China syndromeChinese set to buy yet another U.S. taxpayer-backed hi-tech firm
Lawmakers yesterday expressed their concerns about the likelihood that U.S. taxpayer dollars could end up bolstering the Chinese economy. The lawmakers reacted to reports that a Chinese firm, Zhejiang Geely Holding Group, is leading the list of companies bidding for a majority stake in government-backed Fisker Automotive, and that the only serious rival of that Chinese company is a Chinese auto maker. Fisker’s main battery supplier — U.S. government-backed A123 Systems – has already been acquired by a separate Chinese firm.
Lawmakers yesterday expressed their concerns about the likelihood that U.S. taxpayer dollars could end up bolstering the Chinese economy. The lawmakers reacted to reports that a Chinese firm is leading the list of companies bidding for a majority stake in government-backed Fisker Automotive.
The California-based electric car maker has received about $530 million in government subsidies, but has fallen on hard times and is now looking for a partner. Reuters reported earlier this week that China’s Zhejiang Geely Holding Group is favored to take over – and that its only serious bidding rival is a Chinese auto maker.
Fox News reports that lawmakers who expressed concern about the Chinese takeover point out that last month, Fisker’s main battery supplier — U.S. government-backed A123 Systems — was acquired by a separate Chinese firm.
In the cases of both Fisker Automotive and A123 Systems, Chinese companies and the Chinese military would be handed cutting-edge technologies which were developed largely with funding from the American tax-payer.
Senators John Thune (R-South Dakota) and Chuck Grassley (R-Iowa), noted Wednesday that Chinese companies are benefiting from U.S. taxpayers’ investment.
“Obama’s green energy investments appear to be nothing more than venture capital for eventual Chinese acquisitions,” Thune said in a statement. “After stimulus-funded A123 was just acquired by a Chinese-based company, it’s troubling to see that yet another struggling taxpayer-backed company might be purchased under duress by a Chinese company.”
Grassley added: “Like A123, this looks like another example of taxpayer dollars going to a failed experiment. Technology developed with American taxpayer subsidies should not be sold off to China.”
Fisker, however, said that the Reuters report notwithstanding, there are other realistic bidders in addition to the two Chinese companies.
“The company has received detailed proposals from multiple parties in different continents which are now being evaluated by the company and its advisors,” Fisker spokesman Roger Ormisher said in a statement.
Fox News notes that the Obama administration defended the Energy Department’s overall loan program, which originally extended the nearly $530 million loan to Fisker in 2010.
“The department’s loan program invests in advanced hybrid electric vehicles because they have the potential to significantly improve performance and fuel economy for American consumers. Every one of these loans has strict conditions in place to protect taxpayers,” department spokesman Bill Gibbons said. “The department is working with Fisker to determine the best path forward so the company can meet its benchmarks, produce cars and employ workers here in America.”
Fisker has received about $200 million of its U.S. government loan to date, while raising roughly $1 billion from the private sector.
Last year, after Fisker failed to reach production and development deadlines, the DOE stopped disbursement of the loan. The stopping of federal funds also led some of the private investors to rethink their position, plunging the company into debilitating financial problems.
Fisker’s situation became more desperate when its battery supplier, A123 Systems, filed for bankruptcy.