Tuesday, November 25, 2014
Inquirer Daily News

Fisker thanks US for $500M+ electric car loans at DE plant

Henrik Fisker and Bernhard Koehler have spent the last couple of days in Delaware thanking American politicians and taxpayers and local autoworkers for backing their upstart luxury-electric-hybrid car company, Fisker Automotive, which plans to take over an old GM plant in Wilmington

Fisker thanks US for $500M+ electric car loans at DE plant

Henrik Fisker and Bernhard Koehler have spent the last couple of days in Delaware thanking American politicians and taxpayers and local autoworkers for backing their upstart luxury-electric-hybrid car company, Fisker Automotive, which on Monday night signed a letter of intent to buy General Motors Corp.'s shuttered Saturn and Pontiac plant on Boxwood Road west of Wilmington, pending "a routine four-month evaluation period."

Fisker and Koehler, formerly executives at Ford Motor Co., among other automakers, plan to pay $18 million to bankrupt GM successor Motors Liquidation Co. for the 142-acre complex and 3.2 million square feet of assembly, warehouse, paint shop and office space and factory equipment, and spend $175 million "to refurbish and retool the factory over the next three years."

When it's done, the plant will produce up to 100,000 cars a year, employing 2,000 workers, according to Fisker. The company's Nina line of cars are supposed to price for around $40,000 each, after government rebates.

The pair have raised "around $100 million" from equity investors, spokesman Russell Datz told me, including Silicon Valley venture capitalists Kleiner Perkins Caufield & Byers and Palo Alto Investors LLC, publicly-traded California electric power-train manufacturer Quantum Fuel Systems Technologies Worldwide Inc., and the Persian Gulf oil-exporting nation of Qatar, whose other investments include the Al-Jazeera TV network.

They've also been promised $529 million in loans, for the Delaware plant and other engineering and manufacturing projects, from the U.S. Department of Energy's electric-car development program, which is also backing projects by Ford, Nissan, Tesla and Tenneco, among other carmakers now competing with U.S. government-controlled General Motors and Chrysler. "The funds come at the government's cost of borrowing. The most recent rate is 2-7/8 percent, substantially better than the market rate," Matt Rogers, senior adviser to the Secretary of Energy, told me. "The view was, the capital markets wouldn't provide money fast enough" to "make the most efficient cars in the world."

Delaware is considering an additional "$12.5 million loan to Fisker that will be forgiven if the company meets certain benchmarks for job creation and investments in upgrading the plant," plus "a $9 million grant that will go into escrow for Fisker to pay utility costs for two years," said Joe Rogalsky, a spokesman for the state's governor, Jack Markell.

Fisker addressed a crowd of more than 1,200 members of United Auto Workers Local 435 that hope to return to the plant under new ownership, senior UAW officers and other visitors, from a stage on the shop floor, and made a case for public financing for the nascent electric-car business.

"We can lead the world again, in the United States of America, in car manufacturing," Fisker said with a trace of his native Danish accent. "We were planning to start in about three years. But with the help of the Department of Energy, we are able to start this car today." The crowd cheered long and loud.

"We're planning to produce the vehicles here, and export at least 50 percent (of them) to the rest of the world" through the plant's railway connection and the nearby Port of Wilmington's auto terminal. "We believe the future is plug-in hybrids. We believe the vehicles have to be desirable, beautiful, and attractive to people.... Fisker Automotive is only going to play a small part. But we're willing to grow. And I think you guys are willing to grow with us."

There were so many UAW-jacketed workers parked in the lot and flooding the security checkpoint,  "it looks like a shift change before the plant closed," Sam Lathem, head of the state AFL-CIO, told me. He warned that most of the jobs won't materialize until 2012 and 2013, after the plant's been rebuilt.

There were so many politicians on hand to take credit, "It looks like Return Day in Georgetown," said U.S. Rep. Mike Castle, R-Del., recalling the Delaware tradition whereby victors join defeated politicians in a joint appearance after each election.

Castle, Markell and Sen. Tom Carper, D-Del., among others, got to speak, but the day's big talker was Vice President Joe Biden, son of a prosperous Delaware car dealer who told the crowd he was once refused a college summer job at the plant, and has spent hours of his life since then haunting the plant gate looking for votes and strategizing with company and union officials to keep the plant open.

"I wouldn't be the Vice President of the United States of America without you, because I never would have been a Senator," Biden said, to shouts of "Joe! Joe!" and "Wil-ming-TON!" "When I was a 28-year-old kid running for Senate, the first outfit to endorse me was the UAW. So I owe you."

Biden defended the government's role in picking winners and bailing out losers in the car business. "We're going to provide, not subsidies, this is seed money that will return back to the American consumer in billions and billions and billions of dollars in new jobs."

It's a blow "against the oligarchs of oil," Biden added. While "all the rest of the world is trying to have their (automotive) industry get a foothold" in electric cars, "we're not going to stand by."

Lathem said he'd heard much of the same talk from the same crew at a Tuesday morning labor breakfast, and in a signing ceremony at Gov. Markell's house Monday night.

"They signed that letter of intent," Lathem told me. "At least we have it on paper now." As to the "middle-class" wages and benefits Biden bragged about, and other terms and conditions of employment that UAW workers in Delaware used to enjoy, "that's still to negotiate."

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
Business Videos:
Also on Philly.com:
Stay Connected