Fisker's $529 Million Loan Sets Off Media Storm

It started with a Wall Street Journal article entitled "Gore-Backed Car Firm Gets Large U.S. Loan." That's all it took, because anything Gore-backed is red meat for the airwaves and blogosphere. When competing in the "Green Car Challenge" on the Jay Leno Show, Rush Limbaugh bashed a cardboard cutout of Gore, then backed up to hit him again.

The WSJ article is not inaccurate (except where it said that Tesla Motors produces hybrid cars, which was later corrected).  Gore does like the Fisker, and even put down a deposit on one. And the company did receive a huge Department of Energy (DOE) loan to build plug-in hybrid cars, $529 million. But it was a loan, not a grant -- there's a difference!

For the record, Fisker is an American company, based in Irvine, California, and it is spending all the loan money in the U.S.A. Some of that money, $169 million, is going into final engineering work on the Karma high-performance luxury sedan, which will be built in Finland. The money will not be spent in Finland, though, but in Irvine, California and Pontiac, Michigan.

"This was a loan, and it has to be paid back with interest," said a bewildered Henrik Fisker today. "There seems to be some confusion between grants and loans. And all the money has to be spent in the U.S. -- it's a condition of the loan."

Fisker told me, in fact, that he would have preferred to build the Karma in the U.S. but could not find an American manufacturing partner able to handle the low volume (just 15,000 a year).

From the WSJ the Fisker story soon gained altitude on Fox News. As detailed in a lengthy MediaMatters.com post, the Fisker story got a lot of attention over there. The heads were certainly provocative: "$529M Gov't Loan Will Help Gore-Backed Co. Build Cars in Finland," one said. And that's true too, but most of the grant is going to finance the company's smaller, $40,000 Project Nina plug-in hybrid, which will be built in the U.S.

Fox contributor Stephen Moore described the Fisker money as a "grant" (it's a loan) and then said, "But I think the vast, vast majority of Americans would say, at least if we do it, find an American company that's going to employ American workers to do this." But it is an American company, and it is employing American workers.

Fox might have a point about the Karma being built in Finland -- that part is definitely true, though Fisker would have wished it otherwise. Somehow, when we hear that we think of socialist-medicine-loving Finns basking in their saunas and eating brie on America's dime.

Another Fox headline said, "Why is European Car Company Getting Money From Uncle Sam?" But it's not a European company; it just builds cars there.

There also seemed to be some confusion about the citizenship of Tesla Motors, which is also an American company, based in San Carlos, California. The WSJ described Tesla as "purveyors of a $109,000 British-built electric Roadster," so that's probably where that one got started. And of course, both Henrik Fisker (who's Danish) and Elon Musk (born in South Africa) have, horrors, foreign accents.

Fisker will not be wildly spending American taxpayer dollars in Europe. The DOE loan is conditional, requiring the company to clear some fairly steep hurdles. It didn't get handed a $529 million check, but will get additional money as it reaches targets. Fisker also plans to export half its cars, which should help our seriously strained trade deficit.

I must admit I didn't anticipate this big a reaction. I wrote about the Fisker DOE loan for the New York Times, and didn't think it would ignite a storm. But Chelsea Sexton, the former GM employee and founder of the Lightning Rod Foundation who was featured in Who Killed the Electric Car?, wasn't that surprised. "Obviously, the frustration is aimed at DOE as much as at Fisker," she said. "Start-ups like Fisker also need to get better at cultivating relationships with veteran industry stakeholders who can have their backs in such situations. It's not uniquely a Fisker problem."

Maybe Americans' attitude about all this was summed up in a Daily Finance post by Zac Bissonnette, also cited by my colleague Matt DeBord of Slate (catch us together on Dan Rather Reports). "By all accounts, the money was doled out fairly," Bissonnette writes. "And in Fisker's defense, it says that most of the money will be used to finance the production of a $40,000 sedan that hasn't been designed yet. But still -- huh? Why did we just give a start-up $529 million to build something that they haven't designed yet? Can I have $529 million for the AIDS cure I haven't discovered yet?"

But most of this money went to stuff that isn't built yet. That's kind of the whole idea behind the $25 billion Advanced Technologies Manufacturing Loan Program, of which the Fisker loan represents two percent. They're supposed to start new businesses and get America moving again.