Carmaker Fisker, a Hollywood Favorite, Faces Government Scrutiny
The automaker's founder and COO gave testimony at a D.C. hearing about the financial troubles plaguing the company.
Fisker Automotive, maker of the Hollywood favorite Karma luxury hybrid plug-in vehicle, is in financial trouble. Its executives faced a Congressional hearing Wednesday about the government loans that it has yet to repay.
The Karma, which only sold in the low thousands since its launch in 2011, nevertheless counts notable industry figures as owners. Cee Lo Green, Justin Bieber and Pixar's John Lasseter have been reported to be owners or wait-listed buyers of the $100,000 vehicle (Bieber was ticketed on the 101 Freeway for reckless driving and speeding in the car).
Actor and environmental activist Leonardo DiCaprio, an investor in the company, summed up his love for the vehicle last year to BBC's Top Gear: "It's fantastic-looking. It drives like a sports car. It's amazing. ... I wanted to be part of the company and invest in it."
But for all the hype Hollywood has lavished on the gas-sipping sports sedan, the company faces questions about its future.
Earlier this week, the Treasury Department seized $21 million from Fisker after the company did not yet pay $192 million in funds loaned by the government to the automaker, the New York Times reported. The Times noted that the company is being seen as "the Solyndra of the electric car industry," in reference to the solar panel startup that failed with government investment.
The Atlantic, a cheaper $55,000 mid-sized sedan planned by Fisker, has been delayed, and the company has been mulling bankruptcy, sources told Reuters last month.
On Wednesday, the automaker's founder Henrik Fisker and COO Bernhard Koehler spoke at a Congressional hearing called "Green Energy Oversight: Examining the Department of Energy’s Bad Bet on Fisker Automotive."
In testimony at the hearing, Koehler outlined the challenges the automaker has faced, including losing a battery supplier that went bankrupt and losing $30 million in inventory due to Superstorm Sandy sweeping the East coast last fall.
"Fisker has not been able to restart vehicle production since a previously scheduled seasonal shutdown began in July 2012," he said, according to prepared remarks. "At the same time, our operating position has been impacted by the effects of Hurricane Sandy, when 338 Karma sedans were destroyed in the port of Newark, N.J., resulting in a loss of more than $30 million of irreplaceable inventory."
Henrik Fisker stated in prepared remarks that the automaker could get back on its feet.
"We sold approximately 2,000 of these vehicles to buyers around the world before having to cease production due to several difficult events," he said in testimony. "After resolving initial launch challenges, the cars perform well and customers love them. Fisker still has the potential to build on these achievements if the company can secure financial and strategic resources. I sincerely hope that the company can find a way to move forward and repay its Department of Energy loans."
However, since Fisker stepped down as CEO of the company in 2012, he is not "privy to details of the company's current financial condition or ongoing negotiations with the Department of Energy."