|Fisker Lays Off 75 Percent of Employees|
|By MATTHEW MOSK (@mattmosk)||Apr 5, 2013, 12:13 PM|
The government-backed electric car company Fisker Automotive laid off about 160 workers Friday, or roughly 75 percent of the automaker's staff, as it has struggled to find financial backing that would allow it to continue building its high concept clean cars.
The layoff announcement came as the innovative start up faces a looming repayment on a loan from the U.S. Department of Energy, and as reports have swirled that it could be preparing to file for bankruptcy. As with the failed solar firm Solyndra, the green car company was once an early pick by the Obama Administration to be part of America's clean energy future. The Obama Energy Department had approved Fisker for a government loan up to $529 million.
Stunned workers filed out of Fisker's Anaheim headquarters Friday morning with their belongings in boxes. One told ABC News that the employees had no advance notice the layoffs were coming, and they were told they would received no severance.
Among Fisker employees, the worker said, there was an overwhelming sense of sadness Friday that even after building a new, environmentally-focused line of gracefully-designed, high-end American cars, they had not been able to find financial success.
An Energy Department spokesman said today that early signs of the company's distress prompted officials there to freeze payments to Fisker after having provided the company with nearly $200 million to produce its first car, the $97,000 Fisker Karma.
"The Department of Energy stopped payment on the federal loan in 2011 after Fisker stopped meeting their milestones, and is committed to the best outcome for taxpayers," the Energy Department statement said, before defending other green investments by the Obama administration.
"Despite Fisker's difficulties, our overall loan portfolio of more than 30 projects continues to perform very well, and more than 90 percent of the $10 billion loan loss reserve that Congress set aside for these programs remains intact," the department said.
Among those laid off by Fisker Friday were the company's team of spokespeople. The head of that team, Roger Ormisher, told ABC News earlier this week that he could not address reports that the automaker had hired a law firm to prepare it for bankruptcy.
"We are not offering any official comment on the speculation around bankruptcy at this stage," Ormisher said.
Even before the layoffs, the Anaheim, Calif.-based company disclosed that it had furloughed non-essential U.S. workers in March, a move made as the company is "in the process of identifying a strategic partner... [but] continuing to manage its day-to-day operations," Ormisher had said.
Fisker Automotive entered the electric car market with hefty support from the U.S. Energy Department and backing from such celebs as Justin Bieber and Leonardo DiCaprio, but the company and its high-priced Fisker Karma have continued to skid financially.
If the California-based luxury carmaker goes bust, it will be the most high profile failure of an alternative energy firm backed by the Obama administration since the solar company Solyndra filed for bankruptcy in 2011.
In April 2010, Fisker started receiving payments on a loan of up to $529 million from the Department of Energy as part of the Obama administration's push to bolster alternative energy firms. Fisker has been making repayments on the loan interest for several years, but the first sizeable repayment of the principle – an amount the company has not disclosed – is due at the end of April.
The loan to Fisker was part of a $1 billion bet the Energy Department made in two politically-connected California-based electric carmakers producing sporty -- and pricey -- cutting-edge autos. Fisker Automotive, backed by a powerhouse venture capital firm whose partners included former Vice President Al Gore, predicted it would eventually be churning out tens of thousands of electric sports sedans at the shuttered General Motors factory it bought in Delaware. The other major recipient of financial support, Tesla Motors, is backed by PayPal mogul Elon Musk.
Fisker launched the Karma with great fanfare, showing off prototypes of its sleek, quiet-running sports sedan at major auto shows and opening showrooms around the globe.
But in October 2011, ABC News aired reports revealing that the government loan to Fisker raised concerns among industry observers and government auditors, and added to questions about the way billions of dollars in loans for smart cars and green energy companies were being awarded.
In a 2011 interview with ABC News, Henrik Fisker, the renowned Danish auto designer who founded the company, issued a promise to U.S. taxpayers that they had no reason to worry about the more than $500 million in federal funds the government was getting set to bet on the company.
"No, I don't think they need to worry about it," Fisker said. When asked if Fisker might be the next Solyndra, he said, "Absolutely not."
When Henrik Fisker resigned from the company in March, the auto maker released a statement saying, in essence, that nothing had changed: "Mr. Fisker's departure is not expected to impact the company's pursuit of strategic partnerships and financing to support Fisker Automotive's continued progress as a pioneer of low-emission hybrid electric powertrain technology."
But the outlook has only appeared to get worse.
In December, the Wall Street Journal reported that Fisker board members had discussed the prospect of filing for bankruptcy, citing unnamed sources. Company executives responded by saying they were seeking larger partners for the small automaker.
For weeks following, there were widespread reports of a possible deal involving Chinese automakers. But a major Chinese manufacturer said those talks had fallen through. Last week came word in a report by Reuters that Fisker Automotive had begun consulting with bankruptcy lawyers.
That news came with less than a month before Fisker must make a significant payment on its U.S. Energy Department loan, which comes due April 22.