* Republicans ask whether taxpayer loan prudent
* Fisker loan frozen after production delay
By John Crawley
WASHINGTON, April 23 Two U.S. senators have
asked the Obama administration to explain why it approved a $529
million loan to startup Fisker Automotive, which has suspended
U.S. production of a heavily touted plug-in electric car as it
revamps its business plan.
Charles Grassley, the top Republican on the Judiciary
Committee, and John Thune, a senior Republican member of the
Finance and Commerce committees, asked Energy Secretary Steven
Chu whether it was wise to grant financing to Fisker, which ran
into production problems after receiving part of the loan.
"Though the Department of Energy has now frozen the
remaining portion of Fisker's loan, questions remain as to why a
loan was extended to this now 'troubled' auto company in the
first place," the two lawmakers said in an April 20 letter that
was released on Monday.
The Department of Energy (DOE) is working with an outside
consultant, Houlihan Lokey, to evaluate a variety of agency
loans, including Fisker.
Fisker was approved for the $529 million loan in 2009 under
a DOE program aimed at helping automakers make more
fuel-efficient cars and trucks.
Fisker received about a third of the money initially to
mainly support U.S. engineering and other efforts to roll out
its first electric car, the $100,000 Karma, that was assembled
in Finland. But delays in getting that car to showrooms prompted
the DOE to hold additional financing.
Remaining funds were to go to develop a $50,000 sedan,
called the Atlantic, at a former General Motors factory
in Wilmington, Delaware. Work on the Atlantic was suspended in
Since the collapse of solar-panel maker Solyndra last year,
congressional Republicans primarily in the U.S. House of
Representatives have pressured the DOE to justify billions in
loan programs aimed at green economy projects and related jobs.
Grassley and Thune asked Chu whether he believed it was
prudent to spend taxpayer funds to help finance Fisker's
development of high-end vehicles. They also want to know the
degree of technical expertise the DOE used to evaluate,
originate and monitor the loan.
Agency spokesman Damien LaVera said DOE financing programs
have strict conditions and borrowers must meet milestones and
other conditions to receive loan proceeds.
He added that startup delays are common, and that the DOE is
working with Fisker to review a new business plan and determine
"the best path forward so the company can meet its benchmarks,
produce cars and employ workers" in the United States.
Fisker says it has devised an approach that allows it to
launch the Atlantic and be profitable without U.S. government
loans. So far, it has raised more than $1 billion in private
financing since closing its Energy Department loan, the agency
A spokesman for Fisker confirmed the company was still in
talks with the DOE and exploring all funding options.
A number of automakers are betting heavily on hybrids and
electric vehicles. GM and Nissan Motor Co Ltd, which
received DOE loans, have electric cars on the road. The push for
greener cars has also ushered in a host of venture-backed
startups like Fisker and Tesla Motors Inc.