Amid rumors that struggling electric car maker Fisker Automotive is teetering on the edge of bankruptcy, House Republicans are launching an inquiry into the troubled carmaker, which was slated to receive a $529 million Department of Energy-backed loan.
Though the Anaheim, Calif.-based company ended up borrowing only about $192 million of the total amount granted, they've missed financial and product-development benchmarks according to multiple sources, prompting some to speculate the luxury automaker could default on its loan.
According to documents obtained by U.S. News & World Report, the House Committee on Oversight and Government Reform has requested testimony from DOE loan program officials and former and current Fisker employees for a hearing on April 24 to "examine taxpayer support offered to Fisker Automotive, including the loan guarantee received from the U.S. Department of Energy."
Current witnesses include David Frantz, acting executive director of the DOE's loan programs office; Lachlan Seward, director of DOE's Advanced Technology Vehicles Manufacturing Loan Program; Fisker CEO Tony Posawatz; Fisker COO Bernhard Koehler; and former Fisker Executive Chairman Henrik Fisker.
Fisker did not return a request for comment.
Observers and lawmakers might have reason to speculate. Troubles began brewing last summer when the carmaker's battery supplier went belly up, bringing vehicle production to a screeching halt. The company - which makes the Fisker Karma, a $100,000 luxury plug-in hybrid sedan - scaled back to a skeleton staff last Friday, laying off 160 of its 210 employees, reportedly in preparation for bankruptcy proceedings.
Troubles at Fisker mean the DOE's loan program could come under siege again by House Republicans, who have chided the agency's program in the past, most prominently for a recent $535 million loan to the now-defunct solar-panel manufacturer Solyndra.
"Fisker was kind of a wing and a prayer, and there was this extra intrigue of resuscitating a decommissioned GE plant to build these cars," says Bill Visnic, senior editor at automotive information site Edmunds.com. "It all sounded so good and made for great headlines."
But the next headlines the company could see are the ones announcing its bankruptcy and default, potentially linking it and its relatives in the broader electric vehicle industry to failed DOE gambles. Beating out expectations, rival electric vehicle maker Tesla –which was also approved for a DOE loan amounting to $465 million – began deliveries of its Model S in June 2012 and has produced more than 7,000 vehicles to date. In April, the company announced its first quarterly profit.
Still, drama at Fisker could overshadow the industry's gains and stain its reputation among would-be car buyers, according to experts.
"It can put doubt into the mid of consumers," says Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. "These aren't big, big manufacturers and if they run into issues and aren't backed by a Nissan or a Chevrolet, that's where the issue arises."
"Someone who was perhaps considering a Fisker originally or a Tesla, even though they're doing just fine, might have some concerns," Gutierrez added.