Detroit News:
Two U.S. senators want the Energy Department to answer new questions about the decision to loan $529 million to luxury auto start-up Fisker Automotive Inc. and award $249 million in grants to battery start-up A123.
In a letter to Energy Secretary Steven Chu on Monday, Sens. Chuck Grassley, R-Iowa, and Sen. John Thune, R-South Dakota, questioned why the Energy Department invested in Fisker when it is partly owned by the Qatar Investment Authority: “Why should the American taxpayer have to accept the credit risk of a company owned by a foreign government?”
Roger Ormisher, a spokesman for California-based Fisker, said the company has investors all over the world and has sold more than 1,000 cars worldwide generating more than $100 million in revenue. He said the company was focused on creating American jobs and wanted to stay out of politics. “We’re focused on our business,” Ormisher said.
In April, Fisker said it is delaying production of its next-generation family sedan and may not build the vehicle in Wilmington, Del., after suffering several setbacks with its first plug-in hybrid batteries.
Fisker’s battery supplier, A123, said it will replace about 600 batteries at a cost of $55 million after it said it found manufacturing flaws.
Grassley and Thune asked the Energy Department if the A123 recall will impact the government’s decision to release the remaining portion of the A123′s $249 million grant under the stimulus. “Will DOE consider A123′s ongoing financial struggles before distributing the rest of the grant?” the letter asked.
This month, Massachusetts-based A123 plans to hire as many as 400 workers in coming months for its manufacturing plants in Livonia and Romulus — a move tied to fulfilling promises made for state and federal subsidies.
A123 has about 780 employees in Michigan. New workers would be added at a 100-per-month pace beginning this month, the spokesman said.
If the company follows through with its plan, by fall it will have replaced the workers it lost late last year after a round of layoffs.
A123 in April received a two-year extension on its deadline to spend a $249.1 million grant from the federal government, originally received in 2009. The money was to be used for the construction of new lithium-ion battery manufacturing facilities in Michigan. A123′s Livonia plant opened in 2010, and its Romulus plant opened last year. The company had $120 million left of the $249.1 million grant.
In 2011, A123′s loss grew 69 percent to $257.7 million from the year earlier. And in April the company reported a first-quarter loss of $125 million — a 133 percent increase from the $53.6 million loss during the same quarter in 2011.
A123 then said it had “retained an outside adviser to provide financial strategic advisory services in connection with our ongoing strategic efforts and evaluation of strategic alternatives.” One of the strategic alternatives that money-losing companies often consider is selling parts or all of the business.”
In 2010, Fisker won $529 million in low-cost Energy Department loans, and has drawn $193 million, mostly for use in developing the Fisker Karma that was designed and engineered in the United States but assembled in Finland.
But the Energy Department froze the rest of the loan last year amid talks about the company’s business plan.
The rest here.