Months have passed since the saga about the fate of Fisker Automotive ended, which was the stimulus-funded electric vehicle flop that always seemed on the verge of bankruptcy but had a long existence as part of the walking dead.
The inevitable finally happened in November, after Fisker’s executives spent many desperate months traveling the world trying to find a buyer for the struggling company. Apparently blunders and stumbles that included fires, recalls and bad reviews for the only model Fisker ever produced – the Karma – made the business untouchable for outside investors.
It all contributed to an unrelenting run of bad publicity connected to the Department of Energy‘s toxic loan program, which provided taxpayer-backed funding for several duds, including now-famous Solyndra. Fisker’s collapse cost the U.S. public $139 million, which is inexcusable considering that founder Henrik Fisker and his colleagues burned through at least $1.4 billion and barely got the Karma to market, with only a couple thousand vehicles produced.
All that angst and acrimony has vanished now that the scrutiny over taxpayer losses has been alleviated (for better or worse), and the company has been delivered (on the cheap) into the hands of China‘s Wanxiang Group Inc., and chairman Lu Guanqiu (pictured). Where there was once a worldwide search for somebody – anybody – who would help bail Fisker out of its fiscal misery, now the new owner appears ready to spend his fortune to make the electric automaker succeed. He said as much to Bloomberg News earlier this month.
“I’ll put every cent that Wanxiang earns into making electric vehicles,” Guanqiu said at the company’s Chinese headquarters. “I’ll burn as much cash as it takes to succeed, or until Wanxiang goes bust.”
Where was this guy in 2012 and 2013 when Fisker circled the drain? A tycoon with that kind of commitment to success would have been welcome to salvage the crappy investment made by the Obama administration in this electric-toy-for-rich-people company. But the Energy Department says they tried oh-so-hard to make it work.
“While the outcome is not what we hoped for,” said Dawn Selak, an Energy Department spokeswoman, “the Department explored every option available and closely followed federal legal processes in an effort to get the best possible recovery for the taxpayer.”
The truth is, as Fisker cast about for a buyer or a partner, Wanxiang Group was on the agenda for a conversation. After all, China’s largest auto parts manufacturer won the bidding for Fisker’s former battery supplier A123 Systems – another DOE stimulus grant recipient that went bankrupt.
“It’s in our interest if we can help Fisker, in any way we could,” said Wanxiang America President Pin Ni to Bloomberg news at the end of January 2013. “They’re a customer so it will be in our best interest to support them, as a vendor or possibly in a strategic alliance.”
But Wanxiang wasn’t so interested that they wanted to help the Obama administration out of its embarrassing fix with the U.S. taxpayers. So, smartly, Lu, Pin and company waited the process out so they could seize the moment when Fisker would be at its cheapest (bankrupt) and most desperate. The $149.2 million Wanxiang plunked down covered the comparatively paltry $25 million that DOE “recovered for the taxpayers,” and the rest covered the remaining assets held by Fisker.
According to Bloomberg News the motive for the Wanxiang’s investment is the opportunity to sell cars in the U.S., a milestone that Chinese companies have yet to achieve. An interview with the 69-year-old Lu revealed his longtime desire to manufacture vehicles, which has largely been thwarted by the technology deficit compared to automakers in other nations. He sees the electric niche as an opening to enter an untapped market in which he can compete, although many have failed and none have succeeded yet. An analysis by a law firm that specializes in patent infringement also revealed that Fisker’s intellectual property in technologies for components such as the drive-train and aluminum sub-framing holds significant value as well.
Lu’s rhetoric speaks to a commitment that Fisker’s seed investors – such as Silicon Valley tech boosters Kleiner, Perkins, Caufield and Byers – were unwilling to match. They enlisted the help of the Obama administration, who coerced an “investment” from the American taxpayer, and then they bailed on the enterprise.
China reaps the good parts while the U.S. gets shortchanged. Thanks Al Gore!
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.