You may have heard about the "Gore-backed" car company that got more than $500 million to make a sports car. What you may have missed: the government is backing green technology and a plan to make it popular.
The loan in question (reported by the Wall Street Journal) is the fourth conditional loan commitment the Department of Energy has entered into under the Advanced Technology Vehicles Manufacturing Loan program. The DOE reports that the loan is for the development of two cars -- one a high performance sports car and another family version that will list for around $40,000. Additionally, the loan will create more than 5,000 green jobs.
The company's founder, Henrik Fisker, has designed cars for BMW, Aston Martin and another electric car manufacturer. The latter of which, the Tesla, retails for $109,000. The Fisker Karma will cost about $30,000 less, and presumably pack more punch. He has a track record, quite literally, for making high-performance cars that garner a lot of attention, and his career is on the rise.
The $25 billion ATVM program was established by Congress in 2007 to provide incentives for auto maker investment in green technology in keeping with a congressional mandate to improve fuel efficiency. The DOE has already awarded $8 billion to Ford and Nissan. Fisker's former employer, Tesla, got $465 million from the same program. The $529 million jumpstart Fisker received will introduce a much-needed competitive edge to a sparsely populated market.
The government was right to pick Fisker. Opponents of the loan argue that it will help finance something only the wealthy can afford--an $89,000 sports car. The argument is either the product of dogma or Exhibit A in the case for why said opponents have jobs as watchdogs and critics: they have no native feel for how to win on the open market.
So let's look at a thumbnail sketch of the plan. Al Gore opts in to buy a Fisker Karma the minute he hears about it. Of course he does. So do a bunch of elites. It's a hot car. It's green. Very sexy. That's a pretty standard move in marketing circles. Get influentials on board and work your wait to Joe America.
Fisker puts 15,000 cars a year on the streets. These fast, over-performing cars are a sight to behold, the topic of bar room conversation. It gets more than 100 miles to the gallon and can travel 50 miles on electric power while providing all the torque of a German sports car. Gore opting in on the pricey version: a priceless amount of marketing for the $40,000 sedan that follows.
Compare to the sour grapes competition referred to in the Journal piece: O. John Collett of Eco Motors International asked for $20 million from the same program and was turned down. Check out the above-linked Eco Motors site. Exciting, huh? Now compare it to Fisker.
Which one would you invest in?
Originally published by Air America.