Spending $900,000 to produce a car selling for $70,000? … something's amiss.
The sad long story of Fisker Automotive, ‘the largest VC-backed debacle in U.S. history’
In January 2005, legendary car designer Henrik Fisker founded a company to bring innovative new thinking to the automobile industry.
Between that date and today, Fisker Automotive would create perhaps the most beautiful car ever made, raise almost $1.4 billion dollars from investors as diverse as Leonardo di Caprio and Kleiner Perkins, obtain a $528 million loan from the U.S. Department of Energy, balloon to 600+ employees, default on loans or investment conditions at least four separate times, spend $535,000 on a website, get sued by its own employees, get evicted from its primary business location, and be investigated by the government — apparently for its incredible ability to burn a billion dollars while delivering only a few thousand actual completed cars.
What a wild, crazy ride it’s been.
“Fisker spent a stunning $900,000 for each vehicle it produced,” PrivCo chief executive Sam Hamadeh told me. “Then they sold them to dealers for an invoice price of just $70,000.”
PrivCo, a research firm focused on non-public companies, has compiled an exhaustive dossier on Fisker, its cash, its commitments, and its massive failure to produce anything like a functional, profitable business. While burning through $1.4 billion dollars, Fisker produced fewer than 2,200 cars, PrivCo data shows, 600 of which remain unsold on dealers’ lots. And 1,200 investors, which include university endowment funds and company pension plans, are learning that their cash has been completely wiped out.
Even worse?
The government was grossly negligent in its issuing of the Fisker loan, Hamadeh maintains, saying that Fisker is the biggest public loss since the infamous Solyndra Solar debacle, which cost the government as much as half billion dollars. Not only did the U.S. Department of Energy apply “negligent underwriting standards” in granting the Fisker loans, it also failed to enforce the loan conditions as Fisker breached the loan terms, PrivCo says. That failure cost the U.S. taxpayer an extra $192.3 million.
That’s bad enough. But sadly, it gets even worse…
Keep reading: The sad long story of Fisker Automotive, ‘the largest VC-backed debacle in U.S. history’ | VentureBeat.
