Blood Rivalry Over Electric Cars Now Fueled by a Billion Taxpayer Dollars

Elon Musk and Hendrik Fisker are mortal enemies in the green car business. Yet the feds just split a billion dollars between the two companies. If that sounds like a bad idea, blame Al Gore.

Gore, you see, is a prominent backer of Fisker's Fisker Automotive, which just last week got a $529 million government loan to build a hybrid sports car. Gore also is a partner at the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, another Fisker investor. The Department of Energy said the former vice president's involvement did not sway its decision, but his involvement with the company can't hurt the firm's credibility with investors in this down economy. Musk's electric car company Tesla, meanwhile, is backed by rival Valley firm Draper Fisher Jervetson and Google co-founders Larry Page and Sergey Brin and is a media and celebrity darling. It got $465 million in government loans back in June.

Fisker once had an $800,000 contract with Tesla to design the Model S, the car central to the company's plan for profitability, and Tesla accused him in a lawsuit of stealing company secrets. Tesla also claimed Fisker did shoddy work, sabotaging their design and setting the company back three to six months, a delay that came during one of the company's darkest periods. Fisker won an arbitration ruling saying he did nothing wrong, but there's no reason to think that settled the grudge.

The government is now subsidizing both sides as they go head to head in the market for affordable electric-powered cars. Sure, one makes a plug-in hybrid and the other a pure electric, but the market for pricey, super-environmentally-friendly sedans is relatively small at this early stage. Not the best time to help the companies potentially undercut one another's profit margins. It would have been better to let Fisker get money from a government closer to where he'll be manufacturing the car, over in Finland.

After all, "I'm buying a Fisker!" probably doesn't sound nearly so dirty over in the European market.