Net Loss to Taxpayers: $139 Million; Chinese Conglomerate Snatches Up Second Failed Green Firm
Published on February 19, 2014 · Filed Under Uncategorized
by Michael Bastasch
(WASHINGTON D.C.) The Chinese auto conglomerate Wanxiang Group has bought electric automaker Fisker Automotive, marking the second time they snatched up a failed green firm that received taxpayer dollars.
Workers operate on vehicle batteries at Wanxiang Group’s electric automobile division in Hangzhou, Zhejiang, China. 2012 Photographer: Qilai Shen/Bloomberg
The bankrupt Fisker was sold to Wanxiang last week for $149.2 million and the sale was approved by the bankruptcy court on Tuesday. Last year, the Energy Department’s $192 million loan of Fisker was sold off to Wanxiang for $25 million — netting taxpayers a $139 million loss.
This is the second time a green energy company that got a loan guarantee from the Obama administration was sold off to Chinese investors, garnering criticism from conservatives that hundreds of millions of taxpayer dollars have been wasted for the benefit of foreign businessmen.
“In 2009, Secretary Chu promised American taxpayers that a $528.7 million conditional loan for Fisker Automotive would create or save 5,000 jobs,” Tennessee Republican Rep. Marsha Blackburn told The Daily Caller News Foundation.
“The height of Fisker’s employment barely reached over 200 employees,” Blackburn added. “The only thing worse than these continued broken promises and lack of accountability from this administration is that yet another company that received taxpayer funding will be sold to China’s Wanxiang Group.”
Early last year, electric car battery maker A123 Systems was sold off to Wanxiang Group, which is owned by Chinese billionaire Richard Li. A123 got $249.1 million from the Obama administration and more than $100 million in grants and tax credits from the state of Massachusetts. But financial troubles forced the company to file for bankruptcy in October 2012.
A123?s new Chinese owner cleverly renamed it B456 — which is also apparently the name of a fire extinguisher.
Fisker got a $529 million loan guarantee from the Obama administration in 2009 to produce a luxury hybrid car, the Fisker Karma, which sold for a $103,000 per unit. The company struggled to sell cars and meet benchmarks set out by the Energy Department and had its funding cut in 2011 after drawing down on $192 million.
The Karma gained some traction among liberal celebrities and environmental activists. The car has been sported by Al Gore, Justin Bieber and Leonardo DiCaprio.
But Fisker’s backers were heavily engaged in lobbying the federal government for more green energy subsidies. The venture capital firm Kleiner, Perkins, Caufield and Byers — where Gore is a partner — was a seed investor in Fisker and spent $400,000 in 2009 and 2010 on lobbying. The Gore’s firm also lobbied in for the stimulus bill that handed out $90 billion for green energy programs.
“It’s time for this administration to start working for taxpayers instead of playing venture capitalist for foreign investors,” said Blackburn.