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October 21, 2011

Fisker Responds To ABCNews Story

I missed some of this, or ABCNews did. Some of this is semi-important context.

First up, Fisker says "only" $169 million went for the Fisker Karma, being built in Finland. "Only" $169 million went to designing this car (and, they say, designing the tools to build it).

The larger part of their loan is supposed to go towards building a more mass-market vehicle, the Nina, which they claim will be built in Delaware, just as Biden had hoped. Sometime in 2013.

Eh. I don't know why we should be spending $169 million to design a luxe gas-hybrid for the very rich.

As for the mass-market vehicle: I am doubtful about this. I don't know much about cars, but I know this: Mass market vehicles are the province of the big auto manufacturers, because they are engineered to the penny. To keep costs down, they attempt to save, seriously, a nickle, dime, or quarter here and there in the design.

That kind of expensive engineering is really only justified when you're going to make tens of thousands of units, and price -- even a couple of hundred dollars' difference -- is a driving consideration for buyers.

Small companies tend to produce more expensive, higher-end vehicles. Because they're going to have inefficiencies, and they're not going to be engineered to the penny, and so cars they produce can't really compete on a price basis.

I'm thinking of, like, the DeLorean. Which was a failure. But imagine if DeLorean tried to make a Ford Escort competitor. Forget it. He wouldn't even have tried.

Why are we, the taxpayer, spending money on Fisker's engineering when we have multiple big automakers already doing that sort of thing? And do we have any confidence that a start-up will be successful in this venture?

And why are we giving a subsidy to high-end cars in the first place? If, absent our loan guarantees, the Fisker Karma would have cost $200,000 per vehicle -- What do we care? Leonardo DiCaprio is not price sensitive, is he?

I don't think any of this is going to work. The big auto makers make these cars at a loss. They do it because they sort of have to -- PR crap -- and the losses are hidden among their multibillion-dollar general operating costs.

But a couple of start-ups making only these sorts of high-expense, low-actual-performance, eco-prestige cars? Where do the losses get hidden in the budget when there's nothing to the budget except the losses?

Oh right -- it gets hidden in the US government budget.

If the big automakers want (or feel they need to) piss millions away on these cars, fine. The American taxpayer should not be drafted into subsidizing someone else's car.

Thanks to AndyU.

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posted by Ace at 02:40 PM

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