After failing to meet the milestones required by a loan agreement with the U.S. Department of Energy, Fisker Automotive, a startup making high-end hybrid electric cars, announced recently that it would stop work on a factory in Delaware and lay off 26 people. Fisker's troubles could prove disastrous not only for Fisker, but also for A123 Systems, which supplies the automaker with lithium-ion batteries.
The events raise the prospect of two failures at a time when the DOE loan and grant programs are under scrutiny after the bankruptcy of companies that it had funded: Beacon Power, Ener1, and most famously, Solyndra, a solar-panel maker that received a$535 million loan as part of a federal loan-guarantee program.
Fisker Automotive received a loan guarantee for $528.7 million; it has received $193 million so far. A123 Systems, a young company that was started with the help of government funds, was recently awarded a $249 million federal grant to build battery factories. It has used about half of the grant so far. Both companies have also raised large amounts of private capital.
Instead of drilling for oil and natural gas, President Barack Obama wants to make electric cars so that the U.S. will be less dependent on Middle East oil. Even General Motors' electric Volt had its batteries catch on fire. A study shows that charging the batteries in these cars would cost more in electricity than they would save in gas and put a bigger carbon footprint on the country.
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