Gore-Backed Car Firm Gets Large U.S. Loan

WASHINGTON -- A tiny car company backed by former Vice President Al Gore has just gotten a $529 million U.S. government loan to help build a hybrid sports car in Finland that will sell for about $89,000.

The award this week to California startup Fisker Automotive Inc. follows a $465 million government loan to Tesla Motors Inc., purveyors of a $109,000 British-built electric Roadster. Tesla is a California startup focusing on all-electric vehicles, with a number of celebrity endorsements that is backed by investors that have contributed to Democratic campaigns.

Fisker's Karma hybrid sports car, above, will initially cost about $89,000.
.The awards to Fisker and Tesla have prompted concern from companies that have had their bids for loans rejected, and criticism from groups that question why vehicles aimed at the wealthiest customers are getting loans subsidized by taxpayers.

"This is not for average Americans," said Leslie Paige, a spokeswoman for Citizens Against Government Waste, an anti-tax group in Washington. "This is for people to put something in their driveway that is a conversation piece. It's status symbol thing."

DOE officials spent months working with Fisker on its application, touring its Irvine, Calif., and Pontiac, Mich., facilities and test-driving prototypes.

Matt Rogers, who oversees the department's loan programs as a senior adviser to Energy Secretary Steven Chu, said Fisker was awarded the loan after a "detailed technical review" that concluded the company could eventually deliver a highly fuel-efficient hybrid car to a mass audience. Fisker said most of its DOE loan will be used to finance U.S. production of a $40,000 family sedan that has yet to be designed.

"It's the ability to drive significant change in fuel economy across a large market segment" that swayed the department to approve the Fisker loan, Mr. Rogers said. "We got quite excited."

Henrik Fisker, who designed cars for BMW, Aston Martin and Tesla before starting his Fisker Automotive in 2007, said his goal is to build the first plug-in electric hybrids that won't sacrifice the luxury, performance and looks of traditional gas-powered luxury cars.

The Karma will target an exclusive audience -- Gore was one of the first to sign up for one. Mr. Fisker says all new technology starts out being expensive. He pointed to flat-screen televisions that once started at $25,000 but are now affordable to the mass market.


.The four-door Karma, powered by a lithium-ion battery, will be able to run solely on electric power for 50 miles, and will achieve an average fuel economy of 100 mpg over the span of a year, the company says. Production is scheduled to start in December, with about 15,000 vehicles a year expected to hit the U.S. market starting next June.

Many of the 1,500 people who have made deposits on the Karma are former BMW and Mercedes owners who want an environmentally friendly car without sacrificing luxury, Mr. Fisker said.

He said he pitched the Karma to Mr. Gore at an event hosted by KPCB last year, and that the former vice president almost immediately submitted a down payment for the car.

Kalee Kreider, a spokeswoman for Mr. Gore, confirmed that the former vice president backs Fisker and purchased a Karma. "He believes that a global shift of the automobile fleet toward electric vehicles, accompanying a shift toward renewable-energy generation, represents an important part of a sensible strategy for solving the climate crisis," she said in a statement.

Fisker's top investors include Kleiner Perkins Caufield & Byers, a veteran Silicon Valley venture-capital firm of which Gore is a partner. Employees of KPCB have donated more than $2.2 million to political campaigns, mostly for Democrats, including President Barack Obama and Hillary Clinton, according to the Center for Responsive Politics, a nonpartisan group that tracks campaign contributions.

Officials at Kleiner Perkins didn't return requests for comment.

Asked whether Mr. Gore had any influence on Fisker's application, the DOE's Rogers said, "None at all."

"This is a very attractive, very across-party-lines kind of vehicle," Mr. Rogers said. "All of the detailed due diligence [was] done by independent review teams."

Other Fisker investors include Eco-Drive (Capital) Partners LLC, an investment consortium, and Qatar Investment Authority, a state-run investor based in Qatar.

Fisker's government loans will come from a $25 billion program established by Congress in 2007 to help auto makers invest in the technology to meet a new congressional mandate to improve fuel efficiency. In June, the DOE awarded the first $8 billion from the program to Ford Motor Co., Nissan Motor Co., and Tesla, which are all developing electric cars.

Some companies that have been turned down for loans from DOE say they did not get much feedback from the department about their applications. O. John Coletti, president of EcoMotors International of Troy, Mich., said his company applied for a $20 million loan from the agency last December, and last month got a one-page rejection letter from the loan program's director, Lachlan Seward. EcoMotors' lead investor is Vinod Khosla, himself a former Kleiner Perkins partner and a longtime campaign contributor to Republicans and Democrats alike.

"I don't have an issue with the winners … it's possible somebody has better ideas than us," Mr. Coletti said. At the same time, he said, "More feedback from DOE on a timely basis would be wonderful. When you're running a business you'd like to know whether you're going to be able to take advantage of this opportunity."

Mr. Coletti's company -- which makes diesel engines and is still waiting to hear from the Department on a separate loan application to help it build a manufacturing facility -- isn't without politically well-connected patrons, either. Its major investor is Vinod Khosla, himself a former Kleiner Perkins partner who has donated to campaigns.

Scott Redmond, CEO of XP Vehicles Inc., said he met with DOE officials twice in Washington after applying for a $40 million loan to develop a $15,000 to $25,000 hybrid, and that both times he was told his application looked good. Since receiving a rejection letter from DOE in August, Redmond said, he has been unable to get a full explanation as to why his request was turned down.

Mr. Rogers said he was not at liberty to discuss individual applications that had been turned down, but said the process has been handled fairly and objectively.
http://online.wsj.com/article/SB125383160812639013.html?mod=WSJ_hpp_MIDDLTopStories

I know we have to start somwehere with the technology.
But why the $89,000 and $40,000. Not very affordable to most Americans.
Why not the $15,000 to $25,000 that more could afford?
Wouldn't there then be more of a demand for them and cause the tech to get better faster?

I saw this yesterday and briefly skimmed through it, I wonder what interest Gore has in this company, how much stock does he own?

On the one hand this is all about grant money and political connections. One the other hand, it is about low production cars being expensive and high production cars being cheaper.

The battery technology really isn't good enough for electric cars to sell although in practice, most trips are very short. There are some technologies that could work, but aren't being seriously developed. Therefore, for now, electric cars will be low production and expensive.

Much of the "direction" of the auto industry is based on old thinking and profit motive, not what is good for America in the long term. Electric cars make great sense for the future and we disparately need to get off the oil "teat". GM's crushing the fleet of EV1 electric cars after billions of dollars of development was one of the dumbest corporate moves in history. Instead of being poised to lead the way into the future, they are almost out of it.

I remember when the first handheld calculators were introduced. They cost hundreds of dollars for a simple scientific calculator. Within ten years they were down to $20

The first CB radios cost hundreds of dollars when they were introduced. Within ten years they too were down to $20 or $30

the first wave of any new technology is gonna be really expensive and toys for the rich.

They are all profit driven otherwise they wouldn't be in busuness.

Tesla may have legitimate prospects; at least it is selling something. The company claims in an August 7 press release to have posted a profit of $1 million on sales of $20 million during the month of July.

I just think it's a lttle fishy that Al Gore has his hands in on it.

Why don't these groups that spend millions on being green and stoping global warming spend some of the money they have on these companies insteat of the millions in comercials and the hollywood types who all want us to go green and save the planet spend there money to invest in them. Why does it have to be our tax dollars? Will we see any of the $1 million in profit in one month come back to us?

I think you missed the point. GM's "profit motive" caused them to invest billions in an electric car, the EV!. Their "profit motive" (CEO) decided to abandon electric cars when they had the dominant level of technology in the world. Their "profit motive" had GM produce expensive large SUVs at a higher profit level at the expense of producing high quality smaller cars demanded by most of the world. Their short term "profit motive" has almost put them out of business as opposed to the long term view of Ford, Toyota, and Honda.

GM's EV1 was pretty cheap, well liked, reliable as far as the battery could be pushed, and would sell today if produced. Every one of the electric car companies are trying to get to where GM was years ago.