Could a V8 engine save the Fisker brand?
Yesterday, FoxNews.com asked: “Can the internal combustion engine save the electric car?” and answered: “In the case of the Fisker Karma, it just might be”.
We last wrote of Fisker Automotive in October 2012 when Mitt Romney, then standing against Barrack Obama for the Presidency of the United States, described the firm as “losers”. In the case of Romney, many of our readers rejoiced at his rejection but events of recent weeks have suggested that Fisker indeed will go the same way.
The Fisker Karma was the brainchild of Henrik Fisker, a Danish car designer whose previous creations have numbered the Shelby GR1 concept, the Aston Martin V8 Vantage and the BMW Z8 Roadster. In co-founding Fisker Coachbuild in 2005 and then Fisker Automotive in 2007, Henrik Fisker brought his design skills together with the “business acumen” and knowledge of “veteran auto executive” Bernhard Koehler.
With the backing of, amongst others, an Italian businessman named Gianfranco Pizzuto, Qatar Holdings and Kleiner Perkins Caufield & Byers, the pair began to manufacture their own automobiles. The Fisker Karma, a “plugin luxury sports sedan” described by AC/DC frontman Brian Johnson as a “cracking looking jamjar”, was the firm’s first vehicle. It was revealed at the 2008 North American International Auto Show in Detroit. Fisker and Koehler were bolstered by a $528 million loan from the U.S. Department of Energy in 2009 and after various delays, the Karma finally rolled off the production line at a starting price of $102,000 in July 2011.
The car was an immediate hit with environmentally conscientious personalities. Leonardo DiCaprio, a big fan and equity investor, got the first one and Justin Bieber was given one as a gift from his manager and Usher on the Ellen show. The normally cynical Top Gear presenter James May described the vehicle as “probably the most politically correct car on earth” whilst others who rushed to buy into Fisker’s concept numbered Al Gore, Colin Powell and Ashton Kutcher.
By February 2012, however, cracks in the company’s structure had begun to appear. Fisker moved to the role of executive chairman before production stopped in the summer of that year. The company refinanced but though it is said that some $1 billion was raised, several vehicles self-combusted that August resulting in a voluntary recall. Worse still came for Fisker Automotive then when A123 Systems Inc., the manufacturer of its car batteries, declared bankruptcy.
This body blow caused Fisker Automotive to cease production indefinitely as without batteries, they could not continue to make the Karma nor move forward with a cheaper $55,000 model named the Atlantic that was intended as the “volume car that begins to build growth”.
October 2012’s Hurricane Sandy dealt further disaster for Fisker after its entire European shipment of 300 Karmas was flooded and destroyed at Port Newark in New Jersey. Sixteen of the cars burned when eight foot of seawater caused a short circuit in one of them. Fifteen other vehicles burned as the blaze spread and in total some $30 million of damage resulted.
On 13th March 2013, Fisker Automotive was, according to Thilo Koslowski, an analyst at Gartner Inc., left as a “brand without a soul” when Henrik Fisker resigned. In an email to Automotive News, Fisker wrote:
“The main reasons for his resignation are several major disagreements that Henrik Fisker has with the Fisker Automotive executive management on the business strategy”.
Among the potential partners that Fisker Automotive’s management had been negotiating with to raise the funds needed to save the company were the Geely Holding Group, the Chinese company that owns Volvo, and Wanxiang Group Corp., whom recently bought battery maker A123 Systems Inc. out of bankruptcy. By late March 2013, however, with no deal concluded, Fisker Automotive’s board terminated 75% of their employees without notice and hired a law firm to prepare for a possible bankruptcy.
As FoxNews.com reported, though, Aaray of hope has come for Henrik Fisker’s Karma in the form of a boutique carmaker named VL Automotive. Founded by the former vice chairman of General Motors, Bob Lutz, VL Automotive plans to combine the Karma’s shell with a 556hp 6.2-litre supercharged V8 engine from the Cadillac CTS-V.
The rebranded vehicle, which the company have named the Destino, will be priced at around $185,000. Lutz has acquired 20 battery and powertrain free Karma “gliders” so far and claims to have some 100 orders on his books.
In addition, VL Automotive will also convert existing electric Karmas to V8 power for circa $90,000. Of such, Mr Lutz commented:
“We’ve heard from hundreds of Karma owners, with about 10% who may want to convert their cars, because sooner or later the cars might wind up as boat anchors”.
In conclusion, he added: “If Fisker disappears, it won’t affect us” as he believes VL Automotive could work with the automaker’s Finnish platform suppliers Valmet Automotive to build the Karma/Destino itself.
Oil could indeed be the Karma’s Destino.
To view the official website for Frisker Automotive, go to: http://www.fiskerautomotive.com
To view the official website for VL Automotive, go to: http://www.vl-automotive.com
Thank you for documenting the plight of Fisker. As a GSM of one of their franchise dealers since 2010, there are a few things in this article that I would like to either add or correct.
Fisker Automotive then went through a series of unfortunate event after unfortunate event that if were written into a Hollywood script it would have been rejected as being too unbelievable and farfetched that audiences would not buy it. You got most of them accurately however allow me to elaborate a little.
First of all, the Karma was originally announced to start at $87k and was to come out by summer of 2010. By the time the car came out in December of 2011 the price was already increased to $96k for the EcoStandard (made in Black or White with Black leatherette, no Navigation or Back up camera and 2 less speakers).
The Fires:
The first one happened in TX and there were several suspicious findings that were never expanded on by the media (because it may not have been the Fisker that caught fire on its own and that didn’t fit their agenda). The owner of the car and house had a checkered past and there were Insurance red flags raised and swept under the rug.
The second one (the only actual spontaneous combustion incident) was in California and was caught on video. Fisker launched its own investigation into the cause of the fire and had identified the problem and had a fix for it within 10 days. The owner of this car was so impressed with how Fisker reacted to the event that they not only bought another one they reportedly invested in the company as well. They quickly alerted the dealers and reached out to every customer to come to a dealer for the update.
The third and final was Super Storm Sandy. Electric vehicles are not built to be submerged in salt water for any amount of time let alone 8 ft. for several hours. I constantly pointed out to people that there were several other EV/Hybrid vehicles from other makes that had the same thing happen but you rarely heard about it because they were not targeted by the media in the same way Fisker was/is.
The A123 situation was not a good one but could have been spun much better by Fisker Automotive like this. A123 was too small of a company to satisfy the orders that Fisker needed for mass production let alone continue to advance the technology of the batteries to get us something that could give us 70, 80, 100 miles per charge. If people are getting from 20-400+ MPG now with a battery that gets from 35-52 miles of electric driving imagine what they will get with a battery with better range. They have been purchased by a company (Wanxiang Group Corp.) that has the necessary resources to be an adequate battery supplier for an electric vehicle company.
As Fisker Automotive tried to negotiate with potential partners to keep the company from having to file a BK the deals kept falling apart because of one main reason, the DOE. Every time Fisker Automotive brought a potential partner (Geely Holding Group, Dongfeng Motor Corp., Wanxiang Group Corp.) to the DOE the deal fell apart. The DOE is not interested in negotiating at all. They hold the position that it is all or nothing. Fisker Automotives potential investment partners attempted to make offers to buy them out for a lesser amount and allow them to participate in the future earnings, but the DOE is firm on every getting penny or nothing at all (this makes no sense something is better than nothing). The potential investors were all told that they must make use of the Plant in DE (a plant that was built in 1947 and needed a tremendous amount of work to be ready for production of any automobile let alone a high class automobile). Fisker Automotive still owes $172mil of the $193mil that they borrowed after the DOE went and took $21mil from a reserve account (essentially getting there pennies on the dollar) and seemingly forcing a BK file from Fisker Automotive.
This technology has been proven not to be Fiskers problem. The problem is and was its lack of leadership along with catastrophe after catastrophe and the inability to handle each properly. Fisker Automotive seemed to always stick their head in the sand and hope that the problem dies down on its own and in this day and age of internet journalism, social media and blogging they needed to be transparent and own mistakes and learn from them publically. Transparency is key now a days in establishing the trust of the public and the public is forgiving if you own up to and admit when you make a mistake (like an unrealistic sales projection and time table being tied to a crucial loan of your business plan or having the Signature Series not be the first vehicles sold from each dealership, etc…).
Hopefully Fisker Automotive can find that “white knight investor” to save them from a BK or they will hopefully file a Chapter 11 and not a 7. I am confident that with the DOE out of the way they will be bought out of BK court and carry on. They still have at least 3 other models already designed (Atlantic, Sunset & Surf) that they can produce and succeed with. I have said all along that if they were smart they would build a traditional gas version (like the Destino), and EVer version (like the Karma) & and EV version (like the Tesla) and have something for everyone. This would open up the company to all markets and allow people to choose what level of fuel consumption that they are ready for.
I think that a common sense approach to this business will be the Karma’s Destino!