In the suit against Coda Automotive, former employee Tony Bulchack says that Coda laid off 125 employees around December 14, 2012. The complaint says that these workers weren’t given 60 days notice of the planned layoffs in writing. Now that Coda has filed for bankruptcy, the suit was filed in the bankruptcy court.

I’ve embedded the complain below:

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Next AutoWorks didn’t receive the loan. And rightly so. Next AutoWorks made Fisker look like a good idea (both companies were backed by Kleiner Perkins, by the way). The company struggled right out of the gate with its gas-sipping, low cost, plastic car, and never went anywhere with it.

But there were another almost half dozen alternative vehicle startups that asked the DOE for loans out of the Advanced Technology Vehicle Manufacturing Program (created in 2007 and funded in 2008) but that didn’t receive loans: Bright Automotive, Aptera, Coda, Think, and Carbon Motors. And these are just companies that publicly discussed the loans with the media.

Tesla and Fisker were the only startups that received funding from the ATVM program, and half of Fisker’s loan was withheld. The close to $200 million that went to Fisker represents around 2 percent of the entire ATVM loan portfolio advocated. The bulk of the loans went to the big automakers, Nissan and Ford. The DOE became much more cautious with this program in 2011 (coinciding with Solyndra’s struggles), and has since frozen the remaining $16.6 billion of the $25 billion program.

All in all, the DOE was actually pretty cautious and conservative with the ATVM loan funding. The program definitely had problems, to be sure, including some things I outlined in this previous post: miscommunication with companies, and better early due diligence. It’s also questionable whether the government should be giving such sizable amounts to single companies, instead of putting those funds into other incentives like tax breaks.

But the ATVM program wasn’t an example of massive misspending from the DOE; it was a program that was stalled before it was really even started.

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A couple months after that, boy megastar Justin Bieber got one for his 18th birthday as a present from his manager. The car even had its television debut driven by Ashton Kutcher, playing an internet mogul, on Two and a Half Men.

Fisker’s Project Nina, later called the Atlantic, which was never manufactured.

That summer gas prices were predicted to rise about 40 percent, leading to a boost in sales of fuel-efficient cars. A year earlier, electric-car company Tesla held a blockbuster IPO, and Nissan’s low-cost electric car the LEAF had gone on sale. The country seemed like it might finally be ready for electric cars, and perhaps ready for the first car enthusiast’s plug-in hybrid, as the Fisker Karma was being called.

But the limelight was short-lived for Fisker. In the months and years that followed, the company spiraled downward, burning its dreams and reputation to the ground — just like faulty parts did to a couple of its cars. Fisker has been reported to be on the brink of bankruptcy, lawsuits are piling up, and a government hearing is reportedly in the works.

There are a lot of crash-and-burn stories in Silicon Valley. It’s in the nature of entrepreneurs, startups and investors to take risks and sometimes fail. But it’s not often that you see such a dramatic downfall.

Those that have been tarnished by Fisker’s demise include venture-capital grandaddy Kleiner Perkins; Fisker’s executives, many of whom had long distinguished careers in Detroit; and Fisker’s broker, Advanced Equities, which helped the company raise hundreds of millions of dollars and has now disbanded entirely. Fisker raised and spent more than a billion dollars over its lifetime.

A handful of celebrities and politicians that championed the company have also been caught up in its wreckage, as has the Department of Energy, which ended up loaning the company close to $200 million. The entire electric-vehicle industry could take a hit because of Fisker.

How did this do-gooder dream that was supposed to combine Silicon Valley-backed tech innovation, gorgeous design, and eco-friendly hot-rod cars turn out so horribly wrong for so many people? That’s what I’ve tried to find out in a dozen interviews in recent weeks with people at the center of the Fisker story.

Summer of 2011

It was in that summer of 2011 — even as the company outwardly was showing some signs of hitting its stride —  that I first started to wonder if something wasn’t going awfully wrong at Fisker. Mitt Romney had just announced his presidential run, a federal grand jury had indicted John Edwards, and we were enduring the second hottest summer in the U.S. on record.

I had been following Fisker since its founding four years earlier, and the company was on the cusp of delivering its first electric hybrid sports car, the Karma, to customers. Though the delivery was running 18 months behind schedule, there was a sense of anticipation among the media, investors and car enthusiasts.

Then two things happened that gave me pause. An auto industry executive that I trusted made me an offhand bet that included the idea that Fisker’s second car — then called Project Nina and partly funded by a Department of Energy-approved $529 million loan — might never see the light of day. Fisker had deep pockets, such high-profile investors and so much media hype — I really hadn’t considered something so shocking. Clearly I lost that bet.

The second unsettling event of the ’11 summer was when Fisker invited the media to watch “the delivery” (re-enacted reality TV- show style) of one of the first Karmas to Kleiner Perkins partner Ray Lane. Outside Kleiner’s offices, in the hot parking lot, Lane held up the keys in celebration of the delivery and talked about the joys of driving his Karma as a large group of photographers, reporters and TV crews captured the moment.

Afterwards, I did a long interview with Lane back in the air-conditioned comfort of the Kleiner offices, where he explained to me his counterintuitive thesis for backing Fisker: Either get the valuation high enough so they don’t get crushed on dilution or get low-cost loans that are high leverage for equity investors. “My partners thought I was out of my mind. But I had a thesis,” said Lane.

Kleiner Partner Ray Lane receives the keys for his Fisker Karma, Summer 2011.

The media learned a couple weeks later that the Karma hadn’t received any of the needed regulatory approvals — so the car wasn’t legally driveable on public roads. It wouldn’t get full certification from the EPA until three months later.

The early days

But to understand Fisker’s missteps you have to go back to at least 2006. Fisker’s founder Henrik Fisker was a well-known car designer formerly with BMW and Ford who had his name on hot cars like the Aston Martin DB9 and the BMW Z8 Roadster. In 2004 he started a luxury-car company called Fisker Coachbuild with his long-time buddy Bernhard Koehler, who was later his co-founder at Fisker. In late 2006, Henrik Fisker started working on a contract basis with Tesla, creating designs for Tesla’s second car, a sedan, later called the Model S.

This was also the year that Al Gore’s Inconvenient Truth debuted, and some in the Hollywood elite were starting to embrace hybrid cars and eco causes. Henrik Fisker has told reporters that he was inspired to build Fisker Automotive after seeing DiCaprio drive a Prius to the Oscars and thinking he should have something more high-end. DiCaprio later became an investor and marketing partner to the company.

In 2006 and 2007, cleantech investing was the all the rage among VCs. Research firm the Cleantech Group called 2006 a “watershed period” for cleantech venture investing. VCs put $3.9 billion into global cleantech startups that year, an increase of about 50 percent over 2005. The annual investment numbers grew even more in the following years, but 2006 was a turning point.

Around that time Kleiner Perkins had a plan to bet a third of its fund on cleantech investing. More than a decade ago, Kleiner made a fortune from investments like Google and Amazon, and in the early 2000′s was trying to find the next big thing. Some of the Valley’s most well-known investors like Draper Fisher Jurvetson and VantagePoint Capital Partners were also excited about cleantech back then, and had decided to put millions into Tesla, led by charismatic PayPal co-founder Elon Musk.

At some point at the very end of 2007, Kleiner became Fisker’s early flagship venture backer. Musk told PandoDaily’s Sarah Lacy last year that Kleiner actually tried to invest in Tesla before Fisker, during Tesla’s Series C round, but Musk said that Kleiner wouldn’t let him choose the Kleiner Partner for the board seat. Musk wanted John Doerr, but Kleiner’s transportation guy at the time was Lane, who later joined the board of Fisker. Musk ended up going with VantagePoint, and Kleiner ended up funding Fisker. Clearly Tesla’s VC funding, followed by its IPO in the summer of 2010, were significant motivators for Fisker’s investors.

Tesla’s Roadster, with VC-backing, was first delivered to customers in Feb 2008.

In early 2007, after a chance encounter with the girlfriend of then-Quantum Technologies CEO Alan Niedzwiecki, Henrik Fisker and Niedzwiecki decided to meet for lunch to discuss the possibility of launching an electric car based on the Quantum drivetrain. In late Summer of that year, Fisker Automotive was officially born as a joint venture between Fisker Coachbuild and Quantum.

The idea at the time was ambitious, exciting, and perhaps even a little threatening to potential competitors. A little over a year after Henrik Fisker did design work for Musk’s company, Tesla sued Fisker (Jalopnik called it the world’s most expensive girl fight) for breach of contract and allegedly using the design work to raise funds from venture capitalists and launch a company. The suit went to arbitration, and the arbitrator sided with Fisker.

The heart of Fisker’s business model was in that early deal with Quantum. The idea was to design a gorgeous car, and have suppliers like Quantum provide the technology because off-the-shelf parts from suppliers would help keep costs down.

But there were problems with this strategy: Sometimes, those parts had to be custom-made to fit the design vision, which resulted in higher prices for Fisker. Other times, parts were delivered late or, worse, faulty, but Fisker was locked in to those supplier relationships. Sources close to Fisker have also said that many of the parts were owned by the suppliers themselves, so Fisker didn’t own a lot of the internal technology.

Compare that approach with Tesla‘s strategy: Tesla has invested millions of dollars to amass electric car intellectual property. It can make money selling its core technology to other large auto makers like Toyota and Daimler, and a decent amount of Tesla’s value is in its tech IP.

Toyota’s electric RAV-4 has Tesla tech inside.

Indeed, Fisker’s business model wasn’t the type that funders in the Valley typically like — it’s the polar opposite of the ‘Intel inside’ approach. That so many investors were so eager to back the company has left many in the electric car and tech industries scratching their heads over the years. “It would have only taken a couple a phone calls to industry veterans to have prevented all of this,” says electric car advocate Chelsea Sexton, adding “there’s no excuse for not doing homework. It appears none was done.”

Fast forward to the end of 2012, when Fisker was desperately searching for a lifeline to help it survive, and was bidding itself to Chinese auto giants. Media reports have said, and I’ve heard as well, that the Chinese firms were partly scared off after they took a look under the hood and found that Fisker didn’t own much of its own technology.

Funding an electric car startup from scratch

One of the things Fisker will be most remembered for is the huge amount of capital it tapped into — the at least $1.2 billion it raised and the close to $200 million loan it received from the government.

When Fisker first showed off the Karma at the Detroit Auto Show in January 2008, Kleiner Perkins investors were front and center. Lane told the Wall Street Journal that their early investment in Fisker was more than $10 million and was one of the firm’s bigger investments at the time. Lane also said that the Fisker deal was one of the first in which former Vice President and Kleiner advisor Al Gore provided advice.

But those funds were just the initial drop in the bucket for what Fisker would ask for to grow and produce its cars. In the following years, Fisker raised venture rounds of around $65 million and $86 million. But venture firms couldn’t supply all of the funds for building an electric car, which can cost a billion dollars.

Part of the answer came from the U.S. government. When President Obama took office in 2009, he pledged to support electric cars and low-emission vehicles. His administration used the massive stimulus package to create green jobs and build a so-called clean energy economy. But even before that, a program called the Advanced Technology Vehicles Manufacturing, or ATVM, was created in 2007 and funded by Congress in 2008 and offered loans for companies making vehicles in the U.S. that had better mileage or reduced dependency on foreign oil.

In the summer of 2009, the first wave of ATVM conditional loans were announced, and went to Nissan, Ford and Tesla. Soon after, Fisker itself got approval for a conditional loan of $529 million. Fisker’s goal at that time was to produce 11,000 to 15,000 Karmas per year by September 2011, and 75,000 to 100,000 Project Ninas (later called the Atlantic) in 2012. The DOE ended up only delivering about $200 million of that loan after Fisker didn’t meet milestones for its Karma. Fisker delivered none of its Ninas, later called the Atlantic.

Much of the political reporting that will come out on Fisker, as well as a planned upcoming hearing on April 24, will likely focus on how Fisker got approval from the DOE. Was there cronysim, and did Gore play a role? In the past I’ve looked into rumors suggesting Fisker got the loan because it agreed to build a factory in Vice President Joe Biden’s home state and deliver Delaware green jobs. I’ve never found a direct connection there.

But I would imagine that, as with Solyndra, the DOE and the administration trusted the company’s backers and liked the idea of a beautifully designed, American-made electric car. Fisker fit into their thesis of using public funds to stimulate the clean-energy economy and create green jobs.

Joe Biden speaking at Solyndra’s ground breaking in August 2010

The broker

Getting the conditional loan was a key turning point for Fisker. It gave the company clout and the ability to raise additional funds. Soon after Fisker received the loan agreement, it started working more closely with a broker in Chicago called Advanced Equities.

Over the course of three years, according to my sources, brokers at Advanced Equities raised somewhere between $600 million and $800 million of Fisker’s over $1 billion in funding. The sources say Advanced Equities sold Fisker shares to over a thousand wealthy individuals. These aren’t professional investors that are used to taking on startup risk; they are people who did well in life and wanted to invest in the tech-driven dream of a sleek electric car.

One of those investors was DiCaprio, and numerous sources close to the company have told me that Kleiner Perkins partners Doerr and Lane put millions of dollars of their own money into Fisker. Another person that Fisker listed as a Director on a funding filing in late 2011 was Timothy Shriver. In a recorded internal sales call with Advanced Equity brokers from early 2010 that we’ve obtained, Advanced Equities co-founders tell their brokers that the Fisker opportunity is such a good one that they should bring the deal to their best customers.

Of course, many of the investors through Advanced Equities weren’t household names in San Francisco or Los Angeles. Chicago’s prepaid college saving’s fund, the Illinois Student Assistance Commission, invested $10 million. An investor named Daniel Wray invested $210,000, and later sued the company and its broker.

Fisker’s venture backers commonly pitched in to help Advanced Equities. Sources tell me that it wasn’t unusual for investment calls with Advanced Equities and potential investors to feature Kleiner’s Lane, as well as NEA’s Scott Sandell, sharing Fisker’s vision.

If you asked venture capitalists in the Valley around that time what they thought about Advanced Equities, a common response was that it didn’t have a very good reputation — “snake oil salesmen” was the term often used. I’ve long wondered why Kleiner and NEA would actively work with a broker that had a weak reputation. Advanced Equities brokers, for their part, made millions of dollars in sales commissions from these deals.

It wasn’t until December 2011 and into 2012 that the more dubious efforts of Advanced Equities became clearer to Fisker’s hundreds of investors. The last few hundred million dollars of Advanced Equities’ fund raising for Fisker, starting with the D-1 round, was what brokers call “pay to play.” As Fisker was running into technical, delivery and political problems, its valuation was quickly declining. But the company still needed more money, so the brokers went back to its current investors and said: Unless you give this more, your current shares will be diluted and your preferred stock will be converted to common stock.

It was essentially a gun to their heads. This is why investor Wray sued Fisker in February 2012, alleging he was on the receiving end of this tactic. In his lawsuit, he says Advanced Equities sent him a letter dated Jan. 18, 2012, stating that he needed to decide if he wanted to invest in Fisker’s next round, and pay around $84,000 by Jan. 27, 2012 — a little over a week from receiving the letter. He also says that Advanced Equities assured him that he would have anti-dilution protection. According to the audio clip from Advanced Equities’ internal sales call in early 2010, Advanced Equity leaders say that the Fisker deal will “suffer no dilution,” and was “a dream scenario.”

That dream would soon end. In September 2012 after Fisker closed on $1.2 billion in funding, the bulk of it organized by Advanced Equities, the SEC charged the broker with misleading investors when it raised money for another company back in 2009 and 2010 (Bloom Energy). Advanced settled, agreeing to pay $1 million, and its co-founders were personally fined. Two months later Advanced Equities closed up shop.

The public problems start

In the summer of 2011, Fisker cars finally start rolling off the production line — Lane got one of the first, and so did DiCaprio, Gore and other luminaries. By October, Fisker said about 40 Karmas had been shipped to the U.S. from the factory in Finland, and before the year was out, at least 200 people had Karmas.

But this was still a lower number than expected — delayed regulatory approval was part of the problem. As a result of the delays, Fisker’s battery supplier, A123 Systems, had to lower its yearly revenue guidance.

Ray Lane’s Fisker Karma, Summer 2011

At the end of the year, a dark cloud appeared over Fisker’s celebrity parade. In December, 239 Fiskers were recalled because of a faulty battery hose clamp. The news was alarming, but Tesla had faced the same type of recalls in its early days, and so customers and the media were somewhat forgiving.

Then another red flag: As the ball dropped on 2011, I noticed that Fisker was quietly raising more money using Advanced Equities. That seemed unusual because the company was now delivering its cars, meaning it could bring in revenue, and it had already raised so much. It would take another month for me to figure out why.

Fisker in February 2012 confirmed media reports that its DOE loan had been frozen after $192 million because it hadn’t hit the milestones with its Karma. The last payment Fisker had received was all the way back in May 2011. Many of Fisker’s investors are now wondering why the DOE wasn’t more vocal about the frozen loan when it happened back then, as they had continued to fund the company based on the assumption that the DOE loan was still moving forward.

Regardless, the confirmation of the frozen loan kicked off one of the worst years — both self-inflicted and just plain bad luck — for a startup I have ever seen.

Founder Henrik Fisker stepped down as CEO, and he was replaced by an auto executive from Chrysler. Six months later that executive was replaced by a third CEO, who previously worked on the Volt at GM. Fisker stopped work on its second car and laid off all the workers in its Delaware factory. (When this story was published, the DOE still has a note on its ATVM page saying Fisker created 2,000 permanent jobs in Wilmington, Del.)

In the spring of 2012, Consumer Reports bought a Karma, and when it broke down after less than 200 miles, the magazine understandably gave it one of the worst reviews in automotive history. One of the problems with the Consumer Reports’ test car involved the battery. But the battery issue turned out to be much more widespread that just the review car, and Fisker’s battery supplier decided to replace faulty battery cells to the tune of $55 million.

Later that year, A123 Systems itself went bankrupt, causing more problems for Fisker. Fisker claimed that A123 Systems owed it $140 million, but a bankruptcy settlement reduced that to a paltry $15 million. Chinese giant Wanxiang wound up buying A123 Systems; adding insult to injury for Fisker, sources have told me that Wanxiang also looked at, but seems to have passed on investing in or buying the electric car company.

That summer, Fisker also recalled a cooling fan after it caused a slow-burning fire in a Karma in Woodside, Calif. Watch the disturbing video of a fireman putting out the flames. In hindsight, Fisker is lucky no one was killed while driving its vehicles.

Then there was the just plain terrible luck for the ironically named Karma: Super Storm Sandy wiped out 338 of its Karmas in storage in New Jersey. The cars first drowned, and then caught on fire — salt water damage caused a short circuit that was spread to other cars by high winds, Fisker said at the time.

With all of this happening in public — and in a presidential election year — Fisker’s struggles became highly politicized. The company was mentioned numerous times in presidential debates and speeches leading up to the election. Republican nominee Romney called Fisker and other DOE-supported companies losers.

Where did all the money go?

Fisker had a phenomenal amount of funding in its coffers — so where did all the money go? It’s no doubt expensive to launch a car company, but the way Fisker spent the money didn’t seem to create much lasting value.

The company didn’t seem to invest substantially in technology innovation or tech IP, and seemed to spend a disproportionate amount on suppliers. For example, numerous sources have told me that the company paid upfront for 15,000 of some of the parts for its planned 15,000 Karmas. It ended up only selling around 2,000 of the cars. I’ve also heard that Fisker paid some funds upfront to have BMW make engines for the 100,000 Nina cars it hoped to produce — in the end, Fisker didn’t deliver a single Nina.

Costs to build each Karma also creeped up because the company missed its volume targets, and because engineering had to change designs around supplier constraints. No wonder the company ended up adding $20,000 to its initial sale price.

Expensive hires may also have sucked away chunks of Fisker’s funding: Sources I’ve talked to say that Fisker filled the upper levels of the company with seasoned auto executives from Detroit. At the high point of Fisker, the company had around 300 employees, plus dozens of contract staff. Bringing in a certain amount of the old guard could help a car startup ramp up quickly, and also impress potential investors with “industry names.” But those people are also used to big auto-industry budgets that included extensive travel and salaries — that’s the opposite life of a tech startup.

The end

The bottom line for Fisker: It sucked down over a billion dollars and delivered around 2,000 cars to customers that now have few places to turn if those cars have mechanical problems.

At Kleiner Perkins, the dust is still settling. Reuters reported earlier this year that Kleiner partner Doerr apologized to his limited partners (groups that put money into VC funds) for a weak fund performance and promised to do better in the future. Lane has transitioned away from bringing in new investments for Kleiner’s future fund. Spooked by bad deals, venture firms across the board pulled back on cleantech investing by a third in 2012.

There are political repercussions, too. The DOE was on the hot seat when Solyndra went bankrupt, and now will be equally under scrutiny over Fisker. The ATVM program has essentially been frozen, and the DOE says that despite the fact that it has $16.6 billion remaining in the fund and seven applications pending, it will not award any more loans.

The worst part of the Fisker story could be the fallout for electric cars. Helping reduce America’s dependence on foreign oil and lowering the carbon emissions of personal transportation is necessary. Introducing more electric cars is one way to do that. But with the industry in such a fragile, nascent stage, Fisker could wind up delivering the knock-out blow.

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Midsummer, based in Jarfalla, Sweden, has developed equipment and processes to make thin film solar panels, using the material copper indium gallium (di)selenide, or CIGS. If the term CIGS rings a bell, that’s because the ashes of CIGS firms have burned brightly — and burned their investors’ cash – in recent years.

Silicon Valley’s MiaSolé, which had originally impressed investors with its high conversion efficiencies, was sold at a bargain-basement price to Chinese renewable energy firm Hanergy earlier this year. Reports are that the firm was snapped up for 10 percent of the price tag the board was after. There was also Solyndra, Nanosolar, Heliovolt, and others that have struggled.

But beyond just CIGS, the entire solar panel market is laboring under the weight of oversupply, and manufacturers have production capacities for about twice as many solar panels than the market needs. Even the big manufacturers are struggling and one of the biggest, China’s Suntech, has been unable to pay bondholders, with the subsidiary responsible for much of its manufacturing slipping into insolvency.

So it shouldn’t come as a surprise that it’ll be difficult to sell new equipment to prospective manufacturers. But that hasn’t stopped Sweden’s Midsummer. It believes its new approach to CIGS deposition offers major advantages.

Optical disk approach to solar panels

Midsummer’s approach is to produce individual CIGS thin film cells on a stainless steel substrate. The cells are “punched out” of the stainless roll before deposition. “We wanted to produce many small thin film solar cells and then later on put them together in a module,” says CEO Sven Lindström.

This approach draws on optical disc manufacturing techniques, treating each individual CIGS cells in much the same was a CD or DVD would be created. It certainly marks a departure from current thin film semiconductor deposition, which tends to be employed in a continuous process, either onto a glass substrate or a roll of stainless steel. The closest relative to the Midsummer process in PV would be MiaSolé, which uses a stainless steel substrate cut into cells. But even MiaSolé uses a continuous deposition process with the cells being sorted into efficiencies batches afterwards.

What’s the advantages of the CIGS semiconductor deposition onto individual cells? Lindström believes that it allows R&D improvements to be made more quickly and incrementally, one cell at a time. The company is aiming to produce 200 to 400 cells per hour on its equipment, and says it can change the process parameters a little for each individual cell. Midsummer employs its 2D bar coding system for the substrate, so individual cells can be logged on a database and efficiencies assessed.

Midsummer claims that other advantages include that its cells can be employed in a flexible module, which is a market segment that has been largely left open after Global Solar and Uni-Solar ceased production. The difference between Midsummer’s approach and those companies’ technologies is that Midsummer’s cells are significantly more efficient. Midsummer can produce modules with an efficiency of 14 to 15 percent, while Global Solar and Unisolar were producing modules for closer to 8 to 10 percent.

In addition, Lindstöm says the weight per square meter of Midsummer’s modules is below three kilograms per square meter, which is more lightweight than competitors. Flexible modules have been touted as a solution for commercial rooftop panels or membrane roofing, where weight load is an issue. Light weight, flexible panels could also open up other more unusual markets, like on the roofs of trains.

In terms of costs, the Midsummer claims its flexible module can be made for $1.10/W and with glass for $0.70. It has a roadmap for $0.50/W by the end of 2014, which is slightly ahead of competitors. It also believes that such costs can be achieved at a relatively small scale, tens of megawatts instead of hundreds or gigawatts.

It should be noted that while Midsummer has a line up and running in its labs in Sweden, but that the efficiency and cost results have not yet been tested in scale production. And with very few solar panel manufacturers looking to add capacity, there’s a chance that won’t happen soon.

“Nobody is buying”

While all of these advantages and this new approach appears promising, it could be incredibly hard to find buyers willing to invest in new solar panel equipment. “Nobody is adding new capacity,” at least for the next 12 to 18 months, says Finlay Colville, VP at NPD Solarbuzz. “This makes it a really big problem for anybody who is introducing a new tool,” particularly turnkey thin film lines.

But that doesn’t mean all is lost for Midsummer. It reports that an unnamed Chinese customer has one of the Midsummer lines currently installed for testing. The solar market’s geographical shift away from traditional European markets and to new ones in the Middle East and East Asia may also provide opportunities.

A GTM Research report released recently predicted that the Middle East and Africa will provide 1 GW of demand for solar panels in 2013, an increase of over 600 percent on 2012. The strong performance of thin film panels and CIGS’ in hotter temperatures could also give that technology an advantage. GTM Research’s Shyam Mehta thinks that if some of the CIGS cells that have reached 19 percent efficiency in a lab setting, could be applied to commercial production, there could be good prospects for the technology.

Even with a PV manufacturing market under considerable stress, innovation is still required to drive efficiencies up and costs down and Midsummer may allow for iterative improvements, cell by cell, for the first time in thin film. CEO Lindstöm reports that the company is well funded at present, but for its approach to make an impression it will have to start selling equipment sooner rather than later.

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I reported that Outten & Golden was investigating Fisker and interviewing employees last Friday, and Auto News has the full report of the filed lawsuit, as well as a PDF of the filing itself. Outten & Golden won a $3.5 million settlement against Solyndra using a similar suit.

Fisker Karmas

The suit, filed Friday in U.S. District Court in Santa Ana, Calif., against Fisker alleges that the company violated both federal and California state WARN acts, and the class action lawsuit was filed on behalf of lead plaintiff and former Fisker employee Sven Etzelsberger. The suit is asking for an unspecified amount of damages including unpaid wages and accrued holiday pay for 60 days, as well as legal fees.

Fisker laid off 160 employees last week and has kept 53 around to negotiate with the Department of Energy and to work on selling its assets. Fisker owes the DOE the first loan repayment at the end of this month for its $193 million loan. The company hasn’t made a car since the Summer of 2012, reportedly saw potential acquisition and investment bids from two Chinese auto makers fall through in recent months, and announced last month that its founder design Henrik Fisker had left the company over disagreements.

Filing for bankruptcy is a very real next possible step for the company. Fisker has reportedly hired a bankruptcy lawyer to look at its options.

Fisker has raised over a billion dollars in private funds, including money from Valley venture capitalists Kleiner Perkins and NEA. The company has sold a couple thousand of its $100,000 electric hybrid Fisker Karmas to customers, including celebrities like Al Gore, Matt Damon, Leonardo DiCaprio, Justin Bieber and the Game.

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Late last year there was the ouster of Better Place founder and former CEO Shai Agassi as Better Place struggled to sell cars in Israel, saddled with losses. And no one can forget the posterchild of failing big — Solyndra — as the company’s name was drilled into American minds through the presidential campaign last year after going bankrupt in 2011, and taking taxpayer dollars down with it.

Solyndra’s Factory

As I’ve been thinking about these types of companies — ones that take a lot of investor money and a lot of media attention and for whatever reason flame out on an international stage — I’ve been trying to think about what characteristics these high profile failures have in common. There was a book written a few years on the habits of unsuccessful executives, which is telling. But these “big failure” stories aren’t just about not succeeding, they’re also about failing under a bright media spotlight; often times going from beloved to beleaguered at a rapid clip, and along the way over-promising across many levels and often times losing a lot of people’s money.

To note, Better Place and Fisker haven’t gone bankrupt, so there could be a slim chance they could succeed in some way down the road. Better Place could suddenly grow its customers; Fisker could launch a second car that becomes wildly popular. But let’s face it, these turnarounds aren’t likely. So while we’re waiting to see how they end up, these are my musings on four ways to fail as big as possible:

1). Overhyping the company or tech from the beginning: The big public fail wouldn’t be so big or so public if there wasn’t excessive media attention shining a spot light on the firm. For cleantech companies, usually these proclamations are about changing the world, and making it a — pun intended — better place. It’s pretty hard to live up to the goal of fundamentally changing the world.

But tech companies across sectors do this, too. Most tech and business journalists have been to the overhyped startup launch, where you watch the spectacle and wonder what the ratio of launch cost to time on this earth will end up being.

The overhype can come from not just the media, but from investors and the community, too. Solyndra, Better Place and Fisker attracted a lot of reputable investors that aggressively courted the companies and gave them really high valuations. Outside of cleantech, app maker Color had all the makings of overhype, as did Airtime.

2). The CEO ego: Sydney Finkelstein writes in his book:

“Instead of treating companies as enterprises that they needed to nurture, failed leaders treated them as extensions of themselves. And with that, a “private empire” mentality took hold. CEOs who possess this outlook often use their companies to carry out personal ambitions.”

We all know this type of CEO. Better Place, Fisker and Solyndra all seem to fall into this category. The CEO’s personal mission is intertwined with the company’s goals, and can even blind them (see my article on the problems with righteous investing).

Finkelstein also highlights how failed CEOs sometimes ruthlessly eliminate anyone who isn’t completely behind them due to their ego. I’ve heard that one specifically about Better Place (and some more successful companies, too, come to think of it). The problem with that approach is that often times it removes healthy criticism and also shows how leaders aren’t open to listening to dissenting opinions. Even if a company has the best idea, the execution can easily fail if there’s no constructive discussion of the best ways to proceed.

Finally, Finkelstein writes that failed CEOs “are consummate spokespersons, obsessed with the company image, but with leadership skills that can become shallow and ineffective.” He adds, “Instead of actually accomplishing things, they often settle for the appearance of accomplishing things.”

On the flip side, there’s always some element of ego in almost all CEOs of aggressive and game changing companies. But it’s when these traits overwhelm a solid business decision-making process that the companies get in trouble.

Workers inspecting panels in Solyndra’s factory in April

3). Lacking transparency, until it all comes out: Whether it’s full-blown financial malfeasance, or just mishandling of funds, not being transparent about finances are the fastest way to contribute to a high-profile demise. Suntech Power had its own financial scandal and the company got in trouble with a fund it controlled that financed solar power plant development in Europe.

Solyndra was never found to have used political ties to get its loan, but it seemed to be less than upfront to the media, to state and the federal government, and to its employees about its high costs and looming losses. Around 1,100 of Solyndra’s employees came into work one morning in August 2011 and were laid off that day.

4). Raise and lose a lot of money: It might sound obvious, but companies ultimately fail spectacularly because they raise a lot of investors money, and then lose the lot of those funds. Companies that lose several hundred thousands dollars aren’t going to be touted as a “big fail.” Small failures make up the majority of business in Silicon Valley. The big fails are hundreds of millions, if not a billion, dollars. Solyndra raised almost a billion, Fisker raised over a billion, Better Place had raised $850 million.

These types of losses have happened throughout all bubbles and busts and particularly for infrastructure companies, like the broadband buildout of the 1990s, or the thin film solar investment cycle of recent years. Venture capital firms can survive being involved in maybe one of these in a fund, but not many.

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This week eight Chinese banks asked a court to find Suntech subsidiary Wuxi Suntech insolvent and to allow it to begin restructuring. Suntech responded to the court and said it would not object. The New York Times reported that the bankruptcy is “expected to lead to a takeover of the Wuxi operations by Wuxi Guolian, a financial conglomerate controlled by the city government of Wuxi.”

The solar market has seen an oversupply of solar panels and plummeting prices for those panels for over two years now. Two thirds of solar cells are made in China, where the Chinese government has given Chinese solar makers access to large low cost loans. The oversupply and drop in prices has led to huge solar manufacturers like Q-Cells to startups like Solyndra and Abound Solar to file for bankruptcy.

Suntech solar panels

Suntech may be the largest to date, but it won’t be the last solar maker to crash. As MIT Tech Review put it earlier this week: “hundreds of solar companies need to fail to help bring the supply of solar panels back in line with demand.”

The weeding-out process will help slow the fall in solar panel prices and allow demand to rise back up again. Down the road the re-balancing will enable these companies to continue to invest in more efficient cells and new innovations, which will bring down the cost of solar through technology even more. Another 180 solar panel makers could reportedly disappear by 2015 due to consolidation.

At the same time, Suntech’s woes partly come from a financial scandal. The company got in trouble with a fund it controlled that financed solar power plant development in Europe.

Of course, it’s not all positive that Suntech has declared bankruptcy. As Ucilia Wang wrote for us last week:

The drama presents an ugly turn for a company that was solid and took technology and market risks to grow. . . Chinese companies in general had been known more as mass producers rather than innovators. . . Suntech’s decline also leaves a depressing note in the efforts by the federal and local governments to expand solar manufacturing in the U.S.

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While the move might seem obvious, the trend is in contrast to high-profile companies from yesteryear like Solyndra, which built expensive custom machines to produce their solar panels and had to raise and spend hundreds of millions of dollars on manufacturing. The added expense and complexity of developing new machines and new products just added to Solyndra’s struggles and contributed to its bankruptcy.

The CEO of Alphabet Energy, Matthew Scullin, told me at the Summit this week that his goal from day one was to require all of Alphabet’s products to be made on existing toolsets. Alphabet Energy develops thermoelectric materials and devices, which convert heat into electricity, and the technology can be built on standard chip industry machines. “A startup needs to focus on developing one product in order to be successful, and developing a tool is like developing a second product in parallel. The risk is high,” said Scullin.

Scullin also pointed out that by using traditional semiconductor tools Alphabet can more easily find skilled operators and can also outsource manufacturing to chip foundries, if they choose to do so. For custom machines, “the lack of existing know-how, secondhand equipment, service people, and competition means the cost of doing business is high, adding to risk.”

Battery startup Seeo is using standard machines used to make traditional lithium ion batteries to make its batteries, including its secret sauce: its unique electrolyte. The company employs basic mixers, coaters, and assembly and testing machines at its pilot line factory in Hayward, Calif. and is also using battery cell, module and pack materials that are commonly used to make lithium ion batteries. Later this year the Seeo team hopes to build a larger fab with the same equipment somewhere in the U.S.

Startup Imprint Energy, which is making a zinc battery, uses off-the-shelf  printing equipment from prototyping to scaled production, says Imprint Energy CEO Devin MacKenzie. They haven’t done any customization of the equipment and MacKenzie tells me they do not anticipate requiring any large scale special equipment or significant modifications of commercially-available systems.

Many of the companies in its sustainability portfolio are embracing the practice of using standard plug and play manufacturing machines, Khosla Ventures’s partner Andrew Chung said at the Summit this week. Seeo has raised funds from Khosla Ventures.

Not all energy innovations, by their nature, can use existing machines. Tesla has invested significantly in its factory in Fremont, Calif. that is now churning out the Model S and using programmed robots to assemble the cars in an entirely new way. But Tesla has also long been smart about taking advantage of the cost savings and innovation of the traditional battery sector, as it uses basic Panasonic laptop batteries linked together to power its Model S.

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SoloPower said in late September 2012 that it had started up its large factory in Portland, Oregon. SoloPower then-CEO Tim Harris told us at the time that he expected the company to produce 20 MW – maybe 30 MW — of solar panels per year by the end of 2012 and ship 2 to 5MW of solar panels during the fourth quarter. In SoloPower’s confirmation of the layoffs this week, the company says it “will begin commercial shipments to customers this month.”

But according to The Oregonian, SoloPower is looking to sell millions of equipment from its headquarters in San Jose, Calif., it’s seen the departure of high-level executives like the CEO, the President and the CTO in recent weeks, and the managing director of SoloPower’s lead investor Hudson Clean Energy Partners recently resigned. These are all worrisome signs for a startup that has raised over $200 million in funding. The factory originally was supposed to be 400 MW factory and cost $350 million.

SoloPower was awarded a $197 million federal loan guarantee to help it build out the factory. That loan is supposed to be able to be drawn down on when it has its first production line up at the factory. That’s the same program that funded Solyndra. SoloPower has drawn down on a state loan according to the Oregonian.

This article was updated at 11:48AM PST on March 5, 2013, to clarify the status of its loans.

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Musk said Tesla has ten years to pay back the $465 million loan, which it won back in the summer of 2009, and Tesla plans to reduce that time in half and get it repaid in under five years. Tesla already started paying back its loan, and made its first payment of $12.7 million to the DOE in the fourth quarter of 2012. It plans to make its second payment by March 2013.

During the discussion at ARPA-E, Musk said that if the DOE got so much attention for failures like Solyndra, it should get praise for its successes like Tesla.

Tesla has successfully been transforming from a small-scale electric car maker, into a company that’s producing its second electric car the Model S at a scale of 20,000 cars per year at a factory in Fremont, Calif. During the company’s earnings call last week, Tesla said it would turn its first profit ever (on a non-GAAP basis) in the first quarter of 2013. Musk said he was confident that Tesla could also be profitable for other quarters this year, too.

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