The U.S. Energy Department on Tuesday awarded a $529 million low-interest loan to a California-based start-up luxury automaker to fund the development of an $88,000 plug-in hybrid vehicle and a future “family-oriented” plug-in sedan.
The work could create jobs in Metro Detroit, because Irvine-based Fisker Automotive Inc. plans to do some of the product and production development work at its facility in Pontiac.
Energy Secretary Steven Chu said the loan to Fisker to develop two lines of plug-in hybrids will help save hundreds of millions of gallons of gasoline and offset millions of tons of greenhouse gas emissions by 2016.
This is the second loan to a small-scale electric or plug-in vehicle producer that focuses on high-priced models.
San Carlos, Calif.-based Tesla Motors Inc. received a $465 million loan in June to finance production engineering and assembly of the Tesla Model S, an all-electric family sedan with an expected base price of $49,900 after a federal tax credit.
A primary reason for the high cost of pure electric and plug-in vehicles is the cost of batteries. General Motors Co.’s Chevrolet Volt — an extended-range electric vehicle — will be low volume and priced in the upper $30,000 range.
“Luxury buyers are going to be willing to spend more, allowing automakers to build more of the technology into the vehicles,” said Erich Merkle, an auto expert who founded autoconomy.com.
The Energy Department said the Fisker project will create or save about 5,000 jobs for U.S. parts suppliers, and create thousands more to build plug-in hybrid vehicles in the United States.
This is the fourth loan out of the $25 billion automotive retooling program funded by Congress in September 2008. Earlier, $7.5 billion in loans went to Ford Motor Co. and Nissan Motor Co.
GM, Chrysler Group LLC and Delphi Corp. are among the companies that are still seeking loans under the program.
Vehicles built using the $25 billion loan program must be 25 percent more efficient than current models. Last week, the Obama administration proposed increasing fuel-efficiency standards to an average of 34.1 miles per gallon by the 2016 model year, an increase that the administration says will cost the auto industry $60 billion to meet.
In the first stage of its program, Fisker will use a $169.3 million loan for engineering integration costs as it works with primarily U.S. auto suppliers to complete the company’s first vehicle, the Fisker Karma. Engineers will also design tools and equipment and develop manufacturing processes.
The work will be conducted at Fisker’s Pontiac office with support from its headquarters in Irvine.
While the final assembly of the Karma will be done overseas, more than 65 percent — based on cost — of the parts required for Karma will come from U.S. suppliers.
The four-door Karma is scheduled to appear in showrooms in summer 2010, and the company said it has more than 1,500 pre-orders.
The second-stage funding from the Energy Department includes a $359.36 million loan for Fisker’s Project Nina, involving the manufacture of a plug-in hybrid in the United States. Fisker estimates that 75,000 to 100,000 of these vehicles will roll off assembly lines in the country every year beginning in late 2012 and will be priced around $45,000. But Fisker said with a federal tax credit of up to $7,500, the Nina will cost no more than $39,000 — a price still out of reach for most car buyers.
“This conditional loan represents a significant step in America’s future,” CEO Henrik Fisker said. “With it, Fisker Automotive can rapidly develop affordable, clean cars that satisfy our passion for driving and help restore the U.S. as an auto industry leader.”
Fisker Automotive has 45 dealers in about 20 states. It plans to have at least 100 dealers by 2012.
The company was founded by two industry veterans, but it has yet to produce many vehicles.
Fisker was design director for Aston Martin and president and CEO of BMW’s DesignworksUSA. Bernhard Koehler, Fisker’s chief operating officer, led design operations at Ford, Aston Martin and BMW.
The Energy Department said the projected annual sales of these vehicles would contribute significantly to the Obama administration’s goal of having 1 million plug-in hybrids on the road by 2015.
Many auto experts have called that goal highly unrealistic because there are only a few hundred on the roads today.