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October 21, 2011

"Solyndra on Wheels:" How Another Half Billion Went To Pay Finnish Workers To Make Cars That Get The Gas Mileage of Your Average SUV

"Solyndra on Wheels" is the designation given to this boondoggle by "Fantastical Andrew Fox."

I recalled reading that the Federal government had become a major financial partner in Fisker Automotive. That would explain the official rollout taking place in Washington. When I got back to my computer, I looked up the specifics. We the taxpayers are on the hook for more than half a billion dollars, about the same amount that got loaned to Solyndra, another “green manufacturer,” before they went bankrupt. At least Solyndra was manufacturing their products in this country, providing American manufacturing jobs (if short-lived jobs), and making a product that average Americans could conceivably afford. Fisker is manufacturing these gorgeous Leonardo DiCaprio toys in Finland. And the kicker, for those of you who would still claim that the risk of half a billion tax dollars is justified by environmental gains… contrary to the company’s initial hype, the Karma will only run for thirty-two miles on its electric motors before its turbocharged gasoline engine needs to kick in (as opposed to the initial estimate of fifty miles). Once that occurs, the Karma gets about the same mileage as a Ford Explorer. Not the new Explorer, even. The older, gas-hog, body-on-frame model. We’re talking twenty miles per gallon, folks. So much for your “green investment.”

The Karma is a $100,000 car, intended for the most niche of all markets: green-conscious ultra-rich types who can afford to blow $100,000 on a non-performance vehicle that has a little bit (a little bit) of eco-prestige.

How many cars could they possibly sell? How many multimillionaires are in the market for a gas-electric hybrid that costs $100,000 and looks like a cartoon version of a Corvette?

Is the thing actually delivering some kind of technological breakthrough? Not really.

Fisker said the EPA had rated the Karma at 54 MPGe (MPG-equivalent) when running on electricity from its battery pack, and that the EPA-rated electric range would be 32 miles.

But the other half of the window sticker--the 20-mpg rating for a Karma running on power from its range-extending gasoline engine--appeared nowhere in the release.

The only other series hybrid on the market, the 2012 Chevrolet Volt--with a less powerful electric motor and smaller gasoline engine--is rated at 94 MPGe in electric mode, and 37 mpg on gasoline, with an electric range of 35 miles.


Electric-car advocates privately express concern that critics both of electric cars and of the DoE low-interest loan program that helped fund Karma development will jump all over the gas-mileage figure, using it to criticize DoE efforts to aid advanced vehicle technologies.

So what seems to be going on here is that the Fisker Karma uses the performance equivalent of technology already on the market today, and is really only offering to give you an under-engineered gas-hybrid with some luxe features and styling.

The "innovative technology" here isn't really technology at all, but conventional niche-marketing. It's a gas-electric for the sorts of people who buy top-range luxury sedans at $100,000 a pop.

And American workers won't even build it. It's being built in Finland.

For this we should spend a half billion dollars?

Keep that in mind as you read the defenses of the expenditure, as reported by ABCNews.

With the approval of the Obama administration, an electric car company that received a $529 million federal government loan guarantee is assembling its first line of cars in Finland, saying it could not find a facility in the United States capable of doing the work.

Vice President Joseph Biden heralded the Energy Department's $529 million loan to the start-up electric car company called Fisker as a bright new path to thousands of American manufacturing jobs. But two years after the loan was announced, the company's manufacturing jobs are still limited to the assembly of the flashy electric Fisker Karma sports car in Finland.

"There was no contract manufacturer in the U.S. that could actually produce our vehicle," the car company's founder and namesake told ABC News. "They don't exist here."

Henrik Fisker said the U.S. money has been spent on engineering and design work that stayed in the U.S., not on the 500 manufacturing jobs that went to a rural Finnish firm, Valmet Automotive.

"We're not in the business of failing; we're in the business of winning. So we make the right decision for the business," Fisker said. "That's why we went to Finland."

Uh-huh. By the way, they will offer a different rationale for the move to Finland a bit later.

But for now -- a start-up company spent $529 million only on engineering and design?

I don't find that plausible. Especially because this vehicle's technical specifications are so low-side-of-mediocre. Based on their weak electric-range/miles-per-gallon-equivalent figures, it looks to me, as I said, that basic off-the-shelf technology is powering this car. The "innovation" lies in just saying "Let's do a high-end gas-electric hybrid." And that's it.

Did they design their own proprietary batteries and drive trains and so on? If they did, they did not seem to advance the state of the art, but merely created an inferior proprietary version of what larger auto manufacturers were already achieving.

Again: This is what we get for $529 million?

A half billion dollars on cartoony design choices combined with below-industry-average technical specifications?

Now, remember earlier it was claimed that the work had to be done in Finland, because no US site was capable of doing the work?

That's not true. It's just that... it would cost more to do it in America.

In a lengthy interview, Fisker said he apprised the Department of Energy of his decision to assemble the high-priced Karma in Finland after he could not find an American facility that could handle the work. They signed off, he said, so long as he did not spend the federal loan money in Finland -- something he says the company has taken care to avoid. He said the decision, ultimately, was to help prevent his company from following the path of Solyndra, which exhausted nearly all of its loan money on a high-tech solar manufacturing plant in Freemont, California.

"If you just start doing like what Solyndra did, making a factory in a place where it was too expensive to manufacture … [you] obviously fail," he said.

That's a perfectly valid business decision... except for the fact that a half-billion American, not Finnish, taxpayer dollars went in to "designing" this (wink, wink).

A Department of Energy spokesman pushes the "innovation" claim:

"Two years ago, critics said we shouldn't be investing in American auto manufacturing at all because the industry wouldn't survive," said Damien LaVera, an Energy Department spokesman. "They were wrong then and they're wrong today. From well-established names like Ford to innovative startups like Tesla and Fisker, America's auto industry is being reinvented. Continuing this turnaround demands more innovation, not defeatism. While supporting innovative technologies always carries a degree of risk, these investments deliver long-term benefits."

Once again, the car has a shorter electric range than the Chevy Volt (which I take to be the current industry standard) and gets worse miles-per-gallon on its gas engine.

Now that's probably largely because this Karma is a larger car with more features. But wouldn't "innovative technology" deliver some breakthrough, like being able to match (or nearly match) the Chevy Volt's performance but with a bigger, heavier vehicle?

Again, it just seems like we're paying to take pre-existing technology (or at least "new technology" which nevertheless fails to improve upon the old) and sticking it into the chassis of a cartoon-car sedan, and calling that a "major technological innovation."

If Ford just sticks a gas electric engine into the body of a Mustang, can they have $500 million, too?

Actually over one billion has been spent, with the rest going to another car company, Tesla. Because Tesla is a publicly-held firm, we've seen its books, and... it loses money every quarter.

While over one billion in loans (ahem, loans) has been approved for both companies combined, $300 million has been actually drawn down so far between them. (Note that keep saying that a half billion went to designing the Karma; that's not really true. Not yet. They can draw up to $529 million in loans. So far, between Tesla and Fisker (which makes, hypothetically, the Karma), $300 million have been drawn; I don't know how much of that is attributable to "designing' the Karma.)

And of course both Tesla and Fisker are politically-connected. Of course they are. Because when you're selling a political product, your true customers are politicians, aren't they?

Folks, we're making a bet," Biden said on Oct. 27, 2009. "We're making a bet on the future, we're making a bet on the American people, we're making a bet on the market, we're making a bet on innovation."

The announcement that the plant would re-open followed a heavy lobbying push by Delaware politicians from both parties, who cited the news as a sign of industry's turnaround. In September 2009, Republican Rep. Mike Castle wrote directly to Energy Secretary Steven Chu, saying the Fisker proposal had "great merit," and urging Chu to give the company "careful consideration" for the loan.

I had to put that in, for those who opposed Castle. Yes, he was a giant douche.

The governor and state politicians took turns, along with Biden, to proclaim the project to cheering blue-collar workers clad in jeans, caps and jackets. They said it would produce thousands of jobs and have cars rolling off the line by next year. Fisker said he remains convinced those jobs will come. While he has hired marketing, design and engineering teams in the U.S., the auto plant jobs in Wilmington right now number about 100.

And yet, the plant is in Finland. Spending this kind of money, we couldn't even have demanded that the plant would be in the US?

The Department of Energy loan to Fisker closed in April 2010, and again Biden took center stage in a department statement announcing the loan. "The story of Fisker is a story of ingenuity of an American company, a commitment to innovation by the U.S. government and the perseverance of the American auto industry," said the vice president.

ABC News sent questions to the White House Monday and requested an interview with the vice president. Biden was not made available, but an official in his office said "the Office of the Vice President did not encourage the Department of Energy to choose any particular company over any other but, like others in the Administration, supported the Department's loan program and the creation of car manufacturing jobs in the United States."

Energy Department officials have been steadfast that politics never entered the picture and each project was screened by professionals and secured on the merits. And executives from Tesla and Fisker said they won government support because their projects had the best shot at success. They said the involvement of well-connected figures in their companies should not suggest they attempted to use special influence to secure the loans.

Both companies have political heavyweights behind them.

I won't cut and paste the bigtime Democratic donors behind this. It's on page 3 of the story. But of course Al Gore makes an appearance... but not a comment.

Former Vice President Al Gore is another Kleiner Perkins senior partner. Gore could not be reached for comment.

Here's the kicker. With so much taxpayer money being pissed away on Democratic pet projects -- "stimulus," they call it -- Obama's actually doubling down on failure. One of his guys at OMB basically threatens an Obama veto of any budget that reduces his "green energy" mad-money.

In a letter from OMB director Jack Lew to congressional appropriators, the administration cites “critical domestic priorities” necessary to “win the future” such as full funding for the implementation of Obamacare, which presumably includes the CLASS Act, full funding for the Dodd-Frank financial regulatory regime and, last but not least, full funding for the Department of Energy’s Energy Efficiency and Renewable Energy Programs.

That’s right, the same “green” energy initiative that brought us Solyndra, and for which the administration has requested no less than $1.95 billion this year.

Republicans will presumably put the president’s words to the test. As well they should.

$1.95 billion more this year for this crap.

But then, as Obama has said, we could not possibly cut another dime from the domestic budget.

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posted by Ace at 01:52 PM

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