The Delaware Fisker Plant. To take a line from Gimli in “Lord of the Rings,” “You could find more cheer in a graveyard.”
The automotive business is a wild ride; some companies are riding high while others continue to get knocked down.
On the downward spiral:
It’s been awhile since we talked about Fisker. Unfortunately, they’re not up to much…
The electric car company continues to sink in the quicksand of unpaid loans and has become a permanent fixture at the Delaware taxpayer-funded buffet. It still has yet to pay off its $170 million federal loan from the Department of Energy, and Governor Jack Markell, the Delaware governor who enticed Fisker to move to DE, is now starting to feel the heat.
The car manufacturer moved to Delaware after the promise of a $21.5 million package of state taxpayer loans and grants. Currently, the Newport-area Fisker plant sits boarded up — all of its employees were laid off in the spring of last year. To make matters sound even worse, the state of Delaware continues to write checks for the plant’s utility bills. It sounds like the energy assistance program created for low-income Americans has been extended to money-sucking government projects…
My Opinion: No more taxpayer-funded loans to electric car companies unless their credit is better than “junk.” There are too many risky, start-up companies for such a small market—hence the domino effect of bankruptcy in the alternative energy sector (Fisker, Solyndra, A123 Systems, etc.). Even after the federal analysts gave Fisker’s loan a “junk” credit rating, Delaware still assigned them a $20 million loan package. No more taxpayer dollars to unworthy, risky ventures.
On the UP Swing:
Tesla.
I wrote a piece a few weeks ago called “Tesla: Miss America.” Several people took offense because they thought I was giving Tesla unwarranted, positive praise and jumping on the “Tesla bandwagon.” I thought page two of that same article was a clear indicator of my stance—as well as many of my other articles urging the cautious adoption of alternative energy vehicles. That being said, we have to give Tesla some credit. Compare its track records to some of its competition: repaid loans vs. bankruptcy and existence vs. dismantlement. Tesla is a dark horse and people watch it with fascination… will it fail or will it succeed?
Tesla made headlines again last week, POSITIVE headlines, mind you. The story? It entered the NASDAQ-100.
Oracle, the company Tesla replaced in the NASDAQ-100, decided to move to the NYSE; thus opening up a spot for the start-up. I’m seeing both congratulatory and skeptical responses on the internet regarding this move—I think I’m more with the latter.
My Opinion: I will give Tesla some superficial points for its induction into the NASDAQ Frat, but I think extrapolating Tesla’s future from this event is both hasty and unwise. Being given a seat at the “big kids table” doesn’t necessarily indicate future success. As stated by Car and Driver, “Electric vehicles might be the future of cars, and Tesla might delight its stock-trading fans by becoming an automotive Apple. It might not, too.”
That’s a lot of “mights”–and Car and Driver magazine is right to use them.
Compared to the company that Tesla replaced in the NASDAQ-100, Tesla is very small. Oracle is valued at $147.97 billion. Conversely, Tesla is only valued at $12.8 billion. Tesla has a long way to go to catch up with the big boys. Hopefully, the start-up will be able to use its new position to bolster business and quiet ongoing skirmishes over dealer-franchise laws.
With a spot in the NASDAQ, Tesla has gained leverage and respect. Now it needs to prove that it is worthy.
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