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OPINION

At Least Fisker's Cars Didn't Spontaneously Catch Fire...Oh, Wait

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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If you’ve come in late to the movie the Life and Death of Fisker Automotive, you might get the impression that the only thing that stood between success and failure for the electric car company was their inability to meet a few milestones that the government imposed.

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In reality, the biggest problem Fisker faced in their quest for success wasn’t the milestones the government gave them, but rather the money the government gave them.

“The electric carmaker,” reports CNN, “which laid off 75% of its employees earlier this month, missed its first loan payment to the Energy Department on Monday. Treasury has already seized $21 million in an effort to get back some of the taxpayer money loaned to it, but most of the $192 million that was given to the company over the three years is very much at risk.”

Fisker is what is known as a story stock. It’s not a public company, of course, but it still qualifies. A story stock is a company that relies upon “a story” to get new investors to pony up more money to keep the story going. 

It can’t point to results, or a business model, or demographics. It has some new, breakthrough technology or process that will revolutionize the world if and when… blah, blah, blah, blah, talk, talk, talk.

And all they need is a bit more money.  

Facebook was not- is not- a story stock. They have many users and will someday figure out how to monetize them, just as Google figured out how to monetize their users. Google wasn’t a story stock either.

Story stocks suffer from the opposite problem Google and Facebook posed: Story stocks have a revolutionary way to monetize demand for products, but they have little demand.

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And the last thing a company with very little demand needs is a bit more money.

A bit more money gives a company with no customers the trappings of success without the fuss and bother of actually selling things; a bit more money allows the story to supplant sales; a bit more money means that the only thing left to do is go out and get a bit more money over and over again.

In the 1990s the fuel of the future was to be ethanol, especially ethanol derived from biomass cellulose waste like switchgrass and cornstalks and sawdust.

All they needed was a bit more money to perfect the technology of refining ethanol from waste products and success was to be ensured.

Twenty years later, all biomass fuels have to show for the story is more research grants from the Department of Energy, more demonstration plants that can’t produce commercial volumes and more need for subsidies from the federal government to stay afloat.

And regular corn ethanol- a competitor to biomass ethanol- is still only about as economical as regular gasoline, if not a little less so. 

Just a bit more money, please.

“There are two times in a man's life when he should not speculate,” Mark Twain wrote in Following the Equator, “when he can't afford it, and when he can.”

Twain by then had been ruined by a story stock of his own making.

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“The author,” he says, “did not gather [these observations] from practice, but from experience.”

Twain invested in, managed and ultimately smothered a new marvel in typesetting technology called the Paige Compositor. Twain had the great disadvantage of knowing a thing or two about typesetting. He was a young apprentice typesetter in Philadelphia, New York and St. Louis.

In Twain’s case- as in other story stocks- a little knowledge proved to be a dangerous thing.  The inventor James Paige beguiled Twain with creating the most perfect machine ever, instead of one that would sell. Consequently the machine never even got to the prototype stage. Instead of merely losing money in the affair, Twain’s quest for a perfect machine finally drove him into bankruptcy- an event from which his creative mind never fully recovered.

According to biographer Justin Kaplan, Twain later indulged in fantasies of locking the inventor of the typesetting machine in a steel trap and watching him die.

The folks from Fisker have no less arduous a trap to face themselves.

“As the years rolled by,” writes Scientific American, “Fisker observers became increasingly suspicious that the company didn’t even possess a working car. At the 2008 debut, Fisker announced that the Karma would go on sale in late 2009. Yet by early 2010, when Bill Gifford profiled the company for Popular Science, no one but the chauffeur for the Crown Prince of Denmark had driven even an early prototype.”

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They actually did build a few cars, but most of them flooded before some spontaneously caught fire, just like the Chevy Volt. Really.

So now the steel trap set for Fisker is in Congress, which of course wants taxpayer money back. But what Congress really wants more than anything is to embarrass Obama, the Department of Energy and the whole green energy scheme, which was produced by a little too much knowledge and way more money than they ever needed.

They have found a willing victim in Fisker.

While Twain could only fantasize about retribution, Congress owns the steel trap of public investigation in which many others who speculate on the public dime have gone to die a slow, and humiliating, death.  

It’ll make a great story.   

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