Posted 3 years ago on Feb. 12, 2012, 2:50 p.m. EST by Jflynn1964
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from Louis Woodhill at Forbes:
It’s too bad that airbags can’t save investments in automobile companies. If they could, there might be some hope for taxpayers when Fisker Automotive, another one of Barack Obama’s “investments” in “green energy”, crashes and burns financially.
In May, 2010, the Department of Energy (DOE) approved $529 million in loan guarantees to Fisker to help finance development of battery-powered cars. Fisker had drawn down $193 million of this money by February 7, 2012, when DOE announced that it was “freezing” disbursement of the loans because the company had not met agreed milestones.
Fisker responded by laying off 26 people who were working on preparing a plant in Delaware to produce a “plug-in hybrid” car to be called the Nina. They also laid off 40 contract employees at their headquarters in Anaheim, Calif., where Fisker still employs 600 people. Fisker is currently seeking to renegotiate the terms of its deal with the DOE so that it can resume drawing down taxpayer-guaranteed funds, but the prospects are uncertain.
At this point, taxpayers should be concerned their $193 million loan to Fisker will follow the $535 million loan to solar energy firm Solyndra, the $118 million grant to battery maker Ener1, and the $39 million loan given to Beacon Power down the economic rat hole called “alternative energy”.
In a sense, Fisker’s woes could be attributed to bad karma, because most of the taxpayer-guaranteed funds it has drawn down thus far went to help it develop its first car, the Fisker Karma.
The Chevrolet Volt, which was also developed at taxpayer expense, has not been selling well. Despite $7,500 (or more) in taxpayer subsidies to every purchaser, it turns out that there is not a huge market for a small, cramped hatchback that lists for $49,000 and can, at best go 40 miles before it must switch from batteries to gasoline power.
Now, try to imagine the sales prospects for a car that has a smaller back seat than the Volt, a smaller trunk than the Volt, can only go 25 miles on pure electric power, is backed by a company that most people have never heard of, and lists for $103,000.
Fisker claims to have produced 1250 Karmas and to have sold about 250 of these. Its business plan calls for selling 15,000 Karmas a year. This is more than Lexus sells of its LS460 luxury sedan, which is similar in size, much roomier, considerably quicker, gets similar mileage under gasoline power, is backed by Toyota, and lists for only $67,630.
To be sure, the Fisker Karma is a beautiful car, perhaps the most beautiful 4-door sedan in the world. It might have made more sense for Obama to funnel the $193 million to Fisker through the National Endowment for the Arts rather than the DOE. Unfortunately, however, the Karma’s commercial viability will depend upon its virtues as an automobile, rather than as a piece of sculpture.
The Fisker Karma exemplifies the inherent problem with “alternative energy”. Namely, what is alternative energy an alternative to? It is an alternative to energy sources that make economic sense. If an alternative energy project were capable of producing energy that was worth more than it costs, it would not need taxpayer subsidies.
Extending loan guarantees to alternative energy projects, as the Obama administration has done in droves, essentially guarantees a series of bankruptcies and scandals. It will be interesting to see how many of these cans can be kicked down the road past the election, and how many will blow up before then.
Gasoline-electric hybrids like the Karma eliminate the “range anxiety” that comes with battery-electric vehicles (BEVs) like the Nissan Leaf. However, they do so at the cost of putting two power trains into the same vehicle, and compromised pure-electric performance. When a Karma or Volt is operating on battery power, its gasoline engine represents dead weight.
A look at the technical specifications of the Fisher Karma reveals the inherent problem with electric cars. Despite the “advanced lithium ion battery technology” used in the Karma, its 600-pound battery pack holds about the same amount of energy (in terms of driving range) as one gallon of gasoline, which weighs about 6 pounds. The Karma’s batteries also take hours to recharge, while pumping one more gallon of gasoline into a car’s gas tank takes about 5 seconds.
Interestingly enough, the 443-pound battery pack in the Chevy Volt also provides about the same driving range as one gallon of gasoline poured into the fuel tank of this vehicle.
Fisker’s ostensible purpose in seeking the release of additional DOE loan guarantees is so that it can resume preparing a plant in Delaware to produce the Nina, a smaller plug-in hybrid family car that is supposed to sell for about $50,000. However, this vehicle will compete directly with the Chevy Volt, which is itself not selling well. It’s hard to imagine a happy ending for this taxpayer-financed saga.
Progressives, like President Obama, believe that they are smarter than the rest of us, and so they should have the power to direct the economy from Washington. Unfortunately, putting Progressives in the driver’s seat results in companies being driven off the economic cliff with hundreds of millions of taxpayer dollars in the trunk. Solyndra, Ener1, and Beacon Power were just a start. There are more to come. There is no escaping karma.