How Electric Automaker Fisker Went From Industry saviour To The Brink Of Collapse

2012 fisker karma

Photo: Fisker Automotive

In 2009, Fisker Automotive was an exciting company: With Detroit in shambles and a huge loan from the federal government, the startup automaker had plans to change the industry.It was going to build 100,000 cars a year in Delaware and save or create 5,000 jobs. The Karma, its gorgeous, extremely efficient plug-in hybrid electric car, was on the way.

It landed a cover story on Forbes magazine in May, with the title, “The Next Detroit.” Justin Bieber and Leonardo DiCaprio were huge fans.

But today, no Karmas are being built. Production of the Atlantic, the car meant to generate real profits, has been delayed to late 2014. The Delaware plant sits nearly empty, and company’s namesake and co-founder suddenly resigned this week.

Here’s how Fisker went from the up-and-comer that was going to change the game, to a company flirting with disaster, and just maybe the next Solyndra.

Fisker Automotive was founded by Henrik Fisker and Bernhard Koehler in late 2007. Fisker (left) was known for designing amazing cars like the Aston Martin DB9 and BMW Z8; Koehler was a veteran auto executive.

In January 2008, the Karma concept was revealed at the North American International Auto Show in Detroit.

It was as stunning and sleek as anything Henrik Fisker had done before.

A plug-in hybrid electric vehicle, the Karma would get the equivalent of 52 mpg, and had an all-electric mode range of 32 miles (it could go much farther using gasoline as well).

Because of its small interior, it was categorized as a subcompact car.

At its unveiling, Fisker said the Karma would cost $80,000. That rose steadily over the next few years, settling at between $102,000 and $116,000.

In September 2009, the US Department of Energy allocated a $528.7 million conditional loan for Fisker, under its Advanced Technology Vehicles Manufacturing program (created by a 2007 law).

It was the big investment Fisker needed to get production really going. Part of the money was for finishing the design of the Karma, to be assembled in Finland.

But most was for repurposing a defunct GM plant in Wilmington, Delaware, to manufacture 100,000 cars per year. Here, Delaware Gov. Walter Bacon breaks ground on the original plant, in 1945.

Before long, Fisker showed off the finalised version of the Karma.

It hit the track in Monterey, California, in October 2009.

The first Karma finally rolled off the line in July 2011. Leonardo DiCaprio, a big fan and equity investor, got the first one.

Justin Bieber got one as a gift from his manager and Usher, on the 'Ellen' show. He was thrilled, and later painted it chrome.

The Karma hit dealerships in December, and received a lot of praise from critics.

Top Gear Magazine named it the Luxury Car of the Year, and Automobile Magazine called it the Design of the Year in January 2012.

But the Karma had missed expected delivery dates in December 2009 and September 2010, due to technical difficulties. Without the established infrastructure of a company like GM, Fisker was easily delayed by unforeseen problems with the car's design.

Those failures had an effect: The Department of Energy froze Fisker's access to its loan in May 2011.

The company had already spent $193 million, a bit more than the portion set aside for the Karma.

But it needed the rest of the money for the Delaware plant, where it planned to build its next model: the Atlantic.

Fisker held on, and a year later had raised more than $1 billion in private cash.

Fisker was dealt an even more serious blow in October: A123, the manufacturer of its car batteries, declared bankruptcy.

A month later, it halted production of the Karma indefinitely, due to the lack of batteries.

And it delayed production of the Atlantic — originally planned for 2012 — to late 2014.

Fisker's problems were compounded by leadership changes: Henrik Fisker, Tom LaSorda, and Tony Posawatz all served as CEO in the space of a year.

In December, Posawatz (who is still at the helm), announced Fisker had hired Evercore Partners to find it potential investors and buyers. According to the Wall Street Journal, it's looking mostly in China and Europe.

That may save the company, but it will mean that a foreign automaker will have a majority stake in a company on which the American people have spent nearly $200 million.

Meanwhile, no more Karmas are being built, no Atlantic has hit the road, and the Delaware plant — with its promised 2,500 jobs — sits nearly empty.

The once-great promise of Fisker is gone, and unless it pulls off a miracle, it could go down as a repeat of the Solyndra fiasco: a symbol of poorly thought out federal loans and too much ambition.

Now see the story of another electric automaker.

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