assumed the duties of vice chairman.
The car maker had indicated in 2010 the Atlantic would be in full production at the Boxwood plant by the summer of 2012. To date, the facility has not been retooled, according to Fisker officials and local area businesses. Fallout from the loan freeze and production delays has impacted another green energy company. A123 Systems, a supplier to Fisker of electric car batteries, has also been affected (“Solyndra Nation,” The American Spectator, April 2012).
There were only four cars in the entire complex’s massive parking lots on the week day we visited the plant late last month. A man identifying himself as the site manager refused to answer our questions other than to confirm Fisker Automotive owned the plant before asking us to leave the property.
Nearby businesses reported seeing significant activity in 2011 as assembly line equipment and scrap metal were removed from the plant but, the massive facility has appeared to be vacant for the last several months.
The carmaker has toughened its negotiating position with the Obama Administration, threatening to move its Atlantic manufacturing operations elsewhere, including overseas. LaSordastated a decision on where to build the car will not be made until later this year and possibly not until 2014.
The Caesar Rodney Institute, a Delaware-based think tank, is skeptical of the production claims advanced by Fisker Automotive. The Institute notes that current hybrid auto sales average about 300,000 cars annually. It questionshow a start-up carmaker producing expensive, high-end autos could expect to sell 100,000 cars and seize considerable market share from established, low-cost manufacturers such as Toyota whose Prius already accounts for 55 percent of hybrid auto sales.
The question is what will the Department of Energy do with the $336 million already earmarked but not yet disbursed to Fisker Automotive? We may not know the answer to this question until after November 6, 2012.
Mark Hyman hosts "Behind the Headlines," a commentary program for Sinclair Broadcast Group.