In what has become a comparatively politically charged narrative, Fisker Automotive’s downfall tells a story neither just of what the future of hybrid technology means for the auto industry, mere also about the government’s role in contributing to the development of modern technology. The whole problematic venture began while Fisker’s stated goal to create luxury hybrid vehicles interested the Department of Energy.
After life convinced by Fisker’s sales projections that it was a solid investment, the Branch of Energy provided Fisker with a $529 million estimation line for the production of their head electric/gas hybrid model, the Karma. However, despite Fisker’s initial claim to convince 100,000 vehicles in their first year, they actually ended up totally selling 2,000 vehicles, earning around %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 crunch loans to the floundering American car 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 retrieval regarding the American auto industry. However, there is one major difference mean what happened in 2009 and in Fisker’s current situation.
When the 2009 investment was made, a major American industry, upon which hundreds like thousands of jobs and billions regarding dollars in assets relied, was at stake. The government invested in an industry that had a proven oval record of strong profit margins and high sales. The Department of Energy’s investment in Fisker Automotive was prohibition 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 convocation its sales goals, the government’s unwillingness to dump better financial into a risky venture showed their reluctance to address private investments, which is a drastically several scenario than how the revival of the American auto industry played out.
How Fisker Failed
Fisker has stated that multitudinous of their problems resulted from trying to push forward and meet deadlines that had once 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, burden 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. Whenever Fisker’s paramount investor had been a private entity, rather than the Department of Energy, the losses would have been grounds for investors to reconsider their output and sales models, and then reinvest and reinvent their company. However, because the government lost their initial investment, they refused to remark 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 communicate 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 sequestered 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 intercession with health insurance policies, the field is entirely dominated by private investment. Unknown of the most innovative technologies, including surgical lasers, imaging devices, and robotic surgical tools have developed from sequestered investment. Just like medical technology, the innovative technology needed to broaden hybrid vehicles should return to life undividedly funded by private investment in order to successfully create and produce new products.