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Fisker’s Road to Failure Paved by Losses of $1 Billion

Fisker Karma

The unwinding of Fisker Automotive and its ill-fated Karma plug-in hybrid is quickly becoming the paragon for what not to do as a startup automotive manufacturer. The full extent of Fisker’s failure continues to be unearthed, and a new article by Reuters reporters Deepa Seetharaman and Paul Lienert paint the picture of an automaker with a vision but no real way to get there; Fisker raised $1.4 billion throughout its lifespan but still suffered losses of $35,000 per Karma. With the number of cars sold, production costs, the crumbling of battery supplier A123 Systems, and the loss of $33 million worth of Karmas during Superstorm Sandy last year resulted in an estimated $1 billion total loss for Fisker since its inception.

We all knew that Fisker was cut off from a Department of Energy-funded loan program, from which it drew $193 million of a $529 million loan before the DoE cut funding due to Fisker’s missed production targets in June 2011. Many investors jumping in at this time were unaware that the funds had been frozen, and to say that disclosing this development would have been crucial in investors’ decisions is an understatement. Other interesting tidbits from the article:

-11th hour design and engineering changes left between $50 and $100 million worth of overstocked components outdated and worthless for Karma application.

-While most cars feature an exhaust at the rear of the car, the Karma used a front end exhaust system was deemed to noisy and detrimental to performance, leading to a multimillion dollar retool.

-Executive salaries for founders Henrik Fisker and Barney Koehler are estimated to be between $600-700,000, even after production on Karmas stopped and the company laid off a significant portion of its workforce.

The report is rather damning with regards to Fisker and the positive light it shone on itself to investors as the company was struggling behind the scenes. Fisker’s investors have undoubtedly been following the company’s downfall closely as the hidden goings on are surfacing.

The Reuters article can be viewed in its entirety here, and is a very worthwhile read for anyone wanting to know more about the hubris that eventually led to the demise of a promising young player in the industry.

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About Cameron Rogers

Cameron Rogers is the founder and lead writer at Downshift Autos, the only automotive blog on the Internet*. Born in the back of an AMC Gremlin, Cameron vowed to never let this extraordinarily embarrassing detail define him, so help him God. He drives a GTI but absolutely will not shut up about it if somebody asks. He will not hesitate to let people know that no, they shouldn't get a Porsche 911 when a Morgan 3 Wheeler is so obviously the superior choice. He is obsessed with the seats of a Carrera GT and the steering wheel of a Fisker Karma. He once sat in the driver's seat of a Tesla Model S, his greatest accomplishment to date. He is just now realizing that writing an autobiography, however miniscule, in the third person is odd and unnerving. *As of this writing, Cameron has been informed that there are, in fact, many websites and blogs centered around cars and car culture. He regrets his grievous error.

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