Who Put the Hex on Fisker?
Luxury plug-in automaker Fisker has not had a good year. Adding to a string of bad news over the past few months, approximately 300 new, completed Karma sedans were sitting at their port in New Jersey when Sandy hit. (The Karma is built in Finland by Valmet). The cars were apparently waiting for dealers to pick them up, and were ruined. Total losses. What’s more, 16 of the cars caught fire when seawater shorted their 12 volt batteries (not their large Lithium-ion traction batteries), then high winds spread the fire to other cars. Several other non-hybrids at the port, including some Toyotas, also caught fire from the same series of events. Still, even though it’s not related to the traction battery, searching for karma fire (no quotes) in Google yields 49 million results.
What has gone wrong at Fisker this year? Let’s see.
- Its Karma plug-in luxury cars have been involved in a few high-profile fires
- The company did not meet required milestones for its Department of Energy loan, so didn’t receive a tranche of payment
- Fisker’s CEO, Tom Lasorda (who was Chrysler’s CEO before Bob Nardelli, before Cerberus owned them) was sacked after a few months on the job and was replaced by Tony Posawatz, former head of GM’s Volt program
- Fisker’s sole traction battery supplier, A123 Systems, declared bankruptcy about three weeks ago. Two of the three main reasons for the bankruptcy were the low-bid contract that it gave to Fisker (and it’s trying to exit), and the cost of replacing fire-prone Karma batteries that A123 was on the hook for.
- The third major reason A123 had to declare bankruptcy is that the EV market did not grow nearly as quickly as the company had hoped. That’s A123’s problem, but it’s also Fisker’s problem, since the Karma is basically an electric car with an add-on conventional drivetrain
- Fisker’s Atlantic (formerly referred to as the Nina), a lower-cost midsize plug-in hybrid to be built at the former GM plant in Wilmington, Delaware, has now been delayed for years, which doesn’t help the company’s tenuous situation
Despite losing the government loan support, Fisker claims that it has raised sufficient capital from private investors to meet its near-term funding needs. Insurance will cover the replacement cost of the storm-destroyed Karmas, and the company (fortunately or unfortunately) has sufficient inventory at dealers to cover sales for a while.
But with A123 balking at the prospect of continuing to sell the Karma’s batteries to Fisker because it’s a loss-leader, and Fisker needing more Karma production to generate enough revenue to continue operations, the news is not good. We’re not trying to spread rumors, but it seems unlikely that Fisker could handle much more bad news before going belly-up. It’s a company desperately needing a shot or two of good news, in fact.