ABC News got an early look at both the Fisker Karma, the first 40 of which were delivered to dealers last week, and of the new family sedan being built by a rival start-up company, Tesla, which also benefitted from a green energy loan.
Silicon Valley-based Tesla plans to build 20,000 vehicles a year at a massive shuttered auto plant it bought in California, which is now being prepared for production to start next year. The company was co-founded by internet billionaire Elon Musk, who told Nightline two years ago he was driven by concerns about global warming.
"I think socially it is very much the right time," he said.
Tesla has already been selling its high-priced Roadster to a niche market that includes George Clooney and Arnold Schwarzenegger. But company executives told ABC News that its future depends on the success of the family sedan, called the Model S, which was only recently unveiled to the public. Priced at around $57,000, it is styled to compete with luxury mid-sized cars including BMW and Mercedes.
"We're developing a higher volume model, which is going to allow us to build that vehicle at less than half the cost of our first," said Diarmuid O'Connell, Tesla's vice president of corporate and business development. He says the company will use the smarts of American high tech wizards to revolutionize the way cars are made, building its new sedan from the ground up.
But some industry analysts, including Alexander Taylor, the auto columnist at Fortune magazine, said that Tesla has put itself at risk by trying to reinvent the way cars are assembled by eliminating outsourcing of components.
"This is a huge learning curve, even for an established company like GM or Ford," Taylor said. "For a startup company like Tesla, it's almost impossible to do it right the first time around."
Tesla's O'Connell disputes that, calling his company a "disruptive" force in the auto industry, compelling it to pursue electric technology. He said that, even though it has yet to make any profit, the company is meeting expectations and its government loan is not in jeopardy.
"We have a strong track record," he said. "We've attracted private investors. We're a public company whose records and performance can be judged by anybody."
However, Tesla has yet to see a profitable quarter, and its own government filings laying out the risks faced by investors acknowledge that a lot could still go wrong. "We have a history of losses and we expect significant increases in our costs and expenses to result in continuing losses for at least the foreseeable future," the company's June filing with the Securities and Exchange Commission says.
In an interview to be aired tonight on ABC's Nightline, O'Connell is asked how the company will repay the loan if it doesn't make a profit.
"We will make a profit. That's the plan, and we're executing it," he said.
The Energy Department has said that projects like those of Fisker and Tesla are risky by nature, but that the taxpayer backed financing will ultimately pay off.
Yet the Government Accountability Office, the investigative arm of Congress, has already raised questions about the Energy Department's oversight of the $25 billion Advanced Technology Vehicles Manufacturing loan program.
An audit this year by the GAO criticized the Energy Department for not keeping close enough tabs on its fleet of auto loans -- including those to Fisker and Tesla -- to ensure they meet benchmarks. "DOE cannot be assured that the projects are on track to deliver the vehicles as agreed," said the GAO report examining the department's ATVM program. "It also means that U.S. taxpayers do not know whether they are getting what they paid for through the loans."