Will Electric Car Loans Be Enough?

Fisker Automotive, an electric carmaker that’s often spoken of in the same company as Tesla Motors (and occasionally the same lawsuits) has just, like Tesla, qualified for a Department of Energy loan. Tesla got $465 million earlier this year, and now Fisker has received $528.7 million. Both companies are supposed to use the money to bring affordable electric vehicles to market. Of course, “affordable” is a relative term. Tesla builds a $100,000-plus Roadster, but wants to bring out a sub-$50,000 sedan, the Model S. Fisker also builds an exotic, expensive supercar, the Karma, but has proposed a plug-in hybrid, code-named NINA, on the way. It will sell for slightly less than $40,000.

The DOE has been throwing around funds for new forms of transportation lately. Ford (F) and Nissan received billions at the same time Tesla got its loan. But at some point you have to look at the historic economics of the auto business. Tesla was probably running on financial fumes late last year. The DOE loan is a godsend—as it probably also is for Fisker—but will it be enough money? It takes an established carmaker something like a $1 billion to bring a new vehicle to market. A new vehicle that runs on gas, not a paradigm-shifting revision of personal mobility. Considered this way, the DOE loans to Tesla and Fisker, relative to what the Big Boys are getting, could be seen as … well, skimpy. Or even a bad investment, if both companies fail to create the not-really-that-affordable, electrified mass mobility they promise.