Fisker's Aptly Named Car Shows the Folly of Government

For the last 6 years, Delawareans have been barraged with promises from so-called "Green companies", most of which promised lofty job numbers and economic booms.  Blue Water Wind came to town with a plan to provide wind energy that would be clean and green and could even eliminate the need for dirty coal fired plants.  Their scheme turned out to be one that would produce far less energy than expected, one that required the government to enforce a mandate on Delmarva Power which forced them to pay more, one that required the federal government to give the company a non-compete contract for the off-shore wind farm location and one that ultimately failed just days ago when the project did not receive MORE government assistance in the form of more direct subsides.  Despite receiving awards of more than $800 million (although we can't be sure how much of it was spent on the project, how much went into the pockets of government cronies or how much the government still has, if Solyndra is any example, that money is long gone) of which we know that enough was used to pay at least 6 executives making 6 figures plus their assistants for 6 years (likely around $4 million) plus the cost of lobbyists, legislators (this is not a typo), architects, lawyers and surveyors for the ramp up to production (which likely cost Delmarva ratepayers millions more), Blue Water Wind needed MORE government funding just to begin production on a surveying tower to see if their idea would ever generate a single kilowatt of power!  After Solyndra, the government realized that green energy problems (like those that plagued Spain, the nation whose green jobs plan bankrupted their nation and after whom Obama's green jobs plan is modeled) would cause more scrutiny and so they decided to cut funding to this off shore wind disaster.  Subsequently, Blue Water Wind folded because they were unable to secure private backing (despite the assurances of company leaders who promised that it would be able to function without government support) for their venture.  Their contract with Delmarva ended 2 days ago at the stroke of midnight and along with it, any chance that we'd see a dime from the investment returned.

More recently, the buzz has been about the Obama crony run car company, Fisker.  You might remember Fisker (or more likely not) as the start-up company who out muscled Tesla as the Obama Administrations favorite in the Plug-in electric car market.  It bought (on the cheap) the Boxwood Road site formerly owned by GM and has been rehabbing it in preparation to begin production on the "cheaper" of its two offerings, the Nina (the more expensive Karma is made in Finland because Fisker says that no one in America can do the job...) in 2013.  The Karma is offered for sale at Union Park's family of dealerships in Wilmington.  A friend of mine recently tried to secure a test drive of one of the Fisker Karma's at Union Park only to find each time that he came by, that the vehicle was "in the shop" for some kind of software upgrade or maintenance issue (odd for a showroom car that is never driven).  Now, this friend may or may not have the means to purchase the vehicle, I don't get into that kind of thing but if I had to guess, I would say his credit record and history would warrant at least a test drive of almost any vehicle ever built.  The Karma retails for more than $102,000 and less than 300 have yet been sold.  Now remember, the Fisker business model actually called for them to own a significant portion of the hybrid/electric car market in just the first couple of years of production.  They would have to beat to market shares of GM, Toyota (who owns the largest share with the Prius), Nissan and Honda to name a few.  Delaware's Caesar Rodney Institute highlighted the bold plan years ago:

Competition in the hybrid market is fierce. All the major automobile producers are moving into the hybrid market. By 2015 GM plans for 26 out of 33 models to be some form of hybrid. Chrysler plans to have 8 hybrid or electric vehicles by that year. The current U.S. hybrid market averages across the business cycle 25,000 cars per month (300,000 per year). Three quarters of the sales are Toyota's Prius or Lexus, with Prius accounting for 55% of the total hybrid market. Ford and Mercury (Fusion, Milan) currently have a 9% market share, with Honda at 8% and GM at 5%. Sales have dipped during the recession and are directly influenced by the price of gas.

 

Will the market support Fisker's 2014 sales projection? U.S. car sales should top 8 million by 2014. If the hybrids share of cars rises from its current 1% and climbs to 5%, hybrid sales in 2014 will be around 400,000. This means that Fisker, with a limited retail and service network and no established reputation, will capture 19% to 25% of the U.S. hybrid market. Should 50% of Fisker's cars be sold as exports, the highest proportion of exports for any current American company, Fisker is assuming a U.S. hybrid market share of 9% to 13%, greater than the current shares of Honda and GM.

 

The likelihood of such a plan working was also a subject of the Institute and it found that the plan left far more questions on the table than it answered.  Fisker has had to hike the prices of the Karma to keep the company afloat, pushed back production and start-up plans, has sought more taxpayer funding and still has only delivered a relative handful of vehicles.  It's certainly not competitive in the market with companies like Toyota, Honda and Nissan.  Which bring us now to the news of today which is also a blow to sales of the start-up car makers most expensive model.  It turns out that the battery packs inside the Fisker Karma's can catch fire (much like the Chevy Volt which was recalled earlier this year) and cause explosions.  Battery fires have plagued the electric car industry largely due to government's force behind the implementation of the unproven and untested technology to save face in its quest for green energy goals.  The bottom line is, do we want to pin our hopes to another Pinto or Yugo?  Fisker is already north of $600 million in government subsidies, some have said it's closing in on $1 billion and now with these setbacks, business will suffer.  There can be no doubt that the $50,000 Nina, which is planned to be built in Delaware will suffer from these setbacks if it comes online in 2013 as promised and many good folks, like the people at Union Park and the many contractors who embraced this green energy plan will be affected by these pains.  The fact is that electric cars aren't ready for prime time and no amount of government force will make it so.  In fact, I say, when the private market venture capitalists start investing THAT is when you will see the rise of the electric car.  

Government picks for winners and losers, Solyndra, Blue Water Wind and Fisker are proving what conservatives have been saying for a long time, that private markets should be dictating the products in the market place.  Government wastes untold billions of dollars every year that could be used to pay down or deficit on misguided attempts to solve every problem when the reality is that it just can't do it.  Government solutions rely on mandates, cash subsidies and risky gambles with other people's money that more often than not lead to disaster.  Look at the latest deal with Bloom energy.  Delmarva Power ratepayers are now venture capitalists (don't get excited, you get no return on this investment) in a company that markets unproven emergency backups to major corporations.  Better still, not only did the government have to force Delmarva Ratepayers to subsidize Bloom but it also forced subsequent governments to have to stick with the plan.  That's right, future General Assemblies MUST remain in the agreement with Bloom for 21 years.  TWENTY ONE YEARS!  No matter how much it costs, how effective it is or how many jobs it produces.  Further, they had to compromise their own leftist principles to do it!  In 2011, the General Assembly passed a bill that redefined the term "Renewable Energy" to include Natural Gas (a fossil fuel considered dirty by the left) because the Bloom boxes need natural gas to operate and because anything not classified as renewable under Delaware's Renewable Energy Portfolio costs Delmarva more money to use.  UNREAL!  We've got to stop this madness.  We need someone with an ounce of common sense to make some changes.