What If Fisker Walks
With some good reporting by Eric Ruth and Jonathan Starkey at The News Journal, we now have some details on what happens if Fisker walks. Yeah, they probably just read the contracts, but did you want to do that?
Under terms of the loan and grant, Fisker wouldn’t have to pay back any of that $21.5 million if certain conditions are met.
The $12.5 million loan will convert to a grant — and thus be Fisker’s to keep — if it has 2,495 workers on the job at the plant and its suppliers by March 1, 2015.
For each worker it falls short of that employment goal, Fisker would have to repay the state $5,010.02. So if no workers have been hired by then, Fisker would have to repay the entire amount.
The $9 million grant for gas and electric payments works somewhat differently. That money is Fisker’s to keep unless it fails to meet a different employment goal — 1,495 workers by March 1, 2015. That number reflects the expected employment level inside the the 3.2 million-square-foot plant, excluding suppliers.
When the deadline is reached, Fisker will be expected to pay $6,020.06 for each worker it falls short of the 1,495 goal.
New Castle County, on the other hand, has no “clawbacks” on their 50% cut in property tax. Though, if Fisker defaults, then they pay the full rate.
Tags: Fisker
Ouch. This deal seems perfect for Fisker to walk away from.
Hindsight is always 20/20, but can someone explain to me the thinking in 2009 behind the notion that Fisker was going to be selling 100,000 cars/year at $46,000 a pop in 2013, and 125,000/year in 2014? Put aside the overly-optimistic timetable, the price-point is just way too high.
The top-of-the-line Prius costs $30,000, and now the Prius C costs less that $20,000. Honda, Chevy and Nissan all have hybrids that sell for less than $30,000.
The basic economics have never made sense.
Oh, and one question which no one has ever seemed interested in answering: how much does it cost to charge up the car to go 50 miles? Presumably car owners’ electric bills are going to go up, but how much? And how is the electricity going to be generated that charges up these cars?
@AQ “Oh, and one question which no one has ever seemed interested in answering: how much does it cost to charge up the car to go 50 miles?”
$1.50 — that’s what I pay for mileage on my Nissan LEAF. Most charging is done late night. This is a non-issue until 100,000 cars are out there trying to pull juice at once. There’s also the whole smart charging idea to use excess energy only.
The economics are there for ownership, especially with the current tax credits. Instead of paying $160 per month for fuel, I pay an extra $25 for electricity. No oil changes, no mufflers, rare brake pad replacement (mostly regenerative braking), no gas tax,… The savings add up pretty quickly.
There’s also the pull-back idea for powering the grid from cars. If the electric utility needs an extra 100 megawatts quickly, and there are 100,000 cars plugged in, it could take a kilowatt from each of those cars. Car owners would get a credit for energy storage. This would reduce the strain on the grid and make power generation less expensive. The technology for this is there.
You can like or not like electric cars, but what conservative advocate goes beyond that. Since Bush, they have taken the approach that the United States should not have an industrial policy at all. That all investment decisions should be in the hands of “the market” which is another way of saying that all investment decisions should be made by a small group of people who have a huge stake in preserving the status quo.
But electric cars will take over and someday (in the not too distant future) dominate the landscape.
How do I know this? It’s a better ride. It’s just better, and this “better” will win.
We should have an industrial policy, this just seems like it was a really dumb one. Electric cars are coming but we should have been smart enough to see that they weren’t coming from Fisker.
You know what makes the Fisker cars different/better? They are smoking hot. The Karma will make you say “holy shit” when you see it. The Atlantic is just as beautiful.
Make the f*cking Atlantic now, I want one.
@anon “Make the f*cking Atlantic now, I want one.”
Who knows?? Maybe people will buy them. The car has major torque and a range extender. I’m not sure if the 2 liter gasoline thing is a generator or hooked into the transmission like on the Chevy Volt. It’s looks to be a decent car if they can keep the price reasonable (…but it’s not a car I would buy.)
Liberal Elite — thanks for the info on charging cost. If it’s $1.50 for the first 50 miles, as compared to $3-4/gallon, that’s some savings (although gas was $1.84/gallon when Obama became president). Note as well that you still pay gas tax when you buy gas for the next 250 miles, but, in any event, that tax is included in the cost of gas.
My more basic point, though, remains unaddressed. Who thinks that an annual sales rate of 100,000 to 125,000 for a $46,000 specialty car is going to fly given the competition out there?
Electric cars may indeed “take over” someday, but only when the technology and economics work for the average American. For now, they are too limited. Can you imagine trying to drive to Philadelphia or Washington DC or even Baltimore for that matter on electric only?
@AQ “…you still pay gas tax when you buy gas for the next 250 miles,…”
But 90% of all driving is in the first 50 miles of each day. If you see a random car on the road, there’s only about a 1 in 10 chance that its driven more than 50 miles since midnight.
@AQ “Can you imagine trying to drive to Philadelphia or Washington DC or even Baltimore for that matter on electric only?”
Done it. There’s a nice charging station on Kent Island that opens up Washington and Baltimore.
Do you remember the first time you saw a laptop computer? It was back-and-white only. It was a bit clunky. It didn’t have a long life battery, it ran too hot, it had limited memory,…. But you KNEW that it would take over and dominate the market. You just knew it. THAT is where we are with electric cars!
If you live in a two-adult household, you probably have two cars. You probably wouldn’t drive the smaller one on a long trip. Same deal with electric cars. You don’t have to replace both gasoline engines to see savings — just one will do.
“although gas was $1.84/gallon when Obama became president…”
…amid a global recession that reduced petroleum demand and led to a fairly rapid drop in prices. You’ll never understand reality if you keep thinking about it like a Republican.
Thanks Geezer. I’m still waiting for someone to explain the underlying economics of 100-125,000 cars a year at $46,000 a pop when the competition is a third to more than half the price. You’ll never understand the economy if you keep thinking like a liberal.
And you’ll never understand either the reality or the economy if you just make stuff up like Republicans.
Top of the line Prius’ are about 40K MSRP.
A Volt is about the same price.
A Ford Fiesta will get you everyplace you need to go in a car. But that doesn’t mean that there isn’t a decent marketplace for Mustangs.
Gas powered vehicles come in a wide price range and style, why shouldn’t electric or hybrid vehicles? The emergence of market choices for these vehicles is a good thing.
I admit, when I first heard Fisker announce it was designing a “family sedan,” the Atlantic wasn’t what I pictured.