WASHINGTON – Sen. Chuck Grassley and Sen. John Thune are asking the Energy Department to explain the selection of a luxury automaker – now described as “troubled” -- for a $529 million federal loan for advanced technology vehicles manufacturing. The federal government made part of the loan to the Fisker Automotive Corporation, then froze the remaining portion, raising questions about whether the company was vetted properly in the first place.
“The government is responsible for minimizing risk to taxpayers,” Grassley said. “It’s important to know what went into the Energy Department’s decision to fund the production of expensive luxury vehicles. The riskiness of loans to companies that may or may not be able to pay them back deserves scrutiny. The taxpayers can’t and shouldn’t have to subsidize these decisions.”
“There seems to be a troubling pattern developing at the Department of Energy when it comes to providing taxpayer-backed government loans to private companies,” Thune said. “Taxpayers have a right to know why their hard-earned money was used in part to back the production of luxury automobiles overseas, especially in a manner that might not have undergone proper review. I hope Secretary Chu will provide Congress with answers about why this loan was granted and to ensure that taxpayer dollars are not at risk.”
The Energy Independence and Security Act of 2007 required the creation of a direct loan program from the federal government to car companies through the Advanced Technology Vehicles Manufacturing Incentive program. Fisker’s two planned vehicles would sell for more than $100,000 and about $50,000. The high retail prices seem to indicate the vehicles would be out of reach for most Americans, thereby seeming like a questionable choice of investment for a federal program. Also, the senators questioned whether the company’s vehicle production in Finland diminishes the goal of developing advanced vehicle technology to create jobs in the United States.
The text of the Grassley-Thune letter to Energy Secretary Stephen Chu is available here.