Fisker: we scarcely knew ye

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Of all the Department of Energy's green loan debacles and there have been many, Fisker stands above even the Solyndra disaster for a combination of audacity and incompetence.

(For previous posts regarding Fisker, please go here)

To quickly recap: Fisker Automotive was to build electric hybrids cars and was approved for $529 million in loan guarantees (more than they requested) from the Department of Energy to do so. Originally, the two models of cars they were to build were going to be in the $50,000-$60,000 range. In short order, that price escalated upwards to the $110,000 range for it's high-end model thus going from hybrid to luxury hybrid.

The cars were to be assembled at a plant in Delaware as part of the justification for this massive loan was that it would create good paying green manufacturing jobs here in the U.S. The only problem was that the Delaware plant never produced a single car, rather the assembly operations had been relocated to... Finland.

If you were thinking that perhaps a stipulation of the loan would be that our tax dollars wouldn't go to pay the salaries of Paavo, Heikki and the rest of the boys over there, you and we are in the same company.


After falling drastically short of production and sales goals (last year, they sold only 900 out of the 48,000 market-wide plug-ins), the cars plagued by mechanical, electrical and software problems and the failure of A123 batteries (yet, another DOE green loan #fail) last year was a harbinger of doom for Fisker and its aptly-named luxury model "Karma".

And on Monday, there was even more bad news for the car company that has not produced a car since last August.


From the New York Times:

The all-but-closed company skipped a large loan payment that was due on Monday, leading the federal government to take the unusually aggressive step of seizing $21 million from the company's cash reserves to begin recouping the $192 million in taxpayer dollars spent on the company's flawed strategy.

Which means, of course, Fisker is still on the hook to U.S. taxpayers to the tune of $171 million.


The fall-out from this extends beyond merely financial as green technology and our wisdom of taxpayer subsidies for green technology takes a P.R. hit:

Some environmental activists worry about the potential ramifications of a Fisker bankruptcy.

"We can't get to where we need to be in electric vehicles without government help," said Dan Becker, head of the Safe Climate Campaign, an advocacy group in Washington.

Mr. Becker, good sir, if $192 million committed out of $529 million promised isn't considered "help", we scarcely know what is and Fisker still managed to bollox things up.



And if the Obama administration has committed tax-payer money to other, more established auto-manufacturers like Ford and Toyota for their EVs without such disastrous results what is the explanation for what happened with Fisker?

From CBS News:

The Obama administration was warned as early as 2010 that electric car maker Fisker Automotive Inc. was not meeting milestones set up for a half-billion dollar government loan, nearly a year before U.S. officials froze the financing after questions were raised about the company's statements, newly released documents show.

An Energy Department official said in a June 2010 email that Fisker's bid to draw on the federal loan may be jeopardized for failure to meet goals established by the Energy Department.

Fisker continued to receive money until June 2011, when the Energy Department halted further funding. The agency did so after Fisker presented new information that called into question whether key milestones - including launch of the company's signature, $100,000 Karma hybrid - had been achieved, according to a credit report prepared by the Energy Department.

The December 2011 credit report said "DOE staff asked questions about the delays" in the launch of the Karma "and received varied and incomplete explanations," leading to the suspension of the loan.

Recall that the Fisker loan was approved in mid-2009 so it only took a year for the warning flags to go up. One year.

If the warning flags were going up that early, it would suggest perhaps that exercising some due diligence at the front end would've revealed that the loan should not have been made in the first place. Just sayin'.


As it stands, and we are being polite, what this represents is a dereliction of duty by Team O in the stewardship of the taxpayers' scratch. There's really no other way to look at it and yet there will be no repercussions for this willful negligence.

Committing tax-payer money to not-yet-market-ready technology is a losing proposition and committing the same to a start-up using that same technology that can't find sufficient private backing is a guaranteed losing proposition.

Unfortunately, Team O won't learn this lesson. The pursuit of currently suspect green technology subsidized by your money is an article of faith embedded in their collectivist religion and for the smartest kids in the classroom picking winners and losers with respect to directing the economy and "creating" jobs is a divine rite not to be left to the whims of market realities. That we should be so fortunate to be blessed by their benevolence and wisdom.




* Perhaps the quintessential image of the Karma. Being towed off the track after breaking down shortly into Consumer Reports test drive of the car. On the bed of that truck, the Karma achieves the greenie dream of a zero emissions vehicle lumbering down the highway at 50 mph.

Another day, another DOE green energy loan fail

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You know your idea is sunk when even the Chicomms who probably throw more tax-payer money at "green" technology than we do can't make it work.

A123 batteries, whom we've covered previously, is part of the Department of Energy's green loan program. They make or attempt to make lithium-ion batteries. One problem is, those batteries don't work. Despite this fact and despite the fact that they've declared bankruptcy hasn't appeared to have been sufficient cause for removing them from the government pay roll.

The Obama administration provided struggling battery maker A123 Systems Inc with nearly $1 million on the day it filed for bankruptcy, the company told lawmakers investigating its government grant.

The company, which makes lithium ion batteries for electric cars, filed for Chapter 11 bankruptcy protection last month after a rescue deal with Chinese auto parts supplier Wanxiang Group fell apart.

That same day, October 16, A123 received a $946,830 payment as part of its $249 million clean energy grant from the Energy Department, the company said in a letter, obtained by Reuters, to Republican Senators John Thune and Chuck Grassley.

In the letter, dated November 14, A123 said the October payment was the most recent disbursement it had received from the government, with an additional $115.8 million still outstanding on the grant.

Thune and Grassley have pressed the Energy Department for more details about its funding of A123 as the company has faltered.

"The Department of Energy needs to answer for why it appears to put federal grants on auto-pilot to the detriment of U.S. taxpayers," the two senators said in a statement. "This can't stand."

We haven't seen an actual pay check in perhaps 20 years. DOE loan recipients haven't seen one in a while either as no matter what condition their business is in, every two weeks it seems, they get that direct deposit into their bank account.

And it gets better: A123, who has blown threw just under half of their loan allocation, says they may still need to use the balance of their grant money to work on their batteries that don't work.

In saner times, companies that produced stuff that didn't work would simply be allowed to go out of business. Their capital, both material and human, would be allowed to move on to ventures that perhaps did work bettering the economy and society as a whole. Not anymore. With tax-payer dollars, we enslave this capital in perpetuity that could better be employed elsewhere.

Welcome to our new economic model.

More great moments in the history of tax payer-funded green energy FAIL

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New Rule: If you are a pol that attends the ground-breaking of a business that recieved tax-payer money, your ass better be there as well when they start handing out the pink slips.

Another Department of Energy green loan failure and just the latest among those that are stacking up like cord wood.

President Obama touted it in 2010 as evidence "manufacturing jobs are coming back to the United States,” but two years later, a Michigan hybrid battery plant built with $150 million in taxpayer funds is putting workers on furlough before a single battery has been produced.

Workers at the Compact Power manufacturing facilities in Holland, Mich., run by LG Chem, have been placed on rotating furloughs, working only three weeks per month based on lack of demand for lithium-ion cells.

The facility, which was opened in July 2010 with a groundbreaking attended by Obama, has yet to produce a single battery for the Chevrolet Volt, the troubled electric car from General Motors. The plant's batteries also were intended to be used in Ford's electric Focus.

Production of the taxpayer-subsidized Volt has been plagued by work stoppages, and the effect has trickled down to companies and plants that build parts for it -- including the batteries.

“Considering the lack of demand for electric vehicles, despite billions of dollars from the Obama administration that were supposed to stimulate it, it’s not surprising what has happened with LG Chem. Just because a ton of money is poured into a product does not mean that people will buy it,” Paul Chesser, an associate fellow with the National Legal and Policy Center, told FoxNews.com.

On the campaign trail, the President has continually decried the "top-down economic policies that got us into this mess in the first place” which confuses us because he is a first-rate purveyor of this economic school of thought as evidenced his colossal failure that is the DOE’s green energy loan program.

With no real market analysis executed for electric car demand, they built a factory to make batteries for the number of cars they decided to build.

No amount of money they were going to throw at electric cars, which in the case of Government Motors' Chevy Volt included a $7,500 credit, was going to change the fact that, relatively speaking, no one wants the damn car.



And dig this from Chesser:

Chesser said no amount of government subsidies can counter the practical problems posed by plug-in cars.

“Electric car batteries do not perform much better than they did 100 years ago," he said. "Research has not conquered the battery storage issue, and therefore the electric transportation ‘stimulus’ did not boost the ‘technology of the future,’ but instead a century-old technology as far as performance and capability goes.”

(italics, ours)

Dude. Remind you of any other so-called high-tech green sector technology we are investing in that is more a throw-back to the 19th century? High-speed choo-choos, perhaps.


And Chesser, again, for the kill:

“Had it been private investors rather than government bureaucrats making the decision, there either would have been a reality check about the industry, or only those who made individual decisions to invest would have lost their money, not taxpayers.”

Tax-payer subsidies are all about quantity and brute force. Since there is no direct skin in the game for the investors, ostensibly, the U.S. taxpayers, there is really no accountability required of those people in the government administering those decisions. No skill, no forethought and certainly no prudent market analysis required - you are the U.S. government so, screw it, you just keep throwing money at it.



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RINO Alert

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For those Republicans out there that fear the party has been taken over by extremist elements led, in large part, by the tea party, can turn their lonely eyes to Brian Bilbray (R-San Diego) who is more than willing to throw your money away down the crap hole of green energy subsidies.

Rep. Brian Bilbray is winning praise from the solar industry for casting the sole Republican vote this week against efforts to dismantle the federal loan guarantee program for clean energy linked to the Solyndra debacle.

In the run-up to fall elections, many Republicans in Congress have embraced the "No More Solyndras Act," which would go beyond implementing safeguards to improve loan guarantees and dismantle the program altogether.

California-based solar panel manufacturer Solyndra received a half-billion dollar federal loan guarantee before filing for bankruptcy protection last year.

Bilbray participated in vote on a rough draft of the new legislation by the House Subcommittee on Energy and Power. The measure moved ahead 14-6 toward a possible House vote.

The Solar Energy Industry Association expressed its appreciation on Friday in a news release.

"It takes true vision and courage to ignore politics and take a principled, fact-based stand in support of renewable energy," said Rhone Resch, president of the umbrella trade group for solar manufacturing, distribution, research and financing.

Yes. What passes for vision and courage in D.C. is committing $537 billion dollars of tax-payer money on technology that isn't market-ready and which is owned, in part, by a presidential bundler. That Bilbray is some sort of maverick, or something.



So, who does the congressman think is to blame for the Solyndra fiasco?

Reached by phone, the congressman blamed "mid-management" at the Department of Energy for mishandling clean energy loan guarantees and asserted that his colleagues in the House were "blaming the vehicle" instead of the driver.

"The program is being thrown under the bus because people don't want to admit that it was administered horrendously," Rep. Bilbray said. "The program should be able to do great things if it's administered properly."

This is a prime example of willful ignorance. The decision to award Solyndra this money was made at the White House/cabinet level. Independent and Treasury Department auditors, pleaded with the Department of Energy and the White House not to make this loan - they rightly saw it as a bad bet - but ultimately, their pleading was to no avail.

And guess what? We will blame the driver and the vehicle. Yes, it was administered poorly and yes, it is a fatally-flawed concept. If Solyndra's ability to manufacture solar panels was a viable business plan then what do they need of tax-payer money?

As the Department of Energy's green energy loan program body count continues to mount (Solyndra, Abound Solar, Beacon Power, Ener1, Evergreen Solar, Range Fuels, Raser Technologies, Spectrawatt, Thompson River Power LLC; a partial list of companies that participated in the DOE loan program and which have all filed for bankruptcy), we are waiting to hear of one of its success stories and which will then beg the question if they could've succeeded without tax-payer assistance.

Say, can we just forget about what I said earlier?

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It would appear as though Energy Secretary, Steve Chu is learning there is quite a bit of difference between saying dumb stuff as a pointy-headed academic and saying dumb stuff as the head of the Department of Energy.

Recall it was Chu, before entering the administration and as a professor of physics at Stanford, said he desired to see gas prices in the U.S. approach that of Europe's.

And recall a couple weeks back, Chu, now the very public face of the DOE and maintaining his principled stand on gas prices, told Congress that lowering gas prices was not really that high of a priority of his.


Well, politics has a curious way of adjusting one's principles as bad poll numbers suggest the American public does indeed hold the President and his people responsible for high gas prices.

From the National Journal:

Energy Secretary Steven Chu on Tuesday retracted his now-infamous quote from 2008: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.”

“I no longer share that view,” Chu said in response to questioning from Sen. Mike Lee, R-Utah, at a Senate Energy and Natural Resources Committee hearing on another topic related to DOE’s loan-guarantee program.

Chu’s 2008 quote, initially included in a Wall Street Journal article, has formed the foundation for daily Republican attacks on President Obama over high gas prices.

Chu seemed to equivocate, pause, and stumble over his words when responding to Lee’s question about high gas prices. Other comments Chu made at another hearing late last month put him in hot water on gas prices. Politico reported on Feb. 28 that Chu told a House committee that he was not working to lower gasoline prices but to wean the United States off oil. That story has since been corrected to clarify that DOE is working to both lower gas prices and wean the country off oil. But that was only after the story was picked up by Republicans and used against the administration.

During his testimony before the Senate panel on Tuesday, after stopping and starting with a few thoughts on the economy and the department’s commitment to alternatively fueled vehicles, Chu told Lee: “Of course we don’t want the price of gasoline to go up. We want it to go down.”

New polling out this week found that the president's disapproval rating is going up alongside high gasoline prices, which averaged $3.80 per gallon nationwide on Tuesday.

After the hearing, Chu told reporters that he changed his view from 2008 because of the fragile economy.

“There is a real hardship that Americans are suffering at the gasoline pump,” Chu said. “The recovery is fragile. Another spike in gasoline prices could put that recovery at jeopardy. So there are many, many reasons why we do not want the price of gasoline to go up.”

(italics, ours)



Splitting atoms at Lawrence Livermore Labs is a little different from telling working Americans that higher gas prices is necessarily a good thing, now isn't Steve?

It remains to be seen, however, if Chu really believes this new-found alleged pragmatism. We doubt it. He currently runs the administration's cronyistic green energy loan program and we doubt the President would've picked the guy to run the DOE if he was a practical all of the above energy type.

With the President's poll numbers tanking, throw the people some comforting words to let them know you feel their pain and get back to business as usual.


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More great moments in the history of crony capitalism

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Who's up for a Fisker update?

You all remember Fisker, right? The Al Gore-backed recipients of a $529 million loan guarantee from the federal government in order to build $100,000 electric sedans in Finland. Let us know when this stops looking like a business model in which to poor that amount of tax-payer money because it just keeps getting better.

It would appear that there really is nothing greener than a car that doesn't run.

Here's the test drive report from Consumer Reports:

Our Fisker Karma cost us $107,850. It is super sleek, high-tech—and now it’s broken.

We have owned our car for just a few days; it has less than 200 miles on its odometer. While doing speedometer calibration runs on our test track (a procedure we do for every test car before putting it in service by driving the car at a constant 65 mph between two measured points), the dashboard flashed a message and sounded a “bing“ showing a major fault. Our technician got the car off the track and put it into Park to go through the owner’s manual to interpret the warning. At that point, the transmission went into Neutral and wouldn’t engage any gear through its electronic shifter except Park and Neutral.

We let the car sit for about an hour and restarted it. We could now engage Drive and the same error message disappeared. After moving it only a few feet the error message reappeared and when we tried to engage Reverse the transmission went straight to Park and again no motion gear could be engaged. After calling the dealer, which is about 100 miles away, they promptly sent a flatbed tow truck to haul away the disabled Fisker.

We buy about 80 cars a year and this is the first time in memory that we have had a car that is undriveable before it has finished our check-in process.

(italics, ours)


Because nothing says boondoggle like not even test driving your own vehicle before handing it over for a third-party assessment.


Think about it: billions upon billions of dollars in green technology subsidies and the prices are going in the wrong direction and, in this case, for products that don't even work unlike other areas of the tech sector (computers, TVs and smart phones) where no subsidies were received and real skin was in the game and the market determined the winners and losers.




* As an unintended safety feature, Karma drivers will enjoy the increased visibility.

Yet another Dept. of Energy Agriculture loan FAIL

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Stacking up like cord wood (cellulose)

AgSouth Farm Credit, the bank that loaned Range Fuels $80 million to launch its Soperton ethanol plant, is foreclosing on the plant.

That leaves taxpayers on the hook for the $64 million portion of the loan that was guaranteed by the U.S. Department of Agriculture.

AgSouth advertised the foreclosure sale of the plant in Thursday’s Soperton News.

Repeated phone calls to Range Fuels over several days were not returned. The company’s website disappeared in October.

Justin DeJong, a spokesman for the Department of Agriculture, said in a statement Thursday night: “We are disappointed that this company did not succeed, and we will be working on behalf of the American people to protect the federal government’s interest in the loan.”

In its statement, the Department of Agriculture said it had worked with AgSouth “on options to revive operations, but on October 27th notified the lender that it was moving forward with liquidation, because liquidation is seen as the best way to preserve U.S. assets and reclaim funding.” The department said it anticipates that there are “a number of companies” that could be interested in the site.

That $80 million is on top of $76 million given to the company back in 2007 which claimed it could produce millions of gallons of ethanol from wood chips.




From Robert Bryce:

There’s ample reason for outrage here. Range had claimed it could make ethanol at efficiencies far greater than those being achieved by corn-based ethanol producers. Tad Patzek, chair of the petroleum and geosystems engineering department at the University of Texas at Austin and a veteran critic of the biofuel craze, told me that Range’s failure “was easily predictable based on the thermodynamic inefficiencies of the refineries. But no one in the Department of Energy paid any attention.”

Allow us to translate: It took more energy to produce the ethanol than that same ethanol would yield.



More from Bryce:

Instead, federal bureaucrats were once again gulled by extravagant claims from people like Khosla and a cadre of high-profile national-security types, who continue to claim that ethanol and other biofuels will somehow save America from the evils of foreign oil. And the federal bureaucrats were convinced even though a small dose of sixth-grade math would have shown that large-scale development of wood-based biofuels was little more than a pipe dream.

We're pressed for time right now but we are going to revisit this issue later on as time permits and as related to some breaking news yesterday.

We know you are waiting for the other shoe to drop but we have yet to locate any Obama crony/donor/bundler in this particular case. Shocking, we know.

Suffice to say, however, yet another misguided plunge wasting tens of millions of tax-payer dollars into a not-yet-ready-for-prime-time alternative energy technology.

More great moments in the history of crony capitalism... cont.

As even more and more legacy media outlets are digging into the Solyndra scandal it becomes more and more evident why the White House is blowing off Congressional subpoena request deadlines.





From the WaPo:

At a number of points in its troubled history, the solar company Solyndra faced dire financial problems that threatened its survival. Yet at each crisis, Energy Secretary Steven Chu and officials at his agency failed to take steps that critics say could have limited taxpayer losses when the company collapsed last summer.

Instead, Energy Department officials monitoring the solar panel manufacturer and its $535 million federal loan stepped in with financial assistance, or worked to dispel concerns raised by industry analysts and other Obama administration staffers, according to previously confidential documents analyzed by The Washington Post.

The officials raised no public red flags even as Solyndra executives presented a glowing picture last summer to Capitol Hill lawmakers, describing a growing company when internal sales figures suggested one that was in serious trouble.

The newly obtained documents, along with other records obtained in recent weeks, offer the clearest picture yet of Solyndra’s deteriorating finances and the Energy Department’s extraordinary efforts to prop up the company. Chu, who is scheduled to testify next week before a House investigating subcommittee, is likely to be questioned about his agency’s willingness to invest millions more taxpayer dollars in the firm, even after the White House had abandoned hopes of a rescue.

Everybody including the Treasury Department, OMB and independant auditors knew that Solyndra was a dog but Chu, the Energy Department and, of course, the White House forged ahead with their continuing support of their fair-headed green power child.

With Solyndra technically in default this past December for failing to make a $5 million reserve fund payment as a taxpayer protection, the Energy Department could have shut down the entire operation. However, instead of doing so, DOE officials wrangled $75 million dollars out of private investors with the stipulation that placed their new investment ahead of taxpayers for repayment in the event of a bankruptcy.

If this sounds familiar it should as in the Chrysler and General Motors bankruptcy cram-down proceedings, secured creditors were told to take a back seat to union concerns.



To recap: Against the better judgement of everyone outside the White House and DOE, a $535 million loan at near-zero interest rates (which were lower than similar DOE loans) was dumped into a solar company, linked to Obama fundraiser/bundler George Kaiser, that produced not-yet-ready-for-market-time solar panels and which ultimately went belly up. If that isn't crony capitalism carried out to a "t" then we don't know what is?

Sarah sez

One in a series that takes a look at some of the zany and madcap things said by the ex-governor of Alaska.



In response to a House bill that would overturn an effective ban on older incandescent light bulbs, Palin said the following:

"We are taking away a choice that continues to let people waste their own money,"

So typical of a conservative Republican, isn't it? Whether it's killing the unborn or having the ability to choose what type of light bulb you want to use, they're always so into bossing people around and denying them choices.



Wait. That wasn't Sarah Palin but rather Department of Energy Secretary, Steven Chu?


What he said was rather odd because we can't recall anywhere in the Constitution where it grants the federal government the power to dictate how it is people choose to spend their money.

As for Chu saying this, it really shouldn't come as too much of a surprise as this is the same gent who said he's cool with high gas prices.


But we do thank Chu for his refreshing honesty as he essentially reveals the statist mindset: You are not to be trusted with personal economic choices. Since you cannot be trusted to make the correct choice, we will do it for you.

And what is becoming a trend for this administration is that being drunk with power has this wonderful ability to shed inhibitions and with it, any premise of even attempting veiled meaning or code-speak so we instead get the unvarnished truth.

Admit it... you knew it was coming

It was almost like waiting for the other shoe to drop.


Recall last spring when General Motors CEO, Ed Whitacre, was on national television flat-out lying to the American public regarding paying off their TARP loan when in reality they were simply using another TARP line of credit to do so?

Now, if you were looking for a reason to not buy from Chrysler as well, you just may have found it.

American taxpayers have already spent more than $13 billion bailing out Chrysler. The Obama administration already forgave more than $4 billion of that debt when the company filed for bankruptcy in 2009. Taxpayers are never getting that money back. But how is Chrysler now paying off the rest of the $7.6 billion they owe the Treasury Department?

The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion.

Technically speaking, the DOE loan program is for specific, qualifying re-tooling projects but when your re-election campaign efforts will rest, in large part, on the health of the two domestic auto-makers to which you are wed, why bog down that $3.5 billion in bureaucratic red tape.

So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.

Kind of tough to cram onto a campaign button but you leave out enough of the details, it just might fit.

The Rolling Stones would take issue

With all apologies to Instaglen...

Hey, do you remember when they told us that if we voted for McCain it would mean a continuation of the Bush era environmental policies that weren’t grounded in reality and eschewed good hard science? Well, they were right.

KT has got the low-down here on a very cutting edge and innovative idea that has taken hold at the Department of Energy.