Senators Ask for Explanation of Fisker Loan | TheDetroitBureau.com- htxurl.info

Senators Ask for Explanation of Fisker Loan

Lawmakers question process used by Department of Energy to give $529 million loan to fledgling automaker.

by on Apr.25, 2012

Fisker has suspended work on its Atlantic plug-in hybrid that it hopes to build in a former General Motors plant in Deleware.

Two U.S. senators are asking the Obama administration to explain the process it used to approve a $529 million loan to Fisker Automotive, which has suspended work on an electric car it planned to build in the U.S.

Charles Grassley, the top Republican on the Judiciary Committee, and John Thune, a Republican member of the Finance and Commerce committees, asked the Energy Department to investigate the financing deal.

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Since receiving the loan, Fisker has run into production problems and has had to suspend work on the Atlantic, a midsize electric sedan it planned to build at a former General Motors plant in Deleware.

“Though the Department of Energy has now frozen the remaining portion of Fisker’s loan, questions remain as to why a loan was extended to this now ‘troubled’ auto company in the first place,” the two lawmakers said in an April 20 letter that was released Monday.

According to R, Department of Energy is working with an outside consultant, Houlihan Lokey, to evaluate a variety of agency loans, including Fisker.

Fisker, which also makes the Karma sedan, which sells for more than $100,000, obtained the loan through a DOE program aimed at helping automakers make more fuel-efficient vehicles. the company received about a third of the money to support U.S. engineering as well as efforts to introduce the Karma, which is built by a vendor in Finland.

Delays in getting the Karma into showrooms led to DOE suspending payments from the loan.

Since the collapse of solar-panel maker Solyndra last year, congressional Republicans have asked DOE to justify billions in loan programs aimed at green economy projects.

DOE spokesman Damien LaVera told Reuters that the financing programs have strict conditions and borrowers must meet milestones and other conditions to receive loan proceeds.

But he added that startup delays are common and DOE is working with Fisker on a review of its business plan so it can receive further installments on the loans.

Problems have been mounting for Fisker since it began selling the often-delayed Karma last fall. Last month, the automaker’s battery supplier announced a recall of the Karma’s batteries. (For  more on A123′s recall, click here.)

Just weeks before the battery recall, Fisker was embarrassed when Consumer Reports magazine had to have its new Karma towed to the dealership when it quit working with just 180 miles on the odometer. (For more on Consumer Reports’ experience with the Karma, click here.)

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