Fisker Automotive has laid off workers as it tries to unlock more of the $529 million Department of Energy loan it's using to produce its vehicles.
So far, Fisker has received $193 million to build its plug-in hybrid sports car and retool a former GM plant in Wilmington, Del., scheduled to open this year. But Uncle Sam has put away its checkbook, putting a crimp in the California-based company's production plans, according to the Associated Press.
Fisker hasn't met requisite development and sales milestones, and until new terms are reached, the DOE has cut off additional funds. In a money-saving move, the electric car company has laid off 26 workers at the Delaware plant and 40 employees and contractors at its design lab in Anaheim, Calif., until it can come to an agreement with the DOE. In October, the company reported employing 100 workers in Delaware to reopen the old GM manufacturing facility.
The layoffs and slowdown of production and development could also end up affecting the carmaker's suppliers. Battery supplier A123 Systems named Fisker's slow production as the reason it had to cut its earnings forecast last year. In response to lower battery demand, the lithium ion battery producer reportedly laid off 35 percent of its workers at two Michigan manufacturing plants last year.
While Fisker tries to come to new terms with the DOE to gain access to the rest of the loan and resume work on current and future products, it is also exploring alternate sources of funding. The company said it raised $260 million in private equity in late 2011, according to the Associated Press. In previous, albeit more optimistic years, company CEO Henrik Fisker has also floated the idea of going public to raise money.
But the company is hardly a safe bet. Producing a line of luxury alternative-power-train vehicles has proved a tough task for Fisker. After years of delays, the automotive startup finally brought to market last year the $100,000 Karma plug-in hybrid sports car, only to recall it due to a potential battery fire risk and again this month for a software glitch.
Fisker says it will sell 10,000 vehicles this year. The Wilmington plant is capable of producing up to 100,000 per year of Fisker's next generation of cars that use the Nina platform and will be powered by BMW engines.
Source: Associated Press