California automotive startup Fisker Automotive, Inc. was recently granted a $529 million loan from the United States Department of Energy. While the company eventually plans on creating a sedan in the $40,000 price range, it is currently working on a hybrid sports car, the Karma, which will sell for $89,000. The Karma is a plug-in hybrid that will be able to travel its first 50 miles on battery power and should achieve an average fuel economy of 100 miles per gallon.
Some have criticized the DOE for making this loan because only wealthy consumers will be able to benefit from Fisker’s initial product offerings. However, Matt Rogers, who oversees the Department’s loan programs, defended the DOE’s decision, claiming that the company has the opportunity to drive a significant boost in fuel economy across a variety of market sectors.
The loan has also raised some eyebrows because Silicon Valley venture-capital firm KPCB, of which Al Gore is a partner, backs Fisker. KPCB employees have given $2.2 million in political loans, mostly to the Democratic Party. Rogers said that Gore and the rest of KPCB’s political ties had no bearing on the loan, stating that the vehicle has appeal across party lines and that all of the due diligence was performed by independent review teams.
Meanwhile, other automotive startups such as XP Vehicles and EcoMotors have, after significant delays, been denied DOE loans with little if any explanation. There is certainly no proof of any tampering or political favors in this case. However, it does illustrate that when the government picks technological winners and losers, even if the end goal is highly desirable, it invites criticism upon itself and things inevitably get complicated.
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