It soon may be time to pull the plug on Fisker Automotive, the Southern California-based manufacturer of plug-in electric vehicles.
First came word late last week that the green company had abruptly laid off 160 of its 213 remaining employees (which prompted a lawsuit charging that the displaced workers were not given sufficient notice).
Now come rumblings that Fisker intends to file Chapter 11 bankruptcy this week or next, while at the same time holding talks with possible buyers or investors to salvage the foundering carmaker.
It remains to be seen if the once-seemingly promising electric carmaker manages to stay in business or joins the once-seemingly promising solar panel manufacturer Solyndra in oblivion.
Either way, Fisker provides a business-school-worthy case study in how not to invest in start-up companies in nascent industries.
Indeed, in a presentation this past fall at MIT’s annual EmTech conference, Bill Banholzer, chief technology officer for Dow Chemical, cautioned investors that it was mistake to throw money at green energy start-ups, which promise to bring disruptive technologies to market.
Banholzer’s PowerPoint included a slide with a dozen green energy companies, including the aforementioned Solyndra, A123 Systems, which was to supply state-of-the-art lithium batteries to Fisker and other electric car manufacturers, and other much-hyped start-ups.
Between them, the dozen green energy companies received billions of dollars in investment not only from private venture capitalists, but also from the federal government and green-driven state governments.
Yet, as Banholzer pointed out, “returns are not at all what people would expect.”
And Solyndra, A123 Systems, Range Fuels, Boston Green Power and the other failed or foundering green energy companies were hardly outliers. As Dow Chemical’s CTO told investors at EmTech, “The issue is not just specific companies. Entire industry segments are failing.”
Indeed, Banholzer’s assessment is corroborated by the BNP Paribas Renewable Energy Index, which tracks roughly 40 of the world’s largest green-industry companies. Since 2007, when investors were gaga for green energy, the index has plummeted nearly 90 percent.
It’s one thing for private venture-capital firms to lose billions of dollars on green energy. It’s quite another for the federal government to squander tax dollars, including $535 million on Solyndra, $435 million on A123 Systems and $528 million on Fisker Automotive ($200 million of which the company spent before the feds suspended its funding).
Congress should explicitly forbid the Obama administration from making any further “investments” in green energy companies, the failures of which should not come at the expense of taxpayers.
FROM THE ORANGE COUNTY REGISTER