- The U.S. Department of Justice states that Fisker’s plan to charge owners for recall labor costs violates federal law.
- As part of Fisker’s bankruptcy proceedings, the company aims to limit recall parts expenses to $750,000.
- The National Traffic and Motor Vehicle Safety Act mandates that manufacturers cover all costs for defective vehicles.
Bankrupt electric automaker Fisker has put forward a controversial proposal to force owners to shoulder labor costs for several recall-related repairs. However, the U.S. Department of Justice, speaking on behalf of the National Highway Traffic Safety Administration (NHTSA), has stated that such a move would be illegal under federal law.
In mid-September, Fisker revealed that owners would need to pay for labor costs related to two ongoing recalls for the Ocean. The first is related to faulty door handles, and the second is for a faulty water pump which can trigger a loss of power. The EV startup briefly reversed this decision but then did another 180, confirming that owners would indeed need to pay.
According to the NHTSA, this is forbidden by the National Traffic and Motor Vehicle Safety Act, which all car manufacturers must comply with.
Read: Fisker Flip Flops Again, Requires Owners To Pay For Recall Repairs, But Feds Beg To Differ
Under this act, manufacturers must remedy all vehicle defects or areas of noncompliance without charge to the customer. Fisker’s liquidation plan wants to establish a fund to pay for recall-related parts, but only if such recalls don’t cost more than $750,000 in parts.
It also specifically states that vehicle owners must cover labor expenses and may only be reimbursed at a later date through the Fisker Owners Association, which could receive funds in future litigation against Fisker’s parts suppliers. There are no guarantees, however, that these funds will be recovered and owners will be reimbursed.
The US Department of Justice filed its objection to the plan in the United States Bankruptcy Court for the District of Delaware, stating that “The Safety Act is clear that all costs associated with remedying defective and noncompliant vehicles must be covered by the manufacturer; the Act makes no distinction between parts and labor.” The NHTSA adds that it “may have a priority claim against the Estate” of Fisker if it fails to comply with the Safety Act.
“The United States requests the Amended DS and Plan either be revised so that it complies with the Safety Act, or otherwise rejected; (2) the Plan’s confirmation order includes language preserving the United States’ federal interests; and (3) any and further relief as the Court deems necessary and just,” the court filing adds.
As of now, Fisker has not yet responded to the Department of Justice’s objection to its recall plan.
