Delaware Taxpayers on the ‘Green’ Hook as Fisker Can’t Pay Bills

Delaware Taxpayers on the ‘Green’ Hook as Fisker Can’t Pay Bills
February 7, 2013

Delaware taxpayers may lose a $21.5 million “investment” as Fisker Automotive took taxpayer money to create green jobs but has yet to produce a single car in the state. In addition to the $21.5 million in grants and loans that appear unlikely to be repaid, state taxpayers have had to cover an additional $400,000 in electric bills the company has yet to pay. 

In 2009 Gov. Jack Markell announced California-based Fisker Automotive Inc. would be setting up shop in the state after he offered the company $21.5 million in incentives. Delaware residents were promised 2,500 green jobs in return for their investment. 

Failed to Meet Milestones

Despite the taxpayer subsidies, Fisker has struggled mightily. In February 2012 the U.S. Department of Energy (DOE) suspended a $529 million federal loan to Fisker after the automaker reportedly failed to meet milestones on its first car, the electric-hybrid Karma sedan. Two months later, Fisker halted operations and laid off workers at a former General Motors site it had taken over in Delaware. 

In October 2012, Fisker’s battery supplier filed for bankruptcy, which in turn halted production of the Fisker Karma sedan. 

Of the $21.5 million supplied by Delaware taxpayers, $9 million took the form of outright grants, leaving $12.5 million the state could recover under so-called “clawbacks” should Fisker fail to meet deadlines. However, analysts question whether Delaware taxpayers would be able to collect on the clawbacks. The state is reportedly behind the federal government on the list of who gets paid back first.

Blames Republicans

Catherine Rossi, director of communications for Markell, a Democrat, says Delaware taxpayers are the victims of federal officials pulling out the carpet from Fisker.

“Delaware lost two auto plants within a year due to the worst economic downturns since the Great Depression. The Big Three were shuttering plants across the country, many of which stand vacant today. Repurposing Delaware's Boxwood Road facility to be used by a USDOE-funded hybrid-electric car company was the best shot we had at reestablishing the automotive industry in Delaware. One of its biggest sources of funding, the USDOE, has not provided an additional $300M in funds that were originally contemplated and that, if paid, could allow expansion and production at Delaware's Boxwood Road plant,” said Rossi. 

Although DOE is an executive agency overseen by President Barack Obama, Rossi said Republicans are to blame for DOE’s decision to suspend its loans to Fisker.

“After the Solyndra bankruptcy, Fisker became a political football, with little support and outright hostility from many Republicans. Not long thereafter, Fisker's battery supplier—A123 Systems—went bankrupt and SuperStorm Sandy flooded the port where Fisker's cars are staged, leading to substantial damages.” 

Rossi said Markell still believes in Fisker and taxpayer support for experimental automobiles.

“The governor still believes in the hybrid vehicle market,” Rossi. “Fisker is a company that could redefine what it means to drive a gas-electric vehicle. Its Karma is winning awards like the 2012 Automobile Magazine Design of the Year. Here in Delaware, we are watching the situation carefully, staying in contact with the company, and evaluating our options. If Fisker does not build cars in Delaware, as hoped, we will certainly work to recover the investments we have made.” 

Alyssa Carducci (ad.carducci@gmail.com) writes from Tampa, Florida.