In what has become a relatively politically charged narrative, Fisker Automotive’s downfall tells a story not just of what the future of hybrid technology means for the auto industry, but also about the government’s role in contributing to the development of modern technology. The whole problematic venture began when Fisker’s stated goal to create luxury hybrid vehicles interested the Department of Energy.

After being convinced by Fisker’s sales projections that it was a solid investment, the Department of Energy provided Fisker with a $529 million credit line for the production of their first electric/gas hybrid model, the Karma. However, despite Fisker’s initial claim to sell 100,000 vehicles in their first year, they actually ended up only selling 2,000 vehicles, earning approximately %2 of their initial projected sales. As a result, the company is in financial turmoil, and U.S. taxpayers have lost their government’s investment in the project, opening up a variety of questions about the government’s role in both the auto industry and in developing modern technology.

Reviving an Industry vs. Private Investment

In 2009, President Obama famously extended emergency loans to the floundering American auto industry, and helped to not only revive the industry, but also aid in the production of more fuel-efficient vehicles. This type of government investment appears to be the model that Fisker Automotive was looking to follow. A government investment, which would be paid back once the company was booming, seemed like a safe investment for both parties, as it had proven success in the 2009 recovery of the American auto industry. However, there is one major difference between what happened in 2009 and in Fisker’s current situation.

When the 2009 investment was made, a major American industry, upon which hundreds of thousands of jobs and billions of dollars in revenue relied, was at stake. The government invested in an industry that had a proven track record of strong profit margins and high sales. The Department of Energy’s investment in Fisker Automotive was not a proven industry, as Fisker was a brand new company that relied upon innovative technologies that had no proven track record. Once Fisker failed to meet its sales goals, the government’s unwillingness to dump more money into a risky venture showed their reluctance to pursue private investments, which is a drastically different scenario than how the revival of the American auto industry played out.

How Fisker Failed

Fisker has stated that many of their problems resulted from trying to push forward and meet deadlines that had previously been agreed upon with the Department of Energy. These pushes for faster results led to simple problems in their prototype vehicles, like faulty wiring and unreliable batteries. Plus, pressure from the government led Fisker into contracts with suppliers and manufacturers that were unreliable or offered inferior products.

Regardless of political opinions on the situation, Fisker’s story shows one fact: In a capitalist market, private investment is king. If Fisker’s main investor had been a private entity, rather than the Department of Energy, the losses would have been grounds for investors to reconsider their production and sales models, and then reinvest and reinvent their company. However, because the government lost their initial investment, they refused to see the losses as a set-back and rather pulled the plug on the company.

How Fisker’s Story Affects the Development of Modern Technology

When it comes to creating innovative technologies in the American economy, private investment is a necessary component for a company to reach success. This is not to say that the government will never successfully invest in a product, but it does mean that this type of investment has more limitations than those put on private investors. Limitations are just that, a limit placed on a company’s ability to grow.

Take, for example, the medical technology field. Despite recent government intervention with health insurance policies, the field is entirely dominated by private investment. Some of the most innovative technologies, including surgical lasers, imaging devices, and robotic surgical tools have developed from private investment. Just like medical technology, the innovative technology needed to develop hybrid vehicles should return to being entirely funded by private investment in order to successfully create and produce new products.

John Soland is an experienced writer who has written for a number of notable publications. As a lifestyle expert, Mr. Soland is able to offer advice and insight on a multitude of topics, including those pertaining to business news.

John Soland is an experienced writer who is able to offer advice and insight on a multitude of topics, including those pertaining to business http://news.www.bizjournals.com/profiles/company/us/fl/tampa/laser_spine_institute/922548

Author Bio: John Soland is an experienced writer who has written for a number of notable publications. As a lifestyle expert, Mr. Soland is able to offer advice and insight on a multitude of topics, including those pertaining to business news.

Category: Business
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