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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