The tragic losses of Apollo 1 did not petrify the U.S. and derail the Moon Shot program. The collapse of Henry Ford’s first car company did not mean that the world would never want his product. And the demise of Fisker does not condemn the electric vehicle (EV) to certain failure.
If anything, Apollo 1 strengthened the resolve of those involved to do better. It also provided NASA with information and experience that would one day be critical to successfully landing Apollo 11 on the moon and ensuring the safe return of the Apollo 13 crew despite overwhelming odds. Apollo 1 was a great teacher, and perhaps its biggest lesson is that a nation cannot be held back by individual losses if it intends to achieve greatness.
Yes, Fisker is in the tank. But like Apollo 1, lessons will be learned from this failure. For one, future entrepreneurs and venture capitalists will take note of business strategies that are helping Fisker’s competitors succeed. For instance, Fisker focused on body styling and depended on other companies for technology. Tesla, on the other hand, developed its own technology that eventually brought in revenue streams through partnerships with Toyota and Daimler.
A bigger lesson should—but probably won’t—be learned by congressional opponents of federal loan programs like the one that supported Fisker. These politicians will be quick to use Fisker’s demise as evidence that federal loan programs, and perhaps electric vehicles as a whole, are a complete disaster. But no rational investor writes off an entire portfolio because of a few underperforming stocks. The objective is to have the portfolio return a profit at the end of the investment period.
If America’s earliest car companies had been judged by the same standards that some in Congress are holding EV’s to, the U.S. economy would look very different right now. Hundreds of automakers rose and fell as the market for passenger vehicles emerged. One of these failed enterprises, the Detroit Automobile Company, was run by none other than Henry Ford. But these failures pale in comparison to the enormous success of the few surviving companies (including the one Ford went on to found), which produced 14 million vehicles and employed 135,000 Americans in 2011.
Fisker seemed like a good bet, both to the federal government and to the private investors who backed the company with a total of $1.2 billion. However, as with most of the car companies during Ford’s era, Fisker was unable to get its foothold in the market. But its bankruptcy would amount to a mere 2% loss of the total funds this particular federal program has loaned out. That’s a far cry from disaster, especially when weighed against the opportunities for companies in the loan program’s portfolio to profit from growing demand for advanced vehicles, which are expected to account for 60% of a $1 trillion global auto market. Helping these companies capture a larger share of this emerging market translates to greater rewards for the American economy. Simple as that.
The U.S. must continue its investment in promising new technologies like EV’s, or risk ceding their future markets to others. China’s history provides us with the perfect illustration of this fact. By supporting ventures in trade and global exploration, the early rulers of the Ming dynasty expanded and enriched the Chinese Empire. But in the 1430’s, China took a sudden turn. Deciding that trade and exploration were too expensive and that China had already learned all it needed to know to maintain its wealth and culture, the Empire ended these ventures. By continuing to invest in and utilize China’s superior sailing technologies, the Ming could have forged trading relationships with rising European states, captured some of the riches of the New World, and maintained China’s place as a world power. Instead, they oversaw China’s slow decent in both wealth and influence.
No one likes to lose. And no matter how you slice it or spin it, Fisker is a loss to the U.S. But while it might seem like a safer bet to avoid the uncertainty and potential setbacks of modern technologies and emerging economies, China’s past shows us the folly of “sitting it out.” China seems to have learned from its historical mistake, and shows no sign of giving up on the clean technologies that the world is inevitably moving toward. So will America learn from China’s 15thCentury mistake—or will we insist upon making it ourselves?
Editor’s Note: EarthTechling is proud to repost this article courtesy of Third Way. Author credit goes to Woei Ling Leow* and Ryan Fitzpatrick.