The U.S. Bets a Billion on New High-Tech Automakers

The U.S. government money doesn't come without some strings — officials from both companies note that the DOE loans proceeds can only be spent in the U.S. — and the spending will be monitored to ensure compliance.

The DOE has also given more than $3 billion to the Japanese automaker Nissan, which has promised to spend the cash in the U.S., mostly in Tennessee, which is in the grip of its own auto recession.

Tesla says it will use the loans to support two specific projects, including the U.S.-based production, engineering and assembly of the Model S, an all-electric family sedan. The Model S assembly plant will employ about 1,000 workers in Southern California. "We're already engineering the Model S, a seven-seater family sedan that will have a base price of $49,900 after a federal tax credit that will [over the longer term] cost the equivalent of a car that retails for $35,000, given the relatively expensive cost of gasoline vs. electricity," says Diarmuid O'Connell, Tesla's vice president of business development.

The Model S can be plugged into conventional outlets or be fully quick-charged from a higher-powered system in as little as 45 minutes and the engineering platform will also be used for derivatives including a minivan and crossover utility vehicle, O'Connell notes.

Tesla plans to build a manufacturing facility, employing 650, in northern California that will build advanced power-train components for other automakers.

Fisker plans to use $169.3 million from the Advanced Technology Vehicles Manufacturing Loan Program for engineering-integration costs as it works with suppliers to complete the Karma. However, the second stage includes a $359.36 million loan tied to developing and manufacturing a less expensive Fisker hybrid in the U.S., which has been dubbed Project Nina. His new company expects to build between 75,000 to 100,000 of these highly efficient vehicles starting in late 2012; the second-generation Fisker will be a relative bargain, with a price tag around $40,000. (See the 50 worst cars of all time.)

Unlike Detroit's automakers, Fisker and Tesla are also export-oriented. "We already sell EV components to Daimler, which will soon begin marketing an electric version of its popular and affordable Smart car," says Tesla's O'Connell. Fisker says his company stands to benefit immensely as support from countries around the world for clean vehicles increases. Germany recently unveiled an action plan to have 1 million electric cars on its roads by 2020 and Japan wants electric vehicles to make up half of all vehicle sales within a decade, he notes.

O'Connell also defends the $100,000 Tesla roadster, which debuted last year. "It's twice as energy efficient as a Prius and six times as energy efficient as gasoline competitors, and faster than a Porsche 911," he says.

Despite the technology behind both vehicles, however, some competitors and observers object to the government assistance. These cars will compete for a relatively small pool of buyers, who can afford expensive, sporty cars, says an official with a foreign carmaker. "It's all about boys and their toys," adds Joseph Phillippi, an independent auto analyst from Short Hills, N.J. "They should have written their own checks instead of going to the government."

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