The 2012 Fisker Karma

Fisker Automotive says rumors of impending bankruptcy premature

Henrik Fisker says production of the Fisker Karma is not dependent on Dept of Energy loans, and that the company is pursuing a "plan B" to fund the company independently from private investors to prevent the company from being a political football.
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In early February, Fisker Automotive laid off a few workers following a suspension of the Dept of Energy loans to that company. This has touched off punditocratic furies likening Fisker's impending demise with last summer's sudden collapse of Solyndra, and predictions that when Fisker dies so too will lithium battery manufacturer A123 Systems, because of course the whole Obama green tech vision was a disaster from the start. But, wait, says Fisker spokesperson Roger Ormisher, this talk of Fisker's corporate death is overblown, and the DoE loan issue is just a bump in the road.

Fisker, launched in 2007 by famed car designer Henrik Fisker, recently launched their first car, a luxury plug-in hybrid named the Karma. Their second plug-in hybrid car, Project Nina, was to have gone into production later this year except for the "speed bump" in the form of the Dept of Energy loan suspension. Fisker received approval for up to $527 million of loans in the 2009 Department of Energy loan program that was meant to launch a U.S. electric car industry, and the company has pulled down $193 million from that loan while raising $850 million in private capital. The loan suspension was due to Fisker having missed business development milestones specified in the loan contract, and those missed milestones were responsible for the repeated delivery delays for the Karma. Because of the loan suspension, Fisker laid off 26 of the 100 workers refurbishing the GM plant in Delaware, and laid off another 40-45 workers at its California headquarters, and the company still employs hundreds of people.

Last week, Theodore O’Neill, an analyst with Wunderlich Securities who follows A123, told the Boston Globe that “Everyone that I’ve talked to is pretty certain that the DOE loan is not coming’’, and that the Obama Administration is politically "boxed in" by troubled loans, and that if the Dept of Energy loan to Fisker is not unfrozen “that croaks Fisker and that croaks A123.’’ Fisker Automotive is a major customer of A123 Systems, which obviously poses a risk to A123 Systems.

A123 is making sales elsewhere, such as in the smart grid energy storage. A123 also announced today a new battery product, the Military 6T Battery, an item which replace the current lead-acid 6T battery which currently sees sales of 300,000 units per year. In the meantime A123 has cut their revenue forecast, and laid off 300 workers since July 2011.

On the other hand, Fisker's spokespersons are downplaying the situation. Ormisher dismisses it as a bump in the road, however most of the remaining Dept of Energy loan was for the Nina and the success of Fisker is tied to whether the Nina succeeds.

Henrik Fisker is telling several news outlets that Fisker is working hard to free itself of dependency from the Department of Energy loans. Last week Henrik Fisker told TorqueNews that Karma production is well under-way, and is not dependent on Dept of Energy loans, and that the Nina is capable of paying for itself. AutoNews.com quotes him saying "We are in discussions for alternative financing. We don't want our future 100 percent reliant on DOE funding. It's been great to have. We just want to be sure we have capital without DOE."

Fisker has finished development of the Nina and have lined up 95% of the parts required to build the car. The next step for the company is retooling the plant in Delaware, the cost for which was to come from the Dept of Energy loan.

The Nina is "ready to build" says Henrik Fisker, the question is what's the funding source to go into production. He talked to TorqueNews last week about a "Plan B" that would generate the funding in case the company is unable to come to terms with the Dept of Energy. AutoNews.com goes on to quote him saying "There are so many ways of getting financing without selling equity. Before we put in these hundreds of millions of dollars, we need to know which partner we need to go with."

In January, the company did double the size of its series D financing round from $150 million to $300 million, of which they've already sold $244 million of stock with another $56 million to go. This indicates that the company can raise investment capital on its own and perhaps won't need the Dept of Energy loan. To do so would require finding enough investors to replace the $336 million balance on that loan, and possibly the expansion of the Series D financing round is the first step in this process.

Will Fisker croak? And will that croak A123? These possible events remain as an unknown future. While the $336 million Fisker Automotive expected to get from the Dept of Energy is a large chunk of change, the company has already raised over $800 million on its own and appears poised to raise the remainder on its own as well. Henrik Fisker clearly wants to be in charge of his own destiny rather than to be kicked around as a political football, and may prefer to forgo federal investment money in favor of private investors. If so it would be similar to last weeks move by Chrysler to withdraw their own request for low interest Dept of Energy loans, with a Chrysler spokesperson also citing restrictive terms in the government loan.


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Comments

You repeatedly mentioned the Surf (which is the "sport wagon" version of the Karma, when you should have been referring Project Nina, the next-generation line of vehicles which are supposed to cost about half as much as the Karma -- and be manufactured in Delaware.
I changed it to read Project Nina, and of course in the DoE loan documents the word Nina is used. However, on fiskerautomotive.com they only show two models, the Karma, and the 2013 Surf. WIth a 2013 model year that matches up with production plans for the Nina. It's a fair assumption one can make late at night that Nina is the code name for the Surf. In the light of day, I admit that may have been a bad assumption. But, why wouldn't the Fisker Automotive website show a car named the Nina? In any case, I've change Surf to Nina in the article ...
Fisker have only revealed the Nina design to investors. The Surf is essentially the same vehicle as the Karma, with some minor changes to the rear end; but the Nina is quite different, with a BMW engine, one rather than two electric motors, and a transmission. It's likely to have a shorter wheelbase and not be as wide (and hence weigh less and get better e- and gas-mileage). I wonder whether the transmission idea will work. Tesla could not get theirs to work; the electric motor was too powerful, and kept breaking the transmissions.
Fisker is not anywhere near completion of the NINA design. The occupant packaging is a disaster. They laid off most of the smart engineers. Some left on their own knowing the ship is about to sink. The Karma is having the same problems that they were having a year ago.
Considering Delaware has been practically shut down, I would agree. Layoffs are hitting more than engineers they are completely re-organizing. Karma may be out, but there are big issues.
The Karma has been a problematic car, my good friend karma has left him stranded once, just stopped driving and had gas too (the car had less than 1000 miles on it, software error they said ) He's taken it back for repairs 3 times already, check engine lights, navigation problems, noisy brakes. All I can say is lemon law lawyers are going to have a field day with this fisker karma. SAD....
As an owner of one of the first cars delivered in California, serial number 505 and having driven it over 1,400 miles already, I take strong exception to the comments about the car being problematic. It drives in Stealth mode like a dream, solid high performance and I have not been stranded or had any difficulties with the cars overall drive. The small problems have been primarily in the software operating the radio, mp3 player, etc., but they are clearly working on this and I am getting outstanding service from my Santa Monica Fisker dealer. I think for a brand new car not to have any little nagging issues, would be someone's pipe dream. I ordered this car years ago to have a stylish, four door luxury green car that I could primarily drive in battery mode and not be emitting any CO2 or other tailpipe gases. This car meets that objective and there is no other car like it. Including numerous trips in excess of the 50 mile battery range, I am averaging 49 mpg. People (men and women alike) are regularly telling me it is the most beautiful car they have ever seen, looks way more expensive than it actually is and there is nothing on the road that compares to it. Give Fisker a chance to fulfill his dream. I have mine already.
I'm getting my Fisker in the mid April 2012. Have you had anymore issues with it since you took delivery? How many time have you had to bring it in to get a software updated? Please give all info on how your car is doing so far. It would be greatly appreciated Thank You WOJO Chicago, IL..
I have taken the car in for two upgrades to the software. Service from the dealer in Santa Monica has been outstanding, but frankly, there has not been any significant differences with the upgrades (yet). They're still working on it all and I am confident on future improvements . The few little nagging issues are still there (random volume changes, no MP3 player yet, an error fault, etc.), but the driving pleasure for me is unchanged and is all there. I am sure you have had a couple of test drives, well, for me it only gets better with my daily use of the car. I keep thinking of reasons to go somewhere with the car, just so I can get back inside it and take off. My car now has 1450 miles on it (2 months) and 80% of my driving has been within the 50 mile electric range. I love the quiet, smooth and strong performance, not to mention how nice it is to not see another car like it on the road. Really special. Went to a local car meet and it was the most looked at car of over 40 exotics including numerous Ferrari's, Lambo's, MB gull-wings, Ford GT-40 (1960's), etc.. Numerous people told me it was the most beautiful car there. Nice. Of course, one is not drag racing to 60 mph around town and who cares anyway if it takes 5 or 6 seconds. One of my other cars is a Mini Cooper S and it gets around town a lousy 21 MPG. The Karma economy is phenomenal. My electric bill went up only $66 for the first month of driving (way less than one tank of gas these days!) and only two stops at a gas station since purchase with total of 14 gallons so far (100 mpg). Feel free to ask any other question.
As an owner of the Fisker Karma as of June 20th, I just love it. I drive almost exclusively in stealth (battery only) mode. So far I believe I have used less than a gallon of gas with 286 miles traveled, and when I get the level 2 charger installed, I expect to use even less. In my opinion the car is a pleasure to drive and is just gorgeous. As a bonus, I am not even close to having my first visit the gas station with it.
Even if Fisker can fix the daunting software and quality problems, Karma and Nina will never be profitable. Parts alone cost twice as much as they should to price the car at 100k. As much as I hate to say it, Fisker is just like Solyndra. Fisker has missed every milestone they promised. The problems only continue to get harder to solve.
I highly doubt you've seen Fisker's financial statements. Speaking as someone that works there, the car is profitable.