Last April, Fisker Automotive missed the very first payment on the $192 million it had borrowed from the U.S. government to build luxury hybrid sports sedans that are priced over $100,000 – in Finland.
That default on the $10 million payment was probably inevitable since the company had not built a single vehicle in the nine months previous to the defaulted payment.
But we taxpayers should consider ourselves fortunate. The hit on the treasury could have been much worse if Fisker had borrowed the full amount of the original loan commitment of $529 million. As it stands now, the government has recovered $21 million, putting the amount that Fisker still owes at $171 million.
Fisker borrowed that money under the Energy Department's Advanced Technology Vehicles Manufacturing Loan Program, the same program that has also been dishing out guaranteed loan dollars to Tesla Motors (NASDAQ:TSLA) so it could produce plug-in electric luxury sports sedans that are over $100,000.
Tesla has borrowed $465 million but, in contrast to Fisker, has already begun paying back the loan and promises to pay it back in its entirely in only five years rather than the original 10-year term.
That's a pretty good achievement – and a gutsy promise – for a company that has not produced a profit since it went public in 2010. However, it should be noted that Tesla amended its guidance at the end of March saying that the company would reach full profitability for the first quarter of 2013. We'll have to wait until the Tesla quarterly earnings statement comes out after the market closes on May 8 to see if that prediction holds true.
Let's hope the accountants putting together Tesla's earnings won't be using the same fuzzy thinking the company employed in the disregard for reality displayed in its "True Cost to Own" calculator found on its website.
To be fair, Tesla realized it was in error using a $100 an hour rate for figuring out how much one would save in not spending time at the gas pump. Even CEO Elon Musk himself admitted "we didn't get it quite right."
"We've changed the defaults to be more conservative," Musk said during an announcement in reaction to the disbelief engendered by the company's original fiscal fiction. "We included too many non-financial elements."
The Department of Energy's loan program was meant to give a boost to developers of alternative energy vehicles in order to lessen our dependence on fossil fuels. Whether or not guaranteeing $500 million loans to luxury vehicle producers will achieve that goal is certainly open to debate. But we have to make sure we don't produce cars that will only run on snake oil.