Fisker Allowed to Use Loan Despite Multiple Terms Violations image

A recent report shows that Fisker has spent six times more money to manufacture a Karma vehicle than it received from customers.

Karma production was stopped in 2012 and Fisker managed to manufacture only 2,500 units of the $103,000 model. Although the company violated the Energy Department loan terms multiple times, it was still allowed to continue using the money.

“They made a mistake” in awarding the loan, PrivCo Chief Executive Officer Sam Hamadeh said of the Energy Department in an interview yesterday. “Should they have fought this sooner? Obviously — as soon as it became evident that they had begun to default.”

The report also says that the Energy Department was aware since December 2010 of the fact that Fisker was unable to meet the milestones necessary to keep drawing taxpayer funds, but the officials waited until June 2011to cut the company’s funding, after it has spent almost $193 million.

“PrivCo’s assertion that Fisker defaulted in December 2010 is simply false,” Gibbons said. “The milestones that PrivCo includes in its report are also wrong. The fact is, the department stopped disbursements on the loan after the company stopped meeting its milestones.”

PrivCo says that Fisker spent around $660,000 for each Karma sedan it produced, and the selling price was $103,000. The automaker has to repay $20.2 million from the $529 million loan by April 22nd.

Source: Bloomberg