New car companies are difficult to launch. That's why they're rare. Before the world heard of Fisker Automotive, the last major new car company to emerge from America's economic cauldron was Chrysler. 

That was in 1925.

Fisker Automotive's rise to celebrity status in the green-car world had its allure--but it always had an uncertain road to reality, much less to longevity.

And today, it seems like longevity won't be in the product plan, and the Karma may be the only car we see from Fisker Automotive. Today, the company laid off about 160 of some 200 remaining employees, leaving only a handful to face some immense hurdles: loan repayments, a lack of battery suppliers, and not a single new Karma built since last summer.

From Tramonto to Pentagon

In the fin-de-siecle optimism of early 2008, Fisker Automotive built itself on shaky foundations. Its founder, automotive designer Henrik Fisker, had his most notable success to date with the Aston Martin DB9--a car that likely will outlive his namesake company, since it's still on sale today.

Fisker broke from Aston Martin as it was sold by Ford to Kuwaiti investors, and his first attempt at a solo project would be the Tramonto and Latigo. The idea? To reskin the Mercedes SL and BMW 6-Series with more attractive sheetmetal, without invalidating their manufacturer warranties for safety systems. In the subsequent tussle with Mercedes and BMW, only 13 Tramontos and just a single BMW-based Latigo were delivered.

Fisker then shifted his attention to military contracts, with an attempt at a hybrid-powered, "jeep-like" vehicle that had won some Pentagon orders and some indirect investment by General Motors. Fisker lacked experience and funding to make military contracting happen--no surprise, at a time when even GM partner AM General was struggling with a next-generation vehicle to pitch as a successor to its Humvee.

Still intrigued by the idea of a hybrid vehicle, Fisker turned his company's attention to the ultra-luxury car market once more, with the Karma.

Not so instant Karma

As early as 2008, Fisker Automotive had formed around the extended-range electric vehicle concept, around what would become the Fisker Karma. With the same fundamental technology as the Chevy Volt--battery packs providing power to the wheels, recharged by a gasoline engine--the Karma was cast as a luxury car, with a fantastic shape penned by Henrik Fisker himself. It played perfectly on his skills as a designer, but from the start, the Karma's appeal was directly to a very narrow niche. As we wrote in early 2009, "the Fisker also calls out to an untapped market: moneyed Hollywood vegans, of which there are plenty."

The Karma was bandied as a concept while the company scrambled for funding. Engines would be sourced from GM, while batteries would come from a company that had received Federally-backed grants to produce cells for a new generation of electric cars, A123 Systems.

But developing a new car--in the absence of a vast network of suppliers on board, or a range of vehicles over which it could spread development costs--Fisker needed a shortcut. It took the fateful step of applying for loans under the Department of Energy's $25 billion Advanced Technology Vehicles Manufacturing program, and became part of a government-backed narrative that would follow one administration out of office, one into office, and would trail two major U.S. auto companies headed into insolvency.

Advanced technology, low interest (loans)

The ATVM program had been conceived of and signed into law by President George W. Bush, and prior to Fisker's approval, had already granted low-interest loans for expanding green-car programs to Ford, Nissan, and another new green-car startup, Tesla Motors. The Bush administration had given priority to loans from major global automakers, but under loosened restrictions--a more "fair" consideration, by some interpretations--Fisker was given the green light for a $529 million loan in September of 2009. The money was split between finishing work on the Karma, and a new Project Nina, an electric vehicle to be built in America.

Before long, critics questioned how a carmaker with no track record had been approved for a loan of that size, when a company with Nissan's worldwide reach had been approved for $1.6 billion. Republican party officials called it crony capitalism, and not without agreement from some more neutral organizations. The weakest charge: that $560,000 in Democratic campaign contributions were made by employees at a law firm that was paid nearly $2 million to review Fisker's loan applications.

More provocative arguments tried to pierce the fog of politically connected investors and lobbyists, as well-placed as former Vice President Al Gore, who was an initial investor in Fisker and a senior partner at venture capital firm Kleiner Perkins Caufield & Byers. Another senior partner, John Doerr, served on President Obama's Council on Jobs and Competitiveness. 

Even current Vice President Joe Biden was drawn into the Fisker debacle. To build its planned Project Nina vehicle--to be dubbed the Atlantic--Fisker maneuvered itself into a purchase of a former GM plant in Wilmington, Del., that had once built the smart Pontiac Solstice and Saturn Sky roadsters. The plant was one of many properties split off during GM's 2009 bankruptcy filing, and was to be sold as a part of the "old GM." While the plant had some physical advantages of being near a port, it had several big disadvantages--namely, it was a world away from Fisker's U.S. headquarters in California, needed expensive retooling, was far too large for the task at hand, and was ostensibly more expensive to retrofit than some other "old GM" properties, such as Doraville, the suburban Atlanta plant that once built GM minivans.

The Wilmington plant did have the huge advantage of lying in Vice President Biden's backyard. Lobbying by all local politicians is said to have won the day for the Wilmington plant, but like much of Fisker's financial history, the details are blocked from view. Vice President Biden would not respond directly to questions about Fisker posed by ABC News, his office insisting only that he supported the ATVM program--but failing to address how a site from his hometown was given a Federally-backed reprieve.

Fisker FOIA

Downward spiral

Fisker said over time that it had raised at least $1 billion in private capital, aside from its $529 million loans. And still, that would not be enough to fund a car company, not when a simple refreshing of an existing vehicle can cost upwards of $800 million. By the time Fisker showed a concept of its future American-built Atlantic at the 2012 New York Auto Show, the wheels had already come off the company.

In 2011, the ATVM monies allocated to Fisker dried up. The company was forbidden access to the rest of its $529 million--of which it eventually drew $192 million--when it could not meet performance targets, including 65-percent American content for the Karma, and sales of at least 11,000 vehicles by October of 2011. In fact, it had only delivered a thousand vehicles by then, most visibly to celebrities like Leonardo DiCaprio and Justin Bieber.

The ATVM itself had effectively shut down, no doubt affected by the wider scrutiny of the coming presidential elections. No loans were approved after March of 2011.

In the meantime, car fires began to follow the Karma, about the same time its battery supplier A123 seemed headed to its own bankruptcy. A final indignity came when Hurricane Sandy struck the Northeast in October. Some 230 Karmas were submerged, of which 16 caught fire, while being stored at a port facility.

The whole of last year has been report after report, cataloging Fisker's agonizing downward spiral. By May of 2012, Fisker had mostly abandoned plans to build the Atlantic in Delaware and began to seek out new sources of capital. There would be no Atlantic, no Surf or Sunset to follow up the Karma.

And then, there was no Fisker at all. Last month, Henrik Fisker was separated from the company, which last year had hired--of all people--the lead on Chevy Volt development, Tony Posawatz. Fisker's departure was said to have come after clashes with Posawatz over the direction of the company, which seemed to be headed to a partnership with Chinese investors. At least, that was until the Chinese companies, including Volvo parent Geely, backed away, likely because of the Federal strings attached to Fisker's loans.

No financing has come through. Fisker has reportedly hired bankruptcy attorneys, and as of today, has laid off all but 53 employees. It has no visible means of making a payment due on April 22 toward its ATVM loans.

It has effectively gone dark.

Expensive green lessons learned

Without significant investment, Fisker Automotive is dead, worth only the lesson that the ATVM program has written for future public-private partnerships.

There are marked differences in the companies that prospered from ATVM, and those who have failed. Ford and Nissan have made the most and widest use of the loans. Sales of the Volt and Leaf are surging, but at a significant cost. Those companies can afford to subsidize sales, to cover the ten-year cost cycle that green vehicles inevitably consume.

Tesla has charted a course where sustainability seems possible. It's headed in the cash-positive direction, and is accruing a reasonable set of assets that could appeal to either of its major automotive investors--Toyota and Mercedes-Benz parent Daimler AG.

From the start, Fisker had few real hopes of winning on all major fronts--engineering, marketing, technology--at once, in a way that makes them realistic competitors in an already crowded new-car market.

It's a point delivered by failed presidential candidate Mitt Romney--unfortunately, the messenger least capable of delivering the salient point, because of his own intimate political connections. Romney wrote last year that,

"...The U.S. government shouldn't be playing venture capitalist. It's not merely that government bureaucrats are bad at picking winners. The very process invites cronyism and outright corruption."

When public officials refuse to disclose the intimate connections between bundlers, contributors, and political campaign promises, it's left to speculation. And it doesn't take much imagination to cast doubts on the unpleasant end to a program conceived with the best of intentions. There's every reason to question whether Fisker ever would have come to pass, without its unusual hold over some of our most important elected leaders.

An influential disaster has unfolded at Fisker. Once again, we're all paying for a remedial lesson in economics--that laissez-faire may be the only "fair" the Federal government can, and should, guarantee.

High Gear Media editors John Voelcker, Bengt Halvorson, and Nelson Ireson contributed facts and links to this opinion column.

(c) 2013, High Gear Media.