Let me get this straight: The United States government has put up half a billion dollars in taxpayer's money for a venture dominated by foreigners who are building an electric car that will retail for something like $100,000 but cannot go even 50 miles on electricity alone. The hope is that the venture will eventually produce affordable electric cars built in the United States, but everything about the project screams luxury, and the similarities to the Solyndra fiasco are becoming very uncomfortable.
The venture is Fisker Automotive, the brainchild of one Henrik Fisker, a Danish-born international businessman and designer of luxury automobiles. His experience is with Aston-Martin and BMW and his factory in Finland builds Porsche Cayennes. Yet the U.S. government seems to think he is a good bet for building affordable family cars that run on electric batteries and has awarded his company loan guarantees totaling $529 million.
Fisker has bought a closed-down General Motors plant in Delaware to build the electric car of the future. But for now, the company is producing a luxury model called the Karma at the factory in Finland, with a base price of $95,900, according to its website, $108,000 fully loaded, although in interviews Fisker has casually discounted the car to only $80,000. A hatchback model with slightly more carrying capacity, called the Surf, is on the way.
Even the federal government can't get away with subsidizing a line of straight-out luxury sports cars, so Fisker is promising cheaper cars derived from a deal called "Project Nina" that will supply engines from BMW. All well and good, but BMW doesn't make any cheap engines, and Fisker acknowledges that his "affordable" car will run around $40,000, squarely in what he called the "premium segment." That price presumably reflects the full $7,500 federal tax credit for plug-in vhicles, since the price stated by the company is $47,500. Even the after-credit price is pretty steep. You can buy a GMC Yukon for that much money.
All the cars are hybrids that will run on electric power, although the range is limited to fifty miles a day. While purring along in electric mode (which Fisker calls “stealth") might be satisfying from the environmental point of view, the temptation to switch to "sport mode," utilizing that beast of a BMW engine, might be quite overwhelming to someone who has just invested upwards of fifty thousand dollars in a car. I mean, why purr when you can roar?
The market for expensive, sporty cars is rather small, and previous attempts at affordable sporty cars (the Pontiac Fiero and Mazda Miata, for example) have failed or met with limited success. Americans like big cars and SUV's that can carry lots of stuff. Nobody is talking yet about an electric Yukon.
Fisker will have to sell a lot of cars to pay off the loans guaranteed by the government. History offers little encouragement that it can be done. Uncle Sam is likely to end up with more bad loans in his portfolio, which is turning into a monument to good intentions trampled by reality.
The bottom line is that at a time when real unemployment is running 10 percent or more and the government is deep in debt, the Obama Administration is throwing money at a company that will build playthings for the rich. Hopefully they will still want to buy fancy cars after Obama raises their taxes.